1. SOFTWARE & SERVICES 14 JULY 2009 DAVID SHORE, CFA, MBA
416.860.6784 WEB 2.O WEEKLY [email protected] Arun
Thomas (Associate) 416.860.7666 PANDO RA RAISES $35 MILLION POST RO
YALTY AG REEMENT N EW R O YA L T Y AG R E EM E NT F OR W E B CA ST
IN G A ND C O P YR IG HT F IR MS SoundExchange, a non-profit
royalty collecting organization associated with the Recording
Industry Association of America (RIAA), agreed this past week to a
new deal regarding royalty rates for webcasting. Under the new
agreement, large commercial webcasters will pay up to 25% of their
revenue to copyright holders well below the 70% that could have
been imposed under an earlier deal. W hile the deal was initially
agreed to by three smaller Internet radio webcasters, Pandora
Media, the third largest radio site (according to Alexa), also
indicated that it would sign on to the agreement. Online Media
companies lead financing: Two online media companies, Pandora
(Internet Radio) and QuickPlay (Mobile Video), have secured the
largest financing transactions thus far in July ($35 million and
$12 million, respectively). Total capital raised so far in July is
$66.1 million through eight transactions, averaging $8.3 million
per transaction. June closed with $180 million in financing on 36
transactions. The averages for the months of May (excluding the
Facebook transaction) and June were $6.4 million and $4.7 million,
respectively. Financing Activity Last Three Months 200.0 9.0 8.3
180.0 8.0 160.0 7.0 6.4 140.0 6.0 120.0 5.0 (US$m) (US$m) 4.7 100.0
4.0 80.0 3.0 60.0 2.0 40.0 20.0 1.0 0.0 0.0 May-09 (excl FB) Jun-09
Jul-09 Total Average A w eak price performance week: The companies
in our universe had weak stock price performances over the past
week (for stocks with prices greater than $1) (Figure 6), with 30
companies showing negative returns on the week. Gravity
(NasdaqGM:GRVY) led the group with a 33% return, while GungHo
(3765-OSE) had the worst return, dropping 26.4% in the week. 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. Page 2 THE WEB 2.0 UNIVERSE Ninety two public Web 2.0
companies identified: Our W eb 2.0 universe contains 92 companies,
with a combined market cap of ~$52.5 billion (Figure 1). The
average market cap for the group is ~$584 million (but a median of
only $50.0 million), with average trailing revenue of $153.8
million (median $53.6 million). The companies are also generally
profitable, with a median EBITDA margin of 13.2%. On a valuation
basis, the overall average is 5.3x trailing revenue (median 1.6x)
and 9.2x trailing EBITDA (median 9.2x). Twenty of the companies
have more than 500 employees. C omparable C ompany Analys is >
Web 2.0 Trading C urrent US D Market US D L TM Total US D L TM
Total E B ITDA TE V/L TM TE V/L TM C ompany Name L TM as of Ticker
E xc hange C urrency HQ P rice C ap ($m) R ev ($m) E B ITDA ($m) %
R evenue E B ITDA E mployees Accelerize New Media , Inc. 3/31/2009
AC LZ OT C B B US D United S ta tes 0. 55 15. 2 4. 1 (4.4) NM 4. 9x
- 11 Actoz S oft C o. , Ltd. 3/31/2009 A052790 K OS E KR W S outh K
orea 25,800 169. 8 88. 2 19. 2 21. 7% 1. 6x 7. 4x NA AQ
Interactive, Inc. 3/31/2009 3838 TS E JPY J a pan 55,200 32. 4 66.
8 4.2 6.3% 0. 0x 0. 6x NA As s ociated Media Holdings Inc.
6/30/2007 AS MH OT C P K US D United S ta tes 0. 02 0.9 0. 1 (2.3)
NM 19.2x - 3 B igs tring C orp. 3/31/2009 BS GC OT C B B US D
United S ta tes 0. 04 2.1 0. 1 (2.0) NM 48.3x - 4 B eta wave C
orporation 3/31/2009 B W AV OT C B B US D United S ta tes 0. 09 2.6
8. 4 (12. 6) NM - - 53 B eyond C ommerce, Inc. 3/31/2009 B Y OC OT
C B B US D United S ta tes 0. 40 18. 0 7. 1 (9.5) NM 3. 2x - 69 B
right T hings plc 9/30/2008 AIM: B G T AIM GBP United K ingdom 0.
01 4.1 0. 3 (1.8) NM 15.2x - 9 B roa dW ebAs ia Inc. 9/30/2008 BWBA
OT C P K US D United S ta tes 0. 23 19. 5 0. 0 (4.6) NM - - 46 C DC
C orp. 3/31/2009 C HIN. A Na s daqG S US D Hong K ong 1. 42 150. 7
389.9 30. 8 7.9% 0. 4x 5. 3x 2, 227 C hangyou. com L imited
3/31/2009 C Y OU Na s daqG S US D C hina 37. 61 2,068. 6 222.5
135.1 60. 7% 8. 5x 13. 9x 628 C hina G a teway C orporation
9/30/2008 CGWY OT C P K US D United S ta tes 0. 02 0.3 6. 7 (6.6)
-98. 9% 0. 0x - 37 C hines e G amer Interna tiona l 3/31/2009 G T S
M: 3083 GTS M TWD T aiwa n 430 1,089. 6 55. 7 31. 2 56. 0% 18.4x
32. 9x NA C LIC K E R Inc. 2/28/2009 C LK Z OT C B B US D United S
ta tes 0. 02 1.3 7. 2 2.4 34. 1% 0. 1x 0. 3x 22 C ornerW orld C
orpora tion 1/31/2009 CWR L OT C B B US D United S ta tes 0. 06 3.9
1. 3 NM NM 4. 1x - NA C yberplex Inc. 3/31/2009 T S X :C X TS X C
AD C anada 2 88. 9 70. 3 7.3 10. 3% 1. 2x 11. 7x NA DADA S pA
3/31/2009 C M: DA CM E UR Italy 6. 15 139. 1 234.4 34. 3 14. 6% 0.
