0
Web 2.0 Weekly
                            “Funds for Online Gaming Appear Endless”
                                      ...
Key Developments (past week)
    Deals (M&A, Finance) – Online Gaming Continues to Attract Significant Money
      888 Hol...
Public Company Data




3                         www.mackieresearch.com
Aggregate Public Data

     Web 2.0 Public Companies   Total      Median    Max           Min
    # Companies             ...
5
                                                                      0
                                                ...
Valuation Dashboard – 1 Week
                    Market Cap                                EV/Revenue

                  F...
7
                         Source: CapitalIQ
                                                                             ...
8
                         Source: CapitalIQ
                                                                             ...
9
                         Source: CapitalIQ
                                                                             ...
10
                                                                     -
                                                ...
11
                                                                                                0. 0
                  ...
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"
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Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"

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June financing ahead of average: Financing in the Web 2.0 universe in June continued to be strong with total transaction value (excluding M&A) month-to-date of $291.8 million from 29 transactions, averaging $10.1 million each - led by the Zynga financing. In comparison, total capital raised in June 2009 was $225.2 million, averaging $4.6 million over 49 deals. Excluding Dec 09 and Apr 10, the average monthly total is $260 million.

Deals (M&A, Finance)
888 Holdings acquired online gaming company Mytopia for $18 mm.

In the second largest financing overall this year, Zynga (online gaming) raised another $147 mm from Softbank, bringing its total financing to $381 mm.

Financial Results/Guidance
Cyberplex Inc. (TSX:CX) completed the acquisition of Tsavo Media, Inc. from Fountainhead Estate Holding Corp., American Capital Equity I of American Capital Equity Management LLC, and others on June 8, 2010.

NetDragon WebSoft, Inc. (SEHK:777), announced first quarter revenues of RMB 139,476,000 compared to RMB 173,898,000 for the same period a year ago. Profit before taxation was RMB 21,379,000 compared to RMB 53,502,000 for the same period a year ago. Profit for the period attributable to owners of the company was RMB 21,215,000 compared to RMB 48,943,000 for the same period a year ago. Diluted EPS was 4.03 cents compared to 9.31 cents for the same period a year ago.

Gravity Co., Ltd (NasdaqGM:GRVY) reported net income attributable to parent company was $337 million or $0.05 per share on total net revenues of $9,840 million compared to net income attributable to parent company of $4,649 million or $0.67 per share on total net revenues of $14,696 million for the same period a year ago.

Positive price performance
The Web 2.0 public company universe rose this week, with 56% of companies seeing their market cap rise vs. 36% falling and 8% flat.

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Transcript of "Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?""

