SOFTWARE & SERVICES                                                                                                       ...
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THE WEB 2.0 UNIVERSE
 Eighty-nine public Web 2.0 companies identified: W e have identified 89 public companies f...
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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 )
Twitter raises $35 million: The lar...
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                                                                                              Capital Market Ac...
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                                                                                                           LTM F...
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                                                                                         Web 2.0 Financing (cumu...
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Figures 6 & 7. Financing/M&A, by Country (LTM, $, #)
Source. Company reports

 Larger volume of early-stage fundi...
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                                                                Average financing round size

             40.0
...
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                                                                                                               ...
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                                                                                     1 Week P rice P erformance...
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INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS)
K ey Developments
C ompany                       ...
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                                           W izz ard Media S igns Distribution Agre ement with G et             ...
09 03 10 Web 2.0 Weekly
09 03 10 Web 2.0 Weekly
09 03 10 Web 2.0 Weekly
09 03 10 Web 2.0 Weekly
09 03 10 Web 2.0 Weekly
09 03 10 Web 2.0 Weekly
09 03 10 Web 2.0 Weekly
09 03 10 Web 2.0 Weekly
09 03 10 Web 2.0 Weekly
09 03 10 Web 2.0 Weekly
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09 03 10 Web 2.0 Weekly

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Video companies lead financing wave with $100m over last three months

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Transcript of "09 03 10 Web 2.0 Weekly"

  1. 1. SOFTWARE & SERVICES 10 MARCH 2009 DAVID SHORE, CFA, MBA 416.860.6784 WEB 2.O WEEKLY david.shore@researchcapital.com Arun Thomas (Associate) 416.860.7666 VIDEO COMPANIES LEAD FINANCING WAVE MO ST AC T I V E S EC T O R I N F I N AN CI N G - V ID E O C OM PA NI E S Activity over the last three months was busiest in the video sector, with 13 companies raising almost $100 million. Social networking companies have the next highest totals with nine companies raising $46.7 million. Capital Market Activity by Sector - Last Three Months 120.0 100.0 80.0 (US$m) 60.0 98.6 40.0 46.7 41.5 20.0 35.0 26.5 25.3 25.0 22.5 20.9 15.0 12.4 12.0 11.5 11.4 10.0 9.5 6.2 4.3 4.0 2.0 1.3 1.2 0.0 Comment/Reputatio n G aming Micromedia O nline Learning Travel Financial Services RSS Mic roblog Mobile Search Media Wiki Virtual Goods Crowdsourced Content Video Virtual World Infrastructure Social Networks Aggregation Blog Ad Network Analytics 13 9 4 1 4 4 2 4 2 1 3 1 2 1 1 2 3 1 1 1 1 1 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. www.researchcapital.com 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 identified: W e have identified 89 public companies for our W eb 2.0 universe, with a combined market cap of $27.8 billion. These include a wide variety of companies, including MMOG (Massive Multi- Player Online Gaming) companies, social networking software companies, media sharing companies, and social lending companies. See below for a summary of the full universe (Figure 1). The average market cap for the group is ~$310 million (but a median of only $31.5 million), with average trailing revenue of $130 million (median $40 million). The companies are also generally profitable, with a median EBITDA margin of 13.3%. On a valuation basis, the overall average is 3.7x trailing revenue (median 0.9x) and 8.1x trailing EBITDA (median 5.5x). Ten of the companies have more than 500 employees. C omparable C ompany Analys is > Web 2.0 T rading C urrent US D Mark et US D L TM T otal US D L TM T otal E B ITDA T E V /L T M TE V /L TM C ompany Na me L T M as of Ti cker E xc hange C urrency HQ Price C ap ($m) R ev ($m ) E B IT DA ($m ) % R evenue E B ITDA E mployees Acce lerize N ew Medi a, Inc. 9 /3 0/20 08 A C LZ OTCB B US D United S tates 0. 