8x 5. 5x 578 DXN Holdings B hd 2/28/2009 DX N K LS E MY R Ma la ys
ia 0. 35 22. 4 76. 8 10. 6 13. 8% 0. 5x 3. 4x 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. 3/31/2009 DG LP
OT C B B US D United S ta tes 0. 04 3.0 0. 7 (2.6) NM 6. 3x - 7
DigitalT own, Inc. 2/28/2009 DG T W OT C B B US D United S ta tes
2. 00 54. 2 NM (3.0) NM - - 3 Dolphin Digital Media , Inc.
3/31/2009 DP DM OT C B B US D United S ta tes 0. 45 23. 3 0. 8
(3.7) NM 31.3x - NA E olith C o. Ltd. 12/31/2008 A041060 K OS E KR
W S outh K orea 755 41. 8 14. 1 (3.3) -23. 6% 3. 1x - NA E xtens
ions , Inc. 3/31/2009 E XT I OT C P K US D United S ta tes 0. 10
4.4 NM NM NM - - 2 F luid Mus ic C a nada , Inc. 3/31/2009 T S X :F
MN TS X C AD United S ta tes 0. 65 29. 5 5. 0 (6.9) NM 4. 1x - NA F
rogs ter Interactive P ictures AG 12/31/2008 FRG XT R A E UR G
ermany 11. 50 37. 7 3. 2 (6.1) NM 11.2x - NA G ama nia Digita l E
ntertainment C o., Ltd. 3/31/2009 6180 GTS M TWD T aiwa n 55. 20
252. 6 124.9 20. 7 16. 6% 1. 8x 11. 1x NA G ameOn C o Ltd.
3/31/2009 3812 TS E JPY J a pan 102,000 106. 6 79. 5 18. 8 23. 7%
0. 5x 2. 3x NA G eoS entric O yj 3/31/2009 G E O 1V HL S E E UR F
inland 0. 04 50. 1 5. 9 (15. 3) NM 7. 8x - 108 G iant Interactive G
roup, Inc. 3/31/2009 GA NY S E US D C hina 8 1,705. 2 219.0 NM NM -
- 1, 570 G iga Media Ltd. 3/31/2009 G IG M Na s daqG S US D T aiwa
n 5. 42 295. 5 183.6 NM NM 1. 2x - 751 G ravity C o., Ltd 3/31/2009
GR VY Na s daqG M US D S outh K orea 1. 45 40. 3 43. 7 12. 0 27. 5%
- - 469 G ree, Inc. 6/30/2008 T S E : 3632 TS E JPY J a pan 6,450
1,557. 1 31. 8 11. 4 36. 0% 46.3x - NA G ungHo O nline E
ntertainment, Inc. 3/31/2009 3765 OS E JPY J a pan 185,500 229. 7
111.4 20. 0 18. 0% 1. 8x 10. 0x NA HanbitS oft, Inc. 3/31/2009
A047080 K OS E KR W S outh K orea 4,325 72. 4 52. 7 (14. 1) -26. 8%
1. 1x - NA IAC /InterActiveC orp. 3/31/2009 IAC I Na s daqG S US D
United S ta tes 16. 11 2,431. 3 1, 406. 4 42. 6 3.0% 0. 4x 12. 8x
3, 200 IAS E nergy, Inc. 1/31/2009 IAS C . A OT C B B US D C anada
0. 15 10. 5 0. 0 (0.8) NM - - NA is eemedia Inc. 3/31/2009 IE E T S
XV C AD C anada 0. 10 4.4 1. 5 (4.7) NM 2. 4x - NA J umbuck E
nterta inment P ty Ltd. 12/31/2008 AS X :J MB AS X AUD Aus tralia
0. 38 14. 6 13. 9 5.2 37. 2% 0. 7x 1. 9x 72 J umpT V Inc. 3/31/2009
T S X :J T V TS X C AD C anada 0. 70 68. 8 18. 1 (12. 0) -66. 6% 3.
2x - 237 K AB Dis tribution Inc. 3/31/2009 T S X :K AB TS X C AD C
anada 0. 63 76. 1 71. 1 8.5 11. 9% 1. 1x 9. 6x NA K ings oft C o.
Ltd. 3/31/2009 3888 S E HK HK D C hina 5. 47 766. 3 129.1 52. 0 40.
3% 5. 5x 13. 7x 2, 271 Lingo Media C orporation 3/31/2009 T S X V
:LM T S XV C AD C anada 1. 19 12. 8 0. 9 (1.5) NM 13.2x - NA LiveW
orld Inc. 3/31/2009 LVW D OT C P K US D United S ta tes 0 1.7 11. 4
(0.0) -0.4% 0. 1x - NA LookS mart, Ltd. 3/31/2009 L OO K Na s daqG
M US D United S ta tes 1. 14 19. 5 60. 7 (3.8) -6.3% - - 90
Magnitude Information S ys tems Inc. 3/31/2009 MAG Y OT C B B US D
United S ta tes 0. 01 4.1 0. 1 (3.1) NM - - 14 Mixi, Inc. 3/31/2009
2121 TS E JPY J a pan 605,000 1,005. 4 130.3 46. 2 35. 4% 6. 8x 19.
1x NA Modern T imes G roup Mtg AB 3/31/2009 MT G B OM SEK S weden
221. 00 1,841. 4 1, 702. 0 260.7 15. 3% 1. 4x 9. 2x 2, 969 MO K O
.mobi Limited 12/31/2008 MK B AS X AUD Aus tralia 0. 07 4.7 1. 1
(2.3) NM 3. 2x - NA Myriad G roup AG 12/31/2008 MY R N SWX C HF S
witzerland 4. 70 92. 2 40. 0 0.8 1.9% 2. 6x - 405 NE O W IZ G ames
C orpora tion 12/31/2008 A095660 K OS E KR W S outh K orea 31,000
249. 1 189.0 50. 8 26. 8% 1. 3x 4. 7x NA NetDragon W ebS oft, Inc.
