Internet Data Book, April 2008

INTERNET & MEDIA GLOBAL EQUITY RESEARCH
Internet NORTH AMERICA
Lehman Brothers
SECTOR VIEW Internet Data Book
Rating: 2 - NEUTRAL April 2008
Monthly U.S. Internet Research Product
Douglas Anmuth
1.212.526.0879
danmuth@lehman.com The Lehman Brothers Internet Data Book provides up-to-date statistics on
LBI, New York the Internet industry overall, and more specifically on the 14 companies in our
Brian A. Fenske, CFA coverage universe. The Data Book contains more than 160 figures and charts,
1.212.526.7827 with an emphasis on valuation and financial metrics, broadband penetration and
bfenske@lehman.com
LBI, New York user data, online advertising, e-commerce, and company-specific information and
models.
Ronald V. Josey
1.212.526.4008
rjosey@lehman.com The ratings within our Internet coverage universe are:
LBI, New York
1-Overweight: Google, IAC, Greenfield Online, Orbitz, Harris Interactive
2-Equal weight: eBay, Amazon.com, Expedia, Blue Nile, Netflix
TechTarget, Dice, Alloy
Rating Suspended: Yahoo!
We highlight the following charts on pages:
13 Cross-Media and Cross-Retail Valuation Comps

18-19 Historical Average Multiples (P/E, P/FCF, EV/EBITDA)
26 ROIC and ROE Metrics for Internet Coverage Universe
33 Media Consumption Time Breakdown
40 Lehman Brothers Online Advertising Forecasts
46 U.S. Media Advertising by Category & Medium
Analyst Certification 51-52 U.S. and Global Search Market Share and Growth
I, Douglas Anmuth, hereby certify
(1) that the views expressed in this
53–54 Lehman Brothers Site Partnership Matrix Detailing Ad Relationships
research Industry Report accurately 56 Select Internet Advertising & Usage Statistics in the U.S. and U.K.
reflect my personal views about any 58 U.S. E-Commerce by Category, 2003-11E
or all of the subject securities or
issuers referred to in this Industry
Report and (2) no part of my
compensation was, is or will be
directly or indirectly related to the
specific recommendations or views Lehman Brothers does and seeks to do business with companies covered in its research reports. As a result, investors
expressed in this Industry Report.
should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.
Customers of Lehman Brothers in the United States can receive independent, third-party research on the company or
companies covered in this report, at no cost to them, where such research is available. Customers can access this
independent research at www.lehmanlive.com or can call 1-800-2LEHMAN to request a copy of this research.
Investors should consider this report as only a single factor in making their investment decision.
April 07, 2008 PLEASE SEE IMPORTANT DISCLOSURES BEGINNING ON PAGE 146
http://www.lehman.com
Lehman Brothers Internet Data Book April 2008
Table of Contents
Introduction to the Lehman Brothers Internet Data Book .............................................. 7

Introduction....................................................................................................... 9
Broadband and Internet Usage........................................................................... 29
Online Advertising ........................................................................................... 39
e-Commerce ................................................................................................... 57
Company Information and Models ...................................................................... 77
Table of Figures
Figure 1: Coverage Universe Comparative Valuation – Large Cap......................... 10

Figure 2: Coverage Universe Comparative Valuation – Small Cap......................... 11
Figure 3: Overall Internet Industry Comparative Valuation ..................................... 12
Figure 4: Cross-Media Comparative Valuation ................................................... 13
Figure 5: Retail and Internet Retail Comparative Valuation .................................... 13
Figure 6: Preview of Upcoming Quarter and 2008E ........................................... 14
Figure 7: Internet Coverage Universe, Year-to-Date Stock Performance, 2008 .......... 15
Figure 8: Historical Annual Stock Performance.................................................... 15
Figure 9: Stock Performance Seasonality – Large Cap ......................................... 16
Figure 10: Stock Performance Seasonality – Small Cap ....................................... 17
Figure 11: Historical Average Multiples – Forward Year P/E, P/FCF, EV/EBITDA .... 18
Figure 12: Historical Average Multiples – Forward Year P/E, P/FCF, EV/EBITDA .... 19
Figure 13: Short Interest by Company, 2001–08 Year to Date ............................. 20
Figure 14: Short Interest by Company, 2001–08 Year to Date ............................. 21
Figure 15: Annual Revenue and Growth, 1998–2008E ...................................... 22
Figure 16: Quarterly Revenue and Sequential Growth, 2003–07 .......................... 22
Figure 17: Annual EBITDA and Growth, 1998–2008E ....................................... 23
Figure 18: Annual EBITDA Margins, 1998–2008E............................................. 23
Figure 19: Free Cash Flow and Growth, 1998–2008E....................................... 24
Figure 20: Free Cash Flow Conversion of EBITDA, 1998–2008E ......................... 24
Figure 21: Capital Expenditures and Growth, 1998–2008E ................................ 25
Figure 22: Capital Expenditures as a Percentage of Revenue, 1998–2008E ........... 25
Figure 23: Return on Invested Capital (ROIC), 2001–2008E ................................ 26
Figure 24: Return on Equity (ROE), 2001–2008E ............................................... 26
Figure 25: Share Repurchases, 1998–2008 ..................................................... 27
Figure 26: Select Recent Internet M&A .............................................................. 28
Figure 27: U.S. Households Broadband & Broadband Penetration, 2001–10E ....... 30
Figure 28: U.S. Broadband Penetration, 2000–12E ........................................... 30
Figure 29: Top 23 U.S. ISPs by Subscribers, as of 3Q 2007 ............................... 31
Figure 30: Global Internet Penetration – Top 20 Countries with Most Internet Users ... 31
2 April 07, 2008

Figure 31: International Broadband Penetration – Top 20 Countries ....................... 32

Figure 32: U.S. Household Technology Adoption Forecast, 2000–12E ................... 32
Figure 33: Media Consumption Time Breakdown ............................................... 33
Figure 34: Share of Time Spent Online, Dec. '05, Dec. '06 & Jan. '07–Feb. '08 ..... 33
Figure 35: ACSI Customer Satisfaction Scores, 2000–07 ..................................... 33
Figure 36: Top 50 U.S. Web Properties by Unique Visitors, Feb. 2007–Feb. '08 .... 34
Figure 37: Top 50 U.S. Web Properties by Page Views, Feb. 2007–Feb. '08 ........ 35
Figure 38: Top 50 Global Properties by Unique Visitors, Feb. 2007–Feb. '08......... 36
Figure 39: Top 50 Global Properties by Page Views, Feb. 2007–Feb '08.............. 37
Figure 40: Online Subscription Revenue by Category ($ in millions) ....................... 38
Figure 41: Online Subscription Revenue by Subscription Period and Category ......... 38
Figure 42: Lehman Brothers U.S. Online Advertising Forecast, 2001–11E............... 40
Figure 43: Lehman Brothers Online Video Advertising Forecast .............................. 40
Figure 44: Top 10 U.S. Online Advertising Sites, 2000–10E ............................... 41
Figure 45: Total U.S. Advertising Spend by Medium, 2000–09E .......................... 42
Figure 46: Share of Total U.S. Advertising Spending by Medium, 2000–09E ......... 43
Figure 47: Total U.S. Advertising Growth by Medium, 2000–09E ........................ 43
Figure 48: Contribution to Total U.S. Advertising Growth by Medium, 2000–09E .... 44
Figure 49: Growth Comparisons – Internet Advertising vs. Broadcast & Cable TV ..... 44
Figure 50: U.S. Online Advertising Revenue by Quarter, 1996–2010E.................. 44
Figure 51: U.S. Online Advertising Revenue by Format, 2000–2006..................... 45
Figure 52: U.S. Online Advertising Revenue by Pricing Model, 1998–2006........... 45
Figure 53: Total U.S. Measured Media Advertising by Category and Medium......... 46
Figure 54: Total U.S. Measured Media Adv. by Category and Medium – % Mix .... 46
Figure 55: Top U.S. Advertisers (1–50) Total Spend & Internet Spend..................... 47
Figure 56: Top U.S. Advertisers (51–100) –Total Spend & Internet Spend ............... 48
Figure 57: Domestic Search Share Comparison by Data Source, Oct. '07–Feb. '08 .. 48
Figure 58: Domestic Search Share, February 2008 ............................................ 49
Figure 59: Global Search Share, February 2008 ............................................... 49
Figure 60: Domestic Search Share – Google and Yahoo! .................................... 50
Figure 61: Domestic Search Share – Microsoft, Ask.com, and AOL........................ 50
Figure 62: U.S. Search Market Share and Growth, January 2007–February 2008... 51
Figure 63: Global Search Market Share and Growth, January '07–February '08...... 52
Figure 64: Lehman Brothers Partnership Matrix, Part 1: ........................................ 53
Figure 65: Lehman Brothers Partnership Matrix, Part 2: ....................................... 54
Figure 66: Help Wanted Advertising Market Share Analysis, U.S. 1998–2011E..... 55
Figure 67: Auto Classified Advertising Market Share, U.S. 1998–2011E ............... 55
Figure 68: Real Estate Advertising Market Share Analysis, U.S. 1998–2011E ......... 55
Figure 69: Select Internet Advertising & Usage Statistics in the U.S. and U.K. ............ 56
Figure 70: U.S. E-Commerce by Category, 2003–11 Forecast............................. 58
Figure 71: U.S. E-Commerce Growth Rates by Category, 2004–11E .................... 59
Figure 72: U.S. E-Commerce as a % of Total U.S. Retail, 2003–11E .................... 60
April 07, 2008 3

Figure 73: U.S. Department of Commerce E-Commerce Data, by Quarter, '00–'07 .. 61

Figure 74: U.S. Department of Commerce E-Commerce Chart, by Quarter, '00–'07 . 61
Figure 75: U.S. E-Commerce as a % of Total U.S. Retail, by Quarter, 2000–4Q07 . 61
Figure 76: Top U.S. Online Retailers by Revenue (1–50)...................................... 62
Figure 77: Top U.S. Online Retailers by Revenue (51–100).................................. 63
Figure 78: Top U.S. Online Retailers’ Revenue Growth Rates (1–50) ...................... 64
Figure 79: Top U.S. Online Retailers’ Revenue Growth Rates (51–100) .................. 65
Figure 80: Top U.S. Online Retailers – Online Revenue as a % of Total Rev. (1–50) .. 66
Figure 81: Top U.S. Online Retailers – Online Revenue as % of Tot. Rev. (51-100) .. 67
Figure 82: Top U.S. Online Retailers – Apparel/Accessories ................................ 68
Figure 83: Top U.S. Online Retailers – Computers/Electronics .............................. 69
Figure 84: Top U.S. Online Retailers – Media (Books/CDs/DVDs) ........................ 69
Figure 85: Top U.S. Online Retailers – Flowers/Gifts .......................................... 70
Figure 86: Top U.S. Online Retailers – Food/Drugs ............................................ 70
Figure 87: Top U.S. Online Retailers – Hardware/Home Improvement ................... 70
Figure 88: Top U.S. Online Retailers – Health/Beauty ......................................... 71
Figure 89: Top U.S. Online Retailers – Housewares/Home Furnishings................... 71
Figure 90: Top U.S. Online Retailers – Jewelry ................................................... 71
Figure 91: Top U.S. Online Retailers – Mass Merchant/Department Store............... 72
Figure 92: Top U.S. Online Retailers – Office Supplies ........................................ 72
Figure 93: Top U.S. Online Retailers – Specialty/Non-Apparel ............................. 73
Figure 94: Top U.S. Online Retailers – Sporting Goods ....................................... 73
Figure 95: Top U.S. Online Retailers – Toys-Hobbies .......................................... 73
Figure 96: Top 100 Online Retail Satisfaction Index (1–50) .................................. 74
Figure 97: Top 100 Online Retail Satisfaction Index (51–94) ................................ 75
Figure 98: Yahoo! Snapshot ............................................................................ 78
Figure 99: Yahoo! Income Statement, 2005–09E............................................... 79
Figure 100: Yahoo! Revenue Analysis, 2005–09E ............................................. 80
Figure 101: Yahoo! Cash Flow Statement, 2005–09E........................................ 81
Figure 102: Yahoo! Discounted Cash Flow Analysis ........................................... 82
Figure 103: Google Snapshot ......................................................................... 83
Figure 104: Google Income Statement, 2005–09E ............................................ 84
Figure 105: Google Revenue Analysis, 2005–09E ............................................ 85
Figure 106: Google Cash Flow Statement, 2005–09E ....................................... 86
Figure 107: Google Discounted Cash Flow Analysis ........................................... 87
Figure 108: eBay Snapshot ............................................................................. 88
Figure 109: eBay Income Statement, 2005–09E ............................................... 89
Figure 110: eBay Segment Breakdown, 2005–09E ........................................... 90
Figure 111: eBay Cash Flow Statement, 2005–09E........................................... 91
Figure 112: eBay Discounted Cash Flow Analysis .............................................. 92
Figure 113: eBay Sum-of-the-Parts Analysis ......................................................... 92
Figure 114: eBay Fee Changes—Auction-Style and Fixed Price, U.S. Only .............. 93
4 April 07, 2008

Figure 115: Amazon Snapshot......................................................................... 94

Figure 116: Amazon Income Statement, 2005–09E ........................................... 95
Figure 117: Amazon Segment Analysis, 2005–09E ........................................... 96
Figure 118: Amazon Cash Flow Statement, 2005–09E ...................................... 97
Figure 119: Amazon Discounted Cash Flow Analysis .......................................... 98
Figure 120: IAC/InterActiveCorp Snapshot ........................................................ 99
Figure 121: IAC/InterActiveCorp Income Statement, 2005–09E.......................... 100
Figure 122: IAC/InterActiveCorp Segment Breakdown – Revenue and EBITA ......... 101
Figure 123: IAC/InterActiveCorp Segment Breakdown – Growth Rates & Margins .. 102
Figure 124: IAC/InterActiveCorp Segment Breakdown – Share of Rev. & EBITA .... 103
Figure 125: IAC/InterActiveCorp Breakdown – Retailing, 2005–09E ................... 104
Figure 126: IAC/InterActiveCorp Breakdown – Transactions, 2005–09E .............. 105
Figure 127: IAC/InterActiveCorp Breakdown – Media & Advertising, 2005–09E... 106
Figure 128: IAC/InterActiveCorp Breakdown – Membership & Subs, '05–09E....... 107
Figure 129: IAC/InterActiveCorp Cash Flow Statement, 2005–09E ..................... 108
Figure 130: IAC/InterActiveCorp Sum-of-the-Parts Analysis .................................. 109
Figure 131: Expedia Snapshot....................................................................... 110
Figure 132: Expedia Income Statement, 2005–09E ......................................... 111
Figure 133: Expedia Segment Breakdown, 2005–09E ..................................... 112
Figure 134: Expedia Cash Flow Statement, 2005–09E..................................... 113
Figure 135: Orbitz Snapshot ......................................................................... 114
Figure 136: Orbitz Income Statement, 2005–09E............................................. 115
Figure 137: Orbitz Segment Breakdown, 2005–09E......................................... 116
Figure 138: Orbitz Base Financials, 2005–09E................................................ 117
Figure 139: Netflix Snapshot ......................................................................... 118
Figure 140: Netflix Income Statement, 2005–09E............................................ 119
Figure 141: Netflix Subscriber and Revenue Analysis, 2005–09E ....................... 120
Figure 142: Netflix Cash Flow Statement, 2005–09E ....................................... 121
Figure 143: Blue Nile Snapshot ..................................................................... 122
Figure 144: Blue Nile Income Statement, 2005–09E ........................................ 123
Figure 145: Blue Nile Cash Flow Statement, 2005–09E ................................... 124
Figure 146: Greenfield Online Snapshot.......................................................... 125
Figure 147: Greenfield Online Income Statement, 2005–09E ............................ 126
Figure 148: Greenfield Online Sum-of-the-Parts Analysis ...................................... 126
Figure 149: Greenfield Online Segment Breakdown, 2005–09E ....................... 127
Figure 150: Greenfield Online Cash Flow Statement, 2005–09E........................ 128
Figure 151: Harris Interactive Snapshot............................................................ 129
Figure 152: Harris Interactive Income Statement, Fiscal 2005–09E...................... 130
Figure 153: Harris Interactive Segment Breakdown, Fiscal 2005–09E ................. 131
Figure 154: Harris Interactive Cash Flow Statement, Fiscal 2005–09E ................. 132
Figure 155: Alloy Snapshot ........................................................................... 133
Figure 156: Alloy Revenue and EBITDA Estimates, Fiscal 2005–09E.................... 133
April 07, 2008 5

Figure 157: TechTarget Snapshot ................................................................... 134

Figure 158: TechTarget Income Statement, 2005–09E...................................... 135
Figure 159: TechTarget Segment Breakdown, 2005–09E ................................. 136
Figure 160: TechTarget Cash Flow Statement, 2005–09E ................................. 137
Figure 161: Dice Holdings Snapshot............................................................... 138
Figure 162: Dice Holdings Income Statement, 2005–09E .................................. 139
Figure 163: Dice Holdings Segment Breakdown, 2005–09E .............................. 140
Figure 164: Dice Holdings Pro Forma Analysis, 2005–08E ................................ 141
Figure 165: AOL Quarterly Advertising Forecast, 2005–08E .............................. 142
Figure 166: AOL Annual Advertising Forecast, 2005–11E .................................. 143
Figure 167: AOL Quarterly Income Statement, 2005–08E .................................. 144
Figure 168: AOL Annual Income Statement, 2005–11E ..................................... 145
6 April 07, 2008

Introduction to the Lehman Brothers Internet Data Book
The Lehman Brothers Internet Data Book provides up-to-date statistics on the Internet
industry overall, and more specifically on the 14 companies in our coverage universe. The
Data Book contains more than 160 figures and charts that are broken down into five key
areas:
1. Introduction includes Internet and cross-industry comparative valuation charts in addition

to key financial metrics for our covered companies, among other things;
2. Broadband and Internet Usage features U.S. and global data on broadband
penetration and relevant unique visitor and page view information for leading sites;
3. Online Advertising includes our projections for domestic online ad spending through
2011, data on overall U.S. advertising spending, and a closer look at search industry
statistics, among other metrics;
4. e-Commerce features overall online retail projections by category and data on top sites
by category; and
5. Company Information and Models includes key company-specific data for our
coverage universe.
The Data Book is intended to be a primary resource for investors looking at the Internet
space. Each month, we update the Data Book as appropriate, and add charts that we
believe are increasingly relevant. We highlight the following charts on pages:
13 Cross-Media and Cross-Retail Valuation Comps

18–19 Historical Average Multiples (P/E, P/FCF, EV/EBITDA)
26 ROIC and ROE Metrics for Internet Coverage Universe
33 Media Consumption Time Breakdown
40 Lehman Brothers Online Advertising Forecasts
46 U.S. Media Advertising by Category & Medium
51–52 U.S. and Global Search Market Share and Growth
53–54 Lehman Brothers Site Partnership Matrix Detailing Ad Relationships
56 Select Internet Advertising & Usage Statistics in the U.S. and U.K.
58 U.S. E-Commerce by Category, 2003–11E
Please let us know if there is particular information you would like us to include in future
editions of the Data Book.
April 07, 2008 7

The ratings within our Internet coverage universe are:
1-Overweight: Google, IAC, Greenfield Online, Orbitz, Harris Interactive

2-Equal weight: eBay, Amazon.com, Expedia, Blue Nile, Netflix
TechTarget, Dice, Alloy
Rating Suspended: Yahoo! *

*Lehman Brothers is acting as financial advisor to Yahoo! Inc.
in connection with its evaluation of alternatives. The ratings and
targets on Yahoo! Inc. and Microsoft Corporation have been
temporarily suspended due to Lehman Brothers' role. The
estimates for Yahoo! do not incorporate this potential
transaction.
8 April 07, 2008

Introduction
April 07, 2008 9

Figure 1: Coverage Universe Comparative Valuation – Large Cap

Company Google Yahoo! eBay Amazon Large Cap IAC Expedia
Symbol GOOG YHOO* EBAY AMZN Average IACI EXPE
LB Rating 1-Overweight RS 2-Equal weight 2-Equal weight 1-Overweight 2-Equal weight
Price as of 4/7/2008 $465.70 $27.82 $31.76 $77.37 $21.39 $25.13

Shares Outstanding 2007 316 1,395 1,368 427 300 320
Market Capitalization $147,259 $38,799 $43,450 $33,037 $262,545 $6,413 $8,053

Net Debt 2007 (14,219) (1,614) (5,036) (1,830) (989) (134)
Net Debt 2008 (15,407) (2,549) (6,516) (3,492) (921) (810)
Net Debt 2009 (21,194) (3,598) (8,816) (5,429) (1,604) (1,561)
Less: Non-Consolidated Assets & Investments 1,000 10,290 532 718
Plus: Minority Interest 288
Total Enterprise Value 2007 132,040 26,896 37,882 31,207 4,706 8,207
EARNINGS PER SHARE (EPS) 1,2

EPS 2007 $15.59 $0.76 $1.53 $1.32 $1.46 $1.22
EPS 2008 $18.92 $0.64 $1.65 $1.80 $1.59 $1.52
EPS 2009 $22.29 $0.70 $1.88 $2.35 $1.81 $1.74
2007-2010 EPS CAGR 18% 1% 12% 31% 16% 13% 18%
P/E 2007 29.9x 36.6x 20.8x 58.6x 36.4x 14.7x 20.6x

P/E 2008 24.6x 43.3x 19.2x 43.1x 32.5x 13.5x 16.6x
P/E-to-Growth 1.3x 52.6x 1.6x 1.4x 2.1x 1.1x 0.9x
P/E 2009 20.9x 39.5x 16.9x 32.9x 27.6x 11.8x 14.4x
FREE CASH FLOW (FCF)

FCF 2007 3,373 1,337 2,187 1,183 428 625
FCF 2008 4,317 935 2,338 1,437 550 676
FCF 2009 5,446 1,049 2,709 1,687 659 751
2007-2010 FCF CAGR 25% NA 13% 16% 18% 22% 9%
FCF/Share 2007 $10.67 $0.96 $1.60 $2.77 $1.43 $1.95

FCF/Share 2008 $13.40 $0.66 $1.71 $3.34 $1.89 $2.17
FCF/Share 2009 $16.54 $0.74 $1.97 $3.91 $2.27 $2.39
Price/FCF 2007 43.7x 29.0x 19.9x 27.9x 30.1x 15.0x 12.9x

P/FCF-to-Growth 1.4x NA 1.4x 1.5x 1.7x NA 1.3x
FCF Yield 2007 2.3% 3.4% 5.0% 3.6% 3.6% 6.7% 7.8%
FCF Yield 2008 2.9% 2.4% 5.4% 4.3% 3.7% 8.8% 8.6%
FCF Yield 2009 3.6% 2.7% 6.2% 5.0% 4.4% 10.6% 9.5%
EBITDA
EBITDA 2007 6,921 1,927 2,924 1,095 816 729
EBITDA 2008 9,027 1,850 3,135 1,383 870 800
EBITDA 2009 11,162 2,009 3,543 1,704 950 888
2007-2010 EBITDA CAGR 24% 5% 11% 24% 16% 9% 11%
EV/EBITDA 2007 19.1x 14.0x 13.0x 28.5x 18.6x 5.8x 11.3x

EV/EBITDA-to-Growth 0.6x 3.0x 1.0x 0.9x 1.0x 0.6x 0.9x
REVENUE
Revenue 2007 11,660 5,113 7,672 14,836 6,373 2,665
Revenue 2008 15,703 5,645 8,674 19,303 6,558 3,022
Revenue 2009 19,984 6,415 9,963 23,875 6,650 3,389
2007-2010 Revenue CAGR 28% 12% 14% 24% 19% 3% 12%
Market Cap/Revenue 2007 12.6x 7.6x 5.7x 2.2x 7.0x 1.0x 3.0x
* Yahoo! estimates do not incorporate any potential transactions with Microsoft going forward.
Notes:
1) EPS for YHOO, GOOG, IACI, EXPE, EBAY, AMZN, NFLX, NILE, TTGT, OWW, DHX are all pro forma
2) P/E and P/FCF for Yahoo! does not adjust for Yahoo! Japan
Source: Company reports, Lehman Brothers estimates
Lehman Brothers is acting as financial advisor to Yahoo! Inc. in connection with its evaluation of alternatives. The ratings and targets on Yahoo! Inc. and Microsoft Corporation
have been temporarily suspended due to Lehman Brothers' role. The estimates for Yahoo! do not incorporate this potential transaction.
10 April 07, 2008

Figure 2: Coverage Universe Comparative Valuation – Small Cap

(US$, millions except per share) Greenfield Harris
Company Orbitz Netflix Blue Nile Dice Holdings TechTarget Online Interactive Alloy
Symbol OWW NFLX NILE DHX TTGT SRVY HPOL ALOY
LB Rating 1-Overweight 2-Equal weight 2-Equal weight 2-Equal weight 2-Equal weight 1-Overweight 1-Overweight 2-Equal weight
Price as of 4/7/2008 $7.67 $36.35 $50.67 $8.84 $15.11 $11.29 $2.77 $7.40
Shares Outstanding 2007 84 67 17 66 41 27 55 14
Market Capitalization $647 $2,437 $852 $581 $617 $305 $152 $106
Net Debt 2007 574 (385) (122) 67 (56) (57) (38) (37)
Net Debt 2008 494 (378) (110) (3) (77) (66) (66) (55)
Net Debt 2009 384 (498) (125) (71) (104) (83) (103) (76)
Less: Non-Consolidated Assets & Investments
Plus: Minority Interest
Total Enterprise Value 2007 1,221 2,052 730 648 561 248 113 69
EARNINGS PER SHARE (EPS) 1,2, 3, 4

EPS 2007 $0.66 $1.02 $1.26 $0.47 $0.34 $0.48 $0.16 NA
EPS 2008 $0.55 $1.39 $1.35 $0.52 $0.45 $0.65 $0.21 NA
EPS 2009 $0.65 $1.92 $1.52 $0.65 $0.52 $0.75 $0.26 NA
2007-2010 EPS CAGR 9% 35% 11% 21% 21% 24% 16% NA
P/E 2007 11.7x 35.8x 40.2x 18.9x 44.1x 23.6x 17.7x NA

P/E 2008 13.8x 26.2x 37.5x 16.9x 33.9x 17.4x 13.3x NA
P/E-to-Growth 1.6x 0.7x 3.5x 0.8x 1.6x 0.7x 0.9x NA
P/E 2009 11.8x 19.0x 33.4x 13.5x 28.9x 15.0x 10.5x NA
FREE CASH FLOW (FCF)