22 5. 9 3. 2 ( 4. 7) NM 3. 2 x - 20 Actoz S oft C o. , Ltd. 9 /3 0/20 08 A 05279 0 K OS E KR W S outh K orea 10 ,5 00 5 9. 9 4 7. 3 8. 7 18 .3 % 0. 8 x 4 .3 x NA AQ Inte ractive, Inc. 1 2/31 /200 8 3 838 TS E JP Y J a pan 3 1, 35 0. 00 1 7. 2 6 0. 9 4. 9 8. 0% - - NA As s ociated Me dia Holdings I nc. 6 /3 0/20 07 A S MH OTCP K US D United S tates 0 0. 1 0. 1 ( 2. 3) NM 8. 0 x - 3 Bi gs tring C orp. 9 /3 0/20 08 B SG C OTCB B US D United S tates 0. 01 0. 6 0. 1 ( 2. 1) NM 2 7. 0x - 8 Be ta wave C orporation 9 /3 0/20 08 B W AV OTCB B US D United S tates 0 4. 4 6. 3 (11 .0 ) NM 2. 4 x - 41 Be yond C ommerce, Inc. 9 /3 0/20 08 B YO C OTCB B US D United S tates 0. 48 1 9. 6 1. 1 ( 7. 7) -9 8. 9% 2 0. 6x - 25 Br ight T hi ngs plc 9 /3 0/20 08 A IM: B GT A IM G BP United K ingdom 0 2. 9 0. 2 ( 1. 6) 47 .1 % 1 2. 3x - 9 Br oadW ebA s ia Inc. 9 /3 0/20 08 B W BA OTCP K US D United S tates 0. 75 6 3. 7 0. 0 ( 4. 6) NM - - 46 C DC C orp. 9 /3 0/20 08 C HI N. A Na s daqG S US D Hong K ong 1 8 0. 9 428. 1 18 .8 16 .0 % 0. 3 x 7 .3 x 3,1 25 C hina G ateway C orpora tion 9 /3 0/20 08 CGWY OTCB B US D United S tates 0. 00 0. 0 6. 7 ( 6. 6) 13 .3 % 0. 0 x - 37 C hines e G amer International 9 /3 0/20 08 G T S M: 3 083 GTS M TWD T a iwan 1 44 351 . 7 3 7. 0 17 .4 NM 8. 0 x 17. 0x NA C ornerW orld C orporation 1 0/31 /200 8 CWRL OTCB B US D United S tates 0. 14 6. 6 0. 6 NM NM 1 3. 1x - NA DAD A S pA 9 /3 0/20 08 C M: DA CM E UR Italy 5 9 9. 5 214. 6 34 .3 NM 0. 7 x 4 .1 x 5 74 DXN Holdings Bhd 1 1/30 /200 8 DX N K LS E MYR Ma lays ia 0. 33 2 0. 6 7 4. 7 9. 9 NM 0. 5 x 4 .0 x NA Dibz International, Inc. NA DIBZ OTCP K US D United S tates 0 0. 0 NA NM -0 .3 % - - NA Digita lP os t I nter active, Inc. 9 /3 0/20 08 DG LP OTCB B US D United S tates 0. 00 0. 3 0. 4 ( 3. 3) NM 2. 8 x - 11 Digita lT own, Inc. 1 1/30 /200 8 DG T W OTCB B US D United S tates 3 6 8. 5 NM ( 2. 5) 18 .3 % - - 3 Dolphin Digita l Me dia , I nc. NA DP DM OTCB B US D United S tates 0. 40 1 9. 5 NA NM NM - - 6 E olith C o. Ltd. 1 2/31 /200 7 A 04106 0 K OS E KR W S outh K orea 5 55 1 6. 8 1 6. 2 ( 0. 0) -6 0. 6% 1. 0 x - NA E xtensi ons, Inc. 9 /3 0/20 08 E XT I OTCP K US D United S tates 0. 49 4 6. 3 NM NM 16 .9 % - - 2 F ina ncia l Me dia Group, I nc. 1 1/30 /200 8 F NG P OTCB B US D United S tates 0 1. 0 6. 8 1. 2 26 .4 % 0. 0 x 0 .1 x 22 F luid Mus ic C anada , Inc. 9 /3 0/20 08 T S X: F MN TS X C AD United S tates 0. 33 1 3. 4 4. 2 ( 8. 6) NM - - 29 F rogs te r Inte ractive P icture s A G 6 /3 0/20 08 FRG XT R A E UR G er many 4 1 1. 0 5. 1 ( 3. 1) 61 .9 % 2. 1 x - NA Ga mania Digital E nterta inme nt C o. , L td. 9 /3 0/20 08 6 180 GTS M TWD T a iwan 2 5. 25 110 . 2 106. 8 18 .1 23 .9 % 0. 8 x 4 .7 x NA Ga meO n C o L td. 1 2/31 /200 8 3 812 TS E JP Y J a pan 81 ,0 00 7 9. 1 7 5. 4 19 .9 19 .2 % 0. 3 x 1 .2 x NA Ge oS entric O yj 9 /3 0/20 08 G E O 1V HL S E E UR F inland 0. 04 3 1. 5 5. 2 (12 .0 ) 36 .0 % 5. 1 x - 92 Gi ant Inte ractive G roup, Inc. 1 2/31 /200 8 GA NY S E US D C hina 7 1, 588 . 8 233. 1 1 44. 3 14 .7 % - - NA Gi gaMe dia L td. 9 /3 0/20 08 G IG M Na s daqG S US D T a iwan 4. 33 233 . 9 200. 5 48 .0 -2 5. 6% 0. 8 x 3 .5 x 9 75 Gravity C o., Ltd 9 /3 0/20 08 GRVY Na s daqG M US D S outh K orea 1 1 7. 8 3 1. 7 6. 1 4. 5% - - 6 36 Gree, Inc. 6 /3 0/20 08 T S E : 3 632 TS E JP Y J a pan 4, 69 0. 00 1, 057 . 1 2 9. 7 10 .7 NM 3 3. 5x - NA GungHo Online E nte rtainme nt, I nc. 9 /3 0/20 08 3 765 OSE JP Y J a pan 116 ,8 00 134 . 9 103. 2 15 .2 NM 1. 1 x 7 .2 x NA HanbitS oft, Inc. 9 /3 0/20 08 A 04708 0 K OS E KR W S outh K orea 3, 16 5. 00 4 4. 9 4 4. 9 (11 .5 ) NM 0. 6 x - NA IA C /Inte rA ctive C orp. 1 2/31 /200 8 IAC I Na s daqG S US D United S tates 13 1, 897 . 2 1 , 445 . 1 64 .6 37 .2 % 0. 1 x 2 .2 x NA IA S E ne rgy, I nc. 1 0/31 /200 8 IAS C . A OTCB B US D C a na da 0. 07 4. 9 0. 0 ( 0. 9) -1 5. 3% - - NA IdeaE dge, Inc. 1 2/31 /200 8 O T C B B: ID AE OTCB B US D United S tates 0 1 6. 9 0. 0 ( 4. 6) 7. 6% - - NA is ee media Inc. 9 /3 0/20 08 IE E T S XV C AD C a na da 0. 