3/31/2009 777 S E HK HK D C hina 5. 69 388. 0 87. 0 34. 4 39. 5% 2.
9x 7. 4x 2, 426 Neteas e. com Inc. 3/31/2009 NT E S Na s daqG S US
D C hina 35. 01 4,496. 3 470.6 305.9 65. 0% - - 3, 109 NeXplore C
orporation 9/30/2007 NX P C OT C P K US D United S ta tes 0. 58 32.
4 NM (4.9) NM - - 19 Ngi G roup Inc. 3/31/2009 2497 TS E JPY J a
pan 30,550 40. 9 95. 5 11. 5 12. 0% - - NA Northgate T echnologies
L imited 3/31/2009 590057 BSE INR India 29. 05 20. 7 114.3 (26. 8)
-23. 5% 0. 2x - NA O pen T ext C orp. 3/31/2009 OT E X Na s daqG S
US D C anada 36. 00 1,894. 4 782.6 199.2 25. 5% 2. 5x 9. 8x 3, 400
O penwave S ys tems Inc. 3/31/2009 OP W V Na s daqG S US D United S
ta tes 2. 29 190. 8 197.2 (2.1) -1.0% 0. 4x - 630 P erfect W orld C
o. , Ltd. 3/31/2009 PWRD Na s daqG S US D C hina 28. 78 1,399. 8
228.2 124.6 54. 6% 0. 2x 0. 4x 2, 096 P NI Digital Media Inc.
3/31/2009 T S X V :P N T S XV C AD C anada 1. 45 42. 8 18. 7 0.4
2.3% 2. 2x - NA Q uepa s a C orp. 3/31/2009 QP S A OT C B B US D
United S ta tes 1. 00 12. 7 0. 1 (10. 8) NM - - 74 O AO R B C
Information S ys tems 12/31/2007 R BCI R TS US D R us s ia 0. 75
104. 0 144.6 18. 9 13. 1% 0. 0x 0. 2x NA S handa Interactive E
nterta inment Ltd. 3/31/2009 S NDA Na s daqG S US D C hina 51. 81
3,459. 3 570.2 260.9 45. 8% 0. 0x 0. 1x 3, 124 S hutterfly, Inc.
3/31/2009 S FLY Na s daqG S US D United S ta tes 12. 00 302. 1
215.2 28. 3 13. 2% 1. 1x 8. 3x 514 S K C ommunications C o., Ltd.
12/31/2008 A066270 K OS E KR W S outh K orea 9,050 289. 6 175.7 11.
4 6.5% 1. 6x 25. 3x NA S NAP Interactive, Inc. 3/31/2009 S TVI OT C
B B US D United S ta tes 0. 45 4.9 3. 3 0.9 28. 0% 1. 0x 3. 7x 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 enures ,
Inc. 12/31/2008 S MV I OT C P K US D United S ta tes 0. 32 0.0 0. 1
(0.1) -60. 5% 0. 0x - NA S ocialwis e, Inc. 3/31/2009 S C LW OT C B
B US D United S ta tes 0. 80 34. 7 0. 0 (4.8) NM - - NA S ohu. com
Inc. 3/31/2009 S O HU Na s daqG S US D C hina 58. 92 2,254. 5 460.0
200.5 43. 6% 4. 1x 9. 4x 3, 197 S park Networks , Inc. 3/31/2009 L
OV AME X US D United S ta tes 2. 40 49. 4 54. 3 11. 8 21. 7% 0. 9x
4. 2x 183 S pectrumDNA, Inc. 3/31/2009 S P XA OT C B B US D United
S ta tes 0. 15 7.3 0. 1 (2.6) NM - - 7 T encent Holdings Ltd.
3/31/2009 700 S E HK HK D C hina 87. 05 20, 272.6 1, 203. 7 576.8
47. 9% 18.3x 38. 2x 6, 194 T he P arent C ompany 8/2/2008 K IDS . Q
OT C P K US D United S ta tes 0. 02 0.5 112.0 (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. 65
232. 0 249.9 84. 2 33. 7% - - NA T heS treet. com, Inc. 3/31/2009
TS CM Na s daqG M US D United S ta tes 2 61. 1 67. 0 1.9 2.9% - -
310 T ota l S port O nline AS 3/31/2006 T OS O O T C NO NO K Norway
0. 03 0.1 2. 1 (1.0) -50. 6% 4. 6x - 16 T ree.C om, Inc. 3/31/2009
TR E E Na s daqG M US D United S ta tes 9. 59 103. 5 215.6 (13. 3)
-6.2% 0. 4x - 700 Unis erve C ommunica tions C orp. 2/28/2009 T S X
V :US S T S XV C AD C anada 0. 07 1.5 22. 5 0.1 0.2% 0. 2x - NA
United O nline Inc. 3/31/2009 UNT D Na s daqG S US D United S ta
tes 7. 00 585. 1 811.2 177.3 21. 9% 1. 1x 4. 9x 1, 469 UOMO Media,
Inc 1/31/2009 UO MO OT C B B US D C anada 0 9.0 0. 6 (0.5) -78. 2%
14.7x - NA V alueC lick Inc. 3/31/2009 V C LK Na s daqG S US D
United S ta tes 10 901. 9 591.7 105.5 17. 8% 1. 3x 7. 6x 1, 189 V
OIS , Inc. 3/31/2009 V O IS OT C B B US D United S ta tes 0 8.3 0.
