SOFTWARE & SERVICES                                                                                                       ...
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THE WEB 2.0 UNIVERSE
 Eighty-nine public Web 2.0 companies: Our W eb 2.0 universe contains 89 companies, with a ...
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C A P I T A L M A R K E T S A C T I V I T Y (M & A A N D F I N A N C I N G )
Pace of deal signings slows: Total ...
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Deal round-up for October (to date): The large deal highlights for the month include:

        •       DailyMotio...
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 Social Networks the most active sector: Social Networks experienced the most financing activity among our W eb 2...
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C A P I T A L M A R K E T S A C T I V I T Y (P R I C E P E R F O R M A N C E )
 Web 2.0 index continues to outpa...
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 Broad-based price improvement: Fourteen companies in our universe had positive stock price performances over the...
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P U B L I C C O M P A N Y I N D U S T R Y N E W S (P A R T N E R S H I P S , F I N A N C I A L R E S U L T S , N...
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K ey Developments
C ompany                                   Headline                                            ...
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K ey Developments
C ompany                                   Headline                                           ...
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
09 10 27 Web 2.0 Weekly
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09 10 27 Web 2.0 Weekly

  1. 1. SOFTWARE & SERVICES 27 OCTOBER 2009 DAVID SHORE, CFA, MBA 416.860.6784 WEB 2.O WEEKLY david.shore@researchcapital.com Damian Wojcichowsky, CFA (Associate), 416.860.7652 EARNINGS RO UND-UP: WEB 2.0 EARNINGS SEASON BEGINS GAM IN G CO M PA NI E S KI C K OF F E AR NI NG S SE A S O N I N T H E W E B 2 .0 U NI V E R SE … Changyou.com is a China-based developer and operator of online games – including its 2-D martial arts saga, Tian Long Ba Bu. The company reported revenue growth of 26% Y/Y in the third quarter, with revenue coming in at $68.7 million. Key operating metrics, which provide read-across colour on the state of broader gaming economics, include: registered accounts, up 46% Y/Y to 75.1 million; active paying accounts, up 20% Y/Y to 2.4 million; and average revenue per paying account, up 7% Y/Y to RMB190 (approximately US$28). Management guidance for $69-$71 million in revenue in Q4 is inline with analyst estimates. Sohu, another Chinese-based company that provides online portals in the People’s Republic of China, which include news, entertainment, and online gaming (through the recently spun-out Changyou.com which was previously its online gaming division), reported revenue growth of 13% Y/Y to $136.6 million. Gaming revenue grew 26% Y/Y, while advertising revenue declined 2% Y/Y (as a result of challenging comparisons against the third quarter last year in which advertising spending boomed ahead of the Beijing Olympics). Guidance for Q4 revenue of $134.5-$138.5 million is slightly below analyst consensus of $141.7 million, implying between 11% and 14% Y/Y growth for the quarter. … AN D SM AL L E R S OC IA L G AMI NG D E V EL O P ER S GE T I N ON T H E A CT I O N Watercooler, maker of online fan communities and sports-related social games, which boasts 26 million users primarily on Facebook and six other social networks, raised $5.5 million. Adding intrigue to the deal is the fact that Betfair, the legal online gambling site for horse racing, led the transaction. W e view the participation of Betfair as indicative of the attractiveness of online social gaming – indeed, with Betfair unable to operate its core business in the U.S. due to legal restrictions, an investment in W atercooler may represent a strategy that (1) brings the company closer to the lucrative U.S. market, and (2) brings social network-based gaming expertise into the company fold. F IN AL L Y – H AL L O W EE N S E EM S T O HA V E SC A RE D OF F I N V E ST O R S Deal flow slowed down to four transactions in the week – a week which saw 31 of 56 companies in our W eb 2.0 public comparables list (trading above $1 minimum) experience price declines in the market. Average deal size in the quarter dropped from $7.8 million last week to $7.6 million currently. Financing Activity Last Twelve Months 400.0 16.0 14.6 350.0 14.0 300.0 12.0 9.7 250.0 10.0 9.0 (US$m) (US$m) 7.6 7.6 200.0 8.0 7.0 7.0 7.1 6.5 6.6 6.2 150.0 5.5 6.0 4.9 100.0 4.0 50.0 2.0 0.0 0.0 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 *May-09 includes $200m FB investment Total Average This report has been created b y Anal ysts that are emplo yed b y Research Capital Corporation, a Canadian Investment Dealer. For further disclosures, please see last page of this report. w w w . r e s e a rc h c a p i t a l . c o m T o ro n t o 4 1 6 . 8 6 0 . 7 6 0 0 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550