08 3. 2 1. 1 ( 4. 2) 33 .8 % 0. 6 x - NA J umbuck E ntertainme nt P ty Ltd. 1 2/31 /200 8 A S X :J MB ASX A UD Aus tra lia 0 1 4. 1 1 1. 3 4. 2 -4 2. 5% 0. 9 x 2 .4 x 72 J umpT V I nc. 6 /3 0/20 08 T S X: J T V TS X C AD C a na da 0. 39 3 4. 2 1 1. 5 ( 1. 8) -1 0. 1% 3. 8 x - NA K a boos e Inc. 9 /3 0/20 08 T S X: K AB TS X C AD C a na da 0 4 2. 2 5 7. 3 4. 4 -3 .7 % 0. 9 x 11. 2x NA K i ngs oft C o. Ltd. 9 /3 0/20 08 3 888 S EHK HK D C hina 2. 62 362 . 6 106. 7 36 .0 NM 2. 6 x 7 .6 x 1,6 60 Lingo Me dia C orpora tion 9 /3 0/20 08 T S XV :L M T S XV C AD C a na da 1 9. 7 3. 1 ( 1. 3) 38 .0 % 3. 3 x - NA Live World Inc. 9 /3 0/20 08 L VW D OTCP K US D United S tates 0. 04 1. 2 1 1. 7 ( 1. 2) 16 .0 % 0. 0 x - 73 Look S mart, Ltd. 9 /3 0/20 08 L OO K Na s daqG M US D United S tates 1 1 6. 5 6 9. 5 ( 2. 6) NM - - 93 Magnitude Informa tion S ys tems Inc. 9 /3 0/20 08 MA GY OTCB B US D United S tates 0. 02 8. 3 0. 1 ( 3. 2) NM - - 13 Mixi, I nc. 1 2/31 /200 8 2 121 TS E JP Y J a pan 308 ,0 00 476 . 4 118. 6 45 .1 26 .9 % 3. 1 x 8 .2 x NA Mode rn T imes Group Mtg A B 1 2/31 /200 8 MT G B OM SE K S weden 11 4. 50 828 . 6 1 , 446 . 0 2 31. 2 48 .6 % 0. 9 x 5 .5 x NA Moggle , Inc 1 2/31 /200 8 MMO G OTCB B US D United S tates 2 7 2. 6 NM ( 1. 1) 65 .0 % - - 3 MOK O. mobi L imited 6 /3 0/20 08 MK B ASX A UD Aus tra lia 0. 06 3. 1 1. 3 ( 2. 0) NM 1. 5 x - NA NE O W IZ G ame s C orpora tion 1 2/31 /200 7 A 09566 0 K OS E KR W S outh K orea 36 ,5 50 227 . 3 116. 7 31 .4 30 .8 % 1. 9 x 7 .0 x NA NetDra gon We bS oft, I nc. 9 /3 0/20 08 7 77 S EHK HK D C hina 3. 35 228 . 3 9 5. 2 46 .3 17 .6 % 0. 6 x 1 .2 x 1,4 82 Netea s e. com I nc. 1 2/31 /200 8 NT E S Na s daqG S US D C hina 21 2, 571 . 8 450. 9 2 93. 1 25 .3 % - - NA NeXplore C orporation 9 /3 0/20 07 NX P C OTCP K US D United S tates 0. 95 5 3. 0 NM ( 4. 9) -5 .1 % - - 19 Ngi G roup Inc. 1 2/31 /200 8 2 497 TS E JP Y J a pan 16 ,2 00 2 0. 2 9 9. 4 30 .6 54 .1 % - - NA Northgate T e chnologies L imited 1 2/31 /200 8 5 900 57 B SE INR India 3 0. 65 2 0. 6 130. 0 22 .9 -5 .3 % 0. 2 x 0 .9 x 2 86 Open T ext C or p. 1 2/31 /200 8 OTE X Na s daqG S US D C a na da 29 1, 527 . 4 769. 3 1 95. 0 NM 2. 2 x 8 .5 x 3,4 00 Openwa ve S ys tems Inc. 1 2/31 /200 8 OPW V Na s daqG S US D United S tates 0. 72 6 0. 0 199. 6 (10 .2 ) 13 .1 % - - 6 27 P e rfect W orld C o., Ltd. 1 2/31 /200 8 PWRD Na s daqG S US D C hina 10 550 . 8 210. 1 1 13. 7 46 .0 % - - NA P hotoC hannel Ne tworks Inc. 1 2/31 /200 8 T S XV :P N T S XV C AD C a na da 1. 65 4 2. 6 1 5. 4 ( 0. 8) 13 .3 % 2. 7 x - NA Quepas a C orp. 9 /3 0/20 08 QPS A Na s daqC M US D United S tates 1 1 1. 4 0. 1 (11 .8 ) 9. 4% - - 63 OA O R B C Informa tion S ys tems 1 2/31 /200 7 R BCI R TS US D R us s ia 0. 25 3 4. 7 132. 6 17 .3 10 .1 % 0. 0 x 0 .1 x NA S handa Intera ctive E nte rtainment L td. 1 2/31 /200 8 S NDA Na s daqG S US D C hina 31 2, 134 . 9 521. 7 2 39. 7 -3 4. 8% - - NA S hutterfly, Inc. 1 2/31 /200 8 S F LY Na s daqG S US D United S tates 7. 17 180 . 3 213. 5 28 .4 -6 0. 5% 0. 4 x 3 .2 x 5 14 S K C ommunications C o. , Ltd. 1 2/31 /200 7 A 06627 0 K OS E KR W S outh K orea 6 ,1 10 162 . 6 134. 2 12 .6 NM 1. 2 x 12. 9x NA S NA P I nteractive, Inc. 9 /3 0/20 08 S T VI OTCB B US D United S tates 0. 95 1 0. 1 2. 3 0. 2 21 .7 % 3. 9 x 38. 9x 5 S NM G lobal Holdings 9 /3 0/20 08 S NMN OTCP K US D United S tates 0 0. 0 2. 0 ( 0. 7) NM 1. 1 x - 33 S ocial Media V enure s , Inc. 1 2/31 /200 8 S MVI OTCP K US D United S tates 1. 20 0. 0 0. 1 ( 0. 1) 49 .5 % 0. 1 x - NA S i te s earch C orpora ti on 1 0/31 /200 8 S TPC OTCB B US D United S tates 1 8. 9 NM ( 0. 9) -1 2. 0% - - 15 S park Ne twork s , Inc. 1 2/31 /200 8 L OV A ME X US D United S tates 2. 33 4 7. 9 5 7. 3 12 .4 33 .7 % 0. 8 x 3 .9 x NA S pectrumDNA, Inc. 9 /3 0/20 08 S PX A OTCB B US D United S tates 0 9. 7 0. 1 ( 2. 7) 10 .8 % - - 7 T encent Holdings Ltd. 9 /3 0/20 08 7 00 S EHK HK D C hina 4 7. 25 10 ,9 49 .3 903. 2 4 47. 5 -5 0. 6% 1 3. 1x 26. 5x 6,0 39 T he P arent C ompany 8/2/2 008 K IDS . Q OTCP K US D United S tates 0 0. 2 112. 0 (13 .5 ) -1 0. 4% 0. 2 x - 3 47 T he 9 Limited 1 2/31 /200 8 NC T Y Na s daqG S US D C hina 9. 33 250 . 2 249. 7 84 .1 0. 4% - - NA T he S tre et.com, Inc. 1 2/31 /200 8 TS CM Na s daqG M US D United S tates 2 5 5. 0 7 1. 9 7. 7 23 .0 % - - NA T otal S ports O nli ne A S A 3 /3 1/20 06 TOS O O T C NO NO K Norway 0. 