VC Funding Report, April 2009 -- Web 2.0 Weekly (pdf document) free file download at fliiby.com

"SOFTWARE & SERVICES 28 APRIL 2009 WEB 2.O WEEKLY DAVID SHORE, CFA, MBA 416.860.6784 david.shore@researchcapital.com Arun Thomas (Associate) 416.860.7666 WEEK FO UR IN APRIL MOSTLY Q UIET; MEDIA COMPANY BATANGA RAISES $7.5 MILLION PI C K- U P I N ACT I VIT Y ON L Y MA RG IN AL IN W EE K F OU R The fourth week of April had only a marginal number of capital raises (four) and not enough to push the month above March and February levels. Total financings (month-to-date) were $102.3 million, with February and March closing off at $185.5 mm and $159.5 mm, respectively. As of last week, a total of 16 deals closed, with the $20 million raise by Collective Media and $16 million by GOOM Radio being major contributors. W ith four days left in April, it is evident that the month may likely finish at or slightly below March levels, unless a few high dollar financings materialize. W e speculate that capital market activity in April (for W eb 2.0 companies) worldwide has dropped from prior months, potentially as a follow-on (time lagged) effect of the equity markets. W ith a seeming capital market revival on the horizon (as exhibited by stock market index levels) and if sustainable, we should expect institutional investors to participate in venture capital funds or direct investments in private companies – albeit slowly. Financing Activity Last Three Months 200.0 8.0 180.0 7.0 160.0 6.0 140.0 5.0 120.0 (US$m) (US$m) 100.0 4.0 80.0 3.0 60.0 2.0 40.0 1.0 20.0 0.0 Feb-09 Mar-09 Total Average Apr-09 0.0 Capital Market Activity: Four weeks into April and we saw 16 companies raising money, with GOOM Radio and Collective Media still leading the list with $16 million and $20 million, respectively. The largest raise last week was by Batanga – raising $7.5 million. The month-to-date total capital raised stands at $102.3 million. The Rubicon Project (ad network sector) and Cellufun (gaming sector) followed GOOM Radio, raising $13 million and $10 million, respectively. Price Performance: Most of the companies in our universe had positive stock price performances over the past week (for stocks with prices greater than $1), with 22 companies showing positive returns on the week. Modern Times Group Mtg AB (MTG B-OM) led the group with a 27.7% return, while DigitalTown Inc. (DGTW -OTCBB) had the worst return, dropping 21.7% in the week. Two companies had better than 20% price increases last 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. T o ro n t o 4 1 6 . 8 6 0 . 