FCF 2007 49 46 37 56 16 12 22 NA
FCF 2008 65 69 47 70 24 23 36 NA
FCF 2009 110 96 53 68 27 31 34 NA
2007-2010 FCF CAGR 41% 37% 17% 11% 26% 45% 14% NA
FCF/Share 2007 $0.58 $0.69 $2.17 $0.85 $0.39 $0.45 $0.40 NA

FCF/Share 2008 $0.77 $1.08 $2.78 $1.01 $0.51 $0.86 $0.68 NA
FCF/Share 2009 $1.27 $1.52 $3.15 $1.00 $0.58 $1.11 $0.64 NA
Price/FCF 2007 13.2x 52.9x 23.3x 10.4x 38.9x 25.2x 7.0x NA

P/FCF-to-Growth 0.2x 0.9x 1.1x 0.8x 1.1x 0.3x 0.3x NA
FCF Yield 2007 7.6% 1.9% 4.3% 9.6% 2.6% 4.0% 14.3% NA
FCF Yield 2008 10.0% 3.0% 5.5% 11.4% 3.4% 7.6% 24.6% NA
FCF Yield 2009 16.6% 4.2% 6.2% 11.4% 3.9% 9.8% 23.0% NA
EBITDA
EBITDA 2007 144 125 30 63 25 35 22 10
EBITDA 2008 151 157 33 73 34 41 28 21
EBITDA 2009 171 212 38 85 40 49 33 25
2007-2010 EBITDA CAGR 10% 29% 12% 17% 25% 17% 15% NA
EV/EBITDA 2007 8.5x 16.5x 24.4x 10.4x 22.9x 7.0x 5.2x 6.8x
EV/EBITDA-to-Growth 0.8x 0.4x 1.8x 0.5x 0.7x 0.3x 0.2x NA
REVENUE
Revenue 2007 859 1,205 319 142 95 129 234 202
Revenue 2008 887 1,376 354 169 120 150 267 231
Revenue 2009 953 1,640 396 198 136 172 278 258
2007-2010 Revenue CAGR 6% 16% 11% 17% 17% 15% 9% NA
Market Cap/Revenue 2007 0.8x 2.0x 2.7x 4.1x 6.5x 2.4x 0.6x 0.5x
Market Cap/Revenue 2008 0.7x 1.7x 2.4x 3.6x 5.8x 2.0x 0.6x 0.5x
Market Cap/Revenue 2009 0.7x 1.4x 2.2x 3.0x 5.2x 1.8x 0.5x NA
1) EPS for NFLX is fully-taxed

2) EPS for HPOL is operational, fully-taxed, and based on calendar year; CAGRs are 2007-2010 Calendarized.
3) EPS for SRVY is GAAP, fully-taxed, and excludes one-time benefits
4) No EPS projections for ALOY until company provides more historical financial data
April 07, 2008 11

Figure 3: Overall Internet Industry Comparative Valuation

Lehman Price Market 2007 2008E 2007 2008E 2007 2008E
Company Ticker Rating 4/2/2008 Cap ($M) EV/EBITDA EV/EBITDA P/E P/E P/FCF P/FCF
Online Media & Search
Yahoo! YHOO RS $27.82 38,799 14.6x 15.0x 37.3x 44.1x 29.6x 42.9x
Google GOOG 1-OW $465.70 147,259 19.4x 14.2x 30.3x 23.6x 44.3x 33.7x
TechTarget TTGT 2-EW $15.11 617 18.1x 14.2x 35.8x 27.5x 31.5x 23.9x
Dice Holdings DHX 2-EW $8.84 581 8.7x 6.9x 15.6x 13.9x 8.6x 7.2x
Monster Worldwide MNST -- $25.74 3,239 16.3x 12.7x 17.0x 13.3x 13.8x 11.1x
CNET Networks CNET -- $7.67 1,160 13.7x 11.1x 5.5x 34.9x 24.0x 18.3x
The Knot KNOT -- $11.40 357 20.4x 14.3x 30.8x 21.1x -- --
RealNetworks RNWK -- $6.06 935 15.1x 11.4x 24.2x 46.6x 12.4x --
Bankrate RATE -- $53.04 969 16.1x 12.7x 40.5x 33.8x -- --
Travelzoo TZOO -- $11.57 176 11.0x 9.0x 10.0x 8.2x -- --
WebMD WBMD -- $23.84 213 34.3x 24.3x 46.7x 31.0x -- --
Marchex MCHX -- $10.89 328 11.1x 8.9x 20.5x 16.5x -- --
Miva MIVA -- $1.81 60 -- 8.5x -- 30.2x 12.9x 5.8x
Audible ADBL -- $11.46 278 29.6x 17.1x -- 88.2x -- --
TheStreet.com TSCM -- $9.13 256 16.6x 12.7x 17.6x 13.8x -- --
Looksmart LOOK -- $3.38 77 -- 11.3x -- -- -- --
E-Commerce
eBay EBAY 2-EW $31.76 43,450 11.0x 9.8x 18.0x 16.7x 17.3x 16.2x
Amazon.com AMZN 2-EW $77.37 33,037 26.0x 19.5x 53.7x 39.4x 25.6x 21.2x
IAC/InterActiveCorp IACI 1-OW $21.39 6,413 6.2x 5.7x 15.1x 13.8x 15.4x 11.9x
Overstock.com OSTK 2-EW $12.02 285 22.6x 5.8x NA NA 142.9x 57.8x
Blue Nile NILE 2-EW $50.67 852 20.9x 19.0x 35.2x 32.9x 20.4x 16.0x
Netflix NFLX 2-EW $36.35 2,437 14.3x 11.3x 31.9x 24.9x 47.2x 33.2x
1-800-FLOWERS.COM FLWS -- $8.78 223 12.1x 8.9x 36.6x 27.4x 17.6x 17.6x
FTD Group, Inc. FTD -- $13.92 403 8.9x 8.8x 14.1x 12.5x 11.5x 10.7x
GSI Commerce GSIC -- $13.67 634 16.8x 11.9x 18.2x 20.1x 14.1x 11.4x
Bluefly BFLY -- $0.47 62 -- -- -- -- -- --
Drugstore.com DSCM -- $2.25 214 35.0x 12.0x -- -- -- --
Redenvelope REDE -- $0.28 3 13.0x 5.1x -- -- -- --
Travel
Expedia EXPE 2-EW $25.13 8,053 10.9x 8.8x 19.9x 16.0x 12.4x 11.2x
Orbitz OWW 1-OW $7.67 648 7.7x 5.9x 10.0x 9.5x 8.1x 5.6x
Priceline PCLN -- $127.50 4,830 14.3x 11.6x 42.1x 35.9x 56.9x 42.9x
Advertising Services
Valueclick VCLK -- $18.33 1,830 13.9x 11.7x 22.4x 18.3x 17.8x --
Omniture OMTR 2-EW $24.26 1,191 42.3x 21.3x 303.3x 80.9x 81.7x 29.7x
Internet Services
Greenfield Online SRVY 1-OW $11.29 305 8.8x 7.3x 28.4x 20.9x 30.4x 15.8x
Harris Interactive HPOL 1-OW $2.77 152 5.4x 3.0x 18.1x 13.6x 7.2x 4.2x
Alloy ALOY 2-EW $7.40 106 7.5x 2.7x NA NA NA NA
Autobytel ABTL -- $1.80 78 8.0x 6.4x -- -- -3.9x -7.5x
Napster NAPS -- $1.61 72 8.0x 6.4x -- -- -- --
Earthlink ELNK -- $7.95 980 8.0x 7.2x -- -- -- --
United Online UNTD -- $11.35 757 6.2x 6.4x 10.1x 10.8x -- --
Verisign VRSN 1-OW $34.39 8,353 14.3x 14.1x 35.8x 31.8x 22.2x 18.1x
Akamai AKAM -- $31.04 5,097 26.6x 19.4x 24.3x 18.2x 25.1x 15.6x
Digital River DRIV -- $33.28 1,376 13.3x 10.2x 15.3x 12.4x 9.4x 8.7x
Infospace INSP -- $12.41 409 13.3x 9.3x -- 103.4x -- --
Jupiter Media JUPM -- $2.11 76 9.5x 8.1x 16.2x 8.8x -- --
House Values SOLD -- $2.50 61 8.2x 9.5x -- -- 27.8x 25.0x
Move MOVE -- $3.24 502 18.3x 12.9x 108.0x 21.6x -- --
Vista Print VPRT -- $38.14 1,645 30.4x 18.8x 48.3x 33.2x -- --
Shutterfly SFLY -- $15.45 371 11.3x 8.1x 44.1x 35.1x -- --
Getty Images GYI 2-EW $32.15 1,922 8.8x 7.9x 12.8x 11.3x 9.1x 8.0x
Source: FactSet, company reports, Lehman Brothers estimates

Note: Ratings for OMTR (2-Equal weight/1-Positive), VRSN (1Overweight/1-Positive), and GYI (2-Equal weight/2Neutral) are from Lehman Brothers analysts Vikram Churamani,
Israel Hernandez, and Caroline Sabbagha, respectively.
FactSet consensus estimates are used for all companies not under our Internet coverage universe.
12 April 07, 2008

Figure 4: Cross-Media Comparative Valuation

LB Stock LB Sector Price Market EV/EBITDA Multiple P/E Multiple FCF Multiple
Internet Ticker Rating Rating 4/2/08 Cap ($M) 2007 2008E 2009E 2007 2008E 2009E 2007 2008E 2009E
Yahoo! YHOO RS 2-Neutral $27.82 $38,799 14.0x 14.3x 12.8x 36.6x 43.3x 39.5x 29.0x 42.1x 37.7x
Google GOOG 1-OW 2-Neutral $465.70 $147,259 19.1x 14.8x 11.8x 29.9x 24.6x 20.9x 43.7x 34.8x 28.2x
eBay EBAY 2-EW 2-Neutral $31.76 $43,450 13.0x 11.6x 9.7x 20.8x 19.2x 16.9x 19.9x 18.6x 16.1x
Amazon.com AMZN 2-EW 2-Neutral $77.37 $33,037 28.5x 21.5x 16.4x 58.6x 43.1x 32.9x 27.9x 23.1x 19.8x
Internet Average 18.6x 15.6x 12.7x 36.4x 32.5x 27.6x 30.1x 29.6x 25.5x
Entertainment*
Time Warner TWX 1-OW 2-Neutral $14.64 $55,124 7.3x 6.7x 6.1x 15.2x 13.6x 11.7x 11.1x 13.9x 11.1x
Disney DIS 2-EW 2-Neutral $31.56 $64,901 8.7x 7.8x 7.0x 15.8x 13.9x 12.3x 18.1x 19.3x 14.3x
News Corp NWS 1-OW 2-Neutral $20.00 $61,693 9.6x 8.0x 7.1x 17.3x 15.1x 12.8x 22.4x 17.7x 14.1x
Viacom VIA 2-EW 2-Neutral $40.78 $27,561 10.5x 9.6x 8.9x 17.2x 15.3x 13.7x 16.9x 16.7x 12.9x
Entertainment Average 9.0x 8.0x 7.3x 16.4x 14.5x 12.6x 17.1x 16.9x 13.1x
Cable**
Comcast CMCSK 2-EW 2-Neutral $20.06 $62,416 7.4x 6.7x 6.2x 28.0x 24.6x 19.8x 31.1x 20.9x 14.9x
Liberty Global LBTYA 1-OW 2-Neutral $35.15 $13,733 9.4x 6.7x 5.8x NM NM 29.1x 30.4x 12.9x 11.8x
Cable Average 8.4x 6.7x 6.0x 28.0x 24.6x 24.5x 30.7x 16.9x 13.4x
Broadcasting***
CBS Corp CBS 2-EW 3-Negative $22.79 $16,458 7.6x 7.1x 7.2x 12.3x 11.7x 11.6x 10.0x 9.3x 9.7x
Clear Channel CCU 2-EW 3-Negative $28.24 $14,001 9.2x 9.4x 9.4x 15.0x 20.3x 19.8x 11.8x 15.6x 15.3x
Broadcasting Average 8.4x 8.3x 8.3x 13.7x 16.0x 15.7x 10.9x 12.5x 12.5x
Newspapers****
Gannett GCI 3-UW 3-Negative $30.75 $7,079 4.9x 5.5x 6.1x 7.0x 7.6x 8.3x 6.3x 6.8x 7.4x
New York Times NYT 3-UW 3-Negative $19.43 $2,793 7.2x 8.4x 8.7x 17.2x 21.4x 22.3x 9.6x 14.1x 14.6x
Newspapers Average 6.1x 6.9x 7.4x 12.1x 14.5x 15.3x 8.0x 10.4x 11.0x
Outdoor***
Clear Channel Outdoor CCO 2-EW 3-Negative $19.92 $7,091 9.8x 9.4x 8.9x 28.8x 33.2x 28.6x 21.0x 25.0x 25.0x
Lamar LAMR 2-EW 3-Negative $36.71 $3,365 11.3x 11.2x 10.7x 95.2x 107.5x 96.3x 26.5x 22.4x 22.4x
*Covered by Lehman Brothers Entertainment Analyst Anthony DiClemente.

**Covered by Lehman Brothers Cable and Satellite Communications Analyst Vijay Jayant.
***Covered by Lehman Brothers Broadcasting Analyst Anthony DiClemente.
****Covered by Lehman Brothers Publishing and Advertising Services Analyst Craig Huber.
Figure 5: Retail and Internet Retail Comparative Valuation

LB Stock LB Sector Price Market EV/EBITDA Multiple GAAP P/E Multiple FCF Multiple
Internet Ticker Rating Rating 4/2/08 Cap ($M) 2007 2008E 2007 2008E 2007 2008E
Bed Bath & Beyond BBBY -- -- $31.50 $8,348 10.1x 9.3x 14.7x 13.2x 12.2x 10.9x
Williams-Sonoma WSM -- -- $26.10 $2,821 8.1x 7.3x 14.5x 12.7x 8.9x 7.8x
Best Buy BBY -- -- $43.94 $18,956 8.3x 7.3x 15.9x 13.8x 11.5x 9.8x
Circuit City CC -- -- $4.65 $767 7.3x 5.9x 7.4x 5.2x 2.5x 1.9x
Tiffany TIF -- -- $43.51 $5,769 10.4x 9.4x 20.7x 18.2x 14.4x 12.9x
Specialty Retailing Average 8.8x 7.8x 14.6x 12.6x 9.9x 8.6x
Wal-Mart WMT 1-OW 2-Neutral $54.46 $217,731 8.0x 7.3x 17.0x 15.3x 11.1x 10.1x
Target TGT 1-OW 2-Neutral $53.45 $44,593 8.3x 7.4x 14.8x 13.0x 7.4x 6.7x
Costco COST 2-EW 2-Neutral $66.25 $29,475 9.7x 8.9x 25.9x 22.8x 16.8x 15.3x
Broadlines Average 8.6x 7.9x 19.2x 17.0x 11.8x 10.7x
Amazon.com AMZN 2-EW 2-Neutral $77.37 $33,037 26.0x 19.5x 68.2x 42.7x 25.6x 21.2x
eBay EBAY 2-EW 2-Neutral $31.76 $43,450 11.0x 9.8x 149.4x 22.8x 17.3x 16.2x
Blue Nile NILE 2-EW 2-Neutral $50.67 $852 20.9x 19.0x 48.4x 35.3x 20.4x 16.0x
Internet Average 20.1x 13.5x 88.7x 40.0x 51.6x 27.8x
Note: All retail estimates are from FactSet. Lehman Brothers ratings for Wal-Mart, Target, and Costco ratings are from Department Stores/Broadlines Analyst Robert Drbul.
Source: FactSet, company reports, Lehman Brothers estimates
April 07, 2008 13

Figure 6: Preview of Upcoming Quarter and 2008E ($ millions, except per share data)
Revenue EPS EBITDA
Lehman Lehman Lehman
Brothers First Call - 04/02/2008 Brothers First Call - 04/02/2008 Brothers First Call - 04/02/2008
Qtr Ending Estimate Low Mean High Estimate Low Mean High Estimate Low Mean High
Yahoo! Mar-08 $1,329 $1,287 $1,320 $1,364 $0.08 $0.06 $0.09 $0.13 $426 $415 $434 $536
eBay Mar-08 $2,028 $2,025 $2,064 $2,131 $0.38 $0.38 $0.39 $0.41 $737 $654 $758 $789
Google Mar-08 $3,580 $3,301 $3,607 $3,777 $4.46 $3.88 $4.54 $4.94 $2,084 $2,015 $2,144 $2,396
Amazon.com Mar-08 $4,075 $4,036 $4,084 $4,154 $0.31 $0.29 $0.32 $0.38 $304 $250 $304 $327
IAC/InterActiveCorp Mar-08 $1,487 $1,462 $1,536 $1,700 $79.67 $0.26 $0.31 $0.41 $0 $154 $169 $181
Expedia Mar-08 $650 $627 $656 $690 $0.18 $0.12 $0.16 $0.18 $136 $133 $138 $148
Orbitz Mar-08 $213 $224 $238 $259 $0.07 $0.05 $0.12 $0.19 $29 $30 $36 $39
Blue Nile Mar-08 $70 $67 $68 $70 $0.13 $0.13 $0.14 $0.16 $5 $3 $5 $5
Netflix Mar-08 $326 $323 $326 $329 $0.22 $0.18 $0.21 $0.24 $96 $27 $77 $96
Harris Interactive Mar-08 $63 $56 $61 $63 $0.03 ($0.01) $0.01 $0.03 $6 $4 $4 $6
Greenfield Online Mar-08 $32 $31 $32 $33 $0.09 $0.01 $0.08 $0.11 $7 $6 $7 $8
Alloy Apr-08 - - - - - - - - - - - -
TechTarget Mar-08 $24 $23 $23 $24 $0.05 $0.02 $0.03 $0.05 $4 $4 $4 $4
Dice Holdings Mar-08 $39 $39 $40 $40 $0.05 $0.05 $0.06 $0.07 $16 $15 $16 $16
Revenue EPS EBITDA

Lehman Lehman Lehman
Brothers First Call - 04/02/2008 Brothers First Call - 04/02/2008 Brothers First Call - 04/02/2008
Year Ending Estimate Low Mean High Estimate Low Mean High Estimate Low Mean High
Yahoo! 2008 $5,645 $5,500 $5,626 $6,000 $0.35 $0.29 $0.43 $0.55 $1,850 $1,800 $1,877 $2,180
eBay 2008 $8,674 $8,514 $8,745 $9,013 $1.65 $1.60 $1.66 $1.72 $3,135 $2,757 $3,195 $3,471
Google 2008 $15,703 $15,310 $16,190 $17,210 $18.92 $18.06 $19.55 $21.16 $9,027 $8,790 $9,312 $10,118
Amazon.com 2008 $19,303 $19,032 $19,326 $19,700 $1.53 $1.38 $1.54 $1.70 $1,383 $935 $1,357 $1,476
IAC/InterActiveCorp 2008 $6,558 $6,346 $6,690 $6,900 $464.29 $1.47 $1.62 $1.88 $0 $803 $961 $1,099
Expedia 2008 $3,022 $2,978 $3,038 $3,105 $1.30 $1.08 $1.18 $1.30 $800 $635 $796 $828
Orbitz 2008 $887 $870 $968 $1,053 $0.55 $0.34 $0.67 $0.89 $151 $156 $164 $172
Blue Nile 2008 $354 $350 $353 $360 $1.06 $1.03 $1.06 $1.10 $33 $26 $31 $34
Netflix 2008 $1,376 $1,283 $1,355 $1,389 $1.28 $1.00 $1.22 $1.32 $416 $152 $338 $417
Harris Interactive 2008 $262 $238 $246 $262 $0.18 $0.09 $0.13 $0.18 $30 $20 $23 $26
Greenfield Online 2008 $150 $148 $149 $152 $0.65 $0.55 $0.62 $0.68 $41 $35 $39 $42
Alloy 2009 $231 $258 $258 $258 N/A - - - $21 $26 $26 $26
TechTarget 2008 $120 $118 $120 $121 $0.45 $0.28 $0.37 $0.45 $34 $33 $34 $34
Dice Holdings 2008 $169 $167 $169 $171 $0.31 $0.30 $0.31 $0.33 $73 $67 $72 $74
(1) EPS estimates are Pro Forma for stock option expense for EBAY, GOOG, EXPE, OWW, IACI, and TTGT.
(2) EPS estimates are GAAP for YHOO, AMZN, NFLX, NILE, OSTK, HPOL, SRVY and DHX.
Source: Reuters, company reports, Lehman Brothers estimates
14 April 07, 2008

Figure 7: Internet Coverage Universe, Year-to-Date Stock Performance, 2008

Price as of Market QTD YTD
Company 4/2/2008 Cap. (mil) Return Return
Yahoo! $27.82 $38,799 -4% 20%
Google $465.70 $147,259 6% -33%
eBay $31.76 $43,450 6% -4%
Amazon.com $77.37 $33,037 9% -16%
Large Cap Average 4% -8%
IAC/InterActiveCorp $21.39 $6,413 3% -21%

Expedia $25.13 $8,053 15% -21%
Orbitz $7.67 $648 11% -10%
Netflix $36.35 $2,437 5% 37%
Blue Nile $50.67 $852 -6% -26%
Harris Interactive $2.77 $152 1% -35%
Greenfield Online $11.29 $305 -5% -23%
Alloy $7.40 $106 1% -21%
TechTarget $15.11 $617 7% 2%
Dice Holdings $8.84 $581 -1% 11%
Total Universe Average 3% -11%
NASDAQ 2,361.40 4% -11%

S&P 500 1,367.53 3% -7%
Source: FactSet
Figure 8: Historical Annual Stock Performance

Price as of Market YTD
Company 4/2/2008 Cap ($ mil.) Return 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995
Yahoo! $27.82 $38,799 20% -9% -35% 4% 67% 175% -8% -41% -86% 265% 584% 510% -49% N/A
Google $465.70 $147,259 -33% 50% 11% 115% 92% N/A N/A N/A N/A N/A N/A N/A N/A N/A
eBay $31.76 $43,450 -4% 10% -30% -26% 80% 91% 1% 103% -47% 56% 410% N/A N/A N/A
Amazon.com $77.37 $33,037 -16% 135% -16% 6% -16% 179% 75% -30% -80% 42% 967% 190% N/A N/A
Large Cap Average -8% 47% -18% 25% 44% 148% 23% 10% -71% 121% 654% N/A N/A N/A
InterActiveCorp $21.39 $6,413 -21% -28% 31% -49% -19% 48% -16% 81% -30% 67% 29% 117% -32% 223%
Expedia $25.13 $8,053 -21% 51% -12% 0% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Orbitz $7.67 $648 -10% -41% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Netflix $36.35 $2,437 37% 3% -4% 119% -55% 396% -29% N/A N/A N/A N/A N/A N/A N/A
Blue Nile $50.67 $852 -26% 84% -8% 46% -3% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Overstock.com $12.02 $285 -23% -2% -44% -59% 247% 53% -1% N/A N/A N/A N/A N/A N/A N/A
Harris Interactive $2.77 $152 -35% -15% 17% -45% -5% 181% 2% -21% -72% -27% N/A N/A N/A N/A
Greenfield Online $11.29 $305 -23% 2% 144% -73% 18% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Alloy $7.40 $106 -21% -18% 0% -12% 55% -52% -49% 180% -51% 19% N/A N/A N/A N/A
TechTarget $15.11 $617 2% 15% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Dice Holdings $8.84 $581 11% -40% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Total Universe Average -11% 13% 4% 2% 44% 134% -3% 45% -61% 70% 497% 272% -40% 223%
NASDAQ 2,361.40 -11% 10% 10% 1% 9% 50% -32% -21% -39% 86% 40% 22% 23% 40%
S&P 500 1,367.53 -7% 4% 14% 3% 9% 26% -23% -13% -10% 20% 27% 31% 20% 34%
Source: FactSet
April 07, 2008 15

Figure 9: Stock Performance Seasonality – Large Cap

Yahoo! Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q 24% 23% -18% -10% 8% 47% 4% -48% -21% 42% 33% 65% N/A 12%
2Q NA -13% 2% 2% 50% 36% -20% 27% -28% 2% 70% 26% -36% 10%
3Q NA -1% -23% -2% -7% 8% -35% -56% -27% 4% 65% 113% 1% 3%
4Q NA -13% 1% 16% 11% 27% 71% 101% -67% 141% 83% 38% -20% 32%
Full Year 24% -9% -35% 4% 67% 175% -8% -41% -86% 265% 584% 510% -49% 115%
Google Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -36% -1% -6% -6% N/A N/A N/A N/A N/A N/A N/A N/A N/A -12%
2Q NA 14% 8% 63% N/A N/A N/A N/A N/A N/A N/A N/A N/A 28%
3Q NA 9% -4% 8% 29% N/A N/A N/A N/A N/A N/A N/A N/A 10%
4Q NA 22% 15% 31% 49% N/A N/A N/A N/A N/A N/A N/A N/A 29%
Full Year -36% 50% 11% 115% 92% N/A N/A N/A N/A N/A N/A N/A N/A 67%
eBay Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -10% 10% -9% -36% 7% 26% -15% 10% 41% 71% N/A N/A N/A 9%
2Q NA -3% -25% -11% 33% 22% 9% 89% -38% 10% N/A N/A N/A 9%
3Q NA 21% -3% 25% 0% 3% -14% -33% 26% -7% -5% N/A N/A 1%
4Q NA -15% 6% 5% 27% 20% 28% 46% -52% -11% 435% N/A N/A 49%
Full Year -10% 10% -30% -26% 80% 91% 1% 103% -47% 56% 410% N/A N/A 65%
Amazon.com Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -23% 1% -23% -23% -18% 38% 32% -34% -12% 61% 42% N/A N/A 4%
2Q NA 72% 6% -3% 26% 40% 14% 38% -46% -27% 133% -11% N/A 22%
3Q NA 36% -17% 37% -25% 33% -2% -58% 6% 28% 12% 182% N/A 21%
4Q NA -1% 23% 4% 8% 9% 19% 81% -60% -5% 188% 16% N/A 26%
Full Year -23% 135% -16% 6% -16% 179% 75% -30% -80% 42% 967% 190% N/A 132%
IAC/InterActiveCorp Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -23% 1% 4% -19% -7% 17% 16% 23% -18% 8% 6% 7% -11% 0%
2Q NA -8% -10% 8% -5% 47% -26% 17% -4% 12% -8% 23% -3% 4%
3Q NA -14% 9% -32% -27% -16% -17% -36% 1% -3% -23% 30% -22% -12%
4Q NA -9% 29% 12% 25% 2% 18% 52% -11% 43% 70% 27% 1% 22%
Full Year -23% -28% 31% -34% -19% 48% -16% 40% -30% 67% 29% 117% -32% 15%
Expedia Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -31% 10% -15% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -12%
2Q NA 26% -26% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 0%
3Q NA 9% 5% -18% N/A N/A N/A N/A N/A N/A N/A N/A N/A -2%
4Q NA -1% 34% 21% N/A N/A N/A N/A N/A N/A N/A N/A N/A 18%
Full Year -31% 51% -12% 0% N/A N/A N/A N/A N/A N/A N/A N/A N/A 13%
S&P 500 Average