04 0. 2 1. 9 ( 1. 0) -9 1. 6% 4. 6 x - 16 T ree . C om, Inc. 1 2/31 /200 8 TRE E Na s daqG M US D United S tates 4 3 9. 2 228. 6 (23 .9 ) NM 0. 2 x - NA Unis e rve C ommunications C or p. 1 1/30 /200 8 T S XV :U S S T S XV C AD C a na da 0. 05 1. 0 2 3. 1 0. 1 -1 0. 1% 0. 1 x 31. 3x NA Unite d Online Inc. 1 2/31 /200 8 UNT D Na s daqG S US D United S tates 4 325 . 3 669. 4 1 53. 9 NM 0. 9 x 4 .1 x NA UOMO Media, Inc 1 0/31 /200 8 UO MO OTCB B US D C a na da 0. 06 5. 1 0. 5 ( 0. 4) NM 1 1. 4x - NA VO IS , I nc. 1 2/31 /200 8 V OI S OTCB B US D United S tates 0 3. 3 0. 0 ( 1. 3) NM - - 4 W ebzen Inc. 1 2/31 /200 8 W ZE N Na s daqG M US D S outh K orea 1. 22 1 4. 5 1 8. 4 ( 1. 9) NM - - 3 30 W izz a rd S oftwa re C orporation 9 /3 0/20 08 W ZE A ME X US D United S tates 0 1 9. 0 6. 2 ( 6. 5) 38 .8 % 3. 1 x - 1 10 W oozyF ly, Inc. 9 /3 0/20 08 W ZY F OTCB B US D United S tates 0. 15 2. 6 0. 0 NM 22 .4 % - - 14 W orlds .com Inc. 9 /3 0/20 08 W DDD OTCB B US D United S tates 0 7. 3 0. 1 NM -7 .6 % - - 1 W ynds torm C orporation NA W YN D OTCB B US D United S tates 0. 12 2. 2 NA NM NM - - NA XI NG AG 9 /3 0/20 08 O 1B C XT R A E UR G er many 25 162 . 5 3 9. 7 15 .4 0. 0% 2. 7 x 7 .1 x 1 61 Y e dangO nline C orp. 1 2/31 /200 7 A 05277 0 K OS E KR W S outh K orea 6, 30 0. 00 6 3. 8 4 4. 4 9. 9 65 .0 % 1. 4 x 6 .4 x NA Y nk K orea Inc. 1 2/31 /200 7 A 02377 0 K OS E KR W S outh K orea 3 ,4 60 5. 5 1 2. 6 ( 1. 0) -9 8. 9% 0. 4 x - NA ZipL ocal I nc. 9 /3 0/20 08 T S XV :ZIP T S XV C AD C a na da 0. 02 0. 9 2. 7 ( 3. 7) 8. 2% 0. 6 x - NA High 10 ,9 49 .3 1 ,4 46 .0 44 7. 5 65 .0 % 3 3. 5x 38. 9x 6, 03 9 Low 0. 0 0. 0 -2 3. 9 -9 8. 9% 0. 0 x 0 .1 x 1 Average 312.5 130.4 28.2 7.3% 3.7x 8.1x 468 Medi an 3 1. 5 39 .7 0 .2 13 .3 % 0. 9 x 5 .5 x 72 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 ) Twitter raises $35 million: The largest W eb 2.0 financing of the last three months remains the $35 million raised by Twitter (Figure 2). Overall, there were 25 financings announced in February, totalling $185.5 million, or $7.4 million on average. There have been five financings announced so far in March, totalling $36.2 million, led by the $15 million Series D round for Vidyo. The average value for February was above the $6.8 million average for January, with four financings over $15 million in February (Twitter, Synthasite, Tremor Media, and Offerpal Media) vs. no deals over $15 million in January. For additional details, see Figure 29 (at end of note). Financing Summary - Last Three Months 40.0 35.0 30.0 25.0 Mar-09 (US$m) 20.0 Feb-09 Jan-09 15.0 10.0 5.0 0.0 Tongxue Mixpo Myngle CoveritLive Motionbox TextDigger Xobni Synthasite Vidyo Offerpal Media AdMob Go Internet Media One True Media Tvtrip Kewego SocialMedia MMO Life BackType SundaySky Gbox Mendeley Filtrbox Meez Twitter NewsGator SendMe Inc. IMVU InsideView Tynt Tripwolf fav.or.it Tvinci Tremor Media Yodle Outbrain Nurien JibJab Oodle Virtual Fairground FetchDog 7 Billion People Hubdub Snooth Identi.ca VirtuOz Play Hard Sports Fliqz E-Global Sports Network RatePoint OneSpot Outright DECA Geni Cake Financial mEgo Aster Data Systems AboutUs Sportsblogs FamilyLink.com Pulse Entertainment Imagini Simulmedia Emergent Game Technologies WhistleBox Wamba Figure 2. Financings, Last Three Months Source. Company reports Video continues to be the most active sector: Activity over the last three months was busiest in the video sector, with 13 companies raising almost $100 million (Figure 3). Social networking companies have the next highest totals with nine companies raising $46.7 million.
  4. 4. Page 4 Capital Market Activity by Sector - Last Three Months 120.0 100.0 80.0 (US$m) 60.0 98.6 40.0 46.7 41.5 20.0 35.0 26.5 25.3 25.0 22.5 20.9 15.0 12.4 12.0 11.5 11.4 10.0 9.5 6.2 4.3 4.0 2.0 1.3 1.2 0.0 Comment/Reputation Gaming Micromedia Wiki Travel RSS Microblog Mobile Media Online Learning Financial Services Crowdsourced Content Infrastructure Blog Search Social Networks Virtual Goods Video Virtual World Aggregation Ad Network Analytics 13 9 4 1 4 4 2 4 2 1 3 1 2 1 1 2 3 1 1 1 1 1 Figure 3. Capital Market Activity, by Sector, Last Three Months Source. Company reports Average round size increases slightly: On a trailing 12-month basis, total financing dollars inched up as of February 2009, with average round sizes increasing slightly as well (Figure 4).