7 6 0 0 Montreal 514.399.1500 w w w . r e s e a rc h c a p i t a l . c o m Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550 Page 2 THE WEB 2.0 UNIVERSE Ninety-tw o public Web 2.0 companies identified: Our W eb 2.0 universe contains 92 companies, with a combined market cap of ~ $41 billion (Figure 1). The average market cap for the group is ~$452 million (but a median of only $45.8 million), with average trailing revenue of $145.7 million (median $51.8 million). The companies are also generally profitable, with a median EBITDA margin of 17.6%. On a valuation basis, the overall average is 4.7x trailing revenue (median 1.3x) and 9.1x trailing EBITDA (median 7.6x). Thirteen of the companies have more than 500 employees. C omparable C ompany A nalys is > W eb 2.0 C om pan y Nam e Acce le rize N ew Me dia, Inc. Actoz S of t C o., L td. AQ Inte ractive , Inc. As s ocia ted Media H oldings Inc. B igstring Corp. B e tawave Corpora tion B e yond Commerce, Inc. B right T hings plc B roa dW ebAs ia Inc. C DC C orp. C hina G ate wa y C orpora tion C hine s e G amer International C ornerW orld C orporation C yberplex Inc. D ADA S pA D XN Holdings B hd D ibz Inte rnational, Inc. D igitalP ost Inte ra ctive , Inc. D igitalT own, Inc. D olphin D igital Me dia, Inc. E olith C o. L td. E xte ns ions , Inc. F inancia l Media G roup, Inc. F luid Mus ic Ca nada, Inc. F rogs te r Interactive P icture s AG G a ma nia Digital E ntertainment C o., L td. G a me On C o L td. G e oS e ntric O yj G iant Intera ctive G roup, Inc. G iga Media Ltd. G ravity C o., L td G ree, Inc. G ungH o O nline E ntertainment, Inc. H anbitS of t, Inc. IAC /InterActiveC orp. IAS E nergy, Inc. IdeaE dge, Inc. is ee media Inc. J umbuck E ntertainment P ty Ltd. J umpT V Inc. K a boos e Inc. K ings oft Co. Ltd. Lingo M edia Corporation Live World Inc. LookS mart, Ltd. Magnitude Information S ys tems Inc. Mixi, Inc. Mode rn Times G roup Mtg AB Moggle , Inc MOK O.mobi L imited N E OW IZ G ames C orpora tion N etD ragon W ebS oft, Inc. N ete as e.com I nc. N eXplore Corpora tion N gi G roup Inc. N orthgate Te chnologies L imited Open T e xt Corp. Openwave S ys tems Inc. P e rf ect W orld C o., Ltd. P hotoChannel N etwork s Inc. Quepa s a C orp. OA O R B C Information S ys tems S handa Interactive E ntertainme nt L td. S hutte rf ly, Inc. S K C ommunications Co., Ltd. S N AP Inte ra ctive , Inc. S N M G lobal H oldings S ocia l Media Ve nures , Inc. S ohu. com Inc. S ite s earch C orporation S park Networks , Inc. S pectrumDNA, Inc. T encent Holdings L td. T he Parent C ompany T he 9 L imited T he S treet.com, Inc. T otal S port Online A S T ree.C om, Inc. U nis erve C ommunications Corp. U nited Online Inc. U OMO Media , Inc V a lueC lick Inc. V O IS , Inc. W ebze n Inc. W izza rd S of twa re Corpora tion W oozyF ly, Inc. W orlds .com Inc. W ynds torm C orporation XIN G AG Y e dangOnline Corp. Y nk K orea Inc. ZipLocal Inc. H igh Low A vera ge Median L TM as o f T ic ker 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 