  2. 2. Page 2 THE WEB 2.0 UNIVERSE Eighty-nine public Web 2.0 companies: Our W eb 2.0 universe contains 89 companies, with a combined market cap of approximately $72 billion (Figure 1). The median market cap for the group is $44.5 million, with average trailing revenue of $161 million (median $57 million). The companies are also generally profitable with a median EBITDA margin of 12.5%. On a valuation basis, the overall average is 6.0x trailing revenue (median 1.9x) and 11.4x trailing EBITDA (median 9.8x). Twenty of the companies have more than 500 employees. C omparable C ompany Analys is > Web 2.0 Trading C urrent US D Market US D L TM Total US D L TM Total E B ITDA TE V/L TM TE V/L TM C ompany Name L TM as of Ticker E xc hange C urrency HQ P rice C ap ($m) R ev ($m) E B ITDA ($m) % R evenue E B ITDA E mployees Accelerize New Media , Inc. 6/30/2009 AC LZ OT C B B US D United S ta tes 0. 55 15. 4 4. 4 (3.7) -83. 3% 4. 6x - 11 Actoz S oft C o. , Ltd. 6/30/2009 A052790 K OS E KR W S outh K orea 16,300 118. 3 108.7 25. 9 23. 8% 0. 8x 3. 3x NA AQ Interactive, Inc. 6/30/2009 3838 TS E JPY J a pan 48,400 29. 4 66. 1 (2.0) -2.9% 0. 1x - NA As s ociated Media Holdings Inc. 6/30/2007 AS MH OT C P K US D United S ta tes 0. 01 0.4 0. 1 (2.3) NM 12.6x - 3 B igs tring C orp. 6/30/2009 BS GC OT C B B US D United S ta tes 0. 03 2.0 0. 1 (1.5) NM 49.2x - 4 B eta wave C orporation 6/30/2009 B W AV OT C B B US D United S ta tes 0. 04 1.2 9. 4 (12. 6) NM - - 51 B eyond C ommerce, Inc. 6/30/2009 B Y OC OT C B B US D United S ta tes 0. 10 5.1 11. 7 (12. 8) NM 0. 9x - 101 B right T hings plc 3/31/2009 AIM: B G T AIM GBP United K ingdom 0. 01 5.4 0. 0 (2.7) NM - - NA B roa dW ebAs ia Inc. 9/30/2008 BWBA OT C P K US D United S ta tes 0. 03 2.5 0. 0 (4.6) NM - - 46 C DC C orp. 6/30/2009 C HIN. A Na s daqG S US D Hong K ong 2. 48 262. 8 361.6 25. 1 6.9% 0. 7x 10. 3x 2, 227 C hangyou. com L imited 6/30/2009 C Y OU Na s daqG S US D C hina 31. 30 1,721. 5 241.2 147.2 61. 0% 6. 0x 9. 8x 628 C hina G a teway C orporation 9/30/2008 CGWY OT C P K US D United S ta tes 0. 00 0.0 6. 7 (6.6) -98. 9% 0. 0x - 37 C hines e G amer Interna tiona l 6/30/2009 G T S M: 3083 GTS M TWD T aiwa n 428 1,110. 0 61. 6 34. 7 56. 3% 16.8x 29. 9x NA C LIC K E R Inc. 5/31/2009 C LK Z OT C B B US D United S ta tes 0. 01 0.9 2. 5 (1.2) -45. 8% 0. 4x - 22 C ornerW orld C orpora tion 7/31/2009 CWR L OT C B B US D United S ta tes 0. 06 5.7 6. 8 NM NM 2. 4x - 16 C yberplex Inc. 6/30/2009 T S X :C X TS X C AD C anada 1 77. 9 89. 8 9.7 10. 8% 0. 6x 6. 0x NA DADA S pA 6/30/2009 C M: DA CM E UR Italy 7. 47 177. 4 241.9 31. 8 13. 1% 0. 9x 7. 1x NA DXN Holdings B hd 5/31/2009 DX N K LS E MY R Ma la ys ia 0. 63 40. 9 77. 1 11. 1 14. 4% 0. 7x 5. 0x NA Dibz International, Inc. NA DIB Z OT C P K US D United S ta tes 0. 00 0.0 NA NM NM - - NA DigitalP os t Interactive, Inc. 6/30/2009 DG LP OT C B B US D United S ta tes 0. 06 4.6 1. 0 (1.4) NM 6. 7x - 7 DigitalT own, Inc. 8/31/2009 DG T W OT C B B US D United S ta tes 2. 00 54. 7 0. 0 (1.8) NM - - 3 Dolphin Digital Media , Inc. 6/30/2009 DP DM OT C B B US D United S ta tes 0. 49 26. 3 0. 6 (3.4) NM 46.9x - NA E olith C o. Ltd. 12/31/2008 A041060 K OS E KR W S outh K orea 575 34. 9 15. 4 (3.6) -23. 6% 2. 4x - NA E xtens ions , Inc. 6/30/2009 E XT I OT C P K US D United S ta tes 0. 25 11. 1 NM NM NM - - 2 F luid Mus ic C a nada , Inc. 6/30/2009 T S X :F MN TS X C AD United S ta tes 1. 90 91. 7 5. 3 (5.1) -95. 2% 16.4x - NA F rogs ter Interactive P ictures AG 6/30/2009 FRG XT R A E UR G ermany 19. 90 74. 7 9. 6 (4.5) -47. 0% 7. 6x - NA G ama nia Digita l E ntertainment C o., Ltd. 6/30/2009 6180 GTS M TWD T aiwa n 48. 85 228. 8 140.6 25. 1 17. 9% 1. 5x 8. 2x NA G ameOn C o Ltd. 6/30/2009 3812 TS E JPY J a pan 88,400 95. 6 81. 9 20. 1 24. 5% 0. 3x 1. 0x NA G eoS entric O yj 6/30/2009 G E O 1V HL S E E UR F inland 0. 05 65. 8 5. 4 (17. 4) NM 12.1x - 115 G iant Interactive G roup, Inc. 6/30/2009 GA NY S E US D C hina 8 1,730. 0 198.5 124.1 62. 5% - - 1, 570 G iga Media Ltd. 3/31/2009 G IG M Na s daqG S US D T aiwa n 4. 54 247. 5 183.6 NM NM 0. 9x - 751 G ravity C o., Ltd 6/30/2009 GR VY Na s daqG M US D S outh K orea 1. 60 44. 5 49. 1 16. 6 33. 9% - - 469 G ree, Inc. 6/30/2009 T S E : 3632 TS E JPY J a pan 5,040 2,523. 3 156.0 93. 7 60. 1% 15.4x 25. 7x NA G ungHo O nline E ntertainment, Inc. 6/30/2009 3765 OS E JPY J a pan 221,000 283. 1 119.5 26. 6 22. 2% 2. 1x 9. 4x NA HanbitS oft, Inc. 6/30/2009 A047080 K OS E KR W S outh K orea 3,560 65. 3 60. 7 1.4 2.3% 0. 9x 36. 6x NA IAC /InterActiveC orp. 6/30/2009 IAC I Na s daqG S US D United S ta tes 19. 07 2,524. 9 1, 392. 3 52. 7 3.8% 0. 6x 14. 9x 3, 200 IAS E nergy, Inc. 4/30/2009 IAS A. E OT C B B US D C anada 0. 11 7.4 0. 0 (0.6) NM - - NA is eemedia Inc. 3/31/2009 IE E T S XV C AD C anada 0. 14 6.6 1. 6 (5.0) NM 3. 6x - NA J umbuck E nterta inment Limited 6/30/2009 AS X :J MB AS X AUD Aus tralia 0. 34 14. 5 16. 7 7.2 42. 8% 0. 5x 1. 1x 79 K AB Dis tribution Inc. 6/30/2009 T S X :K AB TS X C AD C anada 0 0.6 67. 9 4.0 5.8% - - NA K ings oft C o. Ltd. 6/30/2009 3888 S E HK HK D C hina 8 1,058. 1 139.1 61. 4 44. 2% 7. 6x 17. 2x 2, 463 Lingo Media C orporation 6/30/2009 T S X V :LM T S XV C AD C anada 1. 00 11. 4 1. 2 (1.9) NM 8. 8x - NA LiveW orld Inc. 6/30/2009 LVW D OT C P K US D United S ta tes 0. 04 1.3 10. 6 (0.1) -1.2% 0. 0x - NA LookS mart, Ltd. 6/30/2009 L OO K Na s daqG M US D United S ta tes 1. 32 22. 6 56. 8 (4.4) -7.8% - - 90 Magnitude Information S ys tems Inc. 6/30/2009 MAG Y OT C B B US D United S ta tes 0. 01 4.1 0. 1 (2.5) NM - - 14 Mixi, Inc. 6/30/2009 2121 TS E JPY J a pan 737000. 00 1,270. 0 136.8 46. 2 33. 8% 8. 4x 24. 9x NA Modern T imes G roup Mtg AB 6/30/2009 MT G B OM SEK S weden 325. 70 3,082. 3 1, 971. 4 302.9 15. 4% 1. 9x 12. 1x 2, 969 MO K O .mobi Limited 6/30/2009 MK B AS X AUD Aus tralia 0. 08 7.3 0. 7 (2.4) NM 9. 1x - NA Myriad G roup AG 6/30/2009 MY R N SWX C HF S witzerland 4. 49 192. 5 63. 0 3.4 5.4% 3. 0x - 405 NE O W IZ G ames C orpora tion 12/31/2008 A095660 K OS E KR W S outh K orea 40500. 00 715. 5 207.3 55. 7 26. 8% 3. 4x 12. 7x NA NetDragon W ebS oft, Inc. 6/30/2009 777 S E HK HK D C hina 5 349. 9 89. 3 25. 7 28. 7% 2. 3x 8. 0x 3, 109 Neteas e. com Inc. 6/30/2009 NT E S Na s daqG S US D C hina 37. 