  5. 5. Page 5 LTM Financing 4,000.0 20.0 18.0 3,500.0 16.0 3,000.0 14.0 2,500.0 12.0 (US$m) (US$m) 2,000.0 10.0 8.0 1,500.0 6.0 1,000.0 4.0 500.0 2.0 0.0 0.0 May-06 May-07 May-08 Nov-05 Mar-06 Nov-06 Mar-07 Nov-07 Mar-08 Nov-08 Jul-05 Sep-05 Jan-06 Jul-06 Sep-06 Jan-07 Jul-07 Sep-07 Jan-08 Jul-08 Sep-08 Jan-09 Total Average Figure 4. Financings, Last 12 Months Source. Company reports Cumulative total over $5.6 billion: Overall, on a cumulative basis, W eb 2.0 financings have totalled over $5.6 billion, with the majority of the financing coming in late 2007 and the first three quarters of 2008 (Figure 5). Financing for the first quarter of 2009 ($438 million) has now passed that raised in the fourth quarter of 2008 ($339 million) – reversing the downtrend since the second quarter last year.
  6. 6. Page 6 Web 2.0 Financing (cumulative) 1,400.0 6,000.0 1,313.3 1,200.0 5,000.0 959.2 1,000.0 4,000.0 800.0 727.7 (US$m) (US$m) 3,000.0 600.0 528.9 438.0 2,000.0 400.0 338.5 319.4 1,000.0 200.0 151.7151.5 135.6 106.6 87.2 82.8 77.4 41.9 57.8 38.8 20.1 37.5 33.5 18.2 0.0 0.0 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 2004 2005 2006 2007 2008 2009 Figure 5. Financing, Cumulative Source. Company reports U.S. remains dominant: U.S. companies continue to dominate capital market activity – with almost 67% of financings/M&A involving U.S. companies (based on dollars) (Figure 6). The international spread of Web 2.0 companies is demonstrated in the financings as well, with 16.6% raised for Chinese companies and 4.2% for Russian companies. Based on number of transactions, the U.S. leads with 72.1% of deals, while Canada is third in number of financings at 5.1% (Figure 7). Financing/M&A by Country - LTM ($) Financing/M&A by Country - LTM (#) China Canada Israel 16.6% UK 5.1% 3.7% 5.1% Russia France 4.2% 2.8% UK Israel 2.1% 1.9% ROW France 1.6% 11.2% Denmark 1.6% ROW 5.1% USA USA 72.1% 66.7%
  7. 7. Page 7 Figures 6 & 7. Financing/M&A, by Country (LTM, $, #) Source. Company reports Larger volume of early-stage funding (by count): Almost half of financings in the last 12 months are for early-stage companies (Angel/Seed or Series A) (Figure 8). Series B rounds are 28.4% of the total, with later-stage (Series D, E and PIPE) deals accounting for just 7.3%. Financing by Type - LTM Series C 15.1% Series B 28.4% Series D 4.7% Angel/Seed 11.2% Debt financing Series A 3.0% 35.8% PIPE 1.7% Figure 8. Financing, by Type (LTM, #) Source. Company reports Equity financings smaller over last 12 months: In the last 12 months, the average size of Series A, B, C, and D rounds have all been lower than the overall average (Figure 9). Note though that Angel/Seed rounds have been larger.
  8. 8. Page 8 Average financing round size 40.0 36.1 35.0 33.5 33.5 30.0 28.8 25.0 22.7 (US$m) 20.0 18.2 15.0 11.7 11.9 11.3 11.3 9.8 10.0 7.3 6.8 5.8 5.0 3.5 2.5 0.0 Angel/Seed Debt financing PIPE Series A Series B Series C Series D Series E LTM Average Size Overall Average Figure 9. Average Size per Round Source. Company reports 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 ) Price Performance: Our W eb 2.0 index (market-cap weighted) underperformed the NASDAQ composite index from mid 2008 until recently (Figure 10).
  9. 9. Page 9 Web 2.0 Index Price Performance 140 120 100 80 60 40 20 0 3/10/2008 3/24/2008 4/7/2008 4/21/2008 5/5/2008 5/19/2008 6/2/2008 6/16/2008 6/30/2008 7/14/2008 7/28/2008 8/11/2008 8/25/2008 9/8/2008 9/22/2008 10/6/2008 10/20/2008 11/3/2008 11/17/2008 12/1/2008 12/15/2008 12/29/2008 1/12/2009 1/26/2009 2/9/2009 2/23/2009 3/9/2009 NASDAQ COMP Web 2.0 (Market Cap Weighted) Figure 10. Web 2.0 Price Performance Source. Capital IQ Webzen leads; NGI gives back price increase: NGI Group (2497-TSE) fell 22.8% after leading last week, to have the worst performance in the group (for stocks with prices greater than $1) (Figure 11), after increasing 22.1% last week. W ebzen (W ZEN-NasdaqGM) rose the most, +37.1%.