6 /30 /200 7 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 9 /30 /200 8 9 /30 /200 8 9 /30 /200 8 9 /30 /200 8 1 2/31 /200 8 1 /31 /200 9 1 2/31 /200 8 9 /30 /200 8 1 1/30 /200 8 NA 9 /30 /200 8 1 1/30 /200 8 NA 1 2/31 /200 7 1 2/31 /200 8 1 1/30 /200 8 9 /30 /200 8 6 /30 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 9 /30 /200 8 6 /30 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 /31 /200 9 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 9 /30 /200 8 1 2/31 /200 8 1 2/31 /200 8 9 /30 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 7 1 2/31 /200 8 1 2/31 /200 8 9 /30 /200 7 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 7 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 7 1 2/31 /200 8 9 /30 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 /31 /200 9 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 8/2/2008 1 2/31 /200 8 1 2/31 /200 8 3 /31 /200 6 1 2/31 /200 8 1 1/30 /200 8 1 2/31 /200 8 1 /31 /200 9 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 1 2/31 /200 8 9 /30 /200 8 NA 1 2/31 /200 8 1 2/31 /200 7 1 2/31 /200 7 1 2/31 /200 8 AC LZ A0 527 90 38 38 AS MH BS G C BW AV BY OC AIM:B G T BW B A C HIN .A CGWY G T S M:308 3 C WR L T S X:C X C M:DA DXN DIB Z DG LP DG T W DP DM A0 410 60 E XT I F NG P T S X:F MN FRG 61 80 38 12 G E O1 V GA G IG M G R VY T S E : 363 2 37 65 A0 470 80 IAC I IAS C.A OT C B B :IDAE IE E AS X:J MB T S X:J T V T S X:K AB 38 88 T S XV : LM LV WD LOOK MA G Y 21 21 MT G B MMOG MK B A0 956 60 77 7 NT E S NXP C 24 97 59 005 7 OT E X OP W V PW R D T S XV : P N QP S A R BC I S N DA S F LY A0 662 70 ST VI S N MN S M VI S OH U STPC LOV S P XA 70 0 K IDS .Q NCT Y TSC M T OS O TR EE T S XV : US S U NT D U OMO VC LK VOIS W ZE N W ZE W ZY F W DD D W YND O1B C A0 527 70 A0 237 70 T S XV : ZIP E xc h ang e OT C B B K OS E TSE OT C P K OT C B B OT C B B OT C B B AIM OT C P K Nas da qG S OT C B B GT S M OT C B B TSX CM KL SE OT C P K OT C B B OT C B B OT C B B K OS E OT C P K OT C B B TSX XT R A GT S M TSE H LS E NY S E Nas da qG S Nas da qG M TSE OS E K OS E Nas da qG S OT C B B OT C B B T S XV AS X TSX TSX S E HK T S XV OT C P K Nas da qG M OT C B B TSE OM OT C B B AS X K OS E S E HK Nas da qG S OT C P K TSE BS E Nas da qG S Nas da qG S Nas da qG S T S XV Nas da qC M R TS Nas da qG S Nas da qG S K OS E OT C B B OT C P K OT C P K Nas da qG S OT C B B AME X OT C B B S E HK OT C P K Nas da qG S Nas da qG M OT C NO Nas da qG M T S XV Nas da qG S OT C B B Nas da qG S OT C B B Nas da qG M AME X OT C B B OT C B B OT C B B XT R A K OS E K OS E T S XV Trading Cu rrenc y H Q USD KR W JPY USD USD USD USD GBP USD USD USD TWD USD C AD EUR MY R USD USD USD USD KR W USD USD C AD EUR TWD JPY EUR USD USD USD JPY JPY KR W USD USD USD C AD AU D C AD C AD HKD C AD USD USD USD JPY S EK USD AU D