0 (1.1) NM - - 4 W ebzen Inc. 3/31/2009 W ZE N Na s daqG M US D S
outh K orea 3. 28 38. 9 22. 0 (0.5) -2.4% - - NA W izzard S oftwa
re C orporation 3/31/2009 W ZE AME X US D United S ta tes 0. 51 24.
4 5. 6 (5.3) -94. 5% 4. 6x - 110 W orlds . com Inc. 3/31/2009 W DDD
OT C B B US D United S ta tes 0. 15 7.9 0. 0 (0.8) NM - - 1 W oozyF
ly, Inc. 3/31/2009 W ZY F OT C B B US D United S ta tes 0. 15 2.6
NM NM NM - - NA 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 3/31/2009 O 1B C
XT R A E UR G ermany 30. 13 221. 6 52. 8 16. 5 31. 2% 3. 2x 10. 3x
239 Y eda ngO nline C orp. 12/31/2007 A052770 K OS E KR W S outh K
orea 7,900 94. 7 52. 3 11. 3 21. 6% 2. 0x 9. 3x NA Y nk K orea Inc.
12/31/2008 A023770 K OS E KR W S outh K orea 6,200 25. 3 10. 9 1.1
10. 5% - - NA ZipLocal Inc. 3/31/2009 T S X V :ZIP T S XV C AD C
anada 0. 01 0.3 2. 6 (2.0) -78. 3% 48.3x 38. 2x NA High 20, 272.6
1,702. 0 576. 8 65. 0% 48.3x 38. 2x 6, 194 Low 0.0 0. 0 -26.8 -98.
9% 0. 0x 0. 1x 1 Average 583.6 153.8 33.6 8.1% 5.3x 9.2x 870 Median
49. 7 53.6 0. 8 13. 2% 1. 6x 9. 2x 376 Figure 1. Web 2.0 Universe
Summary Source. Capital IQ
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 ) Online Media companies lead financing:
Two online media companies, Pandora (Internet Radio) and QuickPlay
(Mobile Video), have secured the largest financing transactions
thus far in July ($35 million and $12 million, respectively). Total
capital raised so far in July is $66.1 million through eight
transactions, averaging $8.3 million per transaction. June closed
with $180 million in financing on 36 transactions. The averages for
the months of May (excluding the Facebook transaction) and June
were $6.4 million and $4.7 million, respectively. Financing
Activity Last Three Months 200.0 9.0 8.3 180.0 8.0 160.0 7.0 6.4
140.0 6.0 120.0 5.0 (US$m) (US$m) 4.7 100.0 4.0 80.0 3.0 60.0 2.0
40.0 1.0 20.0 0.0 0.0 May-09 (excl FB) Jun-09 Jul-09 Total Average
Figure 2. Financings, Last Three Months Source. Company
reports
4. (US$m) 0.0 50.0 100.0 150.0 200.0 250.0 Facebook People
Media Source. Company reports AdLink Internet Media Pandora Media
StumbleUpon One Net Sugar Inc. Tumri Boku Cyberplex QuickPlay Media
Wimba Figure 3. Capital Market Activity, Last Three Months Grab
Networks Peer39 OpenX Imeem Goojet SAS EveryZing AdMeld Inc. beeTV
I Love Rewards WonderHill BlogHer Inc. Gist blueKiwi Software SA
Nokeena Metaversum financings, see Figures 23 and 24 (at end of
note). Fuhu Inc. Zoosk Sense Networks Azuki Systems Gather
MojoPages TimeBridge OLX DocuSign Taomee Animoto GameGround Nexage
StyleCaster Medialets RingRevenue TweetDeck Crowdcast YuMe
eRepublik Newser LLC ClickFuel Financing & M/A Summary - Last
Three Months Inigral AdEx Media GROU.PS Resonate Networks my6sense
Yapta OneTXT Cliqset VoxPop Mo'Minis CoTweet Glubble Picaboo
LiquidPlanner AdWhirl TodaCell Loop'd Network MashLogic People
Capital Jaxtr Jul-09 Jun-09 May-09 Page 4 its revenue from
advertising, indicated that it would be joining the new agreement
as well. For additional details on copyright holders reached
agreement with a group of webcasters regarding royalty rates.
Pandora, which derives most of Pandora raises $35 million: Pandora
had the largest raise over the last week, securing a $35 million
round. Recently,
5. Page 5 Social Network remains the most active sector in
dollars raised, while Ad Network remains the most active in number
of transactions: Following recent trends, Social Networks as a
sector saw the most activity in dollars raised ($240.5 million),
largely attributed to the $200 million investment by Digital Sky
Technologies in Facebook. However, it was the Ad Network sector
that saw the most transactions (13), raising $117.2 million (Figure
4). Capital Market Activity by Sector - Last Three Months 300.0
250.0 200.0 (US$m) 150.0 240.5 100.0 117.2 50.0 80.0 35.0 29.0 25.8
23.0 20.4 20.0 19.3 18.3 17.5 17.0 16.5 13.3 13.0 6.8 6.3 4.0 0.0
3.2 1.0 1.0 0.5 Comment/Reputation Mobile Payment Communities
Online Dating Gaming Mobile Enterprise Collaboration Media
Microblog Publishing Online Lending Music Blog Infrastructure
Search Mobile Ad Widget Social Networks Video Virtual World
Aggregation Ad Network Vertical # companies 11 13 1 1 1 5 2 3 3 6 3
5 3 3 2 1 1 1 1 1 1 1 1 Figure 4. Capital Market Activity, by
Sector, Last Three Months Source. Company reports
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 outpaces NASDAQ recovery:
Our W eb 2.0 index (market-cap weighted) essentially mirrored the
performance of the NASDAQ composite index from mid-2008 until
recently. However, the index has recently had a much stronger
recovery relative to the NASDAQ index (Figure 5). Web 2.0 Index
Price Performance 120 100 80 60 40 20 0 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 3/23/2009 4/6/2009 4/20/2009
5/4/2009 5/18/2009 6/1/2009 6/15/2009 6/29/2009 7/13/2009 ^COMP -
Share Pricing Index: Web 2.0 (Market Cap) Figure 5. Web 2.0 Price
Performance Source. Capital IQ
7. Page 7 A w eak price performance week: The companies in our
universe had weak stock price performances over the past week (for
stocks with prices greater than $1) (Figure 6), with 30 companies
showing negative returns on the week. Gravity (NasdaqGM:GRVY) led
the group with a 33% return, while GungHo (3765-OSE) had the worst
return, dropping 26.4% in the week. 1 Week P rice P erformance G
ravity Co., Ltd 33.0% United Online Inc. 12.0% V alueClick Inc.