  10. 10. Page 10 1 Week P rice P erformance Webz en Inc. 37.1% NEOWIZ G ames Corporation 20.4% Perf ect World Co., Ltd. 17.2% NetDragon WebS oft, Inc. 14.3% G amania Digita l Entertainment Co., Ltd. 12.7% G iant Interactive G roup, Inc. 11.8% Chines e G amer International 8.3% Tencent Holdings Ltd. 7.0% Eolith Co. Ltd. 6.7% G ree, Inc. 6.6% K ings oft Co. Ltd. 4.4% HanbitS oft, Inc. 4.1% Neteas e.c om Inc. 2.2% TheS treet.c om, Inc. 1.7% A ctoz S oft Co., Ltd. 0.5% S handa Interactive Entertainment Ltd. 0.0% Tree.Com, Inc. 0.0% Moggle, Inc 0.0% G ungHo Online Entertainment, Inc. -0.2% S K Communica tions Co., Ltd. -0.8% Y nk K orea Inc. -2.4% Modern Times G roup Mtg A B -2.6% DA DA S pA -3.0% Open Tex t Corp. -3.7% S ocial Media V enures , Inc. -4.0% S park Netw orks , Inc. -4.5% PhotoChannel Netw orks Inc. -4.6% A Q Interactive, Inc. -4.7% Y edangOnline Corp. -5.3% DigitalTow n, Inc. -8.4% S hutterf ly , Inc. -8.5% Frogs ter Interactive Pictures A G -8.6% IA C/InterA ctiveCorp. -9.1% United Online Inc. -10.0% Northgate Technologies Limited -10.4% G ameOn Co Ltd. -12.9% The9 Limited -13.5% Mix i, Inc. -14.2% X ING A G -14.2% G igaMedia Ltd. -14.9% Ngi G roup Inc. -22.8% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Figure 11. 1-Week Price Performance Source. Capital IQ
  11. 11. Page 11 INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS) K ey Developments C ompany Headline Notes T ree .C om, Inc. (Na s daqG M: T R E E ) T ree. C om Inc. L aunches New, S implifie d F ilte r T re e.C om I nc. announce s the lau nch of new, simplified f ilter te chnology available only to Le ndingT ree Network lende rs . F iltering te chnology T echnolo gy at L endingT ree give s lenders a cus tomer targeting capability at their finger tips . T he te chnology , no w eas ier tha n ever, s implifie s the filter s et up a nd management proces s providing le nders a more stre amlined approa ch to targeting the exa ct cus tomer s egments that mee t s pecific unde rwriting crite ria a nd inves tor requ irements. LendingT re e's proprieta ry filtering technolo gy was firs t intro duced in 1998 and s ince that time, has helped more than 25 million borrowers work with lende rs clos ing more tha n $1 85 billion in loa ns . Le nders who belong to the LendingT re e Ne twork work with highly-qua lified cus tomers look ing fo r mortgages a nd ref ina nce loans , home e quity loa ns /lines o f credit, a uto lo ans , and pe rs onal lo ans . R B C Information S y ste ms L aunche s Macroecono mics O AO R B C Information S ys te ms a nnou nced the launch of a new proje ct-M acro economics -integrated with the Q uo te.ru financia l news porta l. O AO R B C Informa ti on S ys tems P roje ct T he pro duct is aime d at providing R B C 's us ers with re gular updates o n macroecono mic statistics for R u ss ia and a number o f other countries . (R T S : R B C I) T he new project is divided into s everal blocks o ffering information, news a nd analys is . In thes e block s vis ito rs will ha ve acce ss to an economic ca lendar fo r 6 countries , the late st s howings fo r at leas t 3 0 to 40 ma croe co nomic indicators , the mos t recent econo mic updates , analy tical articles a nd commenta ries by ex perts o f the world's inves tment companies , a s well as e co nomic f ore ca s ts by mo re tha n 20 top world's and R us sian inves tment banks . In a dditio n to tha t, the po rtal's us ers will a ls o be granted a cce ss to s tatis tics archives f eatu ring histo rical ma croe co nomic indices , along with a brief des cription of e ach of the indicators, including a no te o n the pe riodicity of updates a nd the date of the lates t update. T he dynamics of e ach of the indicators ca n be track ed in a chart. No rthgate T echno lo gie s Limited A ppoints R ames h Northgate T e chnologies Limited informed that M r. R ames h Y arllagada has be en a ppointe d as a dditio nal dire ctor (non-ex ecutive and Northgate Te chnologies L imited Y arllaga da a s Additional Director indepe ndent director) of the company effective from F ebru ary 2 8, 2 009 in the board mee ting he ld on F e bruary 28, 2 009 . (B S E : 590057) IdeaE dge Inc. A nnounces A uditor C hange Idea E dge I nc. announce d tha t the B DO S e idman, LL P wa s appo inted the inde pendent re gis te re d pu blic accounting firm o f the C ompany on Idea E dge, Inc. (O T C B B : ID AE ) O cto ber 8, 200 8 and remains its independent re gistere d pu blic accounting firm. P erfect W orld C o. L td. Announces U naudite d P e rf ect W orld C o. Ltd. announce d unaudited cons olidated earnings res ults for the f ourth quarter a nd y ear e nded December 3 1, 2 008. F or the P erfec t W orld C o., L td. C o ns olidated E arnings R e su lts f or the F ourth Qu arter and quarte r, the company 's total re venues were R MB 417 .8 million ($61. 2 million), an increas e o f 61. 7% f rom R M B 258. 4 million for the fou rth (Nas da qGS : PW R D) Y ear E nde d De ce mbe r 31, 2008 ; P rovides E arnings quarte r of 2 007. Net income f or the qua rter was R MB 12 4.8 millio n and or R M B 0.42 per diluted s hare a s co mpa re d to net inco me of R M B G uidance for the F irs t Qu arter of 2009 146. 2 million or R MB 0. 50 f or the sa me qua rter of 2 007. F or the ye ar, the company 's to tal reve nues we re R MB 1, 437. 2 million as compared to to tal reve nues o f R MB 6 89.1 million in 2 007. T he y ea r- over-y ear increas e wa s primarily due to the ex pansion of the C o mpany 's game portfolio , the s ucces sf ul lau nch of a s eries of e xpa ns ion pack s and ma rk eting campaigns , and a significant e xpa ns ion in overs eas licens ing bus ine ss . Net income f or the ye ar was R MB 64 6.5 millio n and net income attributa ble to o rdinary s ha re holders of R MB 646 .5 million or R MB 2. 18 per diluted s ha re as compared to net income of R MB 361. 