KR W HKD USD USD JPY INR USD USD USD C AD USD USD USD USD KR W USD USD USD USD USD USD USD HKD USD USD USD NOK USD C AD USD USD USD USD USD USD USD USD USD EUR KR W KR W C AD U nited S ta tes S outh K orea J apan U nited S ta tes U nited S ta tes U nited S ta tes U nited S ta tes U nited K ingdom U nited S ta tes H ong K ong U nited S ta tes T aiwan U nited S ta tes C ana da Ita ly Ma la ys ia U nited S ta tes U nited S ta tes U nited S ta tes U nited S ta tes S outh K orea U nited S ta tes U nited S ta tes U nited S ta tes G ermany T aiwan J apan F inland C hina T aiwan S outh K orea J apan J apan S outh K orea U nited S ta tes C ana da U nited S ta tes C ana da Aus tra lia C ana da C ana da C hina C ana da U nited S ta tes U nited S ta tes U nited S ta tes J apan S weden U nited S ta tes Aus tra lia S outh K orea C hina C hina U nited S ta tes J apan India C ana da U nited S ta tes C hina C ana da U nited S ta tes R us s ia C hina U nited S ta tes S outh K orea U nited S ta tes U nited S ta tes U nited S ta tes C hina U nited S ta tes U nited S ta tes U nited S ta tes C hina U nited S ta tes C hina U nited S ta tes N orwa y U nited S ta tes C ana da U nited S ta tes C ana da U nited S ta tes U nited S ta tes S outh K orea U nited S ta tes U nited S ta tes U nited S ta tes U nited S ta tes G ermany S outh K orea S outh K orea C ana da Current Pr ic e 0 .49 14, 700 47 ,100 .00 0 0 .01 0 1 .49 0 0 .45 1 0 .00 215 0 .10 1 5 .85 0 0 .00 0 2 .35 1 760 .00 0 0 .00 0 9 .06 32 92 ,000 .00 0 8 .50 7 0 .90 5, 650 139 ,000 .00 4, 770 15 .92 0 0 .44 0 0 .47 1 0 .59 4 0 .90 0 1 .36 0 483 ,000 .00 212 2 .30 0 58 ,400 .00 5 30 .25 1 36 ,300 .00 46 33 .54 1 16 .78 2 0 .87 1 47 .30 10 10 ,000 .00 1 0 .01 0 50 .53 3 2 .25 0 65 .95 0 9 .21 2 0 .03 6 0 .04 5 0 .06 10 0 .30 3 0 .55 0 0 .17 0 29 .77 9, 670 4 ,700 .00 0 U S D Market C ap ($m) 1 3.4 9 3.2 2 6.2 0 .1 0 .7 3 .2 6 1.6 5 .0 3 8.2 12 6.3 0 .0 54 0.7 6 .4 5 3.8 12 3.7 2 0.2 0 .0 1 .3 6 3.6 2 6.1 4 0.7 1 4.2 0 .3 1 5.0 2 7.8 14 4.4 9 0.9 4 6.7 1,9 21.0 36 4.7 2 5.0 1,2 88.0 16 2.7 7 7.9 2,2 43.9 1 7.5 1 8.8 4 .2 1 6.4 5 1.0 6 7.4 51 5.9 9 .5 3 .1 2 3.1 6 .5 75 7.4 1,6 68.7 8 3.5 4 .4 41 8.5 31 3.1 3,7 22.3 4 1.8 4 5.8 3 1.9 1,7 40.7 9 9.1 88 5.3 4 3.3 1 1.1 10 5.7 3,2 81.8 25 5.1 30 6.4 7 .0 0 .0 0 .0 1,9 26.0 2 8.2 4 6.3 9 .7 15,3 25. 4 0 .3 24 7.0 7 1.9 0 .1 5 8.3 0 .8 39 0.2 5 .1 84 0.6 2 .5 3 3.0 2 5.9 2 .6 8 .9 1 .6 19 9.0 11 2.7 8 .6 0 .3 15,3 25. 4 0 .0 451.8 4 5.8 U S D LT M Total R ev ($m) 3.8 69. 5 61. 6 0.1 0.1 7.7 1.8 0.2 0.0 428 .1 6.7 46. 2 1.3 46. 7 221 .2 76. 7 NA 0.4 NM NA 18. 6 NM 6.8 4.2 5.3 111 .5 76. 2 5.7 233 .6 190 .4 36. 5 30. 0 114 .9 51. 8 1 ,44 5.1 0.0 0.0 1.2 12. 7 13. 4 66. 8 120 .2 3.3 11. 8 65. 0 0.1 119 .8 1 ,57 2.8 NM 1.0 134 .3 87. 3 451 .8 NM 100 .4 135 .1 769 .3 199 .6 210 .5 16. 