4.7% Neteas e.com Inc. 3.2% A ctoz S oft Co., Ltd. 2.8% Tree.Com,
Inc. 2.8% Cy berplex Inc. 2.6% Mix i, Inc. 2.5% Openw ave S y s
tems Inc. 1.8% NetDra gon WebS oft, Inc. 0.9% S park Netw orks ,
Inc. 0.8% Open Tex t Corp. 0.5% X ING A G 0.3% S ohu.com Inc. 0.2%
Perf ect World Co., Ltd. 0.1% PNI Digital Media Inc. 0.0% My riad G
roup A G 0.0% Lingo Media Corporation 0.0% CDC Corp. 0.0% IA
C/InterA ctiveCorp. -0.2% TheS treet.com, Inc. -0.2% Modern Times
Group Mtg A B -0.5% Tencent Holdings Ltd. -0.6% Quepas a Corp.
-1.0% GigaMedia Ltd. -1.1% DA DA S pA -1.3% Frogs ter Interactive
Pictures A G -2.7% NEOWIZ G ames Corporation -3.6% Chines e G amer
International -3.6% S handa Interactive Entertainment -4.1% G iant
Interactive G roup, Inc. -4.3% Eolith Co. Ltd. -5.0% Changy ou.com
Limited -5.6% HanbitS oft, Inc. -6.4% K ings oft Co. Ltd. -6.5% G
amania Digital Entertainment Co., -6.9% The9 Limited -7.2% LookS
mart, Ltd. -7.3% Y nk K orea Inc. -7.3% S hutterfly , Inc. -8.0% S
K Communications Co., Ltd. -8.4% Webz en Inc. -9.1% G ameOn Co Ltd.
-9.7% Y edangOnline Corp. -12.1% G ree, Inc. -12.8% A Q
Interactive, Inc. -20.1% Ngi G roup Inc. -20.2% Northgate
Technologies Limited -20.7% G ungHo Online Entertainment, Inc.
-26.4% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% Figure 6.
1-Week Price Performance Source. Capital IQ
8. Page 8 INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW
PRODUCTS) K ey Developments C ompany Headline Notes J umbuck E
ntertainment Pty L td. Upda te to J umbuck E ntertainment P ty
Ltd.'s E quity As of J uly 6, 2009, J umbuck E ntertainment P ty
Ltd. ha s repurchas ed 87,750 s hares for a total cos t of AUD 0.
03 million under the program. (AS X: J MB ) B uyba ck on J uly 6,
2009 C hina E as tern Airlines C orp. L td. T encent Holdings Ltd.
T ea ms Up with C hina E a s tern T enpa y, an online pa yment pla
tform run by C hines e internet s ervices provider T encent
Holdings L td. has s igned a co-operation a greement (S E HK :
670); Tenc ent Holdings L td. Airlines C orp. Ltd with C hina E as
tern Airlines . Under the agreement, T enpa y a nd C hina E a s
tern will co-operate on online payment of a ir ticket booking and
(S E HK : 700) joint a ir ticket platform opera tions . T enpa y
will als o provide B 2B dis tribution a nd s ettlement s ervices
for travel bus ines s . C L IC K E R Inc . (OTC B B : C L K Z) F
ina ncial Media G roup Inc. will C hange its T icker to E ffective
J uly 08, 2009, F inancia l Media G roup Inc. will change its O T C
B B s tock ticker s ymbol to C L K Z from F NG P . C L K Z from F
NG P S pectrumDNA, Inc . (OTC B B : S P XA) S pectrumDNA Inc.
Appoints J eff Nola n to its B oard of S pectrumDNA Inc. a nnounced
the appointment of J eff Nola n, entrepreneur, venture capita lis t
and prolific s ocial media s tra tegis t, to its boa rd Directors
of directors . Mos t recently, Mr. Nola n wa s the V P C orpora te
Development a t News G ator T echnologies . During his tenure, Mr.
Nolan overs aw res tructuring of News G ator into enterpris e s
oftware a nd media bus ines s units operating independently of each
other. He als o worked to es tablis h brand lea ders hip for the
company in the widget and content s yndica tion market s pa ce. Mr.
Nolan brings to the S pectrumDNA boa rd a n extens ive ba ckground
in technology and Internet infras tructure a nd a ls o deep ma
rketing s kills . B eyond C ommerc e, Inc. B eyond C ommerce Inc. R
eports R evenue R es ults for the B eyond C ommerce Inc. reported
revenue res ults for the s econd quarter ended J une 30, 2009. F or
the period, the company reported tha t due (OTC B B : B YOC ) S
econd Quarter E nded J une 30, 2009 ; P rovides to the s trong
growth of its a dvertis ing and E -commerce divis ions $5. 3
million in revenues , up 8, 826% from the s econd qua rter 2008. R
evenue G uida nce for the T hird, F ourth Q ua rter and S econd
Half of F is ca l 2009 T he compa ny expects s trong revenue growth
throughout the ba lance of the fis ca l year. T he compa ny project
third and fourth qua rter revenues to exceed $27 million as they
were coming into their s tronges t s elling s eas on. J umbuck E
ntertainment Pty L td. Upda te to J umbuck E ntertainment P ty
Ltd.'s E quity As of J uly 7, 2009, J umbuck E ntertainment P ty
Ltd. ha s repurchas ed 95,250 s hares for a total cos t of AUD 0.