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -10% 0% 4% -3% 1% -4% 0% -12% 2% 5% 14% 2% 5% 0%
2Q NA 6% -2% 1% 1% 15% -14% 6% -3% 7% 3% 17% -36% 0%
3Q NA 2% 5% 3% -2% 2% -18% -15% -1% -7% -10% 7% 2% -3%
4Q NA -4% 6% 2% 9% 12% 8% 10% -8% 15% 21% 2% 8% 7%
Full Year -10% 4% 14% 3% 9% 26% -23% -13% -10% 20% 27% 31% -49% 3%
Source: FactSet
16 April 07, 2008

Figure 10: Stock Performance Seasonality – Small Cap

Orbitz Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -19% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -19%
2Q NA N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
4Q NA -25% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -25%
Full Year -19% NA N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Netflix Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q 30% -10% 7% -12% 25% 85% N/A N/A N/A N/A N/A N/A N/A 21%
2Q NA -16% -6% 51% 6% 25% -9% N/A N/A N/A N/A N/A N/A 8%
3Q NA 7% -16% 58% -57% 31% -31% N/A N/A N/A N/A N/A N/A -1%
4Q NA 28% 14% 4% -20% 63% 14% N/A N/A N/A N/A N/A N/A 17%
Full Year 30% 3% -4% 119% -55% 396% -29% N/A N/A N/A N/A N/A N/A 72%
Blue Nile Average

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -20% 10% -13% 0% N/A N/A N/A N/A N/A N/A N/A N/A N/A -6%
2Q NA 49% -9% 18% 32% N/A N/A N/A N/A N/A N/A N/A N/A 23%
3Q NA 56% 13% -3% -10% N/A N/A N/A N/A N/A N/A N/A N/A 14%
4Q NA -28% 1% 27% -18% N/A N/A N/A N/A N/A N/A N/A N/A -4%
Full Year -20% 84% -8% 46% -3% N/A N/A N/A N/A N/A N/A N/A N/A 30%
Harris Interactive Average

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -36% 20% 30% -42% 0% 86% 18% 3% -50% N/A N/A N/A N/A 3%
2Q NA -11% 1% 6% -19% 18% -2% -34% -26% N/A N/A N/A N/A -8%
3Q NA -19% 7% -12% -2% 9% -32% -12% -7% N/A N/A N/A N/A -9%
4Q NA -1% -17% 1% 20% 18% 28% 32% -18% -27% N/A N/A N/A 4%
Total -36% -15% 17% -45% -5% 181% 2% -21% -72% 27% N/A N/A N/A 8%
Greenfield Online Average

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -19% 11% 2% -11% N/A N/A N/A N/A N/A N/A N/A N/A N/A -4%
2Q NA 0% 24% -38% N/A N/A N/A N/A N/A N/A N/A N/A N/A -5%
3Q NA -4% 40% -55% 9% N/A N/A N/A N/A N/A N/A N/A N/A -3%
4Q NA -4% 38% 8% 8% N/A N/A N/A N/A N/A N/A N/A N/A 12%
Full Year -19% 2% 144% -73% 18% N/A N/A N/A N/A N/A N/A N/A N/A 23%
Alloy Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -22% 3% 16% -27% -12% -54% -30% 14% 6% N/A N/A N/A N/A -12%
2Q NA -16% -22% -13% 35% 29% -4% 64% -33% -14% N/A N/A N/A 3%
3Q NA -6% 13% -6% -38% -13% -42% -14% -24% 14% N/A N/A N/A -13%
4Q NA 0% -3% 46% 113% -7% 32% 74% -10% 21% N/A N/A N/A 30%
Full Year -22% -18% 0% -12% 55% -52% 0% 180% -51% 19% N/A N/A N/A 13%
TechTarget Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -4% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -4%
3Q NA 32% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 32%
Full Year -4% NA N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Dice Holdings Average

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q 12% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 12%
Full Year 12% NA N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Large-Cap Average Return (YHOO, GOOG, EBAY, AMZN) Average

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -11% 8% -14% -19% -1% 37% 7% -24% 3% 58% 38% 65% N/A 12%
2Q NA 17% -2% 13% 36% 33% 1% 51% -37% -5% 102% 26% N/A 21%
3Q NA 16% -12% 17% -11% 15% -17% -49% 2% 8% 38% 147% 1% 13%
4Q NA -2% 11% 14% 24% 19% 39% 76% -59% 42% 235% 27% -20% 34%
Full Year -11% 47% -18% 25% 44% 148% 23% 10% -71% 121% 775% 510% N/A 147%
S&P 500 Average

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -10% 0% 4% -3% 1% -4% 0% -12% 2% 5% 14% 2% 5% 0%
2Q NA 6% -2% 1% 1% 15% -14% 6% -3% 7% 3% 17% -36% 0%
3Q NA 2% 5% 3% -2% 2% -18% -15% -1% -7% -10% 7% 2% -3%
4Q NA -4% 6% 2% 9% 12% 8% 10% -8% 15% 21% 2% 8% 7%
Full Year -10% 4% 14% 3% 9% 26% -23% -13% -10% 20% 27% 31% -49% 3%
Source: FactSet
April 07, 2008 17

Figure 11: Historical Average Multiples – Forward Year P/E, P/FCF, EV/EBITDA
Average Quarterly P/E - Forward Year
Large Cap
Quarter Yahoo! Google eBay Amazon.com Average IAC/InterActiveCorp Expedia
1Q04 70.2x -- 48.8x 41.0x 53.3x 26.7x --
2Q04 71.4x -- 53.0x 34.8x 53.0x 26.5x --
3Q04 66.1x -- 53.1x 30.3x 49.9x 22.3x --
4Q04 78.4x 52.6x 66.2x 31.6x 57.2x 23.9x --
1Q05 52.2x 36.6x 40.2x 34.7x 40.9x 20.3x --
2Q05 47.5x 34.0x 33.2x 35.2x 37.5x 18.6x --
3Q05 45.9x 39.6x 36.7x 40.4x 40.7x 17.7x 16.5x
4Q05 51.8x 44.9x 41.8x 43.4x 45.5x 18.4x 17.6x
1Q06 34.7x 33.6x 30.9x 34.0x 33.3x 17.0x 16.3x
2Q06 34.0x 30.7x 24.6x 32.9x 30.6x 15.9x 15.7x
3Q06 32.6x 30.1x 21.1x 29.1x 28.2x 15.1x 13.9x
4Q06 33.2x 33.8x 25.5x 34.2x 31.7x 18.2x 15.8x
1Q07 30.7x 26.4x 21.4x 29.3x 26.9x 18.3x 15.7x
2Q07 29.8x 25.9x 21.3x 39.3x 29.0x 18.1x 18.5x
3Q07 30.2x 25.9x 21.6x 44.0x 30.4x 16.1x 21.1x
4Q07 33.9x 32.5x 20.9x 45.5x 33.2x 15.8x 22.4x
1Q08 34.6x 21.3x 14.6x 30.4x 25.2x 11.8x 13.5x
Average Quarterly P/FCF - Forward Year

Large Cap
1Q04 44.7x -- 47.7x 36.3x 42.9x 16.6x --
2Q04 48.8x -- 51.5x 30.3x 43.6x 16.1x --
3Q04 45.8x -- 49.7x 26.2x 40.6x 12.8x --
4Q04 58.1x 83.8x 57.4x 28.9x 57.0x 14.6x --
1Q05 42.3x 45.0x 34.8x 25.3x 36.8x 14.0x --
2Q05 37.7x 40.6x 29.0x 22.8x 32.5x 13.8x --
3Q05 36.9x 47.8x 31.7x 27.3x 35.9x 18.4x 8.7x
4Q05 50.0x 52.4x 32.1x 27.7x 40.5x 27.0x 9.2x
1Q06 33.0x 33.5x 26.4x 23.1x 29.0x 23.3x 9.0x
2Q06 29.2x 34.5x 20.9x 22.4x 26.7x 18.1x 8.5x
3Q06 30.8x 39.3x 19.6x 20.0x 28.0x 15.0x 7.8x
4Q06 28.3x 55.4x 24.4x 25.0x 33.3x 16.6x 9.1x
1Q07 27.6x 44.1x 20.4x 22.2x 28.6x 16.7x 11.0x
2Q07 26.7x 40.5x 21.3x 28.7x 29.3x 17.3x 13.4x
3Q07 25.1x 37.9x 21.4x 31.3x 28.9x 14.9x 14.7x
4Q07 28.9x 46.1x 20.5x 30.1x 31.4x 14.4x 15.4x
1Q08 32.9x 29.1x 13.9x 19.1x 23.8x 10.1x 10.0x
Average Quarterly EV/EBITDA - Forward Year

Large Cap
1Q04 23.7x -- 29.7x 31.8x 28.4x 11.4x --
2Q04 24.0x -- 32.8x 27.6x 28.1x 10.9x --
3Q04 25.3x -- 32.0x 24.0x 27.1x 7.8x --
4Q04 32.5x 29.9x 40.1x 24.6x 31.8x 8.7x --
1Q05 21.9x 20.7x 22.9x 20.3x 21.5x 7.4x --
2Q05 21.1x 21.3x 18.7x 17.4x 19.6x 7.0x --
3Q05 20.4x 24.9x 21.2x 20.2x 21.7x 7.4x 9.2x
4Q05 23.0x 26.8x 26.0x 21.7x 24.4x 7.0x 9.6x
1Q06 14.5x 19.3x 18.6x 16.7x 17.3x 7.0x 8.0x
2Q06 13.2x 17.4x 14.3x 16.0x 15.2x 6.3x 7.7x
3Q06 11.9x 16.9x 11.7x 13.8x 13.7x 6.1x 7.4x
4Q06 11.6x 20.2x 15.3x 16.3x 15.8x 7.9x 8.9x
1Q07 10.9x 15.1x 12.1x 13.2x 12.8x 8.4x 8.8x
2Q07 10.9x 15.1x 12.2x 18.8x 14.2x 8.8x 10.5x
3Q07 10.6x 15.4x 12.7x 22.7x 15.4x 7.1x 11.6x
4Q07 11.2x 20.1x 12.4x 24.0x 16.9x 6.9x 12.2x
1Q08 11.1x 12.0x 12.0x 15.3x 11.6x 4.4x 6.9x
18 April 07, 2008

Figure 12: Historical Average Multiples – Forward Year P/E, P/FCF, EV/EBITDA
Average Quarterly P/E - Forward Year

90.0x
80.0x
70.0x
60.0x
50.0x
40.0x Yahoo!
30.0x Amazon
Google
20.0x eBay
10.0x Expedia
IACI
0.0x
04
04
04
04
05
05
05
05
06
06
06
06
07
07
07
07
08
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
Average Quarterly P/FCF - Forward Year
90.0x
80.0x
70.0x
60.0x
50.0x
40.0x Yahoo!
30.0x Google
Amazon
20.0x
eBay
10.0x IACI
0.0x Expedia
04
04
04
04
05
05
05
05
06
06
06
06
07
07
07
07
08
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
Average Quarterly EV/EBITDA - Forward Year

45.0x
40.0x
35.0x
30.0x
25.0x Amazon
20.0x Google
15.0x eBay
Yahoo!
10.0x
Expedia
5.0x IACI
0.0x
04
04
04
04
05
05
05
05
06
06
06
06
07
07
07
07
08
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
April 07, 2008 19

Figure 13: Short Interest by Company, 2001–08 Year to Date (shares in millions)
Yahoo! Google eBay Amazon.com IAC/InterActiveCorp Expedia
Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares
2008 Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short
Mar-08 49.8 1337.2 4% 4.9 319.9 2% 29.2 1327.9 2% 36.4 416.8 9% 8.8 252.4 3% 18.3 260.0 7%
Feb-08 55.3 1337.2 4% 4.3 319.9 1% 28.4 1353.5 2% 31.8 416.8 8% 9.6 258.0 4% 16.2 260.0 6%
Jan-08 42.6 1336.4 3% 4.3 319.9 1% 26.3 1353.5 2% 30.8 416.0 7% 9.7 258.0 4% 15.5 258.9 6%
2007
Dec-07 39.1 1336.4 3% 4.1 317.9 1% 22.7 1353.5 2% 30.9 415.2 7% 10.0 258.0 4% 15.7 258.9 6%
Nov-07 58.3 1336.4 4% 5.5 317.9 2% 24.9 1353.5 2% 33.3 415.2 8% 11.8 258.0 5% 17.2 258.9 7%
Oct-07 66.1 1339.6 5% 5.0 317.9 2% 24.9 1353.5 2% 32.4 415.2 8% 11.9 262.6 5% 19.7 254.4 8%
Sep-07 51.8 1339.6 4% 6.6 316.6 2% 32.0 1358.5 2% 36.8 413.4 9% 12.4 262.6 5% 18.4 254.4 7%
Aug-07 62.3 1339.6 5% 5.4 316.6 2% 35.6 1358.5 3% 35.8 413.4 9% 13.5 262.6 5% 22.7 279.3 8%
Jul-07 70.8 1343.9 5% 6.4 316.6 2% 30.1 1358.5 2% 40.6 413.4 10% 13.5 261.0 5% 13.5 277.5 5%
Jun-07 72.6 1343.9 5% 6.2 315.5 2% 32.5 1363.8 2% 46.2 409.7 11% 14.7 261.0 6% 14.6 277.5 5%
May-07 79.3 1343.9 6% 4.0 315.5 1% 34.0 1363.8 2% 53.9 409.7 13% 16.1 261.0 6% 15.0 277.5 5%
Apr-07 79.0 1356.5 6% 4.4 315.5 1% 35.4 1363.8 3% 48.5 409.7 12% 16.4 260.1 6% 14.8 276.6 5%
Mar-07 82.3 1356.5 6% 5.0 314.9 2% 36.7 1369.0 3% 46.6 414.7 11% 15.7 260.1 6% 13.8 276.6 5%
Feb-07 79.9 1356.5 6% 5.1 314.9 2% 32.8 1369.0 2% 46.1 414.7 11% 14.4 268.1 5% 12.2 275.5 4%
Jan-07 84.1 1360.2 6% 5.8 314.9 2% 34.5 1394.1 2% 44.9 411.9 11% 13.8 268.1 5% 13.6 305.5 4%
2006
Dec-06 78.1 1360.2 6% 6.2 313.5 2% 37.2 1394.1 3% 42.8 411.9 10% 14.6 268.1 5% 12.9 305.5 4%
Nov-06 84.3 1360.2 6% 7.4 313.5 2% 40.6 1394.1 3% 42.8 411.9 10% 13.7 268.1 5% 12.8 305.5 4%
Oct-06 77.9 1381.2 6% 7.1 313.5 2% 47.3 1394.1 3% 44.3 411.9 11% 12.5 272.7 5% 13.7 304.6 4%
Sep-06 87.2 1381.2 6% 6.6 310.6 2% 49.0 1415.4 3% 43.6 418.9 10% 14.5 272.7 5% 14.8 304.6 5%
Aug-06 92.3 1381.2 7% 5.8 310.6 2% 51.4 1415.4 4% 40.2 418.9 10% 13.2 272.7 5% 15.9 304.6 5%
Jul-06 87.7 1408.8 6% 5.8 310.6 2% 50.0 1415.4 4% 36.5 418.9 9% 14.0 290.5 5% 16.3 324.0 5%
Jun-06 81.3 1408.8 6% 6.3 310.0 2% 46.4 1410.1 3% 36.9 417.9 9% 14.7 290.5 5% 18.4 324.0 6%
May-06 78.3 1408.8 6% 4.2 310.0 1% 46.3 1410.1 3% 34.4 417.9 8% 14.1 290.5 5% 18.0 324.0 6%
Apr-06 75.8 1414.5 5% 7.2 310.0 2% 40.7 1410.1 3% 30.5 417.9 7% 13.7 294.7 5% 18.5 323.1 6%
Mar-06 73.5 1417.9 5% 4.3 304.1 1% 42.9 1393.8 3% 35.1 416.9 8% 12.1 294.7 4% 18.1 323.1 6%
Feb-06 77.7 1414.5 5% 4.9 304.1 2% 43.0 1410.1 3% 34.7 417.9 8% 11.0 294.7 4% 17.3 317.4 5%
Jan-06 82.4 1417.9 6% 7.9 304.1 3% 49.9 1393.8 4% 34.8 416.9 8% 16.4 294.7 6% 20.2 317.4 6%
2005
Dec-05 80.0 1418.7 6% 8.2 304.0 3% 51.9 1393.8 4% 37.9 414.5 9% 14.8 293.8 5% 17.9 317.4 6%
Nov-05 86.7 1418.7 6% 9.2 304.0 3% 45.7 1393.8 3% 29.6 414.5 7% 14.9 293.8 5% 16.7 317.4 5%
Oct-05 79.2 1409.0 6% 7.4 304.0 2% 38.2 1393.8 3% 29.4 414.5 7% 12.5 309.0 4% 16.7 309.0 5%
Sep-05 79.5 1409.0 6% 8.4 289.7 3% 38.7 1353.9 3% 34.8 411.9 8% 10.1 309.0 3% 17.7 309.0 6%
Aug-05 83.3 1409.0 6% 8.3 289.7 3% 40.7 1353.9 3% 37.8 411.9 9% 15.3 309.0 5% 22.1 309.0 7%
Jul-05 75.7 1396.5 5% 7.8 289.7 3% 36.7 1353.9 3% 36.8 411.9 9% 27.6 337.2 8% 0.0 357.2 0%
Jun-05 76.9 1396.5 6% 9.5 287.2 3% 39.5 1349.1 3% 36.9 410.9 9% 29.4 299.8 10% -- -- --
May-05 78.7 1396.5 6% 9.6 287.2 3% 38.4 1349.1 3% 40.6 410.9 10% 33.3 299.8 11% -- -- --
Apr-05 77.1 1388.0 6% 8.7 287.2 3% 28.3 1349.1 2% 31.0 410.9 8% 25.7 317.1 8% -- -- --
Mar-05 75.1 1387.2 5% 9.8 286.6 3% 35.2 1344.8 3% 31.8 410.6 8% 20.0 317.1 6% -- -- --
Feb-05 76.8 1374.8 6% 13.8 286.6 5% 34.4 1344.8 3% 29.4 408.1 7% 20.6 314.0 7% -- -- --
Jan-05 76.0 1374.8 6% 11.7 286.6 4% 39.6 1325.8 3% 27.0 408.1 7% 21.0 314.0 7% -- -- --
2004
Dec-04 82.3 1374.8 6% 12.1 285.9 4% 47.4 1325.8 4% 29.1 408.1 7% 22.7 314.0 7% -- -- --
Nov-04 85.3 1374.8 6% 12.4 285.9 4% 48.8 1325.8 4% 29.6 408.1 7% 22.2 314.0 7% -- -- --
Oct-04 90.5 1360.6 7% 9.2 285.9 3% 53.0 1325.8 4% 29.0 408.1 7% 22.1 315.7 7% -- -- --
Sep-04 91.0 1360.6 7% 4.1 274.7 1% 61.7 1322.0 5% 26.5 406.9 7% 24.3 315.7 8% -- -- --
Aug-04 88.2 1360.6 6% 0.0 274.7 0% 50.7 1322.0 4% 24.4 406.9 6% 20.6 315.7 7% -- -- --
Jul-04 90.1 1346.7 7% -- -- -- 55.1 1314.7 4% 29.3 406.9 7% 22.3 318.4 7% -- -- --
Jun-04 95.4 1346.7 7% -- -- -- 59.6 1314.7 5% 30.9 405.0 8% 24.6 318.4 8% -- -- --
May-04 100.8 1346.7 7% -- -- -- 55.4 1314.7 4% 32.2 405.0 8% 26.0 318.4 8% -- -- --
Apr-04 103.5 1332.0 8% -- -- -- 59.2 1308.0 5% 35.3 405.0 9% 24.6 318.4 8% -- -- --
Mar-04 96.0 1330.3 7% -- -- -- 59.4 1308.0 5% 28.1 404.3 7% 24.5 316.1 8% -- -- --
Feb-04 56.0 1314.7 4% -- -- -- 53.2 1292.0 4% 26.6 404.3 7% 24.8 323.5 8% -- -- --
Jan-04 63.0 1314.7 5% -- -- -- 67.4 1292.0 5% 34.1 401.1 9% 23.9 323.5 7% -- -- --
2003
Dec-03 63.7 1314.7 5% -- -- -- 68.4 1292.0 5% 33.7 401.1 8% 22.8 323.5 7% -- -- --
Nov-03 63.0 1314.7 5% -- -- -- 65.4 1292.0 5% 36.1 401.1 9% 22.9 323.5 7% -- -- --
Oct-03 77.3 1225.5 6% -- -- -- 72.3 1284.2 6% 43.1 401.1 11% 22.9 330.7 7% -- -- --
Sep-03 78.5 1220.2 6% -- -- -- 69.4 1284.2 5% 43.2 397.0 11% 21.6 330.7 7% -- -- --
Aug-03 61.2 1220.2 5% -- -- -- 72.8 1284.2 6% 43.5 397.0 11% 25.0 330.7 8% -- -- --
Jul-03 61.8 1206.4 5% -- -- -- 81.7 1270.0 6% 43.7 397.0 11% 30.9 247.7 12% -- -- --
Jun-03 54.4 1206.4 5% -- -- -- 72.5 1270.0 6% 45.3 391.7 12% 27.6 247.7 11% -- -- --
May-03 67.9 1206.4 6% -- -- -- 79.9 1270.0 6% 51.4 391.7 13% 23.3 225.6 10% -- -- --
Apr-03 72.5 1196.7 6% -- -- -- 83.8 1258.2 7% 48.9 391.7 12% 18.6 218.4 9% -- -- --
Mar-03 63.6 1195.0 5% -- -- -- 91.8 1258.2 7% 54.2 388.2 14% 13.1 215.6 6% -- -- --
Feb-03 58.3 1181.8 5% -- -- -- 82.9 1234.9 7% 53.5 388.2 14% 8.9 214.6 4% -- -- --
Jan-03 64.4 1181.8 5% -- -- -- 82.8 1234.9 7% 50.7 387.9 13% 12.3 214.6 6% -- -- --
2002
Dec-02 54.6 1181.8 5% -- -- -- 77.8 1234.9 6% 51.3 381.5 13% 11.8 191.9 6% -- -- --
Nov-02 64.1 1181.8 5% -- -- -- 82.3 1234.9 7% 55.5 381.5 15% 12.5 191.9 6% -- -- --
Oct-02 73.2 1201.1 6% -- -- -- 87.6 1222.2 7% 52.3 381.5 14% 10.1 191.8 5% -- -- --
Sep-02 76.7 1201.1 6% -- -- -- 94.8 1127.3 8% 47.3 380.5 12% 11.0 191.8 6% -- -- --
Aug-02 84.3 1201.1 7% -- -- -- 98.5 1127.3 9% 43.7 380.5 11% 10.4 191.8 5% -- -- --
Jul-02 66.1 1201.1 6% -- -- -- 65.5 1120.8 6% 41.3 380.5 11% 8.2 175.1 5% -- -- --
Jun-02 49.3 1195.8 4% -- -- -- 60.2 1120.8 5% 42.3 375.1 11% 16.7 175.1 10% -- -- --
May-02 53.3 1195.8 4% -- -- -- 51.1 1120.8 5% 43.3 375.1 12% 5.2 175.1 3% -- -- --
Apr-02 54.5 1189.9 5% -- -- -- 51.0 1117.9 5% 41.1 375.1 11% 4.2 170.3 2% -- -- --
Mar-02 54.7 1189.9 5% -- -- -- 55.1 1117.9 5% 43.8 373.3 12% 2.1 169.6 1% -- -- --
Feb-02 66.4 1143.5 6% -- -- -- 53.4 1100.5 5% 48.3 373.3 13% 2.0 169.6 1% -- -- --
Jan-02 88.4 1143.5 8% -- -- -- 61.7 1100.5 6% 58.2 373.3 16% 1.6 157.0 1% -- -- --
2001
Dec-01 85.8 1139.2 8% -- -- -- 72.1 1100.5 7% 64.0 371.8 17% 1.9 157.0 1% -- -- --
Nov-01 75.4 1139.2 7% -- -- -- 74.4 1100.5 7% 51.9 371.8 14% 1.8 157.0 1% -- -- --
Oct-01 81.1 1143.5 7% -- -- -- 83.7 1093.1 8% 48.7 371.8 13% 2.2 156.3 1% -- -- --
Sep-01 87.9 1145.7 8% -- -- -- 62.4 1093.1 6% 50.0 371.0 13% 2.3 156.3 2% -- -- --
Aug-01 86.3 1145.7 8% -- -- -- 52.9 1093.1 5% 51.8 371.0 14% 1.7 156.3 1% -- -- --
Jul-01 84.2 1139.5 7% -- -- -- 56.9 1068.3 5% 47.9 362.7 13% 2.0 154.7 1% -- -- --
Jun-01 80.6 1133.8 7% -- -- -- 56.7 1080.7 5% 51.1 359.2 14% 1.3 154.7 1% -- -- --
May-01 79.1 1133.8 7% -- -- -- 52.6 1080.7 5% 51.3 359.2 14% 1.5 154.7 1% -- -- --
Apr-01 75.0 1130.9 7% -- -- -- 59.6 1077.2 6% 50.3 359.2 14% 1.4 152.8 1% -- -- --
Mar-01 61.9 1128.4 5% -- -- -- 48.8 1071.6 5% 49.9 358.6 14% 1.6 152.5 1% -- -- --
Feb-01 57.3 1116.8 5% -- -- -- 43.5 1071.6 4% 44.3 357.1 12% 1.7 152.5 1% -- -- --
Jan-01 69.7 1116.8 6% -- -- -- 41.6 1071.6 4% 43.3 357.1 12% 1.0 152.5 1% -- -- --
Source: Bloomberg, FactSet, Lehman Brothers estimates
20 April 07, 2008