70 4,879. 4 472.4 297.4 63. 0% - - 3, 109 NeuLion Incorporated 6/30/2009 T S X :NLN TS X C AD C anada 0. 76 77. 2 21. 5 (13. 0) -60. 3% 3. 1x - 237 NeXplore C orporation 6/30/2009 NX P C OT C P K US D United S ta tes 1 44. 1 1. 7 (13. 3) NM 28.3x - NA Ngi G roup Inc. 6/30/2009 2497 TS E JPY J a pan 30300. 00 42. 0 93. 0 6.9 7.4% - - NA Northgate T echnologies L imited 6/30/2009 590057 BSE INR India 35. 55 25. 8 82. 9 (41. 5) -50. 0% 0. 3x - NA O pen T ext C orp. 6/30/2009 OT E X Na s daqG S US D C anada 39. 53 2,219. 6 785.7 205.1 26. 1% 2. 9x 11. 0x 3, 411 O penwave S ys tems Inc. 6/30/2009 OP W V Na s daqG S US D United S ta tes 2. 75 229. 7 191.7 4.9 2.6% 0. 6x 24. 6x 590 P erfect W orld C o. , Ltd. 6/30/2009 PWRD Na s daqG S US D C hina 45. 11 2,218. 6 255.6 142.2 55. 6% 0. 7x 1. 3x 2, 096 P NI Digital Media Inc. 6/30/2009 T S X V :P N T S XV C AD C anada 1. 70 53. 5 21. 0 2.3 11. 0% 2. 5x 22. 3x NA Q uepa s a C orp. 6/30/2009 QP S A OT C B B US D United S ta tes 1 17. 2 0. 2 (10. 6) NM - - 74 O AO R B C Information S ys tems 12/31/2007 R BCI R TS US D R us s ia 1. 60 222. 0 157.4 20. 6 13. 1% 0. 0x 0. 4x NA S handa Interactive E nterta inment Ltd. 6/30/2009 S NDA Na s daqG S US D C hina 46. 03 3,095. 8 629.0 296.7 47. 2% - - 3, 124 S hutterfly, Inc. 6/30/2009 S FLY Na s daqG S US D United S ta tes 14. 51 369. 4 218.6 27. 3 12. 5% 1. 4x 11. 2x 514 S K C ommunications C o., Ltd. 12/31/2008 A066270 K OS E KR W S outh K orea 7800. 00 273. 7 192.7 12. 5 6.5% 1. 4x 21. 8x NA S NAP Interactive, Inc. 6/30/2009 S TVI OT C B B US D United S ta tes 0 3.8 3. 5 0.9 27. 0% 0. 6x 2. 3x 11 S NM G loba l Holdings 9/30/2008 S NMN OT C P K US D United S ta tes 0. 00 0.0 2. 0 (0.7) -34. 8% 1. 1x - 33 S ocial Media V entures Inc. 12/31/2008 S MV I OT C P K US D United S ta tes 0 0.0 0. 1 (0.1) -60. 6% 4. 5x - NA S ocialwis e, Inc. 6/30/2009 S C LW OT C B B US D United S ta tes 0. 58 25. 7 0. 0 (5.6) NM - - NA S ohu. com Inc. 6/30/2009 S O HU Na s daqG S US D C hina 60. 85 2,332. 6 485.1 209.6 43. 2% 3. 8x 8. 7x 3, 197 S park Networks , Inc. 6/30/2009 L OV AME X US D United S ta tes 3 52. 7 50. 5 10. 8 21. 3% 1. 0x 4. 7x 183 S pectrumDNA, Inc. 6/30/2009 S P XA OT C B B US D United S ta tes 0 4.9 0. 1 (2.5) NM 39.9x - 7 T encent Holdings Ltd. 6/30/2009 700 S E HK HK D C hina 149 34, 855.4 1, 391. 6 680.3 48. 9% 27.6x - 6, 421 T he P arent C ompany 8/2/2008 K IDS . Q OT C P K US D United S ta tes 0. 01 0.2 112.0 (13. 5) -12. 0% 0. 2x - 347 T he9 Limited 12/31/2008 NC T Y Na s daqG S US D C hina 8. 03 201. 5 250.6 85. 5 34. 1% - - 1, 626 T heS treet. com, Inc. 3/31/2009 TS CM Na s daqG M US D United S ta tes 2. 86 87. 5 67. 0 1.9 2.9% 0. 3x 11. 8x 310 T ree.C om, Inc. 6/30/2009 TR E E Na s daqG M US D United S ta tes 7. 83 84. 6 216.6 (0.7) -0.3% 0. 4x - 700 Unis erve C ommunica tions C orp. 5/31/2009 T S X V :US S T S XV C AD C anada 0. 05 1.1 17. 1 (0.2) -1.0% 0. 2x - NA United O nline Inc. 6/30/2009 UNT D Na s daqG S US D United S ta tes 8. 68 727. 7 949.8 203.2 21. 4% 1. 0x 4. 9x 1, 469 UOMO Media, Inc 7/31/2009 UO MO OT C B B US D C anada 0 8.6 0. 8 (0.4) -54. 2% 11.5x - NA V alueC lick Inc. 6/30/2009 V C LK Na s daqG S US D United S ta tes 13 1,112. 9 563.6 99. 0 17. 6% 1. 7x 9. 9x 1, 189 V OIS , Inc. 6/30/2009 V O IS OT C B B US D United S ta tes 0 4.1 0. 0 (1.0) NM - - 4 W ebzen Inc. 6/30/2009 W ZE N Na s daqG M US D S outh K orea 2. 90 34. 4 23. 2 2.3 9.9% - - 328 W izzard S oftwa re C orporation 6/30/2009 W ZE AME X US D United S ta tes 0. 42 21. 2 5. 3 (4.5) -84. 9% 4. 2x - 110 W orlds . com Inc. 6/30/2009 W DDD OT C B B US D United S ta tes 0. 10 5.2 0. 1 (0.7) NM - - 1 W ynds torm C orpora tion NA W Y ND OT C P K US D United S ta tes 0. 10 1.8 NA NM NM - - NA XING AG 6/30/2009 O 1B C XT R A E UR G ermany 36. 41 281. 1 58. 9 17. 0 28. 8% 3. 9x 13. 5x 246 Y D O nline C orp. 12/31/2007 A052770 K OS E KR W S outh K orea 7750. 00 97. 4 57. 4 12. 4 21. 6% 1. 9x 8. 6x NA Y nk K orea Inc. 12/31/2008 A023770 K OS E KR W S outh K orea 4300. 00 19. 2 11. 9 1.3 10. 5% - - NA High 34, 855.4 1,971. 4 680. 3 63. 0% 49.2x 36. 6x 6, 421 Low 0.0 0. 0 -41.5 -98. 9% - - 1 Average 810.8 161.2 39.0 6.1% 6.0x 11.4x 936 Median 44. 5 57.1 1. 7 12. 5% 1. 9x 9. 8x 246 Figure 1. Web 2.0 Universe Summary Source. Capital IQ
  3. 3. Page 3 C A P I T A L M A R K E T S A C T I V I T Y (M & A A N D F I N A N C I N G ) Pace of deal signings slows: Total transaction value in the W eb 2.0 universe for October is $151.2 (vs. $125.2 million at time of last publication). The week ending October 26 has brought four financings to the sector, bringing the total for October to 20 transactions averaging $7.6 million each (vs. an average of $7.8 million last week). In comparison, total capital raised in September was $232.8 million, averaging $9.0 million (26 deals); August was $232.8 million, averaging $7.6 million (29 deals); and July (35 deals) $191.4 million, averaging $5.5 million. Financing Activity Last Twelve Months 400.0 16.0 14.6 350.0 14.0 300.0 12.0 9.7 250.0 10.0 9.0 (US$m) (US$m) 200.0 7.6 7.6 8.0 7.0 7.0 7.1 6.5 6.6 6.2 150.0 5.5 6.0 4.9 100.0 4.0 50.0 2.0 0.0 0.0 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 *May-09 includes $200m FB investment Total Average Figure 2. Financings, Last Twelve Months Source. Company reports