03 million under the program. (AS X: J MB ) B uyba ck on J uly 7,
2009 OAO R B C Information S ys tems OAO R B C Information S ys
tems Announces E xecutive O AO R B C Informa tion S ys tems a
nnounced tha t on J une 30, 2009, the B oard of Directors of the
compa ny appointed R B C co-founder (R TS : R B C I) Appointments G
erman K a plun, a s G eneral Director, effective J uly 1, 2009. O
wing to his appointment to the pos ition of R B C G eneral
Director, the boa rd a ls o cons idered the ques tion of reelecting
the cha irma n of the B oa rd of Directors . T he G eneral Director
of the R B C T V bus ines s cha nnel- Artyom Inutin, who ha s been
in cha rge of R B C 's media bus ines s for more than 10 yea rs ,
wa s elected a s a new chairman of the B oard of Directors of the
company. DigitalFX International, Inc . Digita lF X International
Inc. Appoints Allen La ngford as O n J uly 1, 2009, Digita lF X
Interna tional Inc. appointed Allen La ngford, age 49, a s its new
C hief O pera ting O fficer. Mr. L angford has over (OTC B B : DG
FX) C hief Operating Officer twenty years of ma na gement
experience in the technology indus try, including three yea rs as
divis iona l E xecutive V ice P res ident of P P G Indus tries Inc.
and various executive level roles in other compa nies . S ince O
ctober 15, 2008, Mr. La ngford ha s s erved the compa ny as a n
independent contra ctor. P rior to his a ppointment as the compa
ny's C hief Opera ting Officer Mr. L angford wa s als o a direct s
elling 'affilia te' of V Mdirect, L . L. C . NetDragon WebS oft,
Inc. (S E HK : 777) NetDragon La unches B eta T es t of Heroes of
Might and NetDragon W ebS oft Inc. a nnounced that the beta tes t
vers ion of the 2. 5D MMOR P G Heroes of Might and Ma gic Online: G
old E dition will be Ma gic O nline: G old E dition officia lly la
unched at 15: 00 (C hina S tanda rd T ime) on J uly 8th. Heroes of
Might a nd Magic Online: G old E dition is a product of s
ignificance for NetDragon, a s it repres ents the culmination of
years of itera tive des ign proces s es , a nd bala nces the des
ires of gamers with the cla s s ic s trategic game-play elements of
Ubis ofts legendary Heroes of Might & Magic fra nchis e.
Gravity C o., L td (Nas daqGM: G R VY) G ravity C o. Ltd. R eports
Unaudited C ons olidated G ra vity C o. L td. reported una udited
cons olida ted earnings res ults for the firs t quarter ended Ma
rch 31, 2009. T he company reported E a rnings R es ults for the F
irs t Q ua rter E nded Ma rch 31, revenues for the firs t qua rter
ended Ma rch 31, 2009 wa s K R W 16, 607 million ($12, 991,000),
repres enting a 9. 27% increa s e from K R W 2009 15, 198 million
($11,889,000) for the fourth quarter ended December 31, 2008 a nd a
32.55% increas e from K R W 12, 529 million ($9, 801, 000) for the
firs t quarter ended March 31, 2008. Income before income tax
expens es and others was K R W 6, 997 million ($5, 474, 000) for
the firs t qua rter of 2009, which repres ents a 76.03% increas e
compa red with K R W 3,975 million ($3, 110,000) a nd a 2, 616. 91%
increa s e yea r on year compared with a los s of K R W 278 million
($217,000). Net income wa s K R W 5, 253 million ($4, 109, 000) for
the firs t qua rter of 2009 compared with a net income of K R W
1,654 million ($1, 294, 000) for the fourth quarter of 2008 and a
net los s of K R W 4,513 million ($3,531, 000) for the firs t qua
rter of 2008. Operating income wa s K R W 5, 513 million agains t
los s of K R W 1,686 million for the s a me period a year a go.
Income before minority interes t a nd equity in los s of rela ted
joint venture wa s K R W 5, 592 million a gains t los s of K R W
1,127 million for the s Open Text C orp. (Nas daqGS : OTE X) Open T
ext C orp. Announces Availa bility of Open T ext O pen T ext C orp.
announced the immedia te a vaila bility of Open T ext W eb S
olutions 10, the la tes t relea s e of O pen T ext's W eb C ontent
W eb S olutions 10 Management (W C M) s oftware. T he new releas e
a llows orga niza tions to intelligently ma na ge a nd deliver a
broad s et of corporate informa tion to us ers over the W eb, and
fea tures extens ive us a bility upgra des , a new technology
founda tion, and deeper and more comprehens ive integration with
the Open T ext E C M S uite a nd the S AP NetW ea ver(R ) P orta l
component. T he role of W C M has s ignificantly expa nded from a
place to s tore a nd publis h externa l-fa cing content to a vital
tool in helping to s upport orga niza tiona l bus ines s goals in s
uch a reas as s ales a nd cus tomer s upport. T his means tha t W C
M mus t deliver a highly pers onal cus tomer experience a nd be a
ble to tap into content hous ed in many different enterpris e s ys
tems . And a s digital as s ets ha ve become les s expens ive to
crea te, companies need better wa ys to ma na ge rich media s uch
as audio a nd video.