  1. 1. Web 2.0 Weekly “Funds for Online Gaming Appear Endless” June 16, 2010 David Shore, CFA, MBA 416.860.6784 dshore@mackieresearch.com Damian Wojcichowsky, CFA 416.860.7652 This report has been created by Analysts that are employed by Mackie Research Capital Corporation, a Canadian Investment Dealer. For further disclosures, please see last page of this report. www.mackieresearch.com Copyright © 2000-2010, Mackie Research Capital Corporation, All rights reserved www.mackieresearch.com
  2. 2. Key Developments (past week) Deals (M&A, Finance) – Online Gaming Continues to Attract Significant Money 888 Holdings acquired online gaming company Mytopia for $18 mm. In the second largest financing overall this year, Zynga (online gaming) raised another $147 mm from Softbank, bringing its total financing to $381 mm. Financial Results/Guidance Cyberplex Inc. (TSX:CX) completed the acquisition of Tsavo Media, Inc. from Fountainhead Estate Holding Corp., American Capital Equity I of American Capital Equity Management LLC, and others on June 8, 2010. NetDragon WebSoft, Inc. (SEHK:777), announced first quarter revenues of RMB 139,476,000 compared to RMB 173,898,000 for the same period a year ago. Profit before taxation was RMB 21,379,000 compared to RMB 53,502,000 for the same period a year ago. Profit for the period attributable to owners of the company was RMB 21,215,000 compared to RMB 48,943,000 for the same period a year ago. Diluted EPS was 4.03 cents compared to 9.31 cents for the same period a year ago. Gravity Co., Ltd (NasdaqGM:GRVY) reported net income attributable to parent company was $337 million or $0.05 per share on total net revenues of $9,840 million compared to net income attributable to parent company of $4,649 million or $0.67 per share on total net revenues of $14,696 million for the same period a year ago. 2 www.mackieresearch.com
  3. 3. Public Company Data 3 www.mackieresearch.com
  4. 4. Aggregate Public Data Web 2.0 Public Companies Total Median Max Min # Companies 101 - - - Market Cap (US$ mm) 75,829.5 69.8 29,926.5 1.7 Revenue (US$ mm) 23,428.4 56.6 3,057.7 0.0 1 Year revenue growth 6.7% 8961.6% -100.0% EBITDA as % of revenue - 12.8% 63.1% -63.7% Net cash (US$ mm) 8,998.7 2.3 1,825.8 -670.8 TEV/Revenue - 1.9x 45.2x 0.0x TEV/EBITDA - 8.5x 43.7x 0.0x P/E - 16.4x 89.2x 0.0x Relative to 52 week high -39.2% -2.0% -95.6% Source: CapitalIQ 4 www.mackieresearch.com
  5. 5. 5 0 5 10 15 20 25 30 Gaming 27 Social Networking 16 Media 10 7 Diversified 6 Marketing 5 Mobile Source: CapitalIQ 3 Infrastructure 3 SMS/Voice 3 Enterprise 3 Advertising 2 Internet Retail 2 Virtual World By Sector 2 Dating 2 Music 1 Vertical Communities 1 Collaboration 1 Podcasting 1 Learning 1 Video 1 Search 1 Payment 1 Financial Services Public Company Distribution 0 5 10 15 20 25 30 35 40 45 United States Canada China South Korea Japan Taiwan Germany Australia United Kingdom Hong Kong Poland Russia By Country Finland Sweden Malaysia India Italy Switzerland Israel www.mackieresearch.com
  6. 6. Valuation Dashboard – 1 Week Market Cap EV/Revenue Flat Flat 8% 4% Falling Falling 59% 36% Rising 56% Rising 37% EV/EBITDA P/E Flat Flat 4% 0% Falling Falling 55% 53% Rising 43% Rising 45% 6 www.mackieresearch.com
  7. 7. 7 Source: CapitalIQ Multiple (x) 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x 5.0x # companies 4/28/2009 5/5/2009 5/12/2009 5/19/2009 5/26/2009 6/2/2009 6/9/2009 6/16/2009 6/23/2009 6/30/2009 7/7/2009 7/14/2009 7/21/2009 7/28/2009 8/4/2009 8/11/2009 Median EV/Revenue 8/18/2009 8/25/2009 9/1/2009 9/8/2009 9/15/2009 9/22/2009 9/29/2009 10/6/2009 10/13/2009 10/20/2009 10/27/2009 Median 11/3/2009 11/10/2009 11/17/2009 11/24/2009 12/1/2009 12/8/2009 12/15/2009 12/22/2009 12/29/2009 1/5/2010 Long-term average 1/12/2010 1/19/2010 1/26/2010 2/2/2010 2/9/2010 2/16/2010 2/23/2010 3/2/2010 3/9/2010 3/16/2010 LT average 3/23/2010 flat with prior 3/30/2010 week, well below 4/6/2010 Revenue multiples 4/13/2010 4/20/2010 4/27/2010 5/4/2010 5/11/2010 5/18/2010 5/25/2010 6/1/2010 6/8/2010 6/15/2010 384040414141414343454646474747485051505150535656616161646666676464666970717174717168707472757679798180818080828285838584 www.mackieresearch.com