  4. 4. Page 4 Deal round-up for October (to date): The large deal highlights for the month include: • DailyMotion – a French online video content provider – raised $25.3 million through a Series C financing. • Yext – an online directory provider – raised $25 million. • PopCap Games – a developer of casual games played on multiple types of devices – raised $22.5 million in its first round of funding. • Engine Yard – provider of managed hosting and deployment solutions for Ruby and Rails applications – raised $19 million in a Series C financing. • Ecast Network – operator of a broadband touch screen network in the U.S. – raised $17 million in a follow-on unattributed financing. • HubSpot – provider of online enterprise marketing application – received $16 million in Series C financing. • Jive Software – maker of enterprise collaboration and social community software – raised $12 million in a Series B financing by returning VC fund, Sequoia. All other deals in the month were in the amount of $10 million or less. For additional details on financings, see Figures 23 and 24 (at end of note). Financing & M/A Summary - Last Three Months 200.0 180.0 160.0 140.0 120.0 Oct-09 (US$m) 100.0 Sep-09 Aug-09 80.0 60.0 40.0 20.0 0.0 DailyMotion Jive Software MediaMath Mzinga InXpo NextBio Reality Mobile Boxee HiveLive Polyvore Aviary Mocapay Fwix Vantrix Fizzback Roblox Linkedex Twitter MOG Yext RightsFlow Skype Zoove RichRelevance Ooyala Edo Interactive Jobvite InnoCentive Booyah YuMe Z2Live Overtone Greystripe DailyBooth iSyndica OnLive NowPublic Ecast Network Livebookings Alliance Health Networks MashLogic Tiny Pictures DataSync Linksify Dopplr Unisfair Fluther VEVO Mint HubSpot OneRiot iSocket KODA Technorati Turbine Friends Reunited Ensequence iLike Engine Yard Traffiq Balihoo Vuclip Fanbase Vdopia NeoEdge OurStage ViVu Scoreloop Tremor Media Loomia Plista FourSquare EduFire ChessCube Chango Listia Scout Labs Conduit Labs Gigpark FeedRoom Bill.com Smith & Tinker Spigit Amie Street TransGaming Inc. PopCap Games Riot Games Sometrics Imeem Gamelab.com Watercooler Figure 3. Capital Market Activity, Last Three Months Source. Company reports
  5. 5. Page 5 Social Networks the most active sector: Social Networks experienced the most financing activity among our W eb 2.0 sector categories in the past three months by number of transactions (11). Advertising continues to be among the highest activity sectors with 10 deals in the past quarter. Gaming follows with nine transactions followed by Video (6) (Figure 4). The $2.0 billion acquisition of Skype skews the dollars transacted to the SMS/Voice segment, while the $170 million acquisition of Mint brings the Vertical Communities segment to the second highest total. Capital Market Activity by Sector - Last Three Months 200.0 180.0 160.0 140.0 120.0 (US$m) 100.0 80.0 60.0 40.0 20.0 2,025.0 192.3 122.0 100.0 96.4 70.3 61.8 46.0 37.9 35.5 34.0 29.1 26.1 17.1 15.8 14.0 13.2 13.0 11.5 3.9 2.8 2.0 1.3 0.4 0.0 Comment/Reputation Social Commerce Communities Gaming Microblog Collaboration Enterprise Mobile Media Online Learning Music SMS/Voice Infrastructure Search Advertising/Mobile Mobile Ad Classified Social Networks Video Advertising Crowdsourced Virtual World Aggregation Analytics Vertical Content # companies 1 3 9 1 11 6 10 4 4 5 3 4 4 3 5 2 1 2 4 1 1 1 1 1 Figure 4. Capital Market Activity, by Sector, Last Three Months Source. Company reports
  6. 6. Page 6 C A P I T A L M A R K E T S A C T I V I T Y (P R I C E P E R F O R M A N C E ) Web 2.0 index continues to outpace NASDAQ recovery: Our W eb 2.0 index (market-cap weighted) essentially mirrored the performance of the NASDAQ composite index from mid-2008 until Q1/09. Since then, the index has diverged in a much stronger recovery relative to the NASDAQ index (Figure 5). Web 2.0 Index Price Performance 300 250 200 150 100 50 0 10/27/2008 11/10/2008 11/24/2008 12/8/2008 12/22/2008 1/5/2009 1/19/2009 2/2/2009 2/16/2009 3/2/2009 3/16/2009 3/30/2009 4/13/2009 4/27/2009 5/11/2009 5/25/2009 6/8/2009 6/22/2009 7/6/2009 7/20/2009 8/3/2009 8/17/2009 8/31/2009 9/14/2009 9/28/2009 10/12/2009 10/26/2009 Index: Web 2.0 (Market Cap) ^COMP - Share Pricing Figure 5. Web 2.0 Price Performance Source. Capital IQ
  7. 7. Page 7 Broad-based price improvement: Fourteen companies in our universe had positive stock price performances over the past week (for stocks with prices greater than $1) (Figure 6), while 31 companies showed negative 1-week returns. 1 Week P rice P erformance Fluid Mus ic Canada, Inc. 37.7% Mix i, Inc. 15.2% L ookS ma rt, Ltd. 10.2% Webz en Inc. 9.5% NEOWIZ G ames Corporation 9.3% Openw ave S y s tems Inc. 8.7% Ngi G roup Inc. 7.4% OA O R B C Inf ormation S y s tems 6.7% Y nk K orea Inc. 6.6% A ctoz S oft Co., Ltd. 4.5% G ree, Inc. 4.1% Cy berplex Inc. 1.6% G iant Interactive G roup, Inc. 0.7% Perf ect World Co., Ltd. 0.3% My riad G roup A G -0.2% IA C/InterA ctiveCorp. -0.6% Tree.Com, Inc. -0.9% Modern Times G roup Mtg A B -1.0% A Q Interactive, Inc. -1.2% Changy ou.com Limited -1.3% X ING A G -1.9% G ameOn Co Ltd. -1.9% CDC Corp. -2.0% Northgate Technologies Limited -2.1% G amania Digital Entertainment Co., Ltd. -2.3% G ravity Co., Ltd -2.4% PNI Digital Media Inc. -2.9% DA DA S pA -2.9% Frogs ter Interactive Pictures A G -2.9% Open Tex t Corp. -3.4% Quepas a Corp. -3.6% United Online Inc. -3.9% Y D Online Corp. -4.2% Neteas e.com Inc. -4.2% TheS treet.c om, Inc. -4.7% Eolith Co. Ltd. -5.0% S K Communica tions Co., Ltd. -5.0% G igaMedia Ltd. -5.6% S handa Interactive Entertainment Ltd. -6.8% V alueClick Inc. -7.1% S hutterf ly , Inc. -8.9% The9 Limited -9.7% Chines e G amer International -9.9% HanbitS oft, Inc. -12.9% S ohu.com Inc. -13.1% -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5 Figure 6. 1-Week Price Performance Source. Capital IQ