9. Page 9 K ey Developments C ompany Headline Notes K ings oft
C o. L td. (S E HK : 3888) An unknown s hareholder entered into a
term s heet to s ell An unknown s ha reholder entered into a term s
heet to s ell 7. 81% s take in K ings oft C o. L td. (S E HK :
3888) on J uly 9, 2009. HS B C is acting a s 7.81% s ta ke in K
ings oft C o. L td. (S E HK : 3888). book runner for the s ale.
VOIS , Inc. (OTC B B : VOIS ) V OIS , Inc., 100 : 1, S tock S plit
or S ignificant S tock V OIS , Inc., 100 : 1, S tock S plit or S
ignificant S tock Dividend, J ul-09-2009 Dividend, J ul-09-2009
Openwave S ys tems Inc. O penwave S ys tems Inc. Appoints J ohn G
iere a s S enior Openwave S ys tems Inc. a nnounced the a
ppointment of J ohn G iere as s enior vice pres ident, products and
marketing, effective J uly 8, 2009. (Nas daqG S : OPW V) V ice P
res ident of P roducts and Marketing G iere brings more than 20
years of mana gement, marketing a nd bus ines s development
experience a t compa nies in the telecommunica tions indus try,
including Alcatel Lucent and E rics s on. G iere will report to the
company's C E O , K en Denman. P rior to O penwave, J ohn s erved
as chief marketing officer a t Alcatel Lucent. He als o held a
number of s enior marketing roles at E rics s on, including vice
pres ident, new bus ines s development; vice pres ident, global
branding a nd ma rketing; a nd executive vice pres ident, bus ines
s development a nd s ales s upport. J ohn currently s erves on the
T elecommunications Indus try As s ociation (T IA) E xecutive B
oard. He holds an MB A from the Univers ity of Maryla nd a nd a B S
degree from G eorgetown Univers ity. B eyond C ommerc e, Inc. B
eyond C ommerce Announces LocalAdL ink's E xpans ion B eyond C
ommerce Inc. a nnounced the P re-L aunch of LocalAdL ink into the C
a nadian ma rket. LocalAdL ink ha s its firs t meeting s cheduled
in (OTC B B : B YOC ) Into C a na da C anada on J uly 25th in T
oronto. T o regis ter for this introductory meeting. LocalAdL ink
is an online advertis ing s ervice tha t enables loca l bus ines s
es to reach local cus tomers . T he cus tomer facing W eb s ite L
ocalAdLink. com is a local s earch directory and acts as the centra
l hub for the Loca lAdL ink technology. W hen a cus tomer vis its
LocalAdL ink. com, the proprieta ry geo-targeting technology
identifies their location a nd s erves up loca l bus ines s es in
their zip code. O nce here, a cus tomer can perform additional s
earches for loca l bus ines s es and s ervices a cros s a complete
s election of categories and get the informa tion they require. P
NI Digital Media Inc. (TS XV: P N); R etail P NI Digital Media Inc.
Adds New Dis tributors and New P NI Digital Media Inc. announced s
evera l new initiatives related to its P NI C onnected K ios k(T
M). P NI a nd R eta il Ima ging Ma na gement Imaging Management G
roup L lc R etailers with P NI C onnected K ios k G roup Llc are
working together to dis tribute the P NI C onnected K ios k to ma
jor retail cus tomers acros s the US . R etail Ima ging has a lrea
dy enabled P NI to s ell the traditional touch-s creen termina l-ba
s ed vers ion of the P NI C onnected K ios k into F red Meyer and K
ing S oopers , a nnounced on April 30th, 2009. P NI a nd R eta il
Ima ging have now teamed up to pla ce the web vers ion of the P NI
C onnected K ios k with As s ocia ted F oods S tores ' online P
ixureT his (T M) photo s olution. P NI has als o teamed up with P
hoto G ift W orld to launch the online vers ion of the P NI C
onnected K ios k to a new range of P G W cus tomers including s ma
ll reta ilers , corporations , non-profit orga nizations a nd s
chools . P G W , the producer of photo gifts , photo books a nd
calendars for C a na dian retailers , is now a ctively purs uing pa
rtners hips in the US . T he P NI C onnected K ios k enables P G W
to offer their thous ands of photo gift products in a n efficient
manner to any number of new cus tomers Open Text C orp. (Nas daqG S
: OTE X) C anopius S elects Open T ext E C M S uite Open T ext C
orp. announced that C anopius has s elected the O pen T ext E C M S
uite to improve proces s es , reduce filing cos ts a nd, more
importa ntly, s upport the implementation of electronic tra ding. R
ealizing the ever-increas ing ma rket dema nd for electronic
trading, C anopius unders ta nds the need for a document mana
gement and workflow s ys tem that would enable the orga nization to
exchange information electronica lly with brokers and third parties
around the world. F ollowing a rigorous evaluation proces s , C a
nopius chos e the O pen T ext E C M S uite, pa rticula rly for its
bus ines s proces s management a nd document management capa
bilities . One of the key factors in the decis ion was that Open T
ext could offer an integra ted document ma nagement and bus ines s
proces s ma na gement s olution, reducing s ys tem integra tion
concerns . Figure 7. Key Developments Source. Capital IQ
10. Page 10 VALUATION Online Gaming companies lead market-cap
charts: Thirteen companies in our W eb 2.0 universe top US$1
billion in market capitalization (Figure 8). Fifty-eight of the 92
companies have market caps under US$100 million, with 26 under
US$10 million. Online gaming companies dominate the top of the
list, led by Tencent Holdings with a market cap over US$20 billion.
Market C ap (US D m) Tencent Holdings Ltd. Neteas e. com Inc. S
handa Interactive Entertainment 3459.3 IA C/InterA ctiveCorp.