Figure 14: Short Interest by Company, 2001–08 Year to Date (continued) (shares in millions)
Netflix Blue Nile Harris Interactive Greenfield Online Alloy TechTarget Orbitz
Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares
2008 Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short
Mar-08 21.0 61.5 34% 5.8 15.8 37% 4.2 53.3 8% 1.7 26.3 6% 0.0 15.4 0% 1.3 41.9 3% 3.8 83.2 5%
Feb-08 21.9 61.2 36% 4.8 16.1 30% 3.6 53.3 7% 1.6 26.3 6% 0.1 14.1 1% 1.1 40.4 3% 2.6 83.0 3%
Jan-08 21.1 65.8 32% 4.5 16.1 28% 3.3 53.1 6% 1.5 26.2 6% 0.1 14.1 1% 1.0 40.4 2% 2.4 83.0 3%
2007
Dec-07 15.0 65.8 23% 4.3 16.1 27% 3.2 53.1 6% 1.1 26.2 4% 0.1 14.1 0% 0.7 40.4 2% 2.1 83.0 3%
Nov-07 16.0 65.8 24% 4.2 16.1 26% 3.5 53.1 7% 1.2 26.2 5% 0.1 14.0 1% 0.7 40.4 2% 2.1 83.0 3%
Oct-07 15.3 67.3 23% 3.3 15.9 21% 3.1 53.1 6% 1.2 25.9 5% 0.1 14.0 1% 0.6 40.3 2% 2.2 82.9 3%
Sep-07 14.9 67.3 22% 3.5 15.9 22% 3.5 53.1 7% 1.3 25.9 5% 0.1 14.0 1% 0.7 40.3 2% 0.5 82.9 1%
Aug-07 19.7 67.3 29% 2.8 15.9 18% 4.1 52.7 8% 1.7 25.9 6% 0.1 14.0 1% 0.8 40.3 2% 0.6 82.9 1%
Jul-07 14.7 68.3 22% 2.7 15.7 17% 3.9 52.7 7% 1.6 25.6 6% 0.1 14.0 1% 0.7 39.1 2% -- -- --
Jun-07 14.6 68.3 21% 2.5 15.7 16% 4.2 52.7 8% 0.2 25.6 1% 0.1 14.0 1% 0.1 39.1 0% -- -- --
May-07 12.7 68.3 19% 3.1 15.7 20% 4.8 52.7 9% 0.2 25.6 1% 0.1 13.6 1% 0.0 39.1 0% -- -- --
Apr-07 12.3 68.8 18% 4.0 15.8 26% 3.5 58.8 6% 0.2 25.6 1% 0.1 13.6 0% -- -- -- -- -- --
Mar-07 12.5 68.8 18% 3.6 15.8 23% 3.0 58.8 5% 0.4 25.6 1% 0.1 14.2 1% -- -- -- -- -- --
Feb-07 11.5 68.5 17% 4.1 16.0 26% 2.3 58.8 4% 0.3 25.4 1% 0.1 14.2 1% -- -- -- -- -- --
Jan-07 9.1 68.5 13% 4.1 16.0 26% 1.7 59.1 3% 0.4 25.4 1% 0.1 14.2 1% -- -- -- -- -- --
2006
Dec-06 8.5 68.5 12% 3.9 16.0 25% 1.9 59.1 3% 0.4 25.4 2% 0.1 14.2 1% -- -- -- -- -- --
Nov-06 8.7 68.5 13% 3.8 16.0 24% 2.1 59.1 4% 0.5 25.4 2% 0.3 12.4 2% -- -- -- -- -- --
Oct-06 11.1 68.2 16% 4.2 16.0 27% 2.4 58.8 4% 0.4 25.4 2% 0.3 12.4 2% -- -- -- -- -- --
Sep-06 12.0 68.1 18% 4.3 16.0 27% 2.7 58.8 5% 0.5 25.4 2% 0.7 12.4 5% -- -- -- -- -- --
Aug-06 11.3 68.1 17% 4.1 16.0 26% 2.3 61.8 4% 0.6 25.4 2% 0.8 12.4 7% -- -- -- -- -- --
Jul-06 13.5 59.5 23% 4.0 17.4 23% 2.3 61.8 4% 0.9 25.3 4% 0.9 12.4 7% -- -- -- -- -- --
Jun-06 12.9 59.5 22% 4.3 17.4 25% 2.3 61.8 4% 1.7 25.3 7% 1.3 12.4 11% -- -- -- -- -- --
May-06 12.3 59.5 21% 4.6 17.4 26% 1.9 61.8 3% 1.7 25.3 7% 1.2 12.4 10% -- -- -- -- -- --
Apr-06 14.0 55.4 25% 4.8 17.3 28% 1.8 61.6 3% 1.3 25.3 5% 1.1 11.7 9% -- -- -- -- -- --
Mar-06 15.2 55.4 27% 5.0 17.3 29% 1.8 61.6 3% 1.2 25.3 5% 0.9 11.7 8% -- -- -- -- -- --
Feb-06 15.5 54.4 28% 4.6 17.3 27% 1.6 61.6 3% 1.3 25.3 5% 0.9 11.7 8% -- -- -- -- -- --
Jan-06 13.9 54.4 26% 3.3 17.3 19% 1.6 61.6 3% 1.1 25.3 4% 0.9 11.7 7% -- -- -- -- -- --
2005
Dec-05 12.8 54.4 23% 3.1 17.3 18% 1.5 61.5 2% 1.3 25.3 5% 0.9 11.7 8% -- -- -- -- -- --
Nov-05 13.6 54.4 25% 3.9 17.3 22% 1.6 61.5 3% 1.4 25.3 6% 1.1 11.7 9% -- -- -- -- -- --
Oct-05 12.9 53.6 24% 4.3 17.5 25% 1.7 61.4 3% 1.6 25.3 6% 1.0 11.7 9% -- -- -- -- -- --
Sep-05 14.9 53.6 28% 4.5 17.5 26% 1.4 61.4 2% 1.8 25.3 7% 1.0 11.7 9% -- -- -- -- -- --
Aug-05 15.2 53.6 28% 4.4 17.5 25% 1.4 61.4 2% 2.0 25.3 8% 0.9 10.8 8% -- -- -- -- -- --
Jul-05 14.8 53.2 28% 4.6 17.6 26% 1.6 61.4 3% 2.6 25.2 10% 0.9 10.8 8% -- -- -- -- -- --
Jun-05 14.8 53.2 28% 4.2 17.6 24% 2.3 61.4 4% 2.0 25.2 8% 0.9 10.8 9% -- -- -- -- -- --
May-05 14.0 53.2 26% 3.7 17.6 21% 2.4 61.4 4% 2.1 25.2 8% 1.0 10.8 10% -- -- -- -- -- --
Apr-05 14.6 52.9 28% 2.9 17.7 16% 2.3 61.5 4% 1.9 21.3 9% 1.4 10.8 13% -- -- -- -- -- --
Mar-05 15.1 52.9 29% 2.7 17.7 15% 2.3 61.5 4% 1.7 21.3 8% 1.5 10.8 14% -- -- -- -- -- --
Feb-05 15.5 52.4 30% 2.5 17.7 14% 2.1 61.5 3% 1.7 21.9 8% 1.4 10.8 13% -- -- -- -- -- --
Jan-05 16.8 52.4 32% 2.0 17.7 11% 1.8 60.6 3% 1.3 21.9 6% 1.4 10.8 13% -- -- -- -- -- --
2004
Dec-04 19.1 52.4 36% 1.6 17.7 9% 1.1 60.6 2% 1.1 21.9 5% 1.2 10.8 11% -- -- -- -- -- --
Nov-04 19.5 52.4 37% 1.8 17.7 10% 1.1 60.6 2% 0.5 21.0 2% 1.4 10.8 13% -- -- -- -- -- --
Oct-04 21.9 52.2 42% 1.1 17.7 6% 1.3 57.0 2% 0.4 16.5 2% 1.5 10.8 14% -- -- -- -- -- --
Sep-04 18.8 52.2 36% 1.2 17.7 7% 1.3 57.0 2% 0.2 16.5 1% 1.5 10.8 14% -- -- -- -- -- --
Aug-04 18.2 52.2 35% 1.0 17.7 6% 1.2 56.9 2% 0.2 16.5 1% 1.5 10.7 14% -- -- -- -- -- --
Jul-04 19.8 51.6 38% 0.5 17.3 3% 1.2 56.9 2% 0.0 16.5 0% 1.6 10.7 15% -- -- -- -- -- --
Jun-04 20.2 51.6 39% 0.2 17.3 1% 1.2 56.9 2% -- -- -- 1.7 10.7 16% -- -- -- -- -- --
May-04 20.0 51.6 39% 0.0 17.3 0% 1.1 56.9 2% -- -- -- 1.6 10.7 15% -- -- -- -- -- --
Apr-04 19.1 51.5 37% -- -- -- 0.9 56.4 2% -- -- -- 1.4 10.5 14% -- -- -- -- -- --
Mar-04 18.7 51.5 36% -- -- -- 0.8 56.4 1% -- -- -- 1.4 10.5 14% -- -- -- -- -- --
Feb-04 12.0 49.5 24% -- -- -- 1.0 56.4 2% -- -- -- 1.4 10.5 13% -- -- -- -- -- --
Jan-04 19.0 49.5 38% -- -- -- 1.2 56.1 2% -- -- -- 1.2 10.5 11% -- -- -- -- -- --
2003
Dec-03 15.5 49.5 31% -- -- -- 1.4 56.1 3% -- -- -- 1.3 10.5 12% -- -- -- -- -- --
Nov-03 0.0 49.5 0% -- -- -- 1.5 56.1 3% -- -- -- 1.2 10.3 11% -- -- -- -- -- --
Oct-03 17.7 49.5 36% -- -- -- 1.2 55.4 2% -- -- -- 1.4 10.3 13% -- -- -- -- -- --
Sep-03 19.2 48.0 40% -- -- -- 0.7 55.4 1% -- -- -- 1.2 10.3 12% -- -- -- -- -- --
Aug-03 16.5 48.0 34% -- -- -- 0.6 63.3 1% -- -- -- 1.3 10.3 12% -- -- -- -- -- --
Jul-03 18.0 48.0 37% -- -- -- 0.5 53.6 1% -- -- -- 1.4 10.3 13% -- -- -- -- -- --
Jun-03 16.2 47.5 34% -- -- -- 0.4 53.6 1% -- -- -- 1.4 10.3 14% -- -- -- -- -- --
May-03 16.0 47.5 34% -- -- -- 0.2 53.6 0% -- -- -- 1.5 10.3 15% -- -- -- -- -- --
Apr-03 14.6 46.0 32% -- -- -- 0.3 52.5 0% -- -- -- 1.6 9.9 16% -- -- -- -- -- --
Mar-03 11.6 44.9 26% -- -- -- 0.3 52.5 1% -- -- -- 1.7 9.9 17% -- -- -- -- -- --
Feb-03 8.8 44.9 20% -- -- -- 0.1 52.5 0% -- -- -- 1.5 9.9 15% -- -- -- -- -- --
Jan-03 7.6 44.9 17% -- -- -- 0.0 52.5 0% -- -- -- 1.6 9.9 16% -- -- -- -- -- --
2002
Dec-02 6.7 44.3 15% -- -- -- 0.1 52.5 0% -- -- -- 1.6 9.9 17% -- -- -- -- -- --
Nov-02 7.7 44.3 17% -- -- -- 0.2 52.5 0% -- -- -- 1.7 9.8 18% -- -- -- -- -- --
Oct-02 7.6 44.1 17% -- -- -- 0.4 52.5 1% -- -- -- 1.8 9.8 18% -- -- -- -- -- --
Sep-02 7.2 44.1 16% -- -- -- 0.7 52.4 1% -- -- -- 1.6 9.8 16% -- -- -- -- -- --
Aug-02 5.1 44.1 12% -- -- -- 0.8 52.8 1% -- -- -- 1.6 9.8 16% -- -- -- -- -- --
Jul-02 3.4 42.9 8% -- -- -- 0.7 52.1 1% -- -- -- 1.7 9.8 18% -- -- -- -- -- --
Jun-02 1.2 42.9 3% -- -- -- 0.5 52.1 1% -- -- -- 1.6 9.8 17% -- -- -- -- -- --
May-02 0.0 41.2 0% -- -- -- 0.3 52.8 1% -- -- -- 1.6 9.8 16% -- -- -- -- -- --
Apr-02 -- -- -- -- -- -- 0.3 51.7 0% -- -- -- 1.3 9.7 14% -- -- -- -- -- --
Mar-02 -- -- -- -- -- -- 0.2 51.7 0% -- -- -- 1.4 9.7 15% -- -- -- -- -- --
Feb-02 -- -- -- -- -- -- 0.2 51.7 0% -- -- -- 0.7 9.7 7% -- -- -- -- -- --
Jan-02 -- -- -- -- -- -- 0.2 35.0 1% -- -- -- 0.4 8.2 5% -- -- -- -- -- --
2001
Dec-01 -- -- -- -- -- -- 0.2 35.0 1% -- -- -- 0.4 8.2 4% -- -- -- -- -- --
Nov-01 -- -- -- -- -- -- 0.3 35.0 1% -- -- -- 0.5 6.3 8% -- -- -- -- -- --
Oct-01 -- -- -- -- -- -- 0.8 34.4 2% -- -- -- 0.3 6.3 5% -- -- -- -- -- --
Sep-01 -- -- -- -- -- -- 0.4 34.4 1% -- -- -- 0.3 6.3 5% -- -- -- -- -- --
Aug-01 -- -- -- -- -- -- 0.1 34.4 0% -- -- -- 0.4 5.8 7% -- -- -- -- -- --
Jul-01 -- -- -- -- -- -- 0.0 34.2 0% -- -- -- 0.4 5.8 6% -- -- -- -- -- --
Jun-01 -- -- -- -- -- -- 0.0 34.2 0% -- -- -- 0.4 5.8 6% -- -- -- -- -- --
May-01 -- -- -- -- -- -- 0.0 34.3 0% -- -- -- 0.2 5.4 3% -- -- -- -- -- --
Apr-01 -- -- -- -- -- -- 0.0 34.3 0% -- -- -- 0.2 5.2 3% -- -- -- -- -- --
Mar-01 -- -- -- -- -- -- 0.0 34.3 0% -- -- -- 0.2 5.2 4% -- -- -- -- -- --
Feb-01 -- -- -- -- -- -- 0.0 34.3 0% -- -- -- 0.2 5.2 5% -- -- -- -- -- --
Jan-01 -- -- -- -- -- -- 0.0 34.3 0% -- -- -- 0.1 5.2 2% -- -- -- -- -- --
Dice Holdings
Shares Shares
2008 Short Out. % Short
Mar-08 2.0 62.2 0.0
Feb-08 1.8 62.0 3%
Jan-08 1.8 62.0 3%
2007
Dec-07 1.2 62.0 2%
Nov-07 1.0 62.0 2%
Oct-07 1.4 62.0 2%
Sep-07 0.5 62.0 1%
Aug-07 0.3 62.0 1%
Jul-07 -- -- --
Jun-07 -- -- --
May-07 -- -- --
Apr-07 -- -- --
Mar-07 -- -- --
Feb-07 -- -- --
Jan-07 -- -- --
Source: Bloomberg, FactSet, Lehman Brothers estimates
April 07, 2008 21

Figure 15: Annual Revenue and Growth, 1998–2008E ($ in millions)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E
Yahoo! 245 592 1,110 717 953 1,473 2,590 3,696 4,560 5,113 5,645
Y/Y Growth -- 141% 88% -35% 33% 55% 76% 43% 23% 12% 10%
Google -- 0 19 86 345 939 1,961 4,024 7,296 11,660 15,703
Y/Y Growth -- NA 8585% 352% 299% 172% 109% 105% 81% 60% 35%
eBay 86 225 431 749 1,214 2,165 3,271 4,552 5,970 7,672 8,674
Y/Y Growth -- 161% 92% 74% 62% 78% 51% 39% 31% 29% 13%
Amazon.com 610 1,640 2,762 3,122 3,933 5,264 6,921 8,490 10,711 14,836 19,303
Y/Y Growth -- 169% 68% 13% 26% 34% 31% 23% 26% 39% 30%
IAC/InterActiveCorp -- -- -- -- 3,029 3,823 4,182 5,417 5,909 6,373 6,558
Y/Y Growth -- -- -- -- -- 26% 9% 30% 9% 8% 3%
Expedia -- -- -- -- -- 1,401 1,843 2,119 2,238 2,665 3,022
Y/Y Growth -- -- -- -- -- -- 32% 15% 6% 19% 13%
Orbitz -- -- -- -- -- -- -- -- 759 850 887
Y/Y Growth -- -- -- -- -- -- -- -- -- 12% 4%
Netflix -- -- -- -- 153 272 506 682 997 1,205 1,376
Y/Y Growth -- -- -- -- -- 78% 86% 35% 46% 21% 14%
Blue Nile -- 14 44 49 72 129 169 203 252 319 354
Y/Y Growth -- -- 216% 10% 48% 79% 31% 20% 24% 27% 11%
Harris Interactive -- 37 56 75 121 137 164 209 214 234 267
Y/Y Growth -- -- 50% 35% 60% 13% 20% 27% 3% 9% 14%
Greenfield Online -- 7 15 14 15 26 44 89 100 129 150
Y/Y Growth -- -- 107% -9% 8% 74% 72% 101% 13% 29% 16%
Alloy -- -- -- -- -- -- 184 195 196 202 231
Y/Y Growth -- -- -- -- -- -- -- 6% 0% 3% 14%
TechTarget -- -- -- -- 27 32 47 67 79 95 120
Y/Y Growth -- -- -- -- -- 22% 44% 43% 18% 20% 26%
Dice Holdings -- -- -- -- -- -- 39 67 104 144 169
Y/Y Growth -- -- -- -- -- -- -- 73% 56% 38% 17%
Figure 16: Quarterly Revenue and Sequential Growth, 2003–07 ($ in millions)

1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07
Yahoo! 283 321 357 511 540 609 655 785 821 875 932 1,068 1,088 1,123 1,121 1,228 1,183 1,244 1,283 1,403
Q/Q Growth -1.0% 13.6% 11.0% 43.3% 5.7% 12.7% 7.6% 19.8% 4.6% 6.6% 6.5% 14.6% 1.8% 3.2% -0.1% 9.5% -3.7% 5.1% 3.1% 9.4%
Google 178 215 250 296 381 423 503 654 795 890 1,049 1,290 1,531 1,671 1,864 2,230 2,539 2,724 3,010 3,387
Q/Q Growth 30.8% 20.3% 16.7% 18.1% 28.7% 11.2% 18.9% 30.0% 21.6% 12.0% 17.8% 23.0% 18.7% 9.1% 11.6% 19.6% 13.9% 7.3% 10.5% 12.5%
eBay 476 509 531 648 756 773 806 936 1,032 1,086 1,106 1,329 1,390 1,411 1,449 1,720 1,768 1,834 1,889 2,181
Q/Q Growth 15.1% 6.9% 4.3% 22.1% 16.6% 2.3% 4.2% 16.1% 10.3% 5.3% 1.8% 20.2% 4.6% 1.5% 2.7% 18.7% 2.8% 3.8% 3.0% 15.4%
Amazon.com 1,084 1,100 1,134 1,946 1,530 1,387 1,462 2,541 1,902 1,753 1,858 2,977 2,279 2,139 2,307 3,986 3,015 2,886 3,262 5,673
Q/Q Growth -24.2% 1.5% 3.1% 71.5% -21.4% -9.3% 5.4% 73.7% -25.1% -7.8% 6.0% 60.2% -23.4% -6.1% 7.9% 72.8% -24.4% -4.3% 13.0% 73.9%
IAC/InterActiveCorp -- -- -- -- 1,019 976 957 1,235 1,063 1,302 1,360 1,691 1,351 1,429 1,409 1,720 1,490 1,510 1,513 1,860
Q/Q Growth -- -- -- -- NA -4.2% -2.0% 29.0% -13.9% 22.4% 4.4% 24.4% -20.1% 5.8% -1.4% 22.1% -13.4% 1.3% 0.2% 22.9%
Expedia -- -- -- -- 413 487 504 439 485 555 585 495 494 598 614 531 551 690 760 665
Q/Q Growth -- -- -- -- NA 17.8% 3.5% -12.9% 10.5% 14.4% 5.3% -15.4% -0.2% 21.2% 2.6% -13.5% 3.6% 25.3% 10.1% -12.4%
Orbitz -- -- -- -- -- -- -- -- -- -- -- -- 174 199 197 189 211 223 219 197
Q/Q Growth -- -- -- -- -- -- -- -- -- -- -- -- -- 14.4% -1.0% -4.1% 11.6% 5.7% -1.8%
Netflix 56 63 72 81 100 120 142 144 152 164 173 193 224 239 256 277 305 304 294 302
Q/Q Growth 23.2% 13.5% 14.3% 12.4% 23.6% 19.9% 17.7% 1.6% 5.9% 7.6% 5.3% 11.7% 16.1% 6.8% 6.9% 8.3% 10.1% -0.5% -3.2% 2.9%
Blue Nile 25 27 27 50 36 35 34 65 44 44 42 73 51 57 53 91 68 72 67 112
Q/Q Growth -18.7% 10.7% 0.7% 80.5% -27.8% -2.1% -3.2% 90.5% -31.7% -0.7% -4.2% 74.4% -30.8% 12.3% -6.4% 70.4% -25.2% 6.2% -6.6% 66.1%
Harris Interactive 32 36 32 34 33 40 39 53 51 54 49 55 52 59 48 57 53 57 55 63
Q/Q Growth -1.2% 11.2% -11.4% 7.2% -1.4% 18.4% -0.6% 33.7% -3.3% 6.6% -9.7% 12.0% -4.7% 12.5% -18.3% 17.8% -7.1% 8.7% -3.3% 13.6%
Greenfield Online 5 6 7 8 9 10 12 14 15 26 23 24 22 24 25 29 27 31 32 38
Q/Q Growth 3.4% 29.5% 18.5% 17.5% 4.1% 18.6% 17.5% 12.9% 12.5% 72.3% -11.9% 5.8% -12.1% 13.6% 0.0% 18.5% -6.8% 12.2% 4.9% 18.8%
Alloy -- -- -- -- 44 43 56 42 43 46 63 43 45 47 64 41 38 52 67 43
Q/Q Growth -- -- -- -- NA -1.7% 30.6% -25.2% 3.3% 6.6% 36.4% -31.2% 3.8% 4.2% 36.3% -35.8% -7.5% 36.7% 28.7% -35.2%
TechTarget -- -- -- -- -- -- -- -- 13.2 19.0 16 18 15 21 20 23 18 25 23 28
Q/Q Growth -- -- -- -- -- -- -- -- NA 44.4% -14.2% 12.1% -18.4% 38.9% -2.2% 14.1% -20.6% 34.1% -5.3% 21.9%
Dice Holdings -- -- -- -- -- -- -- -- -- -- -- -- 22 25 28 30 31 35 38 40
Q/Q Growth -- -- -- -- -- -- -- -- -- -- -- -- NA 15.7% 10.2% 6.3% 5.4% 12.0% 9.9% 3.1%
22 April 07, 2008

Figure 17: Annual EBITDA and Growth, 1998–2008E ($ in millions)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E
Yahoo! -- 96 388 (19) 206 477 1,022 1,557 1,906 1,927 1,850
Y/Y Growth -- -- 306% -- -- 132% 114% 52% 22% 1% -4%
Google -- -- -- 38 237 638 1,280 2,624 4,621 6,921 9,027
Y/Y Growth -- -- -- -- 532% 169% 100% 105% 76% 50% 30%
eBay 18 28 84 232 440 803 1,336 1,865 2,290 2,924 3,135
Y/Y Growth -- 56% 205% 175% 90% 82% 66% 40% 23% 28% 7%
Amazon.com (52) (316) (233) 40 262 437 566 686 706 1,095 1,383
Y/Y Growth -- -- -- -- 561% 66% 30% 21% 3% 55% 26%
IAC/InterActiveCorp -- -- -- -- 314 575 631 873 960 816 870
Y/Y Growth -- -- -- -- -- 83% 10% 38% 10% -15% 7%
Expedia -- -- -- -- -- 497 598 678 648 729 800
Y/Y Growth -- -- -- -- -- -- 20% 13% -4% 13% 10%
Orbitz -- -- -- -- -- -- -- -- 107 144 151
Y/Y Growth -- -- -- -- -- -- -- -- -- 35% 5%
Netflix -- -- -- -- -- 23 44 31 93 125 157
Y/Y Growth -- -- -- -- -- -- 90% -30% 204% 34% 26%
Blue Nile -- -- -- (3) 5 13 16 20 23 30 33
Y/Y Growth -- -- -- -- -- 134% 30% 21% 15% 31% 12%
Harris Interactive -- (13) (25) (20) 7 15 19 18 22 22 28
Y/Y Growth -- -- -- -- -- 111% 31% -10% 23% 0% 30%
Greenfield Online -- -- (39) (10) 2 4 10 22 28 35 41
Y/Y Growth -- -- -- -- -- 165% 135% 112% 28% 26% 18%
Alloy -- -- -- -- -- -- 5 17 19 10 21
Y/Y Growth -- -- -- -- -- -- -- 259% 10% -47% 110%
TechTarget -- -- -- -- 1 1 5 13 20 25 34
Y/Y Growth -- -- -- -- -- 45% 385% 148% 51% 22% 39%
Dice Holdings -- -- -- -- -- -- 8 22 41 63 73
Y/Y Growth -- -- -- -- -- -- -- 189% 86% 54% 16%
Figure 18: Annual EBITDA Margins, 1998–2008E

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E
Yahoo! -- 16.1% 34.9% -2.6% 21.6% 32.4% 39.5% 42.1% 41.8% 37.7% 32.8%
Google -- -- -- 43.4% 68.7% 68.0% 65.3% 65.2% 63.3% 59.4% 57.5%
eBay 16.2% 3.5% 11.0% 24.2% 31.3% 32.1% 35.1% 35.5% 32.8% 33.1% 31.5%
Amazon.com -8.5% -19.2% -8.4% 1.3% 6.7% 8.3% 8.2% 8.1% 6.6% 7.4% 7.2%
IAC/InterActiveCorp -- -- -- -- 3.5% 9.6% 10.0% 12.2% 12.6% 10.3% 10.7%
Expedia -- -- -- -- -- 35.4% 32.4% 32.0% 29.0% 27.4% 26.5%
Orbitz -- -- -- -- -- -- -- -- 14.1% 16.9% 17.0%
Netflix -- -- -- -- -- 8.5% 8.7% 4.5% 9.3% 10.3% 11.4%
Blue Nile -- -- -- -7.0% 7.5% 9.8% 9.7% 9.7% 9.0% 9.4% 9.4%
Harris Interactive -- -35.7% -45.2% -26.4% 5.8% 10.9% 11.8% 8.4% 10.1% 9.3% 10.6%
Greenfield Online -- -- -258.2% -69.4% 11.1% 16.9% 23.2% 24.5% 27.8% 27.3% 27.6%
Alloy -- -- -- -- -- -- 2.6% 8.8% 9.7% 5.0% 9.2%
TechTarget -- -- -- -- 2.9% 3.4% 11.5% 19.9% 25.4% 25.9% 28.5%
Dice Holdings -- -- -- -- -- -- 19.6% 32.7% 39.0% 43.5% 43.0%
April 07, 2008 23