94 million and net inco me attributa ble to ordinary shareholders of R MB 360 .2 million or R M B 1 .35 per dilu ted share in 20 07. P erfect W orld C o S eek s A cquis itions Michael C hi, the F ou nder, C hairman and C E O of P erfect W orld C o., Ltd. , s aid in a co nference ca ll, “O ur pos itive re su lts during the perio d P erfec t W orld C o., L td. co ntinue to be drive n by ou r e xecution of our s trategy. W e continue to de velop and lau nch new games to the marke t in a very time ly ma nne r. (Nas da qGS : PW R D) W e have also s een ma ny great achie vements in our o vers eas e xpa ns ion eff orts during 20 08. W e s ucces s fully broadened our geographic co ve ra ge in A s ia and E u ro pe thro ugh overse as licens ing and we es tablis he d a wholly owne d s ubs idia ry in the U nite d S tate s that ope rates our own games thro ugho ut N orth A me rica. P urs uing s trate gic a cquisitions is als o one of o ur stra tegy to drive bus ines s gro wth.” U pdate to P erfe ct W orld C o., Ltd.'s E quity B u yba ck o n As o f Ma rch 1 , 20 09, P e rfe ct W orld C o. , Ltd. ha s re purchas ed 977, 492 ADS 's (equ ivalent to 48 874 60 s ha re s) and 18 ,750 ,000 s hares , u nder P erfec t W orld C o., L td. M arch 1, 2 009 its s ha re repurchas e pla n. (Nas da qGS : PW R D) J umbuck E nterta inment P ty Ltd. announces a n E quity J u mbuck E ntertainment P ty Ltd. (A S X : J MB ) authoriz ed a n on-mark et s ha re repurchas e program on March 3, 200 9. U nder the progra m, J umbuc k E nte rtainment P ty L td. B uy back J u mbuck will repurchas e up to 4,80 2,011 ordinary s hares , repres enting 9. 7% o f the is s ued capital. T he program will begin on M arch 18 , (AS X :J MB ) 2009 and continue for 1 2 months, or until the maximum number o f s hares is acquired or u ntil notice is given that the buy back is co ncluded. T he s ha re buy back progra m is a part of J umbuck ’s capital management program. O n M arch 3, 2009 , J umbuck has 4 9,53 2,82 5 s hares in is s ue. Au stock S ecuritie s Ltd. (Melbourne ) acted as the brok er to J u mbu ck f or the trans action. T ence nt H ol dings L td. (S E HK : 700) T ence nt Ho ldings Ltd. E x pands Mobile S ervice T urf in T encent Holdings Ltd. ex pands its se rvice to 1 6 area s acro ss C hina , on the s trength of gene ra l packe t radio s ervice (G P R S ) o f C hina C hina U nico m (Ho ng K ong) Ltd. , formerly k nown as C hina U nico m Ltd. C hina U nicom's G P R S u se rs can install the lates t vers io n of Mobile Q Q , a ce llular me ss aging s ervice provided by T e ncent, in the ir mobile pho nes . It means that they can cha t with their friends any time. T he lates t ve rs ion will be available in su cces s io n in other area s in the cou ntry. U p to no w, the lates t vers io n is expe cted in the 1 6 area s including G uangdong P rovince, Zhe jiang P rovince , Hu bei P rovince, S hanghai, J iangs u P rovince , F ujia n P ro vince, T ianjin, J ilin P ro vince, H enan P rovince , S handong P rovince , He bei P rovince, Ha ina n P ro vince, J iangxi P rovince, He ilongjiang P rovince, Xinjiang U y gur A uto nomous R egion, and G uangxi Zhua ng A uto nomous R e gio n. XI NG AG O pens S ubs idiary in Mila n XING A G is continuing o n its clea r cou rs e of inte rnational ex pansion. T he opening of a new su bs idiary office in M ilan mea ns that XIN G AG is X ING AG (X T R A: O 1B C ) now pre se nt a t a local leve l f or the thriving o nline co mmunity in Italy . T he C ompa ny has appointed C ipriano Mo neta (45), an internationally re nowne d Internet Manager, with the aim o f driving f orwa rd member growth and B 2 B operations in Italy with increa se d impe tus . B ey ond C omme rce Inc. R e ports S ale s R es ults for the B e yond C o mmerce Inc. re ported s ale s re su lts f or the mo nth of F ebru ary 2 009. T ota l revenu es of $3,3 26,0 00 fo r the mo nth o f F ebru ary B eyond C omm erce , Inc . M onth of F e bruary 2009 ; P rovide s E arnings G uidance for re pres ent an increas e o f 44 % compared with the prior month, a nd a bout 80% increa se s ince December 20 08. The company a nticipa tes the (O TC B B : B YO C ) the F irs t Qu arter of 2009 ; to La unch i-S U P P LY 's E - firs t quarter to be profitable, bas ed on current trends . C o mmerce W idge t S tore T he compa ny anno unced that its i-S U P P LY 's E -comme rce widget s to re will enter the mark et u sing a be ta vers io n 1.0 on thou sa nds of W eb sites in late March 2 009, off ering abo ut 1 .8 million brand name pro ducts . i-S U P P LY will a dd a n additional re ve nue strea m and be the back bone of the proprie tary advertis ing network the C ompa ny is currently developing. T he 9 to Lau nch O pen B e ta T e st for F IF A O nline 2 T he9 Limited anno unced that it planne d to initiate ope n be ta te st for P E ente rtaining game, F IF A O nline 2 in A pril. T he game is the T he9 L i mited (Nas da qGS : NC T Y) developed ve rs ion o f fo otba ll game FI F A, a multimedia o nline role -play ing ga me (MMO R P G ) by A merican game runner, E le ctro nic A rts , which has go t the of ficial authoriz ation f ro m F e deration Inte rnationale de F oo tball As s ocia tio n. G iant I nteractive G ro up I nc. R e ports E arnings R es ults for G iant Interactive G rou p Inc. unau dited conso lidated ea rnings re su lts f or the fou rth qua rter and fiscal y ear ended December 31 , 20 08. F or the G iant Interactive G roup, Inc . the F ou rth Q uarte r a nd F u ll Y ear E nded December 3 1, fourth qua rter 200 8, the company reported that net income was C NY 290 .3 million, a yea r-over-yea r decreas e o f 13 .0% f ro m C NY 333. 