2431.3 S ohu. com Inc. 2254.5 Cha ngy ou.com Limited 2068. 6 Open
Tex t Corp. 1894. 4 Modern Times G roup Mtg A B 1841.4 G iant
Interactive G roup, Inc. 1705.2 G ree, Inc. 1557.1 Perf ect World
Co., Ltd. 1399.8 Chines e G amer Internationa l 1089.6 Mix i, Inc.
1005.4 V a lueClick Inc. 901.9 K ings oft Co. Ltd. 766.3 United
Online Inc. 585.1 NetDra gon WebS of t, Inc. 388.0 S hutterf ly ,
Inc. 302.1 G igaMedia Ltd. 295.5 S K Communications Co., Ltd. 289.
6 G ama nia Digital Entertainment Co., 252.6 NEOWIZ G ames
Corporation 249.1 The9 Limited 232.0 G ungHo Online Entertainment,
Inc. 229.7 XING A G 221.6 Openw ave S y s tems Inc. 190.8 A ctoz S
oft Co., Ltd. 169.8 CDC Corp. 150.7 DA DA S pA 139.1 G ameOn Co
Ltd. 106.6 OA O R B C Inf ormation S y s tems 104.0 Tree.Com, Inc.
103.5 Y edangOnline Corp. 94.7 My riad G roup A G 92.2 Cy berplex
Inc. 88.9 K A B Dis tribution Inc. 76. 1 HanbitS of t, Inc. 72.4
JumpTV Inc. 68.8 TheS treet.c om, Inc. 61.1 DigitalTow n, Inc. 54.2
G eoS entric Oy j 50.1 S park Netw orks , Inc. 49.4 PNI Digital
Media Inc. 42.8 Eolith Co. Ltd. 41.8 Ngi G roup Inc. 40.9 G ravity
Co. , Ltd 40.3 Webz en Inc. 38.9 Frogs ter Interac tiv e Pictures A
G 37.7 S ocialw is e, Inc. 34.7 A Q Interac tiv e, Inc. 32.4
NeXplore Corporation 32.4 Fluid Mus ic Canada, Inc. 29.5 Y nk K
orea Inc. 25.3 Wiz z ard S of tw are Corporation 24.4 Dolphin
Digita l Media, Inc. 23.3 DXN Holdings B hd 22.4 Northgate
Technologies Limited 20.7 B roadWebA s ia Inc. 19.5 LookS mart,
Ltd. 19.5 B ey ond Commerc e, Inc. 18.0 A cceleriz e New Media,
Inc. 15.2 J umbuck Entertainment Pty Ltd. 14.6 Lingo Media
Corporation 12.8 Quepas a Corp. 12.7 IA S Energy , Inc. 10.5 UOMO
Media, Inc 9.0 V OIS , Inc. 8.3 Worlds . com Inc. 7.9 S pectrumDNA
, Inc. 7.3 S NA P Interac tiv e, Inc. 4.9 MOK O.mobi Limited 4.7 Ex
tens ions , Inc. 4.4 is eemedia Inc. 4.4 B right Things plc 4.1
Magnitude Inf ormation S y s tems 4.1 CornerWorld Corporation 3.9
DigitalPos t Interac tiv e, Inc. 3.0 Wooz y Fly , Inc. 2.6 B etaw
ave Corporation 2.6 B igs tring Corp. 2.1 Wy nds torm Corporation
1.8 LiveWorld Inc. 1.7 Unis erv e Communications Corp. 1.5 CLICK ER
Inc. 1.3 A s s ociated Media Holdings Inc. 0.9 The Pa rent Company
0.5 ZipL ocal Inc. 0.3 China G atew ay Corporation 0.3 Total S port
Online A S 0.1 S ocial Media V enures , Inc. 0.0 S NM G lobal
Holdings 0.0 Dibz Interna tional, Inc. 0.0 0 500 1,000 1,500 2, 000
2,500 3,000 3,500 4, 000 Figure 8. Market Cap Ranking Source.
Capital IQ
11. Page 11 TEV/Revenue (LTM) averages 5.3x: The overall
average TEV/Revenue (LTM) multiple for our group is 5.3x (versus
4.6x last week) (Figure 9). Two companies trade at more than 40x
revenue Bigstring Corp. (OTCBB:BSGC) at 48.3x, closely followed by
Gree (TSE:3632) at 46.3x. The median is only 1.8x. Note that we
exclude multiples greater than 50x. Thirty- two companies have
multiples under 1.5x. T E V/L T M R evenue (x) 60. 0 50. 0 48.3
46.3 40. 0 31.3 30. 0 20. 0 18.318.419.2 14.715.2 13.2 11.2 8.5
10.erage, 5. 3 Av 0 6.8 7.8 5.5 6.3 4.1 4.1 4.1 4.6 4.6 4.9 2.4 2.5
2.6 2.9 3.1 3.2 3.2 3.2 3.2 1.1 1.1 1.2 1.2 1.3 1.3 1.4 1.6 1.6 1.8
1.8 2.0 2.2 2.2 0.1 0.1 0.2 0.2 0.2 0.2 0.4 0.4 0.4 0.4 0.5 0.5 0.6
0.7 0.8 0.9 1.0 1.1 1.1 1.1 0. 0 N E O WIZ G ames C orporation MO K
O .mobi L imited UO MO Media, Inc C LIC K E R Inc. J umbuck E
nterta inment P ty L td. G ungH o O nline E ntertainment, Inc. G a
mania Digital E ntertainment C o., Ltd. P N I Digital Media Inc. C
hines e G amer Interna tional U nis erve C ommunications C orp. N
orthgate T echnologies L imited DXN Holdings B hd C ha ngy ou.com L
imited C DC C orp. T ree.C om, Inc. G a meO n C o Ltd. S K C
ommunica tions C o., Ltd. B ey ond C ommerc e, Inc.