  8. 8. Page 8 P U B L I C C O M P A N Y I N D U S T R Y N E W S (P A R T N E R S H I P S , F I N A N C I A L R E S U L T S , N E W P R O D U C T S ) K ey Developments C ompany Headline Notes Open Text C orp. (Nas daqG S :OTE X) B ehr P roces s C orporation L aunches Newly E nhanced O pen T ext announced that B ehr P roces s C orporation has launched its newly enhanced B E HR . com s upported by B E HR . com S upported by V ignette C ontent Management V ignette C ontent Management from O pen T ext C orp. V ignette W eb C ontent Management S olutions from O pen T ext from O pen T ext provide advanced rich media management capabilities and a high-performance foundation for B E HR . com, enabling deep interactivity and an eas ier, immers ive W eb s ite experience. Development utilizing Adobe F lex and F las h allows B E HR .com to project large magazine-s tyle images and cinematic trans itions from page to page. B E HR . com als o leverages the company's dynamic caching technology to pres ent a high volume of content while improving performance that res ults in a great end-us er experience. S hutterfly, Inc . (Nas daqG S : S FL Y) S hutterfly's P ro G allery S ervice Introduces Digital S hutterfly Inc. announced the addition of Digital Download to its P ro G allery s ervice, a s tore front for profes s ional Download photographers to s ell their photos . W ith the new Digital Download feature, profes s ional photographers can now s ell high res olution copies of their images to cus tomers directly from their P ro G allery account. T he company's P ro G allery s ervice offers profes s ionals premium s ervice with web pres ence, top-quality profes s ional photo printing s ervices , full- s ervice order proces s ing and fulfillment and world clas s cus tomer s ervice. P ro G allery photographers als o receive online s ales reports , photo s torage, and image rights protection. S ites earc h C orporation S ites earch C orporation Announces R es ignation of J ames S ites earch C orporation announced that on O ctober 19, 2009, Mr. J ames S . Dixon res igned as a member of the board S . Dixon from the B oard of directors of the company. The9 L imited (Nas daqG S :NC TY) T he9 L imited, Annual G eneral Meeting, O ct 20, 2009 T he9 L imited, Annual G eneral Meeting, O ct 20, 2009 Agenda: T o re-elect and appoint Davin Alexander Mackenzie, K a K eung Y eung and C hao Y ong W ang an independent director (C las s II) of the C ompany, effective from the clos ing of the Annual G eneral Meeting held on O ctober 20, 2009, to s erve for 3 year term ending at the 2012 Annual G eneral Meeting or until his s ucces s or is duly elected and qualified. Alpha C apital AG ; B igs tring C orp. V IP C onnectz US A, Inc. cancelled the acquis ition of V IP C onnectz US A, Inc. s igned a non-binding letter of intent to acquire B igs tring C orp. (O T C B B : B S G C ) in a revers e (OTC B B : B S G C ); C hes tnut R idge B igs tring C orp. (O T C B B : B S G C ) in a revers e merger merger trans action on O ctober 20, 2008. Under the terms of the letter of intent, B igS tring will is s ue unregis tered s hares P artners , L .P .; E xc alibur C apital trans action. of common s tock equal to 50% of the s um of the total number of s hares of B igS tring common s tock is s ued and Management Inc .; Iroquois C apital, L P ; outs tanding plus the number of s hares of B igS tring common s tock available for is s uance upon the convers ion of P enn Footwear C o.; Tudor Inves tment B igS tring’s outs tanding convertible notes and S eries A P referred S tock, in exchange for all of V IP C onnectz’s capital C orporation; VIP C onnec tz US A, Inc .; s tock. After the clos ing of the trans action E dward J . W eaver, P res ident and C hief E xecutive O fficer of V IP C onnectz, W halehaven C apital F und L imited will s erve as P res ident and C hief E xecutive O fficer of B igS tring. Darin Myman, P res ident and C hief E xecutive O fficer of B igS tring, will become V ice P res ident of S trategic Development of B igS tring. T he trans action is s ubject to s everal conditions , including execution of definitive agreement. Modern Times G roup Mtg AB (OM:MTG Modern T imes G roup Mtg AB R eports E arnings R es ults Modern T imes G roup Mtg AB reported earnings res ults for the third quarter and firs t nine months of 2009. F or the B) for the T hird Q uarter and F irs t Nine Months of 2009 quarter, net profit was S E K 254 million, compared with S E K 405 million a year earlier. P retax profit came in at S E K 336 million agains t S E K 595 million. O perating income decreas ed to S E K 377 million from S E K 574 million. Net s ales ros e 7% to S E K 3. 177 billion. F or the firs t nine months of 2009, the company reported a net profit of S E K 836 million agains t S E K 1. 225 billion in the previous year. T he figure excludes S E K 1. 173 billion of income from the dis continued DT V G roup in 2008. P retax profit declined to S E K 1. 096 billion from S E K 1. 79 billion. O perating income s tood at S E K 1. 199 billion agains t S E K 1.753 billion. S ales increas ed 8% to S E K 10. 097 billion. DigitalPos t Interac tive, Inc . DigitalP os t Interactive S igns C ontracts with T wo P hoto DigitalP os t Interactive Inc. announced the s igning of new contracts with two photo companies . (OTC B B : DG L P ) C ompanies The9 L imited (Nas daqG S :NC TY) C oughlin S toia G eller R udman & R obbins L L P F iles C oughlin S toia G eller R udman & R obbins L L P announced that a clas s action has been commenced in the United C las s Action S uit agains t T he9, L td S tates Dis trict C ourt for the S outhern Dis trict of New Y ork on behalf of purchas ers of American Depos itary S hares of T he9 L imited between November 15, 2006 and J uly 15, 2009, inclus ive (the 'C las s P eriod'), agains t T he9 and certain of the officers and/or directors of T he9 for violations of the S ecurities E xchange Act of 1934 (the 'E xchange Act'). T he complaint charges T he9 and certain directors and officers of T he9 with violations of the E xchange Act. T he9 is an online game operator and developer in C hina. According to the complaint, during the C las s P eriod, the C ompany, directly and through its affiliates and/or s ubs idiaries , operated licens ed mas s ively multiplayer online role-playing games and advanced cas ual games in C hina, including W orld of W arcraft, S oul of T he Ultimate Nation, G ranado E s pada, E A S P OR T S F IF A O nline 2, and Atlantica. It als o operated other licens ed games in mainland C hina, including Audition 2 and F ield of Honor. P laintiff s eeks to recover damages on behalf of all purchas ers of T he9 ADS s during the C las s P eriod Figure 7a. Key Developments Source. Capital IQ
