0
Web 2.0 Weekly
                                                     “AOL Sells Bebo For Massive Loss”
                    ...
Key Developments (past week)
    Deals (M&A, Finance) – Bebo a Disastrous Investment for AOL
     AOL is reported to have ...
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
                  Flat
       ...
7
                         Source: CapitalIQ
                                                                             ...
8
                         Source: CapitalIQ
                                                                             ...
9
                         Source: CapitalIQ
                                                                             ...
10
                                                                  -
                                                   ...
Average EV/EBITDA – by Sector

          50.0

                    45.0
          45.0


          40.0


          35.0

...
Average P/E – by Sector

          100.0

                         91.3
           90.0


           80.0


           70....
13
                                                                                     0.0
                              ...
14
                                                                                                0.0
                   ...
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"
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Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss"

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Deals (M&A, Finance)
AOL is reported to have sold Bebo, the UK-based social network it bought just two years ago for $850 mm, to private equity firm Criterion Partners for under $10 mm. Based on our calculations, AOL paid the equivalent of $38 per Unique Visitor (UV) for Bebo, and sold it for under $1 per UV.

Positive price performance
The Web 2.0 public company universe rose again this week, with 60% of companies seeing their market cap rise vs. 33% falling and 7% flat.

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Transcript of "Web 2.0 Weekly - June 22, 2010: "AOL Sells Bebo for Massive Loss""