2 0.1 141 .0 522 .7 213 .5 154 .5 3.0 2.0 0.1 429 .1 NM 57. 3 0.1 1 ,04 7.9 112 .0 250 .2 71. 9 2.0 228 .6 24. 4 669 .4 0.6 625 .8 0.0 21. 2 6.1 NM 0.1 NA 45. 6 51. 1 14. 5 2.6 1 ,572 .8 0.0 145.7 51. 8 US D L TM T otal E B ITDA ($m) (4 .8) 1 3.9 4 .9 (2 .3) (2 .1) (1 1.8) (8 .6) (1 .6) (4 .6) 1 8.8 (6 .6) 2 3.3 NM 3 .9 3 5.3 1 0.2 NM (3 .3) (2 .5) NM (0 .1) NM 1 .2 (8 .6) (3 .2) 1 6.1 1 9.7 (1 2.8) 14 4.6 4 6.0 7 .0 1 0.8 2 0.5 (1 4.6) 6 4.6 (0 .8) (4 .6) (4 .8) 4 .7 (8 .4) 6 .6 4 6.3 (1 .4) (0 .5) (2 .0) (3 .2) 4 5.6 25 3.7 (1 .1) (2 .1) 3 6.1 3 9.9 29 3.7 (4 .9) 3 0.9 2 3.8 19 5.0 (1 0.2) 11 3.9 (0 .8) (1 1.4) 1 8.4 24 0.2 2 8.4 1 4.5 0 .9 (0 .7) (0 .1) 18 0.5 (1 .1) 1 2.3 (2 .5) 51 2.5 (1 3.5) 8 4.3 7 .0 (1 .0) (2 3.9) 0 .1 15 3.9 (0 .5) 11 3.6 (1 .3) (4 .2) (6 .0) NM NM NM 1 4.6 1 1.4 (1 .1) (2 .8) 51 2.5 -23.9 32.0 1 .2 E B ITDA % NM 20 .0% 8 .0% NM NM NM NM NM NM 4 .4% -9 8.9% 50 .5% NM 8 .4% 16 .0% 13 .3% NM NM NM NM -0 .3% NM 18 .3% NM -6 0.6% 14 .5% 25 .9% NM 61 .9% 24 .2% 19 .2% 36 .0% 17 .8% -2 8.2% 4 .5% NM NM NM 37 .2% -6 2.6% 9 .9% 38 .5% -4 2.5% -4 .3% -3 .1% NM 38 .0% 16 .1% NM NM 26 .9% 45 .7% 65 .0% NM 30 .8% 17 .6% 25 .3% -5 .1% 54 .1% -4 .9% NM 13 .1% 46 .0% 13 .3% 9 .4% 31 .4% -3 4.8% -6 0.5% 42 .1% NM 21 .5% NM 48 .9% -1 2.0% 33 .7% 9 .7% -5 0.6% -1 0.4% 0 .4% 23 .0% -7 8.2% 18 .2% NM -1 9.8% -9 8.2% NM NM NM 32 .0% 22 .4% -7 .6% NM 65 .0% -9 8.9% 6.9% 17 .6% TE V/LT M R evenu e 4.7 x 0.9 x 8.1 x 23.6 x 35.5 x 20.6 x 0.4 x 6.0 x 1.1 x 0.8 x 0.5 x 5.6 x 2.2 x 0.0 x 5.2 x 1.1 x 0.4 x 6.9 x 1.5 x 40.8 x 1.2 x 1.2 x 0.3 x 2.1 x 0.9 x 2.6 x 1.1 x 3.7 x 3.1 x 0.2 x 5.4 x 1.4 x 3.3 x 3.0 x 1.9 x 0.2 x 2.4 x 0.1 x 2.6 x 0.0 x 0.1 x 0.8 x 2.0 x 1.8 x 1.1 x 0.0 x 3.8 x 0.8 x 15.9 x 0.2 x 4.6 x 0.3 x 0.1 x 1.0 x 8.6 x 1.1 x 4.3 x 3.1 x 2.2 x 0.6 x 0.6 x 40.8 x 40.8 x 4.7x 1.3 x T E V/LT M E B IT DA 4.7x 9.7x 1 3.3 x 4.7x 3.9x 7.8x 1.7x 6.3x 6.9x 7.6x 2.5x 1 1.2 x 9.5x 1 4.3 x 8.5x 1 1.3 x 4.2x 1.3x 9.6x 0.2x 0.3x 5.9x 2 1.1 x 5.8x 9.0x 3.8x 3 2.5 x 2 9.5 x 4.5x 6.3x 9.8x 9.8x 3 2.5 x 3 2.5 x 9.1x 7.6x E mployees 11 NA NA 3 4 45 43 3 ,12 5 37 NA NA NA 574 NA NA 11 3 6 NA NA 22 29 NA NA NA 94 NA NA 636 NA NA NA 3 ,20 0 NA NA NA 72 237 NA 2 ,27 1 NA NA 90 13 NA 2 ,96 9 3 NA NA 2 ,42 6 NA 19 NA 286 3 ,40 0 627 NA NA 74 NA NA 514 NA 11 33 NA 3 ,19 7 15 183 7 6 ,19 4 347 NA 310 16 700 NA 1 ,46 9 NA 1 ,18 9 4 NA 110 NA 1 NA 174 NA NA NA 2 0,16 4 20 ,16 4 0 1,122 183 Figure 1. Web 2.0 Universe Summary Source. Capital IQ 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 ) Marginal activity - April financing will likely be below March: Last week closed with 16 financings (month-to-date April) totalling $102.3 million. The month of April (so far) has registered four deals greater than or equal to $10 million and two deals greater than $15 million. The month of March registered 22 financings (total $130.7 million, average $5.9 million) compared to 25 financings announced in February, totalling $185.5 million, or $7.4 million on average (Figure 2). 