8 (NYS E :G A) 20 08 ; P rovides E arnings G uidance for the F irs t Q ua rter millio n. N et income de clined fro m the sa me perio d las t y ear as the C o mpany remained in a trans itio n pe riod following the adjus tme nts made of 200 9 ; Declares C as h Dividend P ay able on April 10, to ZT O nline's mone tiz ation s tru cture du ring the third qua rter 200 8. B as ic e arnings per s ha re for the pe riod was C NY 1.2 6 and dilu ted 20 09 ; P lans to La unch N ew G ames earnings pe r share was C N Y 1 .23 co mpare d to bas ic earnings pe r share of C NY 1.3 9 and dilu ted earnings pe r share of C NY 1.3 3 for the sa me period las t y ear. Net revenu e was C N Y 3 53.1 million, re pres enting 18.8 % decreas e from C NY 434 .8 million in the fou rth qua rter 200 7. Income before income tax expe ns es was C NY 25 5.31 million compa re d to C NY 333 .80 millio n in the fou rth qu arter 20 07. Non-G AA P net inco me for the qu arter was C NY 29 8.26 million compa re d to C NY 347 .32 millio n for the s ame perio d in 20 07. B as ic Non-G AA P earnings per share fo r the perio d was C NY 1 .29 a nd dilute d Non-G A AP ea rnings per s hare was C NY 1.2 6 compared to bas ic No n-G A A P e arnings per s ha r S park Networks , Inc. (AME X : L O V) S park Networks Inc. A nnou nces U nau dited C ons olida ted S park Network s Inc. a nnou nced u naudited conso lidate d ea rnings re su lts f or the fourth qua rter and full y ea r e nde d Decembe r 3 1, 2 008. E arnings R es ults fo r the Fo urth Q ua rter and F ull Y ear R evenue for the fo urth quarter o f 20 08 was $ 13.2 million, a de crea se of 18% compa re d to $16 .0 million in the fourth qua rter of 2 007, and a E nde d Decembe r 31, 2 008 ; A nno unces Impairme nt 6% decre as e compared to $ 14.0 million f or the prio r quarter. Net los s for the fo urth quarter o f 200 8 was $ 164, 000, or $0 .01 per bas ic and C harges diluted s ha re, compared to ne t income of $6. 6 million, or $0. 25 per bas ic and dilute d s hare, for the fo urth quarter o f 200 7. I n the fo urth quarte r of 2 007, the C ompany releas ed net ope ra ting los s valuation allo wa nces , which redu ce d the ta x provision. Adjus te d E B I T DA f or the fourth qua rter of 2 008 was $3. 7 million, a decre as e of 3% compa red to $3.8 million f or the fourth qua rter of 2 007 , and a decre as e of 11% co mpared to $4 .1 million in the prior quarter. Fo r the quarte r, the co mpany has o perating income of $ 1,23 7,000 aga inst ope rating income of $1,6 19,0 00 reported a y ear ago. F o r the quarter, the compa ny had income befo re inco me tax es of $721 ,000 aga ins t income before income tax es of $1,89 6,00 0 repo rted a ye ar ago . F or the qu arter, the company had E B IT DA of $ 1,17 8,00 0 agains t E B IT DA o f $2, 420, 000 re ported a y M odern T imes G ro up to La unch Ne w T V C hannel in Modern T imes G roup Mtg AB will launch a ne w free tele vis ion channel in the C ze ch R epu blic. T he company s aid the channel, to be called Modern T ime s G roup Mtg AB C z ech R epublic P rima C O OL , will air on A pril 1, 200 9 and complement the compa ny's exis ting P rima televis ion cha nnel. P rima C OO L will be a broad-ba se d (O M: MT G B ) gene ra l e nterta inment channel, ta rgeting 2 0-4 0 y ear o ld viewers .
  12. 12. Page 12 W izz ard Media S igns Distribution Agre ement with G et W iz z ard Me dia a divis ion o f W izz ard S oftware C orpo ra tio n an noun ce d th at it ha s sign ed a n agree me nt with G e t Ma rried to dis tribu te its W izzard S oftware C orpora ti on M arried exclus ive video con tent via A pple iT un es , Micro so ft Zun e Ma rk etpla ce and s ele ct vide o s treamin g web s ite s. Driven by unique video and (AME X: W ZE ) in forma tio n, www.G etMarried.com and G et M arried's s ho w on Lif etime T elevis ion conne cts bride s with lo ca l a nd n ational weddin g profes s io nals and in dus try expe rts online and on televis io n every day throu gh e nterta inmen t an d ne ws. W ork ing with G et Married fits with W iz z ard's s trategy o f he lping high-qua lity, branded con tent produ ce rs ex pan d th eir rea ch and expos ure to new audiences . As pa rt of G e t Marrie d's mis s ion to provide unique co nten t to brides and wedding profe ss ionals how and wh en they want it, th e pa rtn ersh ip with W izz ard Media further e nables G et Married to dis tribute its expans ive portfolio of wedding-related video . U pdate to G iant Inte ra ctive G roup, Inc.’s E quity B uy ba ck As o f Decembe r 3 1, 2 008 G ian t Interactive G roup, In c. has repurch as ed 1 4,94 7,20 0 s hares fo r a to tal cos t of $97. 7 million, under the G iant Interactive G roup, I nc . on December 3 1, 2 008 program an noun ce d on Au gus t 1 1, 2 008. (NYS E :G A) S ites earch C orpo ra tio n A ppo ints J a mes Dixo n as a C hief S ites ea rch C orporation co mmenced an emplo yment agree men t with J ames Dixo n pu rs ua nt to which Mr. Dixo n will s erve as the company 's S ites ea rch C orporation E xecutive O ff icer C hief E xe cu tive O ff icer ef fective March 4, 200 9. T he agree me nt is for an in itial on e y ear te rm un les s te rminate d by eithe r party and ma y be (O TC B B : S T P C ) extende d by mutu al agreement between the co mpa ny and Mr. Dixo n. T ree .C om, Inc. (Na s daqG M: T R E E ) T ree. C om, In c. P rovides E arn in gs G uidance f or the F irs t T re e.C om, Inc. provided earnings gu ida nce fo r the f irs t qu arter of 200 9. F or the quarter, the compa ny expects E B IT DA an d ne t in come (los s ) Q ua rte r of 2 009 to be roughly in-line with or s lightly better tha n E B I T DA a nd n et income (los s) f or the fourth qua rter of 2 008. Figure 12. Key Developments Source. Capital IQ VALUATION MMOG companies lead market cap charts: Seven companies in our W eb 2.0 universe top US$1 billion in market capitalization (Figure 13). Sixty-seven of the 89 companies have market caps under US$100 million, with 30 under $10 million. Online gaming companies dominate the top of the list with four of the top five by market cap.

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