  1. 1. Web 2.0 Weekly “AOL Sells Bebo For Massive Loss” June 22, 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) – Bebo a Disastrous Investment for AOL AOL is reported to have sold Bebo, the UK-based social network it bought just two years ago for $850 mm, to private equity firm Criterion Partners for under $10 mm. Based on our calculations, AOL paid the equivalent of $38 per Unique Visitor (UV) for Bebo, and sold it for under $1 per UV. Financial Results/Guidance/Partnerships/Product Multiplied Media (TSXV:MMC) announced it would be adding Telus Live Agents to its popular location-based search application, Poynt Mobile Data Corp. (OTCBB:MBYL) reported unaudited earnings results for the third quarter and nine months ended April 30, 2010. For the quarter, the company has reported net loss of $24,096 compared to $20,504 for the same period a year ago. For the nine months, the company has reported net loss of $137,531 compared to $129,675 for the same period a year ago. Net cash used in operations was $84,802 compared to $69,666 for the same period a year ago. 2 www.mackieresearch.com
  3. 3. Public Company Data 3 www.mackieresearch.com
  4. 4. Aggregate Public Data Web 2.0 Public Companies Total Median Max Min # Companies 101 - - - Market Cap (US$ mm) 77,334.7 73.1 30,367.3 1.2 Revenue (US$ mm) 23,508.7 56.9 3,057.7 0.0 1 Year revenue growth 5.7% 8961.6% -100.0% EBITDA as % of revenue - 13.4% 63.1% -63.7% Net cash (US$ mm) 9,036.9 2.3 1,835.9 -670.8 TEV/Revenue - 2.0x 37.2x 0.0x TEV/EBITDA - 8.8x 45.0x 0.6x P/E - 17.0x 91.3x 0.0x Relative to 52 week high -38.4% -1.8% -95.6% Source: CapitalIQ 4 www.mackieresearch.com
  5. 5. 5 0 5 10 15 20 25 30 Gaming 28 Social Networking 16 Media 10 8 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 Hong Kong Germany Poland Australia United Kingdom By Country Italy Finland Sweden India Russia Malaysia Switzerland www.mackieresearch.com
  6. 6. Valuation Dashboard – 1 Week Market Cap EV/Revenue Flat 7% Falling Flat 44% 1% Falling 33% Rising 60% Rising 55% EV/EBITDA P/E Flat Flat 2% 0% Falling Falling 33% 35% Rising 63% Rising 67% 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 5/4/2009 5/11/2009 5/18/2009 5/25/2009 6/1/2009 6/8/2009 6/15/2009 6/22/2009 6/29/2009 7/6/2009 7/13/2009 7/20/2009 7/27/2009 8/3/2009 8/10/2009 8/17/2009 Median EV/Revenue 8/24/2009 8/31/2009 9/7/2009 9/14/2009 9/21/2009 9/28/2009 10/5/2009 10/12/2009 10/19/2009 10/26/2009 11/2/2009 Median 11/9/2009 11/16/2009 11/23/2009 11/30/2009 12/7/2009 12/14/2009 12/21/2009 12/28/2009 1/4/2010 1/11/2010 Long-term average 1/18/2010 1/25/2010 2/1/2010 2/8/2010 2/15/2010 2/22/2010 3/1/2010 3/8/2010 3/15/2010 3/22/2010 3/29/2010 4/5/2010 but remain well increase slightly 4/12/2010 below LT average Revenue multiples 4/19/2010 4/26/2010 5/3/2010 5/10/2010 5/17/2010 5/24/2010 5/31/2010 6/7/2010 6/14/2010 6/21/2010 394040404141404343454647474747485051515050535656606161646666676564667071717274736871737372747679808280818081828286838584 www.mackieresearch.com
  8. 8. 8 Source: CapitalIQ Multiple (x) # companies 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 5/4/2009 5/11/2009 5/18/2009 5/25/2009 6/1/2009 6/8/2009 6/15/2009 6/22/2009 6/29/2009 7/6/2009 7/13/2009 7/20/2009 7/27/2009 8/3/2009 Median EV/EBITDA 8/10/2009 8/17/2009 8/24/2009 8/31/2009 9/7/2009 9/14/2009 9/21/2009 9/28/2009 10/5/2009 10/12/2009 10/19/2009 10/26/2009 11/2/2009 Median 11/9/2009 11/16/2009 11/23/2009 11/30/2009 12/7/2009 12/14/2009 12/21/2009 12/28/2009 1/4/2010 1/11/2010 1/18/2010 Long-term average 1/25/2010 2/1/2010 2/8/2010 2/15/2010 2/22/2010 3/1/2010 3/8/2010 3/15/2010 3/22/2010 3/29/2010 4/5/2010 EV/EBITDA multiples 4/12/2010 4/19/2010 4/26/2010 increase slightly but remain depressed below LT average 5/3/2010 5/10/2010 5/17/2010 5/24/2010 5/31/2010 6/7/2010 6/14/2010 6/21/2010 2022 2223 23 2222 2324 2322 2424 2626 26 2626 2526 2728 3129 33 3536 3842 3940 3840 4139 39 3942 4342 4143 4343 45 4347 4545 5151 5052 5253 51 5249 5251 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 5/4/2009 5/11/2009 5/18/2009 Median P/E 5/25/2009 6/1/2009 6/8/2009 6/15/2009 6/22/2009 6/29/2009 7/6/2009 7/13/2009 7/20/2009 7/27/2009 8/3/2009 8/10/2009 8/17/2009 8/24/2009 8/31/2009 9/7/2009 9/14/2009 9/21/2009 9/28/2009 10/5/2009 10/12/2009 10/19/2009 10/26/2009 11/2/2009 Median 11/9/2009 11/16/2009 11/23/2009 11/30/2009 12/7/2009 12/14/2009 12/21/2009 12/28/2009 1/4/2010 1/11/2010 1/18/2010 Long-term average 1/25/2010 2/1/2010 2/8/2010 2/15/2010 2/22/2010 3/1/2010 average 3/8/2010 3/15/2010 3/22/2010 3/29/2010 4/5/2010 but also are below LT P/E multiples increase 4/12/2010 4/19/2010 4/26/2010 5/3/2010 5/10/2010 5/17/2010 5/24/2010 5/31/2010 6/7/2010 6/14/2010 6/21/2010 1919 1818 19 1919 1920 1918 1919 1920 21 2424 2525 2627 2727 31 3233 3133 3335 3538 3939 39 3941 4142 4040 4038 37 3834 3332 3535 3535 3535 35 3531 3433 www.mackieresearch.com