  8. 8. 8 Source: CapitalIQ Multiple (x ) # companies 0. 0x 5. 0x 10. 0x 15. 0x 20. 0x 25. 0x 30. 0x 4/28/2009 5/5/2009 5/12/2009 5/19/2009 5/26/2009 6/2/2009 6/9/2009 6/16/2009 6/23/2009 6/30/2009 7/7/2009 7/14/2009 7/21/2009 7/28/2009 Median EV/EBITDA 8/4/2009 8/11/2009 8/18/2009 8/25/2009 9/1/2009 9/8/2009 9/15/2009 9/22/2009 9/29/2009 10/6/2009 10/13/2009 10/20/2009 10/27/2009 Median 11/3/2009 11/10/2009 11/17/2009 11/24/2009 12/1/2009 12/8/2009 12/15/2009 12/22/2009 12/29/2009 1/5/2010 1/12/2010 Long-term average 1/19/2010 1/26/2010 2/2/2010 2/9/2010 2/16/2010 2/23/2010 3/2/2010 3/9/2010 3/16/2010 below LT average 3/23/2010 3/30/2010 and remain depressed 4/6/2010 EV/EBITDA multiples drop 4/13/2010 4/20/2010 4/27/2010 5/4/2010 5/11/2010 5/18/2010 5/25/2010 6/1/2010 6/8/2010 6/15/2010 20 21 22 23 23 22 22 23 24 23 25 23 24 26 26 26 26 26 25 26 27 28 33 29 34 35 37 38 40 40 39 38 41 41 41 39 39 42 43 42 43 42 43 43 43 43 46 45 44 50 51 50 52 53 53 51 51 49 53 51 www.mackieresearch.com
  9. 9. 9 Source: CapitalIQ Multiple (x ) # companies 0. 0x 5. 0x 10. 0x 15. 0x 20. 0x 25. 0x 30. 0x 35. 0x 4/28/2009 5/5/2009 5/12/2009 Median P/E 5/19/2009 5/26/2009 6/2/2009 6/9/2009 6/16/2009 6/23/2009 6/30/2009 7/7/2009 7/14/2009 7/21/2009 7/28/2009 8/4/2009 8/11/2009 8/18/2009 8/25/2009 9/1/2009 9/8/2009 9/15/2009 9/22/2009 9/29/2009 10/6/2009 10/13/2009 10/20/2009 10/27/2009 Median 11/3/2009 11/10/2009 11/17/2009 11/24/2009 12/1/2009 12/8/2009 12/15/2009 12/22/2009 12/29/2009 1/5/2010 1/12/2010 Long-term average 1/19/2010 1/26/2010 2/2/2010 2/9/2010 2/16/2010 2/23/2010 3/2/2010 3/9/2010 3/16/2010 3/23/2010 3/30/2010 4/6/2010 below LT average P/E multiples also 4/13/2010 4/20/2010 4/27/2010 5/4/2010 5/11/2010 5/18/2010 5/25/2010 6/1/2010 6/8/2010 6/15/2010 20 19 18 18 19 19 19 19 20 20 19 18 19 19 20 21 24 24 25 25 26 27 29 27 30 32 33 31 34 34 35 36 38 39 39 39 40 40 41 42 40 40 40 39 38 38 34 33 32 35 35 35 36 35 35 33 35 32 34 33 www.mackieresearch.com
  10. 10. 10 - 5.0 10.0 15.0 20.0 25.0 # Companies 2 Infrastructure 2 Music 7 Social Networking 1 Learning 5 Diversified 1 Vertical Communities 4 Mobile 3 SMS/Voice 6 Marketing Gaming 21 1 Search 1 Collaboration EV/Revenue 9 Media 3 Advertising 1 Podcasting 1 Video 2 Internet Retail 3 Enterprise 2 Dating 1 Financial Services 1 Virtual World - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Average Valuation – by Sector # Companies 1 Mobile 2 Enterprise 5 Diversified 2 Internet Retail 6 Media 1 Collaboration 5 Social Networking EV/EBITDA Gaming 14 3 Marketing 1 Dating 1 Advertising www.mackieresearch.com
  11. 11. 11 0. 0 5. 0 10. 0 15. 0 20. 0 25. 0 30. 0 35. 0 40. 0 45. 0 50. 0 NeXplore C orporation 45.2 Worlds .c om Inc. 33.0 B right T hings plc 29.2 S pectrumDNA, Inc . 23.7 Source: CapitalIQ MO K O . mobi Limited 17.9 T enc ent H oldings L td. 15.6 G eoS entric O y j 15.2 P aid Inc. 12.7 B ey ond C ommerc e, Inc. 11.4 G ree, Inc. 10.1 C hines e G amer International L ingo Media C orporation 9.69.5 Dena C o. L td. T rans G aming, Inc. 7.9 7.6 7.4 DigitalP os t Interactiv e, Inc. HU G H E S T elematic s , Inc . Ac celeriz e New Media, Inc . 5.5 5.3 WebMediaB rands Inc F luid Mus ic C anada, Inc. C hangyou. com Limited S K C ommunic ations C o. , Ltd. 4.84.74.4 4.1 3.8 T aleo C orp. Mix i, Inc. is eemedia Inc. K ings oft C orporation Limited Wiz z ard S oftware C orporation F rogs ter Interac tiv e P ic tures AG 3.53.23.2 3.13.0 eP ro Ltd. EV/Revenue Ranking U O MO Media, Inc O pen T ex t C orp. NE O WIZ G ames C orporation Modern T imes G roup Mtg AB P NI Digital Media Inc. S ohu.c om Inc. XING AG V elti P lc Webz en Inc . S c ore Media Inc. 2.82.62.62.42.32.22.22.12.12.12.0 S hutterfly , Inc . V alueC lick , Inc. G ungHo O nline E ntertainment, Inc. U nilav a C orporation My riad G roup AG P latforma Mediowa P oint G roup S . A. Y D O nline C orp. NeXplore has highest S park Network s , Inc. NeuLion Inc orporated revenue multiple at 45.2x H anbitS oft, Inc . G amania Digital E ntertainment C o., Ltd. H utc his on T elecommunic ations H ong S NAP Interac tive, Inc . O riented Media G roup B erhad 1.9 1.9 1.8 1.8 1.7 1.7 1.5 1.5 1.5 1.51.4 1.4 1.4 1.3 1.3 infoG R O U P , Inc . O AO R B C Information S ys tems C ornerWorld C orporation Internet G roup S A T he New Y ork T imes C ompany AQ Interactive, Inc. T heS treet.c om, Inc . IAC /InterActiv eC orp. NetDragon WebS oft, Inc. United O nline, Inc . Y nk K orea Inc . C DC C orp. Unis erv e C ommunications C orp. AO L, Inc . P oints International L td. DADA S pA G igaMedia L td. G lu Mobile, Inc . 1.0 1.0 1.0 0.90.80.80.80.80.80.80.8 0.70.70.70.60.60.60.6 Northgate T echnologies Limited O penwav e S y s tems Inc . T ree. C om, Inc. Actoz S oft C o. , Ltd. C y berplex Inc. J umbuc k E ntertainment L imited R ealNetwork s Inc. G ameO n C o Ltd. As k net AG L ook S mart, L td. 0.40.40.30.30.30.20.20.10.0 www.mackieresearch.com
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