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 $15 million in January. Financing Activity Last Three Months 200.0 8.0 180.0 7.0 160.0 6.0 140.0 5.0 120.0 (US$m) (US$m) 100.0 4.0 80.0 3.0 60.0 2.0 40.0 1.0 20.0 0.0 Feb-09 Mar-09 Total Average Apr-09 0.0 Figure 2. Financings, Last Three Months Source. Company reports Collective Media largest deal in April: Four weeks into April and Collective Media tops the list with a $20 million raise, followed by Goom Radio and The Rubicon Project with $16 million and $13 million, respectively (Figure 3). For additional details, see Figures 23 and 24 (at end of note). (US$m) 10.0 15.0 20.0 25.0 30.0 35.0 40.0 0.0 5.0 Figure 3. Capital Market Activity, Last Three Months Source. Company reports Financing Summary - Last Three Months Twitter Kaixin001.com Collective Media Synthasite Tremor Media GOOM Radio Vidyo Offerpal Media Imagini The Rubicon Project Buzznet Emergent Game Outbrain LendingClub SendMe Inc. Miva Auditude Cellufun Glam Media Visible Measures SuperSecret Tvtrip GoViral ScanScout Batanga Tongxue Oodle Greystripe Wamba DoubleTwist OMGPOP Socialtext TextDigger OneSpot Mixercast Apture Simulmedia Mixpo FetchDog Virtual Fairground Tynt SoundCloud AnySource Media Pixazza 7 Billion People TubeMogul FamilyLink.com Tribal Nova WhistleBox Tripbase Hunch Bit.ly Sports Composite DE Mendeley Outright Tvinci Filtrbox Socialcast Scan & Target MMO Life AdultSpace Cake Financial Myngle 33Across fav.or.it Three Melons Foodista Apr-09 Mar-09 Feb-09 Page 4 Social Networks is the most active sector: Activity over the last three months was busiest in the Social Networks sector, with 12 companies raising over $74.4 million (Figure 4). The video sector has the next highest totals, with eight companies raising $63.4 million. Page 5 Capital Market Activity by Sector - Last Three Months 80.0 70.0 60.0 50.0 (US$m) 40.0 74.4 30.0 63.4 57.4 41.9 41.4 20.0 37.0 22.5 20.6 10.0 16.0 15.0 12.0 12.0 11.0 Travel 6.5 Virtual World 5.5 Mobile Ad Comment/Reputation 0.0 Gaming Microblog Media Wiki Mobile Social Networks Virtual Goods Lending Aggregation Video Ad Network Analytics 4.3 Search 4.1 Publishing 4.1 Widget 3.9 Infrastructure 3.1 Visual Commerce 2.0 Crowdsourced Content 2.0 Financial Services 1.4 1.3 SAS 1.3 Online Learning 1 # companies 12 8 9 5 7 2 4 2 3 1 1 1 2 2 1 1 1 1 1 1 1 1 1 1 Figure 4. Capital Market Activity, by Sector, Last Three Months 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 ) Web 2.0 Index outperforms: Our W eb 2.0 index (market-cap weighted) essentially mirrored the performance of the NASDAQ composite index