  9. 9. Page 9 K ey Developments C ompany Headline Notes OAO R B C Information S ys tems O AO R B C Information S ys tems P rovides R evenues O AO R B C Information S ys tems provides revenues outlook for the full year of 2009. R evenue of company is expected (R TS : R B C I) O utlook for the F ull Y ear of 2009 to decreas e 26% on the year to R UB 3. 9 billion in 2009. Unis erve C ommunic ations C orp. Unis erve C ommunications C orp. Announces E xecutive Unis erve C ommunications C orp. announced that W illiam S pratt has res igned as the C E O and a Director of the (TS XV: US S ) C hanges company. Michael S chmidt who has s erved as the company's P res ident has agreed to join the B oard and take on the expanded role as C E O . Neteas e.c om Inc . (Nas daqGS : NTE S ) Neteas e.com Inc. to L aunch G ame.163. com Neteas e.com Inc. is to launch online game cons ulting webs ite game. 163. com. V ia the move, NetE as e. com aims to enhance its s aying right in the indus try, gues s ed indus try watchers , adding that the launch of the s ite will als o bring advertis ing revenues for NetE as e. com. T he new s ite will focus on indus try news and product news and promote online games like W orld of W arcraft (W oW ) and J X 3 Online at important pos itions . However, the company made no comment on the is s ue. W izzard S oftware C orporation W izzard Media Announces E ight New P odcas t W izzard Media announced eight new podcas t companion iP hone(T M) Apps approved and available for s ale in the App (AME X: WZE ) C ompanion Apps S tore. T he newly approved Apps are iP hone companion Apps for popular podcas ts offering convenient acces s to the podcas t, s how extras , bonus content and new s ocial communication features . T his brings the total number of W izzard Apps to 58 with 34 awaiting approval and another 20 to be uploaded for anticipated approval in O ctober. T he newly releas ed Apps include, get R eal is currently the #58 podcas t in the B us ines s s ection of iT unes (R ). Quepas a C orp. (OTC B B : QP S A) Q uepas a Introduces New Dis tributed S ocial Media Q uepas a C orp. announced the introduction of a new ad product revenue platform, Dis tributed S ocial Media (DS M). R evenue P latform Q uepas a's DS M is a new viral ad product that allows Q uepas a to leverage not only its s ocial network, but als o all other s ocial networking s ites . T his new approach will allow advertis ers and brands to target and dis tribute their marketing mes s age acros s all s ocial media s ites through Q uepas a. com. T hes e us er-generated campaigns are extremely viral and create great word-of-mouth marketing for the brands by motivating us ers to s hare content with friends and colleagues acros s all of the popular s ocial media s ites . T he effect for brands is that they are able to have a cons is tent brand mes s age delivered to a broad us er bas e at the lowes t equivalent cos t per impres s ion compared to mos t any other forms of advertis ing. At the s ame time, Q uepas a's DS M addres s es the bigges t problem typically faced by brands when trying to launch s ocial network driven campaigns in terms of achieving meaningful us er engagement while providing real time R O I metrics . As part of this new s trategy, Q uepas a intends to expand its s ales efforts for both the Q u B eyond C ommerc e, Inc . B eyond C ommerce, Inc. Accepts R es ignation of W endy O n O ctober 22, 2009, B eyond C ommerce, Inc. accepted the res ignation, dated (OTC B B : B YOC ) B orow-J ohns on as P res ident O ctober 19, 2009, of W endy B orow-J ohns on as P res ident of B rand Management. Ms . J ohns on will continue with the C ompany as a S pecial Advis or and C ons ultant as it pertains to the C ompany's communications and media needs . S ites earc h C orporation S ites earch C orporation announced delayed annual 10-K O n 10/23/2009, S ites earch C orporation announced that they will be unable to file their next 10-K by the deadline filing required by the S E C . G iant Interac tive G roup, Inc . G iant Interactive P artners with As trum Nival to L icens e G iant Interactive G roup, Inc. announced that it s igned an agreement with As trum Nival, L L C to grant a licens e to (NYS E : G A) ZT O nline in R us s ia As trum Nival to operate ZT Online, G iant's flags hip 2D mas s ively multiplayer online role playing game ('MMO R P G '), in the R us s ian F ederation and other R us s ian s peaking territories . ZT O nline is G iant Interactive's firs t internally- developed 2D free-to-play MMO R P G . S ince its commercial launch, ZT O nline has reached peak concurrent us er (P C U) levels over 2. 