  10. 10. 10 - 5.0 10.0 15.0 20.0 25.0 30.0 # Companies 1 Virtual World 26.5 2 Infrastructure 10.1 1 Learning 9.7 8 Social Networking 5.7 2 Music 4.8 1 Vertical Communities 4.7 1 Search 4.2 Gaming 21 4.0 6 Diversified 3.7 4 Mobile 3.6 3 SMS/Voice 3.5 6 Marketing 3.1 Average EV/Revenue – by Sector 1 Podcasting 2.8 9 Media 2.6 1 Collaboration 2.5 3 Advertising 2.3 2 Internet Retail 2.0 3 Enterprise 1.8 1 Video 1.8 2 Dating 1.3 1 Financial Services 0.4 www.mackieresearch.com
  11. 11. Average EV/EBITDA – by Sector 50.0 45.0 45.0 40.0 35.0 30.0 25.0 20.0 17.6 15.8 15.0 11.7 11.6 11.5 11.2 9.8 9.5 10.0 9.0 7.4 5.0 - Diversified Advertising Internet Retail Search Enterprise Mobile Gaming Social Networking Media Collaboration Dating # Companies 1 2 2 5 2 14 6 1 6 1 1 11 www.mackieresearch.com
  12. 12. Average P/E – by Sector 100.0 91.3 90.0 80.0 70.0 60.0 54.2 50.0 39.3 40.0 29.7 30.0 25.8 19.9 20.0 15.3 14.3 13.3 10.0 - Internet Retail Enterprise Collaboration Marketing Social Diversified Advertising Media Gaming Networking 2 3 1 6 16 8 3 10 28 # Companies 12 www.mackieresearch.com
  13. 13. 13 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 37 SocialGO PLC Source: CapitalIQ 27 Worlds.com Inc. 19 SpectrumDNA, Inc. 16 Tencent Holdings Ltd. Beyond Commerce, Inc. MOKO.mobi Limited 13 13 13 Paid Inc. Gree, Inc. 11 11 GeoSentric Oyj Chinese Gamer International 10 10 Lingo Media Corporation 9 TransGaming, Inc. Dena Co. Ltd. Fluid Music Canada, Inc. 8 7 7 DigitalPost Interactive, Inc. 6 HUGHES Telematics, Inc. Accelerize New Media, Inc. 5 5 WebMediaBrands Inc Changyou.com Limited SK Communications Co., Ltd. 4 4 4 Taleo Corp. Mixi, Inc. 4 3 Kingsoft Corporation Limited Frogster Interactive Pictures AG iseemedia Inc. Wizzard Software Corporation 3 3 3 3 ePro Ltd. Open Text Corp. EV/Revenue Ranking NEOWIZ Games Corporation Modern Times Group Mtg AB Sohu.com Inc. UOMO Media, Inc XING AG Velti Plc Unilava Corporation PNI Digital Media Inc. Score Media Inc. Shutterfly, Inc. ValueClick, Inc. Webzen Inc. 2 2 2 2 2 2 2 2 2 2 2 2 2 2 GungHo Online Entertainment, Inc. Myriad Group AG NeuLion Incorporated Platforma Mediowa Point Group S.A. HanbitSoft, Inc. YD Online Corp. Spark Networks, Inc. SocialGo has highest Gamania Digital Entertainment Co., Ltd. revenue multiple at 37x 2 2 2 2 2 2 2 1 Hutchison Telecommunications Hong Kong Holdings Ltd. infoGROUP, Inc. Oriented Media Group Berhad SNAP Interactive, Inc. OAO RBC Information Systems NetDragon WebSoft, Inc. CornerWorld Corporation Internet Group SA The New York Times Company IAC/InterActiveCorp. TheStreet.com, Inc. Ynk Korea Inc. AQ Interactive, Inc. Points International Ltd. Cyberplex Inc. CDC Corp. United Online, Inc. 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 AOL, Inc. Uniserve Communications Corp. DADA SpA Northgate Technologies Limited Glu Mobile, Inc. GigaMedia Ltd. Actoz Soft Co., Ltd. Tree.Com, Inc. Openwave Systems Inc. GameOn Co Ltd. RealNetworks Inc. 1 1 1 1 1 0 0 0 0 0 0 Jumbuck Entertainment Limited Asknet AG LookSmart, Ltd. 0 0 0 Dolphin Digital Media, Inc. www.mackieresearch.com
  14. 14. 14 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 Source: CapitalIQ SK Communications Co., Ltd. 45.0 HanbitSoft, Inc. 35.3 Tencent Holdings Ltd. 30.3 Taleo Corp. 28.4 Frogster Interactive Pictures AG Chinese Gamer International Gree, Inc. 19.819.419.2 Myriad Group AG 17.8 Modern Times Group Mtg AB 16.7 Dena Co. Ltd. 16.1 Mixi, Inc. Shutterfly, Inc. 15.414.9 TheStreet.com, Inc. Openwave Systems Inc. 14.213.7 EV/EBITDA Ranking Score Media Inc. YD Online Corp. 12.812.6 AQ Interactive, Inc. 12.4 IAC/InterActiveCorp. Cyberplex Inc. 10.5 9.8 Platforma Mediowa Point Group S.A. Gamania Digital Entertainment Co., Ltd. Open Text Corp. GungHo Online Entertainment, Inc. 9.3 9.0 9.0 8.7 the group at 45.0x NEOWIZ Games Corporation Velti Plc SK Communications leads XING AG PNI Digital Media Inc. DADA SpA Kingsoft Corporation Limited 8.4 8.3 8.3 8.2 8.1 7.9 Uniserve Communications Corp. Spark Networks, Inc. ValueClick, Inc. Changyou.com Limited CDC Corp. NetDragon WebSoft, Inc. infoGROUP, Inc. 7.4 7.4 7.1 7.0 6.8 6.7 6.7 Hutchison Telecommunications Hong Kong Holdings Ltd. The New York Times Company Sohu.com Inc. 5.6 5.6 5.3 United Online, Inc. 3.8 Actoz Soft Co., Ltd. AOL, Inc. 2.5 2.3 GameOn Co Ltd. Jumbuck Entertainment Limited 1.3 0.6 www.mackieresearch.com Excluding EV/EBITDA > 100x
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