from mid-2008 until recently when it has moved higher than the NASDAQ index (Figure 5). Page 6 Web 2.0 Index Price Performance 120 100 80 60 40 20 0 4/28/2008 5/12/2008 5/26/2008 6/23/2008 7/21/2008 8/18/2008 9/15/2008 9/29/2008 1/19/2009 2/16/2009 3/16/2009 3/30/2009 4/13/2009 10/13/2008 10/27/2008 11/10/2008 11/24/2008 12/22/2008 4/27/2009 12/8/2008 6/9/2008 7/7/2008 8/4/2008 9/1/2008 1/5/2009 2/2/2009 3/2/2009 ^COMP - Share Pricing Figure 5. Web 2.0 Price Performance Source. Capital IQ Index: Web 2.0 X (Market Cap) A positive week: Most of the companies in our universe had positive stock price performances over the past week (for stocks with prices greater than $1) (Figure 6), with 22 companies showing positive returns on the week. Modern Times Group Mtg AB (MTG B-OM) led the group with a 27.7% return while DigitalTown Inc. (DGTW -OTCBB) had the worst return, dropping 21.7% in the week. Page 7 1 Week P rice P erformance Modern Times G roup Mtg A B Eolith Co. Ltd. LookS mart, Ltd. DA DA S pA Chines e Gamer International HanbitS of t, Inc. GungHo Online Entertainment, Inc. Giant Interactive G roup, Inc. XING A G S ohu.com Inc. Frogs ter Interactiv e Pictures A G S handa Interactive Entertainment Ltd. Webz en Inc. Perfect World Co., Ltd. Neteas e.com Inc. V alueClick Inc. TheS treet.com, Inc. G ree, Inc. Tree.Com, Inc. Cy berplex Inc. Gamania Digital Entertainment Co., A Q Interactiv e, Inc. A ctoz S of t Co., Ltd. United Online Inc. G ameOn Co Ltd. B ey ond Commerce, Inc. G igaMedia Ltd. Openw ave S y s tems Inc. IA C/InterA ctiveCorp. S hutterf ly , Inc. The9 Limited S park Netw orks , Inc. Open Tex t Corp. PhotoChannel Netw orks Inc. CDC Corp. DigitalTow n, Inc. -30.0% Figure 6. 1-Week Price Performance Source. Capital IQ 27.7% 21.6% 19.9% 17.3% 14.7% 14.7% 13.7% 11.8% 10.3% 8.8% 8.5% 6.4% 5.7% 5.3% 4.6% 4.4% 4.0% 3.7% 2.8% 2.5% 0.8% 0.2% 0.0% -0.2% -0.2% -0.7% -1.0% -1.7% -1.7% -3.5% -4.0% -4.3% -4.5% -5.5% -15.7% -21.7% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% Page 8 INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS) K ey Developments C ompany S hutterfly, Inc . (Nas daqG S : S FL Y) Headline Notes S hutterfly E xpands B eyond P hotos with New C oordina ted S hutterfly Inc. a nnounced the expa ns ion of its s ta tionery collection to include a n a rra y of new products a nd hundreds of exclus ive des igns by S uites of Des igner S ta tionery s ome of the indus try's mos t celebra ted des igners . B uilding on S hutterfly's pos ition in ca rds , the new pers ona l s ta tionery line grows the C ompa ny's des igns to ca ter to a variety of life's celebra tions . S hutterfly's s uite of s tationery now offers new items s uch a s pers ona lized pa rty invita tions . S hutterfly..."

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