1 million and was voted the mos t popular game in C hina in 2006 according to International Data C orporation. As a free-to-play game, revenues are derived from in-game purchas es of virtual items and s ervices . ZT O nline is currently operated in Mainland C hina by the C ompany and in Hong K ong, Macau, T aiwan, Malays ia and S ingapore via a licens e to L ager Network. Additionally, G iant has als o granted a licens e to V inaG ame S oftware S ervice J oint S tock C ompany, or V inaG ame, to operate ZT O nline in V ietnam. C hangyou.c om L imited C hangyou. com L imited R eports Unaudited C ons olidated C hangyou. com L imited reported unaudited cons olidated earnings res ults for the third quarter and nine months ended (Nas daqG S :C YOU) E arnings R es ults for the T hird Q uarter and Nine Months S eptember 30, 2009. F or the quarter, the company's total revenues were $68, 684, 000 agains t $54, 604, 000 a year ago. E nded S eptember 30, 2009; P rovides E arnings G uidance T he increas es were mainly due to increas ed popularity of the company's flags hip game, T LB B . O perating profit was for the F ourth Q uarter of 2009 $42, 288, 000 agains t $32,474, 000 a year ago. Income before income tax expens e was $43,288, 000 agains t $32, 791, 000 a year ago. Net income was $37, 794, 000 agains t $32, 084,000 a year ago. Diluted net income per ADS was $0. 71 agains t $0. 68 a year ago. Non-G AAP operating profit was $45, 842, 000 agains t $33, 725, 000 a year ago. Non-G AAP net income was $41, 348, 000 agains t $33, 335, 000 a year ago. Non-G AAP diluted net income per ADS was $0. 77 agains t $0. 70 a year ago. O perating cas h flow was a net inflow of $46. 2 million. F or the nine months , the company's total revenues were $196, 887, 000 agains t $143, 455, 000 a year ago. O perating profit was $119, 624, 000 agains t $81, 537, 000 a year ago. Income before income tax expens e was $122, 170, 000 agains t $81, 705, 000 a year ago. Net income was $105, 826, 000 agains t $78, 914, 000 a year ago. Diluted net income per T he company es timates total revenues for the fourth quarter of 2009 to be between $69. 0 million and $71. 0 million. Non S ohu.c om Inc . (Nas daqG S : S OHU) S ohu. com Inc. R eports Unaudited C ons olidated E arnings S ohu. com Inc. reported unaudited cons olidated earnings res ults for the third quarter and nine months ended R es ults for the T hird Q uarter and Nine Months E nded S eptember 30, 2009. F or the quarter, the company reported net income attributable to company of $37, 354, 000 or S eptember 30, 2009; P rovides E arnings G uidance for the $0. 88 per s hare on total revenue of $136, 585, 000 agains t net income attributable to company was $40, 261, 000 or F ourth Q uarter of 2009 $1. 02 per s hare on total revenue of $120, 676, 000 in the s ame period of las t year. O perating profit was $52, 953, 000 agains t $43, 758, 000 in the s ame period of las t year. Income before income tax expens e was $54, 102, 000 agains t $45, 230, 000 in the s ame period of las t year. Income from continuing operations was $47, 080, 000 agains t $40, 238, 000 in the s ame period of las t year. As per non-G AAP , net income attributable to company was $40, 921, 000 or $0. 96 per s hare on total revenue of $136, 585, 000 agains t net income attributable to company was $42, 822, 000 or $1. 08 per s hare on total revenue of $120, 676, 000 in the s ame period of las t year. As per non-G AAP , operating profit was $57, 077, 000 agains t $46,319, 000 in the s ame period of las t year. Figure 7b. Key Developments Source. Capital IQ
  10. 10. Page 10 K ey Developments C ompany Headline Notes OAO R B C Information S ys tems O AO R B C Information S ys tems P rovides R evenues O AO R B C Information S ys tems provides revenues outlook for the full year of 2009. R evenue of company is expected (R TS : R B C I) O utlook for the F ull Y ear of 2009 to decreas e 26% on the year to R UB 3. 9 billion in 2009. Unis erve C ommunic ations C orp. Unis erve C ommunications C orp. Announces E xecutive Unis erve C ommunications C orp. announced that W illiam S pratt has res igned as the C E O and a Director of the (TS XV: US S ) C hanges company. Michael S chmidt who has s erved as the company's P res ident has agreed to join the B oard and take on the expanded role as C E O . Neteas e.c om Inc . (Nas daqGS : NTE S ) Neteas e.com Inc. to L aunch G ame.163. com Neteas e.com Inc. is to launch online game cons ulting webs ite game. 163. com. V ia the move, NetE as e. com aims to enhance its s aying right in the indus try, gues s ed indus try watchers , adding that the launch of the s ite will als o bring advertis ing revenues for NetE as e. com. T he new s ite will focus on indus try news and product news and promote online games like W orld of W arcraft (W oW ) and J X 3 Online at important pos itions . However, the company made no comment on the is s ue. W izzard S oftware C orporation W izzard Media Announces E ight New P odcas t W izzard Media announced eight new podcas t companion iP hone(T M) Apps approved and available for s ale in the App (AME X: WZE ) C ompanion Apps S tore. T he newly approved Apps are iP hone companion Apps for popular podcas ts offering convenient acces s to the podcas t, s how extras , bonus content and new s ocial communication features . T his brings the total number of W izzard Apps to 58 with 34 awaiting approval and another 20 to be uploaded for anticipated approval in O ctober. T he newly releas ed Apps include, get R eal is currently the #58 podcas t in the B us ines s s ection of iT unes (R ). Quepas a C orp. (OTC B B : QP S A) Q uepas a Introduces New Dis tributed S ocial Media Q uepas a C orp. announced the introduction of a new ad product revenue platform, Dis tributed S ocial Media (DS M). R evenue P latform Q uepas a's DS M is a new viral ad product that allows Q uepas a to leverage not only its s ocial network, but als o all other s ocial networking s ites . T his new approach will allow advertis ers and brands to target and dis tribute their marketing mes s age acros s all s ocial media s ites through Q uepas a. com. T hes e us