Figure 19: Free Cash Flow and Growth, 1998–2008E ($ in millions)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E
Yahoo! -- -- -- 57 226 382 850 1,292 1,267 1,337 935
Y/Y Growth -- -- -- -- 294% 69% 122% 52% -2% 6% -30%
Google -- -- -- 18 118 219 658 1,621 1,678 3,373 4,317
Y/Y Growth -- -- -- -- 555% 85% 201% 146% 3% 101% 28%
eBay (7) (24) 50 193 341 509 992 1,574 1,732 2,187 2,338
Y/Y Growth -- -- -- 282% 77% 49% 95% 59% 10% 26% 7%
Amazon.com 3 (378) (265) (170) 135 346 477 570 485 1,183 1,437
Y/Y Growth -- -- -- -- -179% 156% 38% 19% -15% 144% 22%
IAC/InterActiveCorp -- -- -- -- -- -- 348 702 564 428 550
Y/Y Growth -- -- -- -- -- -- -- 102% -20% -24% 29%
Expedia -- -- -- -- 404 598 749 807 525 625 676
Y/Y Growth -- -- -- -- -- 48% 25% 8% -35% 19% 8%
Orbitz -- -- -- -- -- -- (48) (4) 82 49 65
Y/Y Growth -- -- -- -- -- -- -- -- -- -40% 33%
Netflix -- -- -- -- -- 25 35 25 63 46 69
Y/Y Growth -- -- -- -- -- -- 41% -29% 153% -26% 50%
Blue Nile -- -- -- 3 16 16 28 30 39 37 47
Y/Y Growth -- -- -- -- 380% 4% 71% 8% 28% -5% 27%
Harris Interactive -- -- -- -- -- 12 12 17 23 22 36
Y/Y Growth -- -- -- -- -- -- -4% 43% 37% -6% 67%
Greenfield Online -- -- -- (13) (0) 3 3 17 18 12 23
Y/Y Growth -- -- -- -- -- -- -3% 511% 10% -34% 94%
Alloy -- -- -- -- -- -- -- -- -- -- --
Y/Y Growth -- -- -- -- -- -- -- -- -- -- --
TechTarget -- -- -- -- -- -- 7 11 12 19 27
Y/Y Growth -- -- -- -- -- -- -- 65% 9% 53% 41%
Dice Holdings -- -- -- -- -- -- 13 21 36 56 70
Y/Y Growth -- -- -- -- -- -- -- 65% 69% 55% 24%
Figure 20: Free Cash Flow Conversion of EBITDA, 1998–2008E

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E
Yahoo! -- -- -- -- 110% 80% 83% 83% 66% 69% 51%
Google -- -- -- 48% 50% 34% 51% 62% 36% 49% 48%
eBay -- -- 60% 83% 78% 63% 74% 84% 76% 75% 75%
Amazon.com -- -- -- -- 52% 79% 84% 83% 69% 108% 104%
IAC/InterActiveCorp -- -- -- -- -- -- 55% 80% 59% 52% 63%
Expedia -- -- -- -- -- 120% 125% 119% 81% 86% 85%
Orbitz -- -- -- -- -- -- -- -- 77% 34% 43%
Netflix -- -- -- -- -- 107% 79% 81% 67% 37% 44%
Blue Nile -- -- -- -- 292% 130% 171% 153% 170% 122% 140%
Harris Interactive -- -- -- -- -- 83% 61% 96% 107% 100% 127%
Greenfield Online -- -- -- -- -- 64% 26% 76% 65% 34% 57%
Alloy -- -- -- -- -- -- -- -- -- -- --
TechTarget -- -- -- -- -- -- 96% 69% 55% 65% 69%
Dice Holdings -- -- -- -- -- -- 171% 131% 98% 90% 96%
24 April 07, 2008

Figure 21: Capital Expenditures and Growth, 1998–2008E ($ in millions)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E
Yahoo! -- -- 94 86 52 117 246 409 689 602 725
Y/Y Growth -- -- -- -9% -40% 128% 109% 67% 69% -13% 20%
Google -- -- -- 13 37 177 319 838 1,903 2,403 3,141
Y/Y Growth -- -- -- -- 185% 375% 80% 163% 127% 26% 31%
eBay 13 87 50 59 139 365 293 338 515 454 600
Y/Y Growth -- 581% -43% 20% 133% 163% -20% 16% 52% -12% 32%
Amazon.com 28 287 135 50 39 46 89 203 216 223 302
Y/Y Growth -- 913% -53% -63% -22% 17% 94% 128% 6% 3% 35%
IAC/InterActiveCorp -- -- -- -- -- -- 168 241 244 232 243
Y/Y Growth -- -- -- -- -- -- -- 44% 1% -5% 5%
Expedia -- -- -- -- -- 46 53 52 93 87 145
Y/Y Growth -- -- -- -- -- -- 16% -2% 77% -6% 67%
Orbitz -- -- -- -- -- -- 26 63 83 53 72
Y/Y Growth -- -- -- -- -- -- -- 142% 32% -36% 36%
Netflix -- -- -- -- 27 64 118 139 197 266 339
Y/Y Growth -- -- -- -- -- 140% 83% 18% 42% 35% 28%
Blue Nile -- -- -- 1 1 4 2 1 2 5 3
Y/Y Growth -- -- -- -- -16% 254% -48% -42% 78% 157% -45%
Harris Interactive -- -- -- -- -- 2 6 6 3 6 7
Y/Y Growth -- -- -- -- -- -- 183% 5% -48% 87% 24%
Greenfield Online -- -- -- 2 1 1 4 7 5 10 12
Y/Y Growth -- -- -- -- -38% 11% 188% 94% -27% 100% 11%
Alloy -- -- -- -- -- -- -- -- -- -- --
Y/Y Growth -- -- -- -- -- -- -- -- -- -- --
TechTarget -- -- -- -- -- -- 2 2 1 3 3
Y/Y Growth -- -- -- -- -- -- -- 22% -41% 137% 0%
Dice Holdings -- -- -- -- -- -- 1 3 3 4 5
Y/Y Growth -- -- -- -- -- -- -- 154% 0% 33% 39%
Figure 22: Capital Expenditures as a Percentage of Revenue, 1998–2008E

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E
Yahoo! -- -- 8.5% 12.0% 5.4% 8.0% 9.5% 11.1% 15.1% 11.8% 12.8%
Google -- -- -- 15.1% 10.8% 18.8% 16.3% 20.8% 26.1% 20.6% 20.0%
eBay 14.8% 38.7% 11.5% 7.9% 11.4% 16.9% 9.0% 7.4% 8.6% 5.9% 6.9%
Amazon.com 4.6% 17.5% 4.9% 1.6% 1.0% 0.9% 1.3% 2.4% 2.0% 1.5% 1.6%
IAC/InterActiveCorp -- -- -- -- -- -- 4.0% 4.5% 4.1% 3.6% 3.7%
Expedia -- -- -- -- -- 3.3% 2.9% 2.5% 4.1% 3.3% 4.8%
Orbitz -- -- -- -- -- -- -- -- 10.9% 6.2% 8.1%
Netflix -- -- -- -- 17.6% 23.7% 23.3% 20.4% 19.8% 22.1% 24.7%
Blue Nile -- -- -- 2.4% 1.4% 2.7% 1.1% 0.5% 0.8% 1.5% 0.8%
Harris Interactive -- -- -- -- -- 1.4% 3.4% 2.8% 1.4% 2.4% 2.6%
Greenfield Online -- -- -- 13.4% 7.7% 4.9% 8.2% 8.0% 5.2% 8.0% 7.7%
Alloy -- -- -- -- -- -- -- -- -- -- --
TechTarget -- -- -- -- -- -- 3.8% 3.2% 1.6% 3.2% 2.5%
Dice Holdings -- -- -- -- -- -- 2.7% 4.0% 2.5% 2.4% 2.9%
April 07, 2008 25

Figure 23: Return on Invested Capital (ROIC), 2001–2008E

2001 2002 2003 2004 2005 2006 2007 2008E
Yahoo! NA 2% 5% 6% 8% 6% 4% 1%
Google -- -- 27% 29% 23% 21% 19% 19%
eBay 6% 9% 10% 13% 12% 10% 3% 14%
Amazon.com NA 8% 19% 22% 18% 15% 20% 20%
IAC/InterActiveCorp -- -- -- 1% 2% 2% 10% 3%
Expedia -- -- -- 2% 3% 3% 5% 2%
Orbitz -- -- -- -- -- N/A 3% 6%
Netflix -- -- 4% 14% 3% 12% 13% 17%
Blue Nile -- -- -- 34% 14% 17% 26% 40%
Harris Interactive NA NA 6% 6% 3% 4% 4% 6%
Greenfield Online -- -- 8% 3% 2% 2% 2% 1%
Alloy -- -- -- -- -- -- -- --
TechTarget -- -- -- -- 5% 10% 6% 6%
Dice Holdings -- -- -- 7% 5% 5% 8% 10%
ROIC = ((Operating Income + One Time Items) x (1 - tax rate))

(Average Debt + Average Shareholders' Equity)
Figure 24: Return on Equity (ROE), 2001–2008E

2001 2002 2003 2004 2005 2006 2007 2008E
Yahoo! NA 5% 7% 9% 11% 8% 7% 1%
Google -- -- 28% 26% 25% 23% 21% 21%
eBay 7% 9% 11% 13% 13% 11% 3% 15%
Amazon.com NA NA NA NA NA 56% 58% 43%
IAC/InterActiveCorp -- -- -- 2% 4% 3% 2% 3%
Expedia -- -- -- 2% 3% 4% 6% 2%
Orbitz -- -- -- -- -- N/A N/A 2%
Netflix -- -- 6% 16% 5% 15% 16% 19%
Blue Nile -- -- -- 35% 16% 20% 32% 47%
Harris Interactive NA NA 6% 8% 3% 5% 5% 6%
Greenfield Online -- -- 94% 10% 11% 6% 8% 4%
Alloy -- -- -- -- -- -- -- --
TechTarget -- -- -- -- 10% 7% 4% 4%
Dice Holdings -- -- -- 5% 6% 6% 12% 16%
ROE = (Net Income + Tax Adjusted One Time Items)

Average Shareholders' Equity
26 April 07, 2008

Figure 25: Share Repurchases, 1998–2008 ($ in millions)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
(1)
Yahoo! -- -- -- 60.0 100.0 -- -- 388.0 2,778.0 1,585.9 --
Google -- -- -- -- -- -- -- -- -- -- --
eBay -- 1.4 0.4 0.1 0.1 0.1 0.0 -- 1,666.5 1489.5 --
Amazon.com -- -- -- -- -- -- -- -- 252.0 248.0 --
IAC/InterActiveCorp -- 6.6 125.5 -- -- 1,400.0 426.9 1,797.0 999.7 500.0 145.5
(2)
Expedia -- -- -- -- -- -- -- -- 288.3 1,385.0 --
Orbitz -- -- -- -- -- -- -- -- -- -- --
Netflix -- -- -- -- -- -- -- -- -- 100.0 150.0
Blue Nile -- -- -- -- -- -- -- 17.4 57.4 20.0 --
(3)
Harris Interactive -- -- -- 0.8 0.9 -- -- -- 17.5 50.5 --
Greenfield Online -- -- -- -- -- -- -- -- -- -- --
(4)
Alloy -- -- -- -- -- 3.0 -- -- -- 0.5 --
TechTarget -- -- -- -- -- -- -- -- -- -- --
Dice Holdings -- -- -- -- -- -- -- -- -- -- --
Notes:
(1) Yahoo! share repurchase totals include open market purchases as well as structured stock transactions that settle during that calendar year.
(2) Expedia YTD 2007 repurchases include tender offer which company completed on Jan. 19, for 30M shares @ $22.00 per share;
also includes tender completed on Aug 8, for 25M shares @ $29.00 per share.
(3) Harris Interactive's fiscal year ends June 30.
(4) Alloy's fiscal year ends January 31.
April 07, 2008 27

Figure 26: Select Recent Internet M&A

Announced Acquisition Acquirer Business Type Total Consideration Payment Method
4/2/08 Airfarewatchdog.com Expedia (TripAdvisor) Online Travel - low airfare search NA NA
3/14/08 CarRentals.com Expedia (Hotwire) Online car rental marketing and retail NA NA
3/14/08 Rapt Microsoft Advertising yield management NA NA
3/13/08 Bebo AOL Social Networking $850M Cash
2/14/08 Holiday Watchdog Expedia (TripAdvisor) Online Travel - UK-based NA NA
2/12/08 Maven Networks Yahoo! Online Video Services $160M NA
2/11/08 Danger, Inc. Microsoft Mobile Services NA NA
2/5/08 Buy.at AOL Affiliate marketing network $125M Cash
1/28/08 Fraud Sciences eBay (PayPal) Online risk tools ~$169 M Cash
1/15/08 TicketsNow IAC (Ticketmaster) Ticketing ~$265 M NA
1/10/08 Paciolan IAC (Ticketmaster) Ticketing software NA NA
1/8/08 Fast Search & Transfer ASA Microsoft Enterprise Search Solutions ~$1.2B ~$1.2B cash tender
12/12/07 Multimap Microsoft Online Mapping NA NA
11/7/07 Quigo AOL Contextual advertising solutions $346M Cash
10/10/07 Jaiku Oy Google Mobile phone software NA NA
9/17/07 Zimbra Yahoo! Next-gen e-mail & collaborative software $350M NA
9/14/07 Participate Media Yahoo! Online content source tracker NA NA
9/4/07 BlueLithium Yahoo! Advertising Network $300M $300M in cash
7/24/07 Tacoda AOL Advertising Network NA NA
7/16/07 MeziMedia ValueClick Comparison Shopping $100M - $352M (earnout) Cash
7/9/07 Postini Google Communications security & compliance $625M $625M in cash
7/3/07 GrandCentral Google Web-calling Service NA NA
6/1/07 Feedburner Google Web reader for blogs and RSS feeds NA NA
5/30/07 StumbleUpon eBay Internet content discovery $75M NA
5/30/07 Photobucket MySpace Photo and video sharing services NA NA
5/23/07 Brilliance Audio Amazon Audiobook Publisher NA NA
5/18/07 Aquantive Microsoft Online Advertising Services $6B Cash
5/17/07 24/7 Real Media WPP Group Online Advertising Services $649M Cash
5/16/07 ADTECH A.G. AOL Online advertising management & serving NA NA
5/15/07 Third Screen Media AOL Mobile advertising network NA NA
5/14/07 dPreview.com Amazon.com Online Publisher of Digital Camera Reviews NA NA
5/7/07 ConsumerSearch.com New York Times Co. Online Publisher of Meta-Reviews $33M $33M in cash
4/30/07 Right Media Yahoo! Online Advertsising Exchange $680M ($720M including Oct. 20% stake) $680M=50/50 Cash/Stock; $40M Cash
4/13/07 DoubleClick Google Online Advertising Services $3.1B $3.1B in cash
4/12/07 Red Swoosh Akamai Peer-to-peer Content Delivery $15M $15M in stock
4/11/07 Fandango Comcast Onlline Movie Tickets NA NA
3/22/07 Tabloo HP Web-based Printing Software NA NA
3/18/07 AdScape Media Google In-Game Advertising NA NA
3/15/07 WebEx Cisco Collaborative Business Applications $2.9B $2.9B in cash
3/14/07 TellMe Networks Microsoft Voice-based Services/Technology NA NA
3/5/07 Utah Street Networks Cisco Social Networking Software NA NA
2/8/07 Five Across Cisco Social Networking Software NA NA
1/10/07 StubHub eBay Online Event Ticket Marketplace $310M $310M in cash
12/28/06 Abacus Alliance Data Systems Online Data Analytics $435M $435M in cash
12/20/06 Digitas Publicis Online Marketing/Advertising Services $1.3 billion $1.3 billion in cash
12/4/06 Shopping.net ValueClick Comparison Shopping $13M $13M in cash
10/9/06 YouTube Google Online Video & User Generated Content $1.65 billion $1.65 billion in stock
8/15/06 CollegeHumor.com InterActiveCorp Online Content NA 51% stake and full voting control
8/9/06 Atom Entertainment Viacom Online Games & Video $200M NA
7/26/06 BuyCostumes.com Liberty Interactive e-Commerce NA NA
6/5/06 Wedding Channel The Knot Online Content $78M $57.9 million in cash, 1.15M shares
5/30/06 Open List Marchex Content Aggregation $13M NA
4/24/06 Tradera eBay Online Auctions (Sweden) $52M $52M in cash
3/16/06 Uswitch Scripps, E.W. Comparison Service $366M $366M in cash
3/6/06 iVillage NBC Universal Online Content $600M $600M in cash
1/30/06 Shoebuy InterActiveCorp e-Commerce NA NA
1/17/06 dMarc Broadcasting Google Advertising Services $102M + up to $1.136B add'l $102M in cash
12/14/05 PriceGrabber GUS Comparison Shopping $485M NA
12/9/05 del.icio.us Yahoo! Tagging/Bookmarking NA NA
12/5/05 Provide Commerce Liberty e-Commerce $477M $477M in cash
10/6/05 Weblogs AOL-Time Warner Blog Network NA NA
9/12/05 Skype eBay VOIP $2.5B + up to $530M (earnout) $1.3B in cash, $1.2B in stock
9/8/05 IGN Entertainment News Corp Online Content - Video Games $650M $650M in cash
9/6/05 LinkShare Rakuten Affiliate Marketing $425M $425M in cash
8/11/05 Fastclick ValueClick Online Advertising Services $133M $133M in stock
7/18/05 Intermix (MySpace) News Corp Social Networking $580M $580M in cash
7/14/05 Bookings BV Priceline Online Travel $133M $133M in cash
6/20/05 NeoPets Viacom Online Content/Entertainment $160M $160M in cash?
6/13/05 E-Babylon ValueClick e-Commerce $143M $122M in cash, 1.8M shares of VCLK
6/13/05 Web Marketing Holdings ValueClick Online Advertising Services $15M $15M in cash
6/6/05 Shopzilla Scripps, E.W. Comparison Shopping $525M $525M in cash
6/1/05 Shopping.com eBay Comparison Shopping $480M $480M in cash
5/15/05 lastminute.com Sabre Online Travel GBP577M GBP577M in cash
4/7/05 Ciao AG Greenfield Online Online Surveys & Comp. Shopping $154M $74M in cash, 3.95M SRVY shares
3/21/05 AskJeeves InterActiveCorp Search Engine ~$2.26B at closing ~ 88M IACI shares
3/20/05 Flickr Yahoo! Online Photo Sharing NA NA
3/1/05 Cornerstone Brands InterActiveCorp Catalog Retailer $720M $720M in cash
2/17/05 About.com NY Times Online Content $410M $410M in cash
12/17/04 Rent.com eBay Online Real Estate $415M $415M in cash
11/15/04 MarketWatch Dow Jones Online Content - Financial News $453M $453M in cash
9/21/04 Active Hotels Priceline Online Travel $161M $161M in cash
9/14/04 MusicMatch Yahoo! Entertainment/Subscriptions $160M $160M in cash
8/3/04 PriceRunner ValueClick Comparison Shopping $29M NA
7/22/04 Service Magic InterActiveCorp Local NA NA
6/24/04 Advertising.com AOL-Time Warner Online Advertising Services $435M $435M in cash
28 April 07, 2008

Broadband and Internet Usage
April 07, 2008 29

Figure 27: U.S. Households with Broadband & Broadband Penetration, 2001–10E
(in millions) 2001 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E
Total U.S. Households 106.7 108.0 109.2 110.5 111.8 113.1 114.4 115.7 117.1 118.4
Total Online Homes 54.8 60.9 66.8 71.1 73.7 76.2 79.2 83.4 88.2 92.9
% of U.S. Households 51% 56% 61% 64% 66% 67% 69% 72% 75% 78%
Total Narrowband 44.2 43.4 38.6 33.5 29.4 22.0 16.6 13.0 10.6 9.1
% change 15% -2% -11% -13% -12% -25% -25% -22% -18% -15%
Total Cable Broadband 7.2 11.6 16.4 21.0 24.5 29.4 33.3 36.3 38.8 40.3
% change 95% 61% 41% 28% 17% 20% 13% 9% 7% 4%
Total DSL Broadband 3.2 5.1 9.5 13.7 16.3 23.9 28.4 33.2 37.9 42.6
% change 129% 59% 86% 44% 19% 46% 19% 17% 14% 12%
Other Broadband 0.2 0.8 2.3 2.9 3.5 1.0 0.9 0.9 0.9 0.8
% change 100% 300% 188% 26% 21% -73% -4% -2% NM NM
Total Broadband 10.6 17.5 28.2 37.6 44.3 54.2 62.7 70.4 77.6 83.8
% change 104% 65% 61% 33% 18% 22% 16% 12% 10% 8%
Share of Online Homes
Narrowband 81% 71% 58% 47% 40% 29% 21% 16% 12% 10%
Broadband 19% 29% 42% 53% 60% 71% 79% 84% 88% 90%
Share of Broadband Homes
Cable 68% 66% 58% 56% 55% 54% 53% 52% 50% 48%
DSL 30% 29% 34% 36% 37% 44% 45% 47% 49% 51%
Other 2% 5% 8% 8% 8% 2% 1% 1% NM NM
Source: Veronis Suhler, PQ Media, Kagan Worldwide Media, Forrester, Lehman Brothers estimates, company reports
Figure 28: U.S. Broadband Penetration, 2000–12E
90 80%
80
US Broadband Households (MM)
70%
70
60%
60
50%
50
40%
40
30%
30
20%
20
10 10%
0 0%
2000 2001 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E 2011E 2012E
US Broadband Households % of Total US Households
Source: Forrester Research, September 2007
30 April 07, 2008

Figure 29: Top 23 U.S. ISPs by Subscribers, as of 3Q 2007

Rank ISP U.S. Subscribers (millions) Market Share
1 SBC (AT&T) 17.9 18.2%
2 Comcast 12.9 13.1%
3 AOL 10.1 10.3%
4 Verizon 8.0 8.1%
5 Road Runner 7.7 7.8%
6 EarthLink 4.2 4.3%
7 Cox 3.6 3.7%
8 Charter 2.6 2.6%
9 Qwest 2.5 2.5%
10 Cablevision 2.2 2.2%
11 United Online 1.9 1.9%
12 Embarq 1.2 1.2%
13 Windstream (formerly ALLTEL and Valor) 0.8 0.8%
14 Insight BB 0.7 0.7%
15 Mediacom 0.6 0.7%
16 CenturyTel 0.5 0.5%
17 Covad 0.5 0.5%
18 Citizens 0.5 0.5%
19 Clearwire 0.3 0.3%
20 Hughes DIRECWAY 0.3 0.3%
21 LocalNet 0.3 0.3%
22 First Communications 0.2 0.2%
23 Cincinnati Bell 0.2 0.2%
-- Other U.S. ISPs 18.6 18.9%
Total 98.4 100.0%
Note: List does not include MSN or RCN numbers. RCN reports Revenue Generating Units (RGUs), not subscribers.
Source: ISP Planet, September 2007, AT&T
Figure 30: Global Internet Penetration – Top 20 Countries with Most Internet Users
(numbers in millions) Internet % Users Broadband Broadband

Rank Country or Region Internet Users Population Penetration of World Subscribers Penetration
1 United States 210.6 302.0 69.7% 18.0% 58.1 19.3%
2 China 162.0 1,317.4 12.3% 13.8% 35.3 2.7%
3 Japan 86.3 128.6 67.1% 7.4% 25.8 20.0%
4 Germany 50.4 82.5 61.1% 4.3% 14.1 17.1%
5 India 42.0 1,129.7 3.7% 3.6% 2.1 0.2%
6 Brazil 39.1 186.8 21.0% 3.3% 5.8 3.1%
7 United Kingdom 37.6 60.4 62.3% 3.2% 13.0 21.5%
8 Korea (South) 34.1 51.3 66.5% 2.9% 14.0 27.4%
9 France 32.9 61.4 53.7% 2.8% 12.7 20.7%
10 Italy 31.5 59.5 52.9% 2.7% 8.6 14.5%
11 Russia 28.0 143.4 19.5% 2.4% 1.2 0.8%
12 Mexico 22.7 106.5 21.3% 1.9% 3.7 3.5%
13 Canada 22.0 32.4 67.8% 1.9% 7.7 23.7%
14 Indonesia 20.0 224.5 8.9% 1.7% N/A 0.3%
15 Spain 19.8 45.0 43.9% 1.7% 6.7 14.8%
16 Vietnam 16.5 85.0 19.4% 1.4% N/A N/A
17 Turkey 16.0 75.9 21.1% 1.4% 2.8 3.7%
18 Australia 15.1 21.0 71.9% 1.3% 3.9 18.8%
19 Taiwan 14.5 23.0 63.0% 1.2% N/A N/A
20 Philippines 14.0 38.2 36.6% 1.2% N/A N/A
TOP 20 Countries 915.1 4,174.5 21.9% 78.0% N/A N/A

Rest of the World 258.0 2,400.2 10.7% 22.0% N/A N/A
Total World - Users 1,173.1 6,574.7 17.8% 100.0% N/A N/A
Source: Internet World Stats (http://www.internetworldstats.com/top20.htm), compiled from various sources including Nielsen/NetRatings & ITU, June 2007, CNNIC
April 07, 2008 31

Figure 31: International Broadband Penetration – Top 20 Countries

Broadband Subscribers Total Broadband
Rank Country Per 100 Inhabitants Subscribers (millions)
1 Denmark 34.3 1.9
2 Netherlands 33.5 5.5
3 Switzerland 30.7 2.3
4 Korea 29.9 14.4
5 Norway 29.8 1.4
6 Iceland 29.8 0.1
7 Finland 28.8 1.5
8 Sweden 28.6 2.6
9 Canada 25.0 8.1
10 Belgium 23.8 2.5
11 United Kingdom 23.7 14.4
12 Australia 22.7 4.7
13 France 22.5 14.3
14 Luxembourg 22.2 0.1
15 United States 22.1 66.2
16 Japan 21.3 27.2
17 Germany 21.2 17.5
18 Austria 18.6 1.5
19 Spain 17.0 7.5
20 New Zealand 16.5 0.7
Source: OECD June 2007
Figure 32: U.S. Household Technology Adoption Forecast, 2000–12E

2000 2001 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E 2011E 2012E
PC 63% 65% 66% 67% 70% 77% 77% 80% 82% 83% 84% 85% 85%
Mobile phone 54% 53% 58% 62% 71% 76% 79% 83% 85% 86% 87% 87% 87%
Internet 57% 61% 64% 64% 67% 71% 72% 74% 76% 78% 79% 79% 80%
Digital still camera 10% 16% 21% 26% 40% 51% 59% 65% 70% 74% 76% 78% 79%
Broadband 6% 10% 15% 19% 30% 40% 45% 52% 58% 63% 65% 67% 68%
Multi-PC households 21% 22% 24% 25% 32% 36% 38% 42% 47% 51% 55% 58% 60%
Camera phone -- -- -- 3% 13% 25% 37% 59% 72% 77% 79% 80% 80%
Video game console 38% 32% 33% 35% 37% 37% 37% 38% 38% 39% 39% 40% 41%
Laptop -- 13% 15% 16% 23% 29% 32% 38% 43% 48% 51% 53% 54%
MP3 player 2% 3% 4% 5% 10% 20% 30% 35% 38% 39% 40% 40% 40%
Home network -- -- -- -- 9% 16% 18% 24% 30% 36% 41% 45% 48%
HDTV -- -- -- -- 14% 17% 23% 32% 40% 47% 52% 55% 57%
DVR -- 1% 2% 3% 6% 16% 19% 26% 36% 45% 51% 55% 57%
PDA 6% 6% 8% 11% 14% 15% 13% 14% 14% 13% 13% 12% 11%
Satellite radio -- -- 2% 4% 6% 9% 11% 15% 19% 22% 24% 25% 26%
US households 105.5 106.7 108.0 109.2 110.5 111.8 113.1 114.4 115.7 117.1 118.4 119.8 121.2
Source: Forrester Research, September 2007
32 April 07, 2008

Figure 33: Media Consumption Time Breakdown
Radio, 19%
Video or DVD, 11%
Video Games, 3%
Magazines, 6%
Newspapers, 9%
TV, 33%
Internet, 19%
Source: Forrester Research, July 2006
Figure 34: Share of Time Spent Online, December 2005–December 2006 and January 2007–February 2008
Activity Dec-05 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Content 36% 44% 46% 46% 47% 47% 48% 50% 51% 50% 50% 49% 48% 49% 43% 42%
Community - - - - - - - - - - - - - - 8% 7%
Communications 41% 33% 34% 34% 33% 33% 33% 32% 30% 32% 31% 31% 30% 29% 29% 30%
Commerce 19% 18% 16% 16% 16% 15% 14% 14% 14% 14% 15% 15% 17% 18% 16% 15%
Search 4% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Source: Online Publishers Association
Figure 35: ACSI Customer Satisfaction Scores, 2000–07
Portal/Search Engine 2000 2001 2002 2003 2004 2005 2006 2007
Yahoo!, Inc. 74 73 76 78 78 80 76 79
Google, Inc. NM NM 80 82 82 82 81 78
Internet Portals/Search Engines 63 65 68 71 72 76 77 75
All Others 67 72 72 78 78 77 78 75
Ask.com NM NM 62 69 71 72 71 75
MSN 71 67 72 74 75 75 74 75
AOL, LLC 56 58 59 65 67 71 74 67
AltaVista NM NM 61 63 66 NM NM NM
Source: ACSI
April 07, 2008 33

Figure 36: Top 50 U.S. Web Properties by Unique Visitors, February 2007–February 2008 (in thousands)
Web Property Feb-2007 Mar-2007 Apr-2007 May-2007 Jun-2007 Jul-2007 Aug-2007 Sep-2007 Oct-2007 Nov-2007 Dec-2007 Jan-2008 Feb-2008
Yahoo! Sites 128,559 131,227 131,392 130,526 133,093 133,428 135,251 135,578 136,775 136,180 136,634 138,059 136,767
Y/Y growth 7% 6% 3% 0% 3% 3% 3% 5% 6% 5% 4% 7% 6%
Google Sites 114,694 118,492 119,640 120,010 123,601 123,892 128,544 129,508 131,639 131,538 132,954 134,886 135,970
Y/Y growth 21% 14% 10% 15% 20% 19% 19% 21% 20% 21% 18% 19% 19%
Microsoft Sites 114,155 118,716 115,605 113,916 116,824 118,154 118,392 119,193 120,502 119,194 120,034 119,297 118,355
Y/Y growth 3% 2% -4% -4% -1% 0% -1% 0% 2% 2% 3% 4% 4%
AOL LLC N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 109,442 108,911
Y/Y growth - - - - - - - - - - - - -
Fox Interactive Media 77,969 80,098 80,789 82,260 83,598 81,233 79,966 79,951 84,205 81,325 81,847 83,752 83,638
Y/Y growth 461% 346% 370% 283% 529% 521% 11% 13% 18% 10% 12% 12% 7%
eBay 79,559 80,154 79,167 79,428 81,224 79,787 79,707 78,105 79,669 80,510 79,892 78,789 77,864
Y/Y growth 19% 13% 4% 2% 4% 5% -1% -1% -1% -3% -5% -2% -2%
Wikipedia Sites 43,656 47,011 49,632 48,743 47,031 46,372 48,386 52,800 56,104 55,157 51,851 55,589 55,906
Y/Y growth 122% 84% 66% 55% 72% 65% 56% 51% 44% 41% 34% 30% 28%
Amazon Sites 48,905 49,980 48,914 51,567 53,285 52,702 53,904 53,803 56,746 59,058 65,205 59,003 55,172
Y/Y growth 15% 6% 1% 7% 9% 13% 11% 9% 11% 12% 15% 16% 13%
Ask Network 48,722 46,346 47,926 50,068 52,600 51,885 52,075 51,723 55,512 51,636 49,509 52,102 54,120
Y/Y growth 13% -5% -11% -8% 0% 0% -3% -6% 0% -5% -11% 6% 11%
Time Warner - Excluding AOL N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 52,645 52,661
Y/Y growth - - - - - - - - - - - - -
New York Times Digital 39,769 41,464 43,127 43,603 42,718 42,710 44,113 45,276 49,816 47,997 44,362 48,471 47,632
Y/Y growth 14% 14% 9% 8% 12% 12% 15% 12% 16% 13% 13% 21% 20%
Apple Inc. 36,767 27,317 38,789 41,909 44,114 42,561 42,744 43,122 43,157 43,775 47,724 48,413 47,048
Y/Y growth 51% 2% 35% 36% 42% 37% 35% 35% 34% 30% 21% 25% 28%
Viacom Digital 39,128 39,724 39,514 40,462 42,212 43,056 44,888 44,300 43,345 42,796 43,109 42,011 41,216
Y/Y growth - - - - - 40% 40% 26% 18% 8% 8% 13% 5%
Weather Channel, The 37,374 36,189 39,555 38,496 39,865 38,534 38,905 37,571 38,796 34,124 40,663 40,478 41,057
Y/Y growth 34% 13% 13% 8% 10% 10% 12% 13% 14% 6% 25% 14% 10%
CNET Networks 29,881 30,984 30,789 30,954 31,023 32,182 32,490 32,687 35,336 35,731 35,773 34,859 33,320
Y/Y growth 13% 7% 3% 7% 10% 6% 2% 14% 22% 13% 12% 13% 12%
FACEBOOK.COM 16,737 20,896 23,042 26,649 27,965 30,557 33,745 30,601 32,910 33,660 34,658 33,861 32,436
Y/Y growth 59% 62% 85% 89% 103% 113% 128% 129% 118% 102% 81% 79% 94%
Adobe Sites 26,035 26,842 29,477 28,458 36,441 33,361 31,231 30,847 30,592 31,848 30,798 31,169 30,620
Y/Y growth 19% 6% 5% 8% 36% 11% 7% 17% 21% 26% 19% 19% 18%
Glam Media 8,410 10,048 12,221 17,299 19,075 20,656 20,058 22,421 25,487 25,394 25,028 24,626 29,136
Y/Y growth - - 2526% 3638% 1232% 778% 677% 581% 742% 561% 213% 251% 246%
Wal-Mart 25,125 25,679 28,362 27,796 27,922 29,213 28,510 27,036 29,238 42,462 44,341 30,747 27,651
Y/Y growth 20% 18% 16% 7% 10% 10% 9% 8% 8% -1% 1% 14% 10%
Superpages.com Network 15,236 21,727 19,970 20,956 21,426 22,526 21,344 18,980 19,402 25,603 23,448 28,299 27,526
Y/Y growth - - - - - - - - - - - 68% 81%
Verizon Communications Corporation 21,265 23,251 21,903 23,669 23,876 25,151 25,033 23,982 24,389 29,072 28,656 27,220 27,101
Y/Y growth -34% -33% -38% -35% -32% -31% -34% -30% -28% -13% -17% 20% 27%
Disney Online 21,959 20,183 19,626 20,127 23,443 23,948 25,606 21,343 21,133 23,822 26,167 27,524 27,094
Y/Y growth - - -11% -6% -12% -7% 3% -9% -16% -4% 4% 10% 23%
craigslist, inc. 15,991 17,793 18,934 20,581 22,529 23,946 23,987 23,124 23,992 24,427 24,468 26,660 26,822
Y/Y growth - - 69% 75% 72% 73% 64% 68% 67% 71% 74% 75% 68%
Gorilla Nation 29,098 28,852 28,573 29,547 30,721 32,560 30,776 30,097 31,889 26,556 26,642 27,119 26,710
Y/Y growth 40% 26% 19% 26% 22% 23% 18% 23% 26% 7% 5% 14% -8%
Target Corporation 23,038 25,123 25,064 26,013 28,323 30,391 31,042 28,749 31,090 41,933 42,634 27,874 26,631
Y/Y growth 16% 18% 7% 12% 21% 30% 22% 26% 28% 26% 24% 16% 16%
AT&T, Inc. 27,391 27,349 26,608 26,975 29,992 29,692 28,501 28,301 33,749 29,843 30,212 27,890 26,385
Y/Y growth 23% 14% 4% 4% 17% 18% 8% 4% 39% 36% 27% -3% -4%
Shopzilla.com Sites 16,744 17,532 19,040 19,137 21,417 21,983 21,644 22,272 23,569 25,023 26,524 24,210 24,782
Y/Y growth -10% -10% -5% -6% 14% 18% 10% 9% 7% 12% 16% 22% 48%
Comcast Corporation 16,986 18,342 18,302 17,860 19,267 20,659 25,279 24,007 25,277 26,479 26,445 27,068 24,466
Y/Y growth 1% -5% 9% 6% 12% 17% 37% 35% 47% 46% 41% 53% 44%
Yellowpages.com Network 16,274 18,122 17,750 19,826 19,340 20,600 21,347 22,808 24,921 24,221 24,453 22,869 23,691
Y/Y growth - - - - - - - - 117% 125% 51% 42% 46%
CBS Corporation 23,045 26,815 21,952 21,951 21,838 22,258 25,821 30,118 28,262 28,714 25,083 23,643 23,564
Y/Y growth 23% 7% 0% 0% 6% 7% 5% 14% 18% 14% 8% 5% 2%
Gannett Sites 18,619 20,724 20,630 19,262 18,999 20,089 20,050 20,829 22,807 22,272 20,163 22,997 23,407
Y/Y growth -1% 1% -1% -4% -4% 2% -3% 2% 13% 10% 11% 23% 26%
Expedia Inc 25,060 27,039 24,435 25,212 28,238 29,243 27,034 25,058 24,575 21,796 18,702 23,454 23,150
Y/Y growth -1% -2% -11% -9% -2% -2% -3% 9% 9% 2% -4% -8% -8%
Bank of America 21,695 21,848 21,843 21,414 23,240 23,325 23,809 22,997 22,761 23,354 23,771 22,990 23,111
Y/Y growth 3% 2% -5% -7% 0% -1% 2% 3% 4% 10% 5% -1% 7%
Monster Worldwide 22,794 23,515 22,062 24,879 25,825 25,753 27,986 25,615 26,013 23,390 22,565 24,185 22,389
Y/Y growth -5% -12% -22% -17% -12% -9% 7% 3% 6% -1% -2% -3% -2%
CareerBuilder LLC 20,834 20,823 20,750 21,266 21,723 21,723 20,202 22,507 23,000 17,021 13,914 24,752 22,357
Y/Y growth 6% 0% -1% -5% 3% 4% -2% 3% 2% 1% 0% 17% 7%
United Online, Inc 24,773 24,277 23,548 21,430 24,199 23,683 26,255 22,908 23,913 19,305 19,617 22,065 21,966
Y/Y growth 0% -10% -23% -20% -6% -12% -11% -13% -13% -24% -16% -10% -11%
Photobucket.com LLC 16,751 17,978 19,020 21,168 22,873 24,188 23,727 21,349 22,177 19,628 18,060 20,497 20,917
Y/Y growth 133% 93% 88% 93% 65% 56% 63% 45% 47% 26% 8% 16% 25%
Atrinsic, Inc. N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 20,473
Y/Y growth - - - - - - - - - - - - -
E.W. Scripps 16,346 16,343 14,501 14,329 14,164 16,819 16,501 17,080 19,254 21,045 20,207 20,952 20,005
Y/Y growth - - - - -5% 5% 4% 9% 24% 18% 24% 19% 22%
AmericanGreetings Property 11,155 7,568 9,385 8,146 7,340 7,254 6,312 6,561 10,257 16,444 18,102 16,771 19,884
Y/Y growth - - - - - - - - -19% 33% 51% 107% 78%
WebMD Health 16,466 17,801 16,883 16,578 17,127 16,829 16,945 18,366 19,904 18,346 15,597 19,219 19,637
Y/Y growth 26% 22% 16% 9% 28% 23% 15% 29% 32% 22% 15% 13% 19%
WorldNow - ABC Owned Sites 12,188 10,645 10,312 9,824 10,354 11,184 11,783 13,230 16,539 14,014 15,474 19,115 19,426
Y/Y growth - - - - - - - - #N/A 43% 78% 86% 59%
Real.com Network 18,032 18,988 18,795 18,684 19,130 20,298 20,116 19,998 20,108 20,242 20,988 19,747 18,498
Y/Y growth 5% 0% -20% -23% -10% -3% -4% -2% 0% -6% 2% 7% 3%
NBC Universal 15,189 15,902 15,277 15,682 14,984 15,012 16,107 17,132 17,462 16,933 17,309 17,828 17,863
Y/Y growth - - - - 25% 33% 44% -13% 24% 26% 25% 19% 18%
IRS.GOV 17,319 12,104 12,808 4,967 4,065 3,711 3,435 3,430 4,065 4,096 4,442 12,495 17,863
Y/Y growth - - - - - - - - - - 2% -6% 3%
ESPN 15,207 19,199 17,689 17,572 17,473 18,227 19,740 24,168 22,937 22,186 20,667 19,166 17,836
Y/Y growth -15% 3% 1% 9% -2% 5% 11% 19% 13% 19% 21% 18% 17%
Lycos Sites 22,341 22,387 22,584 21,540 20,900 20,268 20,375 20,273 20,229 18,335 18,427 19,484 17,702
Y/Y growth -5% -10% -3% -12% -11% -14% -21% -21% -24% -21% -18% -19% -21%
Cox Enterprises Inc. 15,709 16,187 16,433 16,185 17,370 17,777 18,025 16,224 16,414 16,058 15,450 17,286 17,603
Y/Y growth 9% 7% -2% -6% 7% 4% 2% 12% 9% 11% 7% 6% 12%
Demand Media 6,748 7,345 8,538 10,724 11,927 14,444 13,226 13,615 15,843 15,132 14,958 16,673 17,532
Y/Y growth - - - - - - - - - - 149% 125% 160%
Weatherbug Property 15,025 15,474 16,394 15,714 16,375 16,289 16,722 16,772 17,051 16,274 17,077 17,456 17,256
Y/Y growth -2% 3% 4% -2% 3% 2% 4% 9% 12% 4% 7% 19% 15%
Total Internet : Total Audience 175,653 177,372 178,079 177,487 178,839 180,078 181,257 181,858 182,206 182,362 183,619 184,239 185,017
Y/Y growth 5% 3% 4% 3% 3% 4% 5% 5% 5% 5% 5% 5% 5%
Note: MySpace.com is included in Fox Interactive Media as of August 2006.

Source: comScore Networks
34 April 07, 2008

Figure 37: Top 50 U.S. Web Properties by Page Views, February 2007–February 2008 (in millions)
Rank Web Property Feb-2007 Mar-2007 Apr-2007 May-2007 Jun-2007 Jul-2007 Aug-2007 Sep-2007 Oct-2007 Nov-2007 Dec-2007 Jan-2008 Feb-2008
1 Fox Interactive Media 42,901 44,432 44,765 45,134 48,088 47,712 46,016 45,007 45,956 42,796 38,889 44,013 39,781
Y/Y growth 12803% 9861% 9014% 9680% 16298% 17264% 36% 26% 19% 8% -6% 9% -7%
2 Yahoo! Sites 34,863 36,282 37,490 36,232 34,927 34,919 36,356 35,502 36,853 34,894 32,756 32,361 30,206
Y/Y growth 15% 10% 1% -5% -12% -7% -8% -11% -11% -8% -9% -9% -13%
3 Google Sites 14,349 15,716 16,450 18,425 19,089 19,922 20,123 21,313 22,912 23,854 23,507 26,138 25,860
Y/Y growth 86% 76% 67% 88% 88% 94% 100% 108% 103% 101% 76% 91% 80%
4 Microsoft Sites 17,603 18,788 18,086 20,335 20,418 19,876 20,302 19,493 20,476 18,893 18,560 19,937 18,972
Y/Y growth -3% -7% -15% 2% 6% 2% 0% 4% 6% 6% 3% 10% 8%
5 AOL LLC N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 16,568
Y/Y growth - - - - - - - - - - - - -
6 FACEBOOK.COM 10,779 12,179 14,997 15,841 14,785 14,985 15,260 14,687 15,178 14,832 12,984 12,743 11,707
Y/Y growth 96% 61% 110% 143% 143% 145% 136% 105% 61% 64% 43% 23% 9%
7 eBay 9,758 10,754 9,910 8,761 8,998 9,430 8,882 8,468 8,527 8,958 9,025 9,028 8,503
Y/Y growth -8% -8% -24% -30% -22% -16% -17% -23% -20% -20% -18% -3% -13%
8 craigslist, inc. 4,209 5,346 5,696 5,378 5,904 6,575 6,379 6,404 7,240 6,560 6,602 7,152 6,866
Y/Y growth 127% 125% 114% 88% 109% 111% 88% 102% 116% 135% 119% 69% 63%
9 Comcast Corporation 2,847 3,116 3,063 2,996 3,068 3,261 3,402 3,627 4,290 4,706 4,083 4,225 3,803
Y/Y growth 12% 45% 21% 30% 35% 41% 38% 44% 63% 78% 44% 57% 34%
10 Viacom Digital 2,493 2,427 2,506 2,521 3,222 3,597 3,253 2,622 2,317 2,378 2,668 2,574 2,499
Y/Y growth - - - - - 5% -3% -18% -23% -34% -24% 16% 0%
11 Time Warner - Excluding AOL N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 2,367 2,432
Y/Y growth - - - - - - - - - - - - -
12 Intuit 2,082 989 1,201 264 222 224 271 244 320 287 284 1,413 2,023
Y/Y growth 20% 18% 24% -10% -3% 21% 208% 164% 294% 156% 47% -2% -3%
13 AT&T, Inc. 1,555 1,678 1,672 1,725 1,818 1,800 1,977 2,052 2,127 1,881 1,825 2,064 1,890
Y/Y growth 82% 97% 92% 80% 75% 76% 85% 101% 142% 128% 113% 24% 22%
14 Amazon Sites 1,352 1,532 1,580 1,589 1,678 1,942 1,896 1,770 1,819 2,058 2,571 2,057 1,671
Y/Y growth -10% -8% -7% -4% -6% 24% 21% 23% 25% 11% 25% 31% 24%
15 EA Online 1,267 1,412 1,149 1,182 1,219 1,374 1,332 1,360 1,522 1,382 1,423 1,686 1,608
Y/Y growth -25% -10% -15% -10% -10% -4% -15% -9% 2% -6% 17% 34% 27%
16 Ask Network 1,434 1,450 1,483 1,606 1,675 1,747 1,788 1,679 1,700 1,575 1,433 1,528 1,412
Y/Y growth -6% -17% -26% -13% -11% -3% -4% -6% -3% -6% -16% 2% -2%
17 Photobucket.com LLC 764 824 1,141 1,666 1,912 2,101 2,247 2,207 2,445 2,146 2,104 1,180 1,302
Y/Y growth 190% 144% 195% 219% 148% 208% 193% 256% 340% 211% 179% 51% 71%
18 Bank of America 1,201 1,229 1,148 1,152 1,223 1,258 1,295 1,262 1,295 1,280 1,307 1,333 1,282
Y/Y growth 11% 4% -8% -6% -3% 2% 5% 11% 7% 6% 7% 9% 7%
19 Verizon Communications Corporation 995 1,068 978 895 920 1,040 1,065 1,081 1,113 1,189 1,205 1,267 1,199
Y/Y growth 4% -6% -18% -22% -20% -12% -15% -8% -5% 6% 5% 27% 21%
20 Cox Enterprises Inc. 906 950 910 912 991 1,067 1,010 985 943 921 946 1,104 1,132
Y/Y growth 3% 5% -23% -5% 9% 9% -1% 8% 1% 16% 14% 10% 25%
21 Disney Online 945 726 655 715 879 962 993 722 624 853 1,039 1,100 1,090
Y/Y growth - - -38% -27% -43% -34% -22% -34% -37% -21% -3% 11% 15%
22 United Online, Inc 1,238 1,352 1,294 1,180 1,235 1,136 1,105 1,027 1,133 949 1,023 984 953
Y/Y growth 23% 25% 4% 18% 25% 14% -9% -8% 8% -10% -21% -19% -23%
23 Glam Media 85 101 130 373 460 734 768 666 685 719 756 860 891
Y/Y growth - - 5886% 21479% 5630% 3193% 2071% 1637% 1891% 1448% 1333% 1209% 946%
24 ESPN 687 1,043 920 854 899 977 1,245 1,888 1,849 1,667 1,310 949 885
Y/Y growth -19% -7% -18% 30% -5% 41% 58% 77% 61% 77% 36% 24% 29%
25 Wal-Mart 734 724 769 744 778 876 820 757 876 1,609 1,800 917 809
Y/Y growth 7% -6% -1% -11% -9% 10% 10% -2% 3% 11% 25% 22% 10%
26 Pearson Education 398 304 307 352 393 293 362 585 695 669 531 643 793
Y/Y growth - - - - - - - 44% 61% 58% 79% 93% 99%
27 Wikipedia Sites 598 701 817 846 826 925 846 841 931 832 781 805 751
Y/Y growth 180% 161% 125% 104% 117% 146% 87% 82% 88% 39% 35% 39% 26%
28 JPMorgan Chase Property 650 697 713 691 660 714 722 729 819 794 784 843 735
Y/Y growth 27% 15% 8% 11% 6% 22% 20% 32% 36% 35% 20% 42% 13%
29 Weather Channel, The 591 510 578 551 600 546 558 451 508 396 672 681 685
Y/Y growth 21% -32% -22% -33% -29% -28% -18% -32% -23% -33% 12% -12% 16%
30 Weatherbug Property 682 752 723 726 808 771 757 656 681 584 711 699 666
Y/Y growth 5% 7% -3% -10% 6% -1% 1% -2% 8% -4% 13% 9% -2%
31 Gorilla Nation 556 529 523 578 705 724 577 525 777 723 718 747 641
Y/Y growth 40% 18% 6% 20% 26% 17% -6% -7% 41% 66% 68% 85% 15%
32 Gannett Sites 445 493 493 479 518 573 602 612 630 537 528 586 594
Y/Y growth 26% 14% -1% 11% 20% 28% 25% 43% 31% 12% 23% 32% 34%
33 Expedia Inc 790 942 712 672 704 800 673 572 522 444 413 626 572
Y/Y growth -5% 5% -16% -21% -29% -13% -19% -7% -17% -16% -16% -18% -28%
34 New York Times Digital 462 508 569 509 508 505 519 535 610 546 484 557 547
Y/Y growth 9% 9% -2% 4% 8% 2% -3% 7% 9% -3% 1% 11% 18%
35 Target Corporation 505 598 528 549 620 698 609 531 604 914 931 564 547
Y/Y growth -2% 5% -14% -8% 4% 28% 2% 10% 4% 16% 17% 10% 8%
36 Apple Inc. 440 452 418 526 478 501 486 541 491 511 694 603 545
Y/Y growth 33% 36% 20% 37% 18% 32% 26% 17% 8% 5% -1% 17% 24%
37 Wells Fargo 495 588 560 546 571 565 619 581 616 585 587 627 541
Y/Y growth -9% -2% -7% -3% -5% 3% 3% 1% 11% 20% 20% 24% 9%
38 JCPenney Sites 538 630 491 495 439 505 525 490 506 678 674 512 528
Y/Y growth 36% 13% 2% 9% -7% -3% -2% -14% -4% -17% -12% -3% -2%
39 E.W. Scripps 447 387 324 346 348 395 395 410 466 571 507 617 492
Y/Y growth -6% -8% -16% -9% -10% 2% 11% 13% 32% 32% 15% 19% 10%
40 CNET Networks 532 561 568 560 579 653 666 640 567 498 476 468 471
Y/Y growth -52% -42% -42% -45% -38% -24% -14% 4% -14% -30% -26% -24% -12%
41 CBS Corporation 513 751 696 640 603 509 651 1,036 976 851 613 452 465
Y/Y growth - 5% 2% -6% -15% -19% -25% -4% -2% -11% -17% 0% -9%
42 Sprint Nextel Corporation 483 479 461 452 500 526 526 459 458 530 507 444 463
Y/Y growth 12% 9% -2% -3% 4% 14% 5% -6% -7% 7% 4% -8% -4%
43 WorldNow - ABC Owned Sites 244 213 245 220 289 304 316 311 315 271 331 428 460
Y/Y growth - - - - - - - - - 57% 98% 108% 88%
44 CareerBuilder LLC 414 439 449 406 432 428 429 411 430 327 267 460 459
Y/Y growth 17% 13% 14% -11% -6% -8% -22% -8% -8% -8% -19% 8% 11%
45 Citigroup 580 552 509 482 476 483 498 493 601 500 484 489 439
Y/Y growth 9% -2% -25% -34% -37% -33% -34% -22% 3% -4% -14% -22% -24%
46 Monster Worldwide 483 532 530 531 527 531 541 574 561 461 378 482 396
Y/Y growth -21% -18% -26% -24% -26% -26% -18% -5% -1% -14% -23% -22% -18%
47 NETFLIX.COM 329 347 305 277 315 338 343 325 324 314 335 428 385
Y/Y growth - - - - - - - - - -1% 0% 13% 17%
48 Capital One 374 393 343 306 345 334 353 329 378 451 398 406 379
Y/Y growth - - - - - - -12% -8% 3% 37% 8% 10% 1%
49 Macy's Inc. 391 302 269 320 323 303 273 281 340 441 521 398 356
Y/Y growth - - - - - - - -3% 10% 10% 7% 0% -9%
50 Hearst Corporation N/A N/A N/A N/A N/A N/A N/A N/A N/A 403 381 361 353
Y/Y growth - - - - - - - - - - - - -
Y/Y growth 13% 6% -1% -5% -4% -3% -5% 0% 3% 3% 1% 12% 1%
Note: MySpace.com is included in Fox Interactive Media as of August 2006
April 07, 2008 35

Figure 38: Top 50 Global Properties by Unique Visitors, February 2007–February 2008 (in thousands)
1 Google Sites 503,033 528,005 527,572 536,401 544,783 552,035 561,090 570,480 583,445 581,085 587,806 597,234 605,576
Y/Y growth 13% 13% 12% 18% 20% 20% 20% 22% 24% 22% 19% 19% 20%
2 Microsoft Sites 507,317 526,999 520,238 528,078 529,156 532,351 525,541 528,651 539,364 531,087 540,285 545,608 542,751
Y/Y growth 5% 4% 3% 5% 6% 5% 4% 5% 7% 6% 6% 7% 7%
3 Yahoo! Sites 458,985 476,256 467,642 469,826 471,924 475,826 478,723 481,511 495,901 490,019 484,674 495,335 487,573
Y/Y growth 1% 1% -1% -2% -2% -1% -1% 0% 4% 3% 2% 6% 6%
4 AOL LLC N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 247,880 240,810
Y/Y growth - - - - - - - - - - - - -
5 Wikipedia Sites 192,176 212,171 208,906 217,464 208,120 198,746 210,811 228,830 244,474 241,533 226,119 242,554 240,754
Y/Y growth 93% 82% 71% 60% 63% 57% 52% 48% 49% 40% 37% 28% 25%
6 eBay 248,558 256,270 248,006 258,678 264,732 247,666 240,357 243,348 253,685 254,867 251,847 249,307 239,900
Y/Y growth 2% 0% -4% -1% 3% 3% 1% 3% 6% 2% 0% 0% -3%
Y/Y growth 390% 336% 313% 278% 502% 469% 30% 32% 29% 20% 17% 15% 13%
8 Amazon Sites 143,084 149,643 136,655 141,578 145,947 148,366 151,944 154,210 160,286 163,417 170,599 165,959 155,193
Y/Y growth 11% 7% 1% 5% 13% 13% 13% 15% 16% 14% 13% 11% 8%
9 Apple Inc. 111,877 109,988 115,262 120,982 123,554 123,834 124,069 126,575 126,880 127,023 137,355 140,309 139,213
Y/Y growth 37% 23% 29% 27% 34% 34% 32% 33% 34% 29% 24% 20% 24%
10 CNET Networks 116,394 129,384 119,865 121,423 116,579 124,081 122,240 124,598 135,449 130,635 126,451 125,565 124,750
Y/Y growth 33% 32% 33% 39% 38% 39% 33% 48% 45% 30% 10% 6% 7%
11 Ask Network 108,663 111,427 110,553 113,954 115,655 116,918 121,604 121,470 131,387 127,588 119,799 121,303 116,420
Y/Y growth -4% -6% -9% -4% 3% 2% 5% 8% 16% 15% 5% 11% 7%
12 Adobe Sites 98,748 105,955 101,133 103,165 121,966 115,820 108,728 107,877 113,544 116,496 111,112 112,819 107,954
Y/Y growth 1% -1% -5% 3% 27% 13% 8% 13% 23% 19% 11% 11% 9%
13 FACEBOOK.COM 24,782 32,115 38,764 47,208 52,167 60,491 69,256 73,521 85,636 92,754 97,792 100,668 100,319
Y/Y growth 129% 145% 204% 235% 270% 304% 348% 420% 424% 399% 330% 305% 305%
14 Time Warner - Excluding AOL N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 91,744 90,468
Y/Y growth - - - - - - - - - - - - -
15 Connexus 39,140 42,484 39,244 42,465 42,422 42,136 41,805 41,469 44,896 99,350 105,204 97,567 84,322
Y/Y growth -41% -36% -39% -28% -19% -21% -22% -14% -8% 100% 123% 105% 115%
16 Viacom Digital 76,625 83,358 81,344 85,522 88,655 91,243 92,373 91,697 89,993 87,219 88,745 86,008 83,583
Y/Y growth - - - - - 70% 68% 39% 32% 16% 17% 13% 9%
17 The Mozilla Organization 49,812 61,918 39,759 47,129 70,851 73,989 72,514 76,030 79,676 88,294 81,253 47,989 82,593
Y/Y growth 146% 243% 59% 64% 136% 167% 107% 106% 176% 97% 75% 28% 66%
18 WordPress N/A N/A N/A 37,980 41,898 46,060 52,346 62,615 69,617 72,335 71,027 78,766 78,784
Y/Y growth - - - - - - - - - - - - -
19 New York Times Digital 70,984 75,057 68,485 68,225 66,230 66,534 67,751 69,959 77,237 75,074 69,435 76,331 75,371
Y/Y growth 16% 14% 6% 3% 7% 6% 6% 7% 10% 6% 2% 6% 6%
20 Baidu.com Inc. 52,724 59,226 58,595 58,958 60,062 63,134 58,816 63,344 66,905 67,534 69,558 70,050 66,711
Y/Y growth - - - - - - - - - - - 24% 27%
21 TENCENT Inc. 53,175 60,175 59,473 57,381 61,970 66,223 63,140 65,787 68,485 70,974 68,769 70,643 66,228
Y/Y growth - - - - 8% 15% 16% 26% 27% 26% 19% 27% 25%
22 Lycos Sites 86,581 87,426 79,110 80,728 77,518 78,265 76,789 74,550 77,743 73,739 70,017 70,576 65,454
Y/Y growth 95% 92% -14% -14% -11% -12% -18% -18% -14% -13% -16% -22% -24%
23 SINA Corporation 54,191 60,480 57,520 58,803 60,729 62,464 58,072 59,957 65,750 60,244 60,362 60,970 59,507
Y/Y growth - - - - -4% 0% -1% 5% 15% 4% 3% 6% 10%
24 Orange Sites 51,442 65,010 62,199 65,093 60,847 58,225 62,986 63,173 66,973 62,485 59,326 57,913 58,415
Y/Y growth - - - - - - - 58% 24% 16% 17% 9% 14%
25 Gorilla Nation 65,240 68,628 65,883 67,909 67,789 70,137 68,155 63,066 66,682 52,803 52,931 57,350 55,597
Y/Y growth 39% 34% 33% 43% 38% 36% 31% 31% 34% 1% -4% 3% -15%
26 Sony Online 57,666 61,096 59,963 58,318 53,393 54,054 53,064 51,896 58,076 59,233 66,097 61,933 55,358
Y/Y growth 8% 3% 5% 1% 2% -1% -2% -4% 9% -2% 4% 1% -4%
27 Expedia Inc 51,579 58,498 54,307 55,638 59,551 64,757 62,427 56,938 56,228 53,746 48,780 59,357 53,986
Y/Y growth -6% -6% -11% -5% 4% 1% 3% 12% 12% 16% 14% 8% 5%
28 Glam Media 15,040 18,038 21,901 30,912 33,185 35,036 32,868 37,157 43,548 44,465 44,912 46,853 53,017
Y/Y growth - - - - 1031% 557% 443% 451% 515% 418% 212% 272% 252%
29 Lycos Europe Sites 36,570 48,507 54,190 56,649 53,649 52,985 54,187 55,546 57,828 57,639 56,584 56,338 52,953
Y/Y growth -18% 6% -41% 33% 46% 52% 47% 51% 57% 51% 56% 46% 45%
30 Real.com Network 57,684 62,042 59,122 56,571 55,532 57,857 55,009 56,068 57,065 55,940 56,003 53,802 50,574
Y/Y growth -14% -15% -24% -27% -18% -16% -17% -13% -9% -13% -10% -11% -12%
31 Disney Online 41,056 43,240 40,238 43,841 43,772 45,939 48,647 44,054 49,805 49,787 54,190 51,765 49,645
Y/Y growth 10% 11% -1% 15% 6% 2% 12% 12% 18% 23% 27% 17% 21%
32 NetEase.com Inc. 40,654 44,260 43,331 43,507 46,648 49,654 44,563 47,396 49,188 49,794 48,638 51,422 49,330
Y/Y growth - - - -16% -7% 1% 3% 9% 20% 19% 16% 24% 21%
33 Weather Channel, The 45,097 43,813 47,014 48,864 49,897 49,998 51,120 47,745 49,105 43,945 49,265 48,926 48,323
Y/Y growth 16% -2% 0% 8% 7% 12% 15% 16% 20% 14% 26% 14% 7%
34 Oversee.net Network N/A N/A 48,769 51,536 52,733 50,936 52,361 50,781 53,407 51,628 48,617 51,580 47,742
Y/Y growth - - - - - - - - - - - - -
35 Peerflix Media Network N/A N/A N/A N/A N/A N/A N/A N/A N/A 254 417 29,767 46,675
Y/Y growth - - - - - - - - - - - - -
36 Terra Networks 58,645 60,337 59,445 63,256 63,021 64,067 63,399 62,559 56,391 51,518 49,602 49,259 46,161
Y/Y growth 9% 4% 9% 32% 36% 27% 27% 34% 18% -5% -20% -22% -21%
37 Ares Galaxy - P2P (App) 22,373 25,411 27,588 29,934 32,194 34,463 36,316 38,573 40,581 41,436 44,090 43,920 44,722
Y/Y growth - - - 166% 177% 162% 158% 161% 165% 134% 117% 104% 100%
38 Monster Worldwide 50,931 55,381 49,215 50,725 50,636 49,549 50,516 50,275 50,634 45,198 41,276 46,359 44,656
Y/Y growth -31% -30% -33% -36% -30% -35% -26% -16% -13% -16% -18% -17% -12%
39 ARTISTdirect Network 39,964 45,077 45,424 50,599 49,041 50,572 50,749 49,010 52,134 48,900 47,753 44,658 44,544
Y/Y growth 34% 32% 26% 47% 42% 22% 23% 27% 40% 31% 18% 10% 11%
40 Alibaba.com Corporation 33,972 38,824 36,952 36,991 40,152 40,800 35,788 40,868 43,915 45,263 46,971 47,089 44,455
Y/Y growth - - - - - -11% -16% 6% 8% 6% 3% 28% 31%
41 BBC Sites 46,354 47,579 46,357 47,364 45,615 45,264 44,777 46,338 47,760 45,967 42,975 45,610 44,103
Y/Y growth 6% 0% 2% 1% 1% 4% 4% 6% 12% 5% -2% -6% -5%
42 AmericanGreetings Property 28,585 20,640 23,270 19,520 19,660 19,804 18,088 19,896 23,838 38,616 43,199 40,488 42,249
Y/Y growth - - - - - - - -6% -12% 48% 45% 79% 48%
43 Sohu.com Inc. 40,214 43,466 43,033 43,611 48,465 48,005 42,503 42,622 47,262 45,814 45,805 44,901 41,600
Y/Y growth - - - -18% -9% -10% -11% -3% 9% 6% 3% 5% 3%
44 Photobucket.com LLC 27,706 29,836 29,972 33,695 34,630 38,467 38,674 37,491 38,849 35,611 35,887 39,152 39,556
Y/Y growth #N/A 93% 88% 100% 80% 75% 83% 81% 74% 51% 38% 44% 43%
45 HI5.COM 27,914 27,149 29,345 28,492 28,174 32,211 34,898 35,064 31,422 31,058 31,428 38,344 39,297
Y/Y growth - - - - 56% 51% 54% 51% 25% 35% 35% 61% 41%
46 RapidShare AG 26,078 27,306 26,670 28,591 30,428 30,640 32,399 32,743 35,521 34,730 36,414 38,726 37,662
Y/Y growth - - - - - - - - - - 38% 49% 44%
47 FRIENDSTER.COM 20,284 21,083 22,517 24,684 24,675 25,817 27,378 26,504 28,261 28,408 29,735 34,083 37,114
Y/Y growth - - - - - - - - - - 59% 76% 83%
48 CBS Corporation 29,176 31,800 26,370 26,209 34,358 33,754 39,086 42,501 41,302 42,325 36,656 35,214 36,781
Y/Y growth - - - - - - - - - - 34% 27% 26%
49 UGO 24,857 25,978 25,484 27,882 28,771 29,640 31,062 28,507 29,722 28,702 35,792 35,671 35,965
Y/Y growth - - - - - - - - - - 48% 45% 45%
50 Shopzilla.com Sites 27,277 28,689 30,452 31,337 31,964 32,831 33,127 34,221 36,024 37,531 39,795 37,113 35,456
Y/Y growth - - - - - - 8% 9% 7% 9% 11% 15% 30%
Y/Y growth 10% 10% 10% 9% 9% 9% 9% 10% 10% 10% 10% 10% 11%
36 April 07, 2008

Figure 39: Top 50 Global Properties by Page Views, February 2007–February 2008 (in millions)
1 Google Sites 120,477 141,384 137,240 148,150 150,149 154,132 153,189 153,693 168,531 166,587 166,343 181,558 169,587
Y/Y growth 62% 63% 61% 74% 78% 68% 78% 80% 85% 76% 57% 52% 41%
2 Yahoo! Sites 99,543 109,887 107,055 106,530 105,776 107,514 106,541 102,521 107,227 105,931 102,052 103,216 96,011
Y/Y growth -6% -7% -8% -7% -9% -7% -6% -9% -6% 1% 3% 0% -4%
3 Microsoft Sites 78,825 85,938 80,655 84,508 83,223 81,190 78,484 77,151 81,501 78,621 75,934 80,874 74,584
Y/Y growth 5% 2% 2% 12% 11% 6% 3% 7% 8% 6% 3% 6% -5%
Y/Y growth 11253% 8608% 7526% 8520% 14180% 14260% 45% 36% 28% 16% -2% 10% -5%
5 FACEBOOK.COM 15,500 20,049 26,655 29,882 29,075 30,799 32,967 34,535 38,689 41,581 37,998 41,752 39,681
Y/Y growth 177% 191% 271% 355% 385% 403% 410% 364% 285% 311% 254% 203% 156%
6 eBay 34,546 35,169 31,069 30,872 29,497 29,833 27,790 28,066 29,738 31,005 29,080 29,882 27,568
Y/Y growth -2% -13% -18% -23% -15% -13% -17% -19% -14% -14% -11% -11% -20%
7 AOL LLC NA NA NA NA NA NA NA NA NA NA NA 20,249 19,204
Y/Y growth - - - - - - - - - - - - -
8 FRIENDSTER.COM 4,938 6,081 6,402 8,990 9,507 11,219 10,422 11,172 11,946 10,627 11,328 13,759 16,096
Y/Y growth 84% 140% 230% 311% 308% 368% 257% 278% 228% 178% 152% 194% 226%
9 TENCENT Inc. 26,487 31,390 31,208 32,224 39,950 44,124 26,210 18,821 20,878 20,427 19,195 19,787 15,818
Y/Y growth - - - - 56% 50% -1% 10% 33% -7% -11% -1% -40%
10 NHN Corporation 21,006 21,770 22,287 24,123 22,183 21,164 19,375 15,310 17,650 17,249 16,927 16,792 13,528
Y/Y growth - - - - - - - - - - - -28% -36%
11 HI5.COM 5,985 6,842 7,280 7,192 6,779 7,184 9,116 9,869 10,647 11,163 11,927 14,549 13,102
Y/Y growth 54% 65% 65% 51% 52% 66% 131% 189% 202% 183% 163% 153% 119%
12 Baidu.com Inc. 6,006 7,210 6,925 7,684 9,053 9,781 9,431 7,944 10,129 10,280 9,131 8,005 8,361
Y/Y growth - - - - - - - - - - - 46% 39%
13 Lycos Sites 14,836 13,393 11,815 12,763 12,616 12,473 11,857 10,201 11,308 11,085 9,632 9,538 7,888
Y/Y growth -35% -41% -45% -37% -40% -43% -40% -37% -30% -22% -29% -39% -47%
14 Groupe Hi-Media ... ... 254 295 348 363 5,682 5,887 6,215 6,162 6,573 7,095 7,389
Y/Y growth - - - - - - - - - - - - -
15 Craigslist.org 4,026 5,347 5,789 5,529 6,011 6,428 6,486 6,508 7,178 6,390 6,314 6,876 6,951
Y/Y growth 112% 122% 115% 93% 109% 97% 89% 110% 123% 124% 113% 72% 73%
16 Alibaba.com Corporation 3,209 4,820 4,888 6,014 6,684 7,642 7,979 9,359 10,964 12,548 9,186 8,738 5,969
Y/Y growth - - - - - 41% 75% 144% 219% 202% 119% 161% 86%
17 SINA Corporation 10,685 9,493 8,853 8,519 12,893 10,885 8,302 7,122 7,913 8,020 7,623 6,490 4,680
Y/Y growth - - - -20% -12% -26% -35% -31% -24% -31% -24% -35% -56%
18 NetEase.com Inc. 4,429 5,629 4,469 4,473 5,038 5,861 4,794 5,353 6,224 6,996 6,105 6,675 4,665
Y/Y growth - - - -56% -49% -42% -46% -30% 10% 8% 1% 19% 5%
19 Viacom Digital 4,289 4,240 4,645 4,569 5,358 5,302 5,311 4,262 4,111 4,013 4,730 4,474 4,249
Y/Y growth - - - - - 14% 8% 8% 3% -10% -3% 9% -1%
20 Amazon Sites 3,699 3,963 3,389 3,430 3,655 4,045 4,059 3,956 4,175 4,574 5,301 4,773 3,848
Y/Y growth -3% -5% -12% -6% 3% 16% 15% 16% 14% 7% 14% 20% 4%
21 Wikipedia Sites 3,093 3,673 3,454 3,730 3,530 3,340 3,232 3,586 3,959 3,854 3,305 3,852 3,711
Y/Y growth 157% 157% 128% 103% 112% 96% 77% 72% 66% 43% 38% 32% 20%
22 Orange Sites 4,052 4,661 4,080 4,374 4,120 4,068 3,792 3,995 4,422 4,251 3,900 4,045 3,629
Y/Y growth - - - - - - - -1% -4% -1% 2% -1% -10%
23 Comcast Corporation 2,796 3,026 2,863 2,840 2,910 3,099 3,224 3,493 4,081 4,536 3,897 3,887 3,475
Y/Y growth - - - 27% 32% 38% 34% 43% 58% 78% 47% 46% 24%
24 Sohu.com Inc. 6,755 7,142 6,762 7,084 8,575 7,504 6,014 5,550 6,470 5,729 5,067 4,866 3,429
Y/Y growth - - - -32% -30% -37% -37% -34% -18% -32% -31% -27% -49%
25 Rakuten Inc 3,302 3,513 3,384 3,152 3,260 3,511 3,348 3,281 3,274 3,424 3,453 3,599 3,347
Y/Y growth -3% -7% -9% -9% 9% 10% 9% 4% 6% 15% 21% 7% 1%
26 Terra Networks 4,059 4,421 4,267 4,513 4,109 4,462 3,933 3,746 3,855 3,717 3,417 3,619 3,317
Y/Y growth -4% 4% 10% 6% 3% 8% -1% -15% -9% -5% -18% -17% -18%
27 Time Warner - Excluding AOL NA NA NA NA NA NA NA NA NA NA NA 3,170 3,160
Y/Y growth - - - - - - - - - - - - -
28 FC2 inc. NA NA NA NA NA 2,056 1,958 1,967 1,944 2,219 2,311 2,300 2,371
Y/Y growth - - - - - 64% 60% - - - - - -
29 Ask Network 2,325 2,501 2,405 2,581 2,612 2,740 2,752 2,732 2,827 2,586 2,361 2,469 2,245
Y/Y growth -17% -17% -26% -16% -10% -4% -1% 2% 10% 3% -6% 6% -3%
30 DAILYMOTION.COM 710 980 1,254 1,411 1,720 1,429 1,518 1,632 1,984 2,081 1,909 1,962 1,933
Y/Y growth 2935% 2093% 1916% 2137% 2601% 1375% 783% 576% 496% 348% 244% 222% 172%
31 BBC Sites 2,122 2,322 2,129 2,184 2,015 2,006 2,059 1,919 2,009 1,992 1,887 2,188 1,850
Y/Y growth 6% 2% 5% 8% -2% 5% 8% 4% 7% 3% -5% 0% -13%
32 CNET Networks 2,156 2,448 2,350 2,542 2,283 2,607 2,493 2,087 2,129 1,958 1,905 1,880 1,832
Y/Y growth -2% 12% 12% 23% 24% 48% 54% 51% 12% 0% -11% -8% -15%
33 Disney Online 1,645 1,505 1,380 1,365 1,499 1,703 1,712 1,518 1,407 1,636 1,775 1,834 1,791
Y/Y growth 13% 0% -12% -3% -12% -13% -6% 4% -8% 10% 11% 7% 9%
34 AT&T, Inc. 1,559 1,682 1,617 1,680 1,731 1,671 1,810 1,943 2,036 1,786 1,731 1,951 1,789
Y/Y growth 72% 82% 75% 71% 66% 60% 64% 86% 127% 118% 104% 18% 15%
35 Photobucket.com LLC 973 1,087 1,319 1,841 2,025 2,286 2,407 2,677 3,040 2,778 2,807 1,616 1,761
Y/Y growth 150% 126% 150% 181% 144% 177% 163% 250% 314% 230% 220% 64% 81%
36 ESPN 1,377 1,767 1,555 1,516 1,471 1,653 1,981 2,797 2,639 2,538 2,268 1,944 1,653
Y/Y growth -13% -20% -17% 29% -12% 36% 56% 71% 62% 64% 25% 16% 20%
37 Spill Group NA NA NA NA NA 696 958 1,083 1,288 1,455 2,020 1,873 1,623
Y/Y growth - - - - - - - - - - - - -
38 TUDOU.COM 1,235 1,618 1,931 1,028 1,099 1,684 1,026 1,043 1,262 1,242 1,071 1,919 1,452
Y/Y growth - - - - - - - - 699% 329% 163% 183% 18%
39 Bank of America 1,234 1,262 1,162 1,158 1,234 1,268 1,320 1,275 1,319 1,288 1,319 1,349 1,277
Y/Y growth 12% 5% -7% -6% -3% 3% 6% 11% 9% 8% 7% 7% 3%
40 Xunlei Networking NA NA NA NA NA NA 3,000 1,691 2,011 1,957 1,705 1,456 1,141
Y/Y growth - - - - - - - - - - - - -
41 NTT Group NA NA 1,106 1,082 1,030 1,306 1,096 1,021 1,061 1,171 1,106 1,129 1,133
Y/Y growth - - - - - - - - - - - - -
42 Verizon Communications Corporation 974 1,038 940 867 867 972 1,030 1,036 1,077 1,138 1,128 1,185 1,114
Y/Y growth -3% -13% -23% -27% -27% -19% -18% -11% -9% 1% -2% 21% 14%
43 Monster Worldwide 1,339 1,550 1,349 1,365 1,297 1,256 1,235 1,224 1,518 1,285 1,016 1,132 1,110
Y/Y growth -42% -35% -25% -24% -27% -34% -33% -16% -2% -23% -25% -27% -17%
44 Glam Media 137 170 192 474 564 809 786 741 841 924 972 1,101 1,097
Y/Y growth - - - - - - - - - - 947% 918% 700%
45 Apple Inc. 936 1,075 877 997 971 1,004 973 1,160 1,082 1,124 1,404 1,254 1,095
Y/Y growth - 29% 11% 25% 24% 20% 22% 26% 21% 21% 14% 18% 17%
46 United Online, Inc 1,334 1,500 1,307 1,251 1,291 1,200 1,166 1,098 1,163 1,008 1,041 1,118 1,066
Y/Y growth - - - - - - - - - - -26% -18% -20%
47 MercadoLibre 1,252 1,437 1,445 1,467 1,315 1,380 1,363 1,247 1,321 1,140 1,326 1,191 1,058
Y/Y growth 43% 56% 69% 40% 25% 12% -16% -12% 5% -9% 5% -21% -16%
48 Lycos Europe Sites 1,758 2,199 1,301 1,352 1,344 1,295 1,281 1,267 1,304 1,229 1,199 1,227 1,039
Y/Y growth 38% 50% -2% 12% 34% 38% 37% 17% 35% -39% -33% -37% -41%
49 Groupe PPR 935 1,074 910 1,059 1,028 973 853 903 965 1,020 991 1,216 1,006
Y/Y growth -14% -12% -23% -15% -16% -10% -20% -17% -11% -13% -6% 7% 8%
50 Gorilla Nation 926 991 990 984 1,089 1,127 926 845 1,109 1,011 998 1,084 990
Y/Y growth - - - - - - - - - - - - -
Total Internet : Total Audience 1,838,417 2,009,919 1,925,110 1,944,666 1,975,534 2,004,579 1,947,320 1,915,743 2,059,327 2,005,557 1,962,912 2,127,210 1,951,904
Y/Y growth 7% 5% 5% 6% 7% 6% 7% 13% 19% 15% 14% 17% 6%
April 07, 2008 37

Figure 40: Online Subscription Revenue by Category ($ in millions)

2001 2002 2003 2004 2005
Entertainment/Lifestyle 112.0 227.5 217.6 413.5 573.8
Y/Y Growth 103% -4% 90% 39%
Personals/Dating 72.0 302.1 449.5 469.5 503.4
Y/Y Growth 320% 49% 4% 7%
Business Content/Investment 214.3 292.0 334.1 312.9 320.3
Y/Y Growth 36% 14% -6% 2%
Research 57.9 106.6 108.6 115.1 152.3
Y/Y Growth 84% 2% 6% 32%
Personal Growth 24.7 44.3 90.7 96.5 117.3
Y/Y Growth 79% 105% 6% 22%
Games 46.5 72.0 73.0 88.8 108.4
Y/Y Growth 55% 1% 22% 22%
General News 51.8 70.0 87.5 87.9 78.7
Y/Y Growth 35% 25% 0% -10%
Community-Made Directories 46.1 91.1 87.0 70.5 65.4
Y/Y Growth 98% -5% -19% -7%
Sports 10.0 30.3 38.2 52.8 51.3
Y/Y Growth 203% 26% 38% -3%
Greeting Cards 2.1 36.2 40.6 43.4 45.7
Y/Y Growth 1624% 12% 7% 5%
Credit Help 32.4 40.4 36.6 27.1 28.4
Y/Y Growth 25% -9% -26% 5%
Total Online Content Spending 669.8 1,312.5 1,563.4 1,778.0 2,045.0
Y/Y Growth 96% 19% 14% 15%
Figure 41: Online Subscription Revenue by Subscription Period and Category ($ in millions)
2001 2002 2003 2004 2005
Monthly Annual Other Total Monthly Annual Other Total Monthly Annual Other Total Monthly Annual Other Total Monthly Annual Other Total
Entertainment/Lifestyle 89.6 16.8 5.6 112.0 102.4 109.2 15.9 227.5 87.3 114.2 16.1 217.6 261.3 126.5 25.6 413.5 353.5 191.1 29.3 573.8
Y/Y Growth 14% 550% 184% 103% -15% 5% 1% -4% 199% 11% 59% 90% 35% 51% 14% 39%
Personals/Dating 38.9 15.8 17.3 72.0 178.2 87.6 36.3 302.1 256.7 144.7 48.1 449.5 306.6 89.7 73.2 469.5 357.4 92.1 53.9 503.4
Y/Y Growth 358% 453% 110% 320% 44% 65% 33% 49% 19% -38% 52% 4% 17% 3% -26% 7%
Business Content/Investment 40.7 158.6 15.0 214.3 84.7 186.9 20.4 292.0 146.7 162.4 25.1 334.1 147.4 145.8 19.7 312.9 159.5 138.7 22.1 320.3
Y/Y Growth 108% 18% 36% 36% 73% -13% 23% 14% 0% -10% -21% -6% 8% -5% 12% 2%
Research 9.3 48.6 0.0 57.9 35.2 66.1 5.3 106.6 52.0 48.2 8.4 108.6 55.4 53.6 6.1 115.1 78.1 68.1 6.1 152.3
Y/Y Growth 280% 36% NA 84% 48% -27% 57% 2% 6% 11% -27% 6% 41% 27% 0% 32%
Personal Growth 4.7 19.8 0.2 24.7 21.7 15.9 6.6 44.3 53.1 29.0 8.6 90.7 61.4 25.8 9.4 96.5 85.5 23.2 8.6 117.3
Y/Y Growth 363% -19% 2590% 79% 144% 82% 30% 105% 16% -11% 9% 6% 39% -10% -9% 22%
Games 44.6 1.9 0.0 46.5 51.1 18.0 2.9 72.0 44.7 24.7 3.5 73.0 53.4 31.9 3.6 88.8 84.8 20.3 3.4 108.4
Y/Y Growth 15% 868% NA 55% -12% 37% 22% 1% 19% 29% 1% 22% 59% -36% -5% 22%
General News 48.7 3.1 0.0 51.8 55.3 10.5 4.2 70.0 64.5 17.8 5.3 87.5 69.3 13.6 5.0 87.9 59.7 14.6 4.5 78.7
Y/Y Growth 14% 238% NA 35% 17% 69% 25% 25% 7% -23% -5% 0% -14% 7% -10% -10%
Community-Made Directories 2.8 34.1 9.2 46.1 15.5 61.9 13.7 91.1 22.4 53.1 11.6 87.0 14.6 43.3 12.6 70.5 12.8 36.7 16.0 65.4
Y/Y Growth 460% 82% 48% 98% 44% -14% -15% -5% -35% -18% 9% -19% -13% -15% 26% -7%
Sports 2.4 6.1 1.5 10.0 15.8 10.3 4.2 30.3 19.7 14.5 4.0 38.2 25.7 22.0 5.1 52.8 21.0 26.5 3.8 51.3
Y/Y Growth 557% 69% 183% 203% 25% 41% -5% 26% 30% 52% 28% 38% -18% 20% -26% -3%
Greeting Cards 1.0 1.1 0.0 2.1 10.9 22.8 2.5 36.2 22.7 15.6 2.4 40.6 22.1 19.1 2.2 43.4 26.0 18.0 1.7 45.7
Y/Y Growth 1024% 1911% NA 1624% 109% -32% -7% 12% -2% 22% -6% 7% 18% -6% -22% 5%
Credit Help 3.9 28.5 0.0 32.4 8.1 30.7 1.6 40.4 6.7 26.9 3.0 36.6 4.1 21.7 1.4 27.1 3.2 24.2 1.1 28.4
Y/Y Growth 108% 8% NA 25% -18% -12% 86% -9% -39% -20% -55% -26% -22% 12% -22% 5%
Total 286.5 334.4 48.8 669.8 578.8 620.0 113.7 1,312.5 776.3 651.2 135.9 1,563.4 1,021.1 593.0 163.9 1,778.0 1,241.3 653.4 150.3 2,045.0
Y/Y Growth 102% 85% 133% 96% 34% 5% 20% 19% 32% -9% 21% 14% 22% 10% -8% 15%
38 April 07, 2008

Online Advertising
April 07, 2008 39

Figure 42: Lehman Brothers U.S. Online Advertising Forecast ($ in millions), 2001–11E
(in millions) 2001 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E 2011E
Display Advertising $5,351 $3,907 $3,198 $3,754 $4,264 $5,373 $6,630 $7,956 $9,309 $10,612 $11,886
% Y/Y growth -28% -27% -18% 17% 14% 26% 23% 20% 17% 14% 12%
% of total 75% 65% 44% 39% 34% 32% 31% 30% 30% 29% 29%
% of total growth NA NA NA 24% 17% 26% 29% 27% 26% 26% 25%
Search $285 $902 $2,543 $3,850 $5,142 $6,799 $8,907 $11,401 $14,023 $16,547 $19,029
% Y/Y growth 253% 216% 182% 51% 34% 32% 31% 28% 23% 18% 15%
% of total 4% 15% 35% 40% 41% 40% 42% 44% 45% 45% 46%
% of total growth NA NA 131% 55% 44% 38% 49% 50% 50% 50% 50%
Classifieds $1,141 $902 $1,235 $1,733 $2,132 $3,059 $3,457 $3,975 $4,532 $5,075 $5,583
% Y/Y growth 102% -21% 37% 40% 23% 43% 13% 15% 14% 12% 10%
% of total 16% 15% 17% 18% 17% 18% 16% 15% 14% 14% 13%
% of total growth NA NA 27% 21% 14% 21% 9% 10% 11% 11% 10%
Lead Generation/E-mail $357 $301 $291 $289 $1,004 $1,648 $2,208 $2,871 $3,589 $4,306 $5,038
% Y/Y growth -37% -16% -3% -1% 247% 64% 34% 30% 25% 20% 17%
% of total 5% 5% 4% 3% 8% 10% 10% 11% 11% 12% 12%
% of total growth NA NA -1% 0% 25% 15% 13% 13% 14% 14% 15%
Total Online Advertising $7,134 $6,010 $7,267 $9,626 $12,542 $16,879 $21,202 $26,203 $31,452 $36,541 $41,536
% Y/Y growth -11.8% -15.8% 20.9% 32.5% 30.3% 34.6% 25.6% 23.6% 20.0% 16.2% 13.7%
Total U.S. Advertising $234,185 $239,595 $248,764 $268,617 $278,166 $291,964 $299,633 $310,835 $319,421 $333,291 $343,377
% Y/Y growth -6.2% 2.3% 3.8% 8.0% 3.6% 5.0% 2.6% 3.7% 2.8% 4.3% 3.0%
Online as a % of Total 3.0% 2.5% 2.9% 3.6% 4.5% 5.8% 7.1% 8.4% 9.8% 11.0% 12.1%
Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC), Lehman Brothers estimates. Total U.S. Advertising figures through 2011 are from Lehman Brothers
U.S. Media & Internet research team
Figure 43: Lehman Brothers Online Video Advertising Forecast ($ in millions)

2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E
U.S. Online Video Ad Spend $3 $29 $96 $225 $394 $669 $1,091 $1,669 $2,387
Y/Y Growth 866.7% 231.0% 134.4% 75.0% 70.0% 63.0% 53.0% 43.0%
Total U.S. Online Ad Spend $6,010 $7,267 $9,626 $12,542 $16,879 $21,577 $26,820 $31,980 $36,948
Y/Y Growth 20.9% 32.5% 30.3% 34.6% 27.8% 24.3% 19.2% 15.5%
% of Total U.S. Online Ad Spend 0.0% 0.4% 1.0% 1.8% 2.3% 3.1% 4.1% 5.2% 6.5%
Source: Lehman Brothers estimates, Veronis Suhler Stevenson
40 April 07, 2008

Figure 44: Top 10 U.S. Online Advertising Sites ($ in millions), 2000–10E

2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E
TOTAL U.S. ONLINE ADVERTISING $8,087 $7,134 $6,010 $7,267 $9,626 $12,542 $16,879 $21,202 $26,203 $31,452 $36,541
% Y/Y growth 75% -12% -16% 21% 32% 30% 35% 26% 24% 20% 16%
1. Google $19 $52 $230 $589 $1,176 $2,220 $3,726 $5,443 $6,604 $8,005 $9,158
% Y/Y growth -- 170% 345% 156% 100% 89% 68% 46% 21% 21% 14%
% share 0% 1% 4% 8% 12% 18% 22% 26% 25% 25% 25%
2. Yahoo! $838 $496 $631 $1,003 $1,689 $2,290 $2,822 $3,177 $3,633 $4,130 $4,638
% Y/Y growth -- -41% 27% 59% 68% 36% 23% 13% 14% 14% 12%
% share 10% 7% 10% 14% 18% 18% 17% 15% 14% 13% 13%
3. MSN $458 $496 $600 $837 $1,024 $1,136 $1,274 $1,564 $1,705 $1,933 $2,153
% Y/Y growth -- 8% 21% 40% 22% 11% 12% 23% 9% 13% 11%
% share 6% 7% 10% 12% 11% 9% 8% 7% 7% 6% 6%
4. eBay * $238 $370 $490 $638 $840 $1,082 $1,311 $1,490 $1,497 $1,434 $1,363
% Y/Y growth -- 55% 32% 30% 32% 29% 21% 14% 0% -4% -5%
% share 3% 5% 8% 9% 9% 9% 8% 7% 6% 5% 4%
5. AOL $1,779 $1,427 $1,093 $630 $784 $1,016 $1,235 $1,379 $1,396 $1,527 $1,632
% Y/Y growth -- -20% -23% -42% 25% 30% 22% 12% 1% 9% 7%
% share 22% 20% 18% 9% 8% 8% 7% 7% 5% 5% 4%
6. Monster Worldwide $296 $413 $310 $320 $448 $583 $771 $927 $1,076 $1,211 $1,332
% Y/Y growth -- 40% -25% 3% 40% 30% 32% 20% 16% 13% 10%
% share 4% 6% 5% 4% 5% 5% 5% 4% 4% 4% 4%
7. Fox Interactive Media -- -- -- -- -- $67 $298 $659 $954 $1,104 $1,221

% Y/Y growth -- -- -- -- -- -- 348% 121% 45% 16% 11%
% share -- -- -- -- -- 1% 2% 3% 4% 4% 3%
8. InterActiveCorp ** $136 $107 $103 $136 $292 $418 $544 $759 $795 $889 $991
% Y/Y growth -- -21% -4% 33% 115% 43% 30% 39% 5% 12% 11%
% share 2% 1% 2% 2% 3% 3% 3% 4% 3% 3% 3%
9. Gannett $75 $71 $91 $131 $201 $300 $400 $460 $518 $569 $615
% Y/Y growth -- -5% 28% 44% 53% 50% 33% 15% 13% 10% 8%
% share 1% 1% 2% 2% 2% 2% 2% 2% 2% 2% 2%
10. CareerBuilder *** $45 $63 $54 $80 $141 $248 $337 $387 $426 $458 $485
% Y/Y growth -- 39% -13% 48% 76% 75% 36% 15% 10% 8% 6%
% share 1% 1% 1% 1% 1% 2% 2% 2% 2% 1% 1%
Market Share Summary

1. Google 0% 1% 4% 8% 12% 18% 22% 26% 25% 25% 25%
2. Yahoo! 10% 7% 10% 14% 18% 18% 17% 15% 14% 13% 13%
3. eBay 3% 5% 8% 9% 9% 9% 8% 7% 6% 5% 4%
4. MSN 6% 7% 10% 12% 11% 9% 8% 7% 7% 6% 6%
5. AOL 22% 20% 18% 9% 8% 8% 7% 7% 5% 5% 4%
6. Monster Worldwide 4% 6% 5% 4% 5% 5% 5% 4% 4% 4% 4%
7. InterActiveCorp 2% 1% 2% 2% 3% 3% 3% 4% 3% 3% 3%
8. Fox Interactive Media 0% 0% 0% 0% 0% 1% 2% 3% 4% 4% 3%
9. Gannett 1% 1% 2% 2% 2% 2% 2% 2% 2% 2% 2%
10. CareerBuilder 1% 1% 1% 1% 1% 2% 2% 2% 2% 1% 1%
Market Share of Current Top 10 48% 49% 60% 60% 69% 75% 75% 77% 71% 68% 65%
Note: Top 10 rankings based on estimated 2007 positions
* eBay advertising revenue includes listing fees and advertising revenue

** InterActiveCorp historical figures include Ask.com revenue prior to July 2005 acquisition
*** CareerBuilder revenue shown excludes revenue allocated directly to the contributing newspaper websites (approximately 50%)
Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC), Lehman Brothers estimates, company reports
April 07, 2008 41

Figure 45: Total U.S. Advertising Spend by Medium ($ in millions), 2000–09E

2000 2001 2002 2003 2004 2005 2006 2007(E) 2008(E) 2009(E)
Newspapers 48,670 44,305 44,102 44,939 46,712 47,407 46,611 42,795 40,228 38,621
% Change 5.1% -9.0% -0.5% 1.9% 3.9% 1.5% -1.7% -8.2% -6.0% -4.0%
Magazines 12,370 11,095 10,995 11,435 12,247 12,847 13,168 13,497 13,767 14,042
% Change 8.2% -10.3% -0.9% 4.0% 7.1% 4.9% 2.5% 2.5% 2.0% 2.0%
Broadcast TV 44,802 38,881 42,068 41,932 46,264 44,293 46,880 46,743 49,059 47,123
% Change 12.0% -13.2% 8.2% -0.3% 10.3% -4.3% 5.8% -0.3% 5.0% -3.9%
Cable TV 15,455 15,736 16,297 18,814 21,527 23,654 25,025 26,816 28,365 30,003
% Change 23.0% 1.8% 3.6% 15.4% 14.4% 9.9% 5.8% 7.2% 5.8% 5.8%
Radio 19,848 18,369 19,409 20,863 21,411 21,455 21,665 21,366 20,982 20,683
% Change 12.3% -7.5% 5.7% 7.5% 2.6% 0.2% 1.0% -1.4% -1.8% -1.4%
Yellow Pages 13,704 14,384 14,709 14,906 15,486 15,970 16,289 16,632 16,299 15,998
% Change 6.9% 5.0% 2.3% 1.3% 3.9% 3.1% 2.0% 2.1% -2.0% -1.8%
Direct Mail 44,591 44,725 46,067 48,370 52,191 55,218 58,647 62,166 65,896 69,850
% Change 7.2% 0.3% 3.0% 5.0% 7.9% 5.8% 6.2% 6.0% 6.0% 6.0%
Business Papers 4,915 4,468 3,976 4,004 4,072 4,170 4,195 4,195 4,195 4,195
% Change 10.6% -9.1% -11.0% 0.7% 1.7% 2.4% 0.6% 0.0% 0.0% 0.0%
Outdoor 5,235 5,193 5,232 5,504 5,834 6,301 6,805 7,239 7,627 8,035
% Change 8.3% -0.8% 0.8% 5.2% 6.0% 8.0% 8.0% 6.4% 5.4% 5.4%
Internet 8,087 7,134 6,010 7,267 9,626 12,542 16,879 21,202 26,203 31,452
% Change 75.0% -11.8% -15.8% 20.9% 32.5% 30.3% 34.6% 25.6% 23.6% 20.0%
Miscellaneous 32,083 29,895 30,730 31,990 34,645 35,692 37,321 38,655 40,039 41,317
% Change 1.7% -6.8% 2.8% 4.1% 8.3% 3.0% 4.6% 3.6% 3.6% 3.2%
Grand Total 249,760 234,185 239,595 248,764 268,617 278,166 291,964 299,633 310,835 319,421
% Change 9.6% -6.2% 2.3% 3.8% 8.0% 3.6% 5.0% 2.6% 3.7% 2.8%
Real GDP ($ billions) 9,817 9,891 10,049 10,321 10,756 11,049 11,415 11,655 11,888 12,126
% Change 3.7% 0.8% 1.6% 2.7% 4.2% 2.7% 2.9% 2.1% 2.0% 2.0%
Nominal GDP ($ billions) 9,817 10,128 10,470 10,971 11,734 12,456 13,247 13,882 14,479 15,102
% Change 5.9% 3.2% 3.4% 4.8% 7.0% 6.1% 6.1% 4.8% 4.3% 4.3%
Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising
Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers
42 April 07, 2008

Figure 46: Share of Total U.S. Advertising Spending by Medium, 2000–09E

2000 2001 2002 2003 2004 2005 2006 2007(E) 2008(E) 2009(E)
Newspapers 19.5% 18.9% 18.4% 18.1% 17.4% 17.0% 16.0% 14.3% 12.9% 12.1%
Magazines 5.0% 4.7% 4.6% 4.6% 4.6% 4.6% 4.5% 4.5% 4.4% 4.4%
Broadcast TV 17.9% 16.6% 17.6% 16.9% 17.2% 15.9% 16.1% 15.6% 15.8% 14.8%
Cable TV 6.2% 6.7% 6.8% 7.6% 8.0% 8.5% 8.6% 8.9% 9.1% 9.4%
Radio 7.9% 7.8% 8.1% 8.4% 8.0% 7.7% 7.4% 7.1% 6.8% 6.5%
Yellow Pages 5.5% 6.1% 6.1% 6.0% 5.8% 5.7% 5.6% 5.6% 5.2% 5.0%
Direct Mail 17.9% 19.1% 19.2% 19.4% 19.4% 19.9% 20.1% 20.7% 21.2% 21.9%
Business Papers 2.0% 1.9% 1.7% 1.6% 1.5% 1.5% 1.4% 1.4% 1.3% 1.3%
Outdoor 2.1% 2.2% 2.2% 2.2% 2.2% 2.3% 2.3% 2.4% 2.5% 2.5%
Internet 3.2% 3.0% 2.5% 2.9% 3.6% 4.5% 5.8% 7.1% 8.4% 9.8%
Miscellaneous 12.8% 12.8% 12.8% 12.9% 12.9% 12.8% 12.8% 12.9% 12.9% 12.9%
Grand Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Figure 47: Total U.S. Advertising Growth by Medium, 2000–09E

2000 2001 2002 2003 2004 2005 2006 2007(E) 2008(E) 2009(E)
Newspapers 5.1% -9.0% -0.5% 1.9% 3.9% 1.5% -1.7% -8.2% -6.0% -4.0%
Magazines 8.2% -10.3% -0.9% 4.0% 7.1% 4.9% 2.5% 2.5% 2.0% 2.0%
Broadcast TV 12.0% -13.2% 8.2% -0.3% 10.3% -4.3% 5.8% -0.3% 5.0% -3.9%
Cable TV 23.0% 1.8% 3.6% 15.4% 14.4% 9.9% 5.8% 7.2% 5.8% 5.8%
Radio 12.3% -7.5% 5.7% 7.5% 2.6% 0.2% 1.0% -1.4% -1.8% -1.4%
Yellow Pages 6.9% 5.0% 2.3% 1.3% 3.9% 3.1% 2.0% 2.1% -2.0% -1.8%
Direct Mail 7.2% 0.3% 3.0% 5.0% 7.9% 5.8% 6.2% 6.0% 6.0% 6.0%
Business Papers 10.6% -9.1% -11.0% 0.7% 1.7% 2.4% 0.6% 0.0% 0.0% 0.0%
Total Outdoor 8.3% -0.8% 0.8% 5.2% 6.0% 8.0% 8.0% 6.4% 5.4% 5.4%
Internet 75.0% -11.8% -15.8% 20.9% 32.5% 30.3% 34.6% 25.6% 23.6% 20.0%
Miscellaneous 1.7% -6.8% 2.8% 4.1% 8.3% 3.0% 4.6% 3.6% 3.6% 3.2%
Grand Total 9.6% -6.2% 2.3% 3.8% 8.0% 3.6% 5.0% 2.6% 3.7% 2.8%
April 07, 2008 43

Figure 48: Contribution to Total U.S. Advertising Growth by Medium, 2000–09E

2000 2001 2002 2003 2004 2005 2006 2007(E) 2008(E) 2009(E)
Newspapers 10.9% 28.0% -3.8% 9.1% 8.9% 7.3% -5.8% -49.8% -22.9% -18.7%
Magazines 4.3% 8.2% -1.8% 4.8% 4.1% 6.3% 2.3% 4.3% 2.4% 3.2%
Broadcast TV 21.9% 38.0% 58.9% -1.5% 21.8% -20.6% 18.7% -1.8% 20.7% -22.6%
Cable TV 13.2% -1.8% 10.4% 27.5% 13.7% 22.3% 9.9% 23.4% 13.8% 19.1%
Radio 9.9% 9.5% 19.2% 15.9% 2.8% 0.5% 1.5% -3.9% -3.4% -3.5%
Yellow Pages 4.0% -4.4% 6.0% 2.1% 2.9% 5.1% 2.3% 4.5% -3.0% -3.5%
Direct Mail 13.6% -0.9% 24.8% 25.1% 19.2% 31.7% 24.9% 45.9% 33.3% 46.1%
Business Papers 2.2% 2.9% -9.1% 0.3% 0.3% 1.0% 0.2% 0.0% 0.0% 0.0%
Outdoor 1.8% 0.3% 0.7% 3.0% 1.7% 4.9% 3.7% 5.7% 3.5% 4.8%
Internet 15.8% 6.1% -20.8% 13.7% 11.9% 30.5% 31.4% 56.4% 44.6% 61.1%
Miscellaneous 2.5% 14.0% 15.4% 13.7% 13.4% 11.0% 11.8% 17.4% 12.4% 14.9%
Grand Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Figure 49: Initial Year Growth Comparisons – Internet Advertising vs. Broadcast & Cable Television
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
Broadcast 358 1,012 2,162 2,787 3,698 5,030 6,557 7,885 8,188 8,859 9,766
Y/Y Growth 183% 114% 29% 33% 36% 30% 20% 4% 8% 10%
Cable 147 295 499 745 1,190 1,580 1,853 2,080 2,490 3,180 3,654
Y/Y Growth 101% 69% 49% 60% 33% 17% 12% 20% 28% 15%
Internet 55 267 907 1,920 4,621 8,087 7,134 6,010 7,267 9,626 12,542
Y/Y Growth 385% 240% 112% 141% 75% -12% -16% 21% 32% 30%
Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers LLP, Universal McCann
Figure 50: U.S. Online Advertising Revenue by Quarter ($ in millions), 1996–2010E

$ Rev Q/Q Growth Y/Y Growth $ Rev Q/Q Growth Y/Y Growth $ Rev Q/Q Growth Y/Y Growth
1Q96 30 NA NA 1Q01 1,872 -12% -3% 1Q06 3,848 7% 37%
2Q96 52 74% NA 2Q01 1,848 -1% -12% 2Q06 4,061 6% 36%
3Q96 76 46% NA 3Q01 1,773 -4% -10% 3Q06 4,186 3% 33%
4Q96 110 45% NA 4Q01 1,641 -7% -23% 4Q06 4,784 14.3% 33%
Total 1996 267 NA Total 2001 7,134 -12% Total 2006 16,879 35%
1Q97 130 18% 333% 1Q02 1,520 -7% -19% 1Q07 4,864 1.7% 26%
2Q97 214 66% 313% 2Q02 1,458 -4% -21% 2Q07 5,129 5.4% 26%
3Q97 227 6% 200% 3Q02 1,451 -1% -18% 3Q07 5,245 2.3% 25%
4Q97 336 48% 205% 4Q02 1,580 -9% -4% 4Q07E* 5,900 12.5% 23%
Total 1997 907 239% Total 2002 6,010 -16% Total 2007E 21,138 25%
1Q98 351 5% 171% 1Q03 1,632 3% 7%
2Q98 423 20% 97% 2Q03 1,660 2% 14%
3Q98 491 16% 116% 3Q03 1,793 8% 24%
4Q98 656 34% 95% 4Q03 2,182 22% 38%
Total 1998 1,920 112% Total 2003 7,267 21% Total 2008E 26,203 24%
1Q99 693 6% 97% 1Q04 2,230 2% 37%
2Q99 934 35% 121% 2Q04 2,369 6% 43%
3Q99 1,217 30% 148% 3Q04 2,333 -2% 30%
4Q99 1,777 46% 171% 4Q04 2,694 15% 24%
1Q00 1,922 8% 177% 1Q05 2,802 4% 25%
2Q00 2,091 9% 123% 2Q05 2,985 7% 26%
3Q00 1,951 -7% 60% 3Q05 3,147 5% 35%
4Q00 2,123 9% 19% 4Q05 3,608 15% 34%
*Note: $5.9B represents IAB’s preliminary estimate for 4Q07 announced on February 25, 2008.
Source: Interactive Advertising Bureau (IAB), Lehman Brothers estimates
44 April 07, 2008

Figure 51: U.S. Online Advertising Revenue by Format ($ in millions), 2000–2006

Online Advertising Revenue by Format
2000 2001 2002 2003 2004 2005 2006
Search 82 285 902 2,543 3,850 5,142 6,799
Display Related 6,970 5,351 3,907 3,198 3,754 4,264 5,373
Classifieds 574 1,141 902 1,235 1,733 2,132 3,059
E-mail 246 193 240 218 193 251 338
Lead Generation/Referrals 328 164 60 73 96 753 1,310
Total 8,200 7,134 6,010 7,267 9,626 12,542 16,879
Online Advertising Revenue by Format - % Mix

2000 2001 2002 2003 2004 2005 2006
Search 1% 4% 15% 35% 40% 41% 40%
Display Related 85% 75% 65% 44% 39% 34% 32%
Classifieds 7% 16% 15% 17% 18% 17% 18%
E-mail 3% 3% 4% 3% 2% 2% 2%
Lead Generation/Referrals 4% 2% 1% 1% 1% 6% 8%