er-generated campaigns are extremely viral and create great word-of-mouth marketing for the brands by motivating us ers to s hare content with friends and colleagues acros s all of the popular s ocial media s ites . T he effect for brands is that they are able to have a cons is tent brand mes s age delivered to a broad us er bas e at the lowes t equivalent cos t per impres s ion compared to mos t any other forms of advertis ing. At the s ame time, Q uepas a's DS M addres s es the bigges t problem typically faced by brands when trying to launch s ocial network driven campaigns in terms of achieving meaningful us er engagement while providing real time R O I metrics . As part of this new s trategy, Q uepas a intends to expand its s ales efforts for both the Q u B eyond C ommerc e, Inc . B eyond C ommerce, Inc. Accepts R es ignation of W endy O n O ctober 22, 2009, B eyond C ommerce, Inc. accepted the res ignation, dated (OTC B B : B YOC ) B orow-J ohns on as P res ident O ctober 19, 2009, of W endy B orow-J ohns on as P res ident of B rand Management. Ms . J ohns on will continue with the C ompany as a S pecial Advis or and C ons ultant as it pertains to the C ompany's communications and media needs . S ites earc h C orporation S ites earch C orporation announced delayed annual 10-K O n 10/23/2009, S ites earch C orporation announced that they will be unable to file their next 10-K by the deadline filing required by the S E C . G iant Interac tive G roup, Inc . G iant Interactive P artners with As trum Nival to L icens e G iant Interactive G roup, Inc. announced that it s igned an agreement with As trum Nival, L L C to grant a licens e to (NYS E : G A) ZT O nline in R us s ia As trum Nival to operate ZT Online, G iant's flags hip 2D mas s ively multiplayer online role playing game ('MMO R P G '), in the R us s ian F ederation and other R us s ian s peaking territories . ZT O nline is G iant Interactive's firs t internally- developed 2D free-to-play MMO R P G . S ince its commercial launch, ZT O nline has reached peak concurrent us er (P C U) levels over 2. 1 million and was voted the mos t popular game in C hina in 2006 according to International Data C orporation. As a free-to-play game, revenues are derived from in-game purchas es of virtual items and s ervices . ZT O nline is currently operated in Mainland C hina by the C ompany and in Hong K ong, Macau, T aiwan, Malays ia and S ingapore via a licens e to L ager Network. Additionally, G iant has als o granted a licens e to V inaG ame S oftware S ervice J oint S tock C ompany, or V inaG ame, to operate ZT O nline in V ietnam. C hangyou.c om L imited C hangyou. com L imited R eports Unaudited C ons olidated C hangyou. com L imited reported unaudited cons olidated earnings res ults for the third quarter and nine months ended (Nas daqG S :C YOU) E arnings R es ults for the T hird Q uarter and Nine Months S eptember 30, 2009. F or the quarter, the company's total revenues were $68, 684, 000 agains t $54, 604, 000 a year ago. E nded S eptember 30, 2009; P rovides E arnings G uidance T he increas es were mainly due to increas ed popularity of the company's flags hip game, T LB B . O perating profit was for the F ourth Q uarter of 2009 $42, 288, 000 agains t $32,474, 000 a year ago. Income before income tax expens e was $43,288, 000 agains t $32, 791, 000 a year ago. Net income was $37, 794, 000 agains t $32, 084,000 a year ago. Diluted net income per ADS was $0. 71 agains t $0. 68 a year ago. Non-G AAP operating profit was $45, 842, 000 agains t $33, 725, 000 a year ago. Non-G AAP net income was $41, 348, 000 agains t $33, 335, 000 a year ago. Non-G AAP diluted net income per ADS was $0. 77 agains t $0. 70 a year ago. O perating cas h flow was a net inflow of $46. 2 million. F or the nine months , the company's total revenues were $196, 887, 000 agains t $143, 455, 000 a year ago. O perating profit was $119, 624, 000 agains t $81, 537, 000 a year ago. Income before income tax expens e was $122, 170, 000 agains t $81, 705, 000 a year ago. Net income was $105, 826, 000 agains t $78, 914, 000 a year ago. Diluted net income per T he company es timates total revenues for the fourth quarter of 2009 to be between $69. 0 million and $71. 0 million. Non S ohu.c om Inc . (Nas daqG S : S OHU) S ohu. com Inc. R eports Unaudited C ons olidated E arnings S ohu. com Inc. reported unaudited cons olidated earnings res ults for the third quarter and nine months ended R es ults for the T hird Q uarter and Nine Months E nded S eptember 30, 2009. F or the quarter, the company reported net income attributable to company of $37, 354, 000 or S eptember 30, 2009; P rovides E arnings G uidance for the $0. 88 per s hare on total revenue of $136, 585, 000 agains t net income attributable to company was $40, 261, 000 or F ourth Q uarter of 2009 $1. 02 per s hare on total revenue of $120, 676, 000 in the s ame period of las t year. O perating profit was $52, 953, 000 agains t $43, 758, 000 in the s ame period of las t year. Income before income tax expens e was $54, 102, 000 agains t $45, 230, 000 in the s ame period of las t year. Income from continuing operations was $47, 080, 000 agains t $40, 238, 000 in the s ame period of las t year. As per non-G AAP , net income attributable to company was $40, 921, 000 or $0. 96 per s hare on total revenue of $136, 585, 000 agains t net income attributable to company was $42, 822, 000 or $1. 08 per s hare on total revenue of $120, 676, 000 in the s ame period of las t year. As per non-G AAP , operating profit was $57, 077, 000 agains t $46,319, 000 in the s ame period of las t year. Figure 7c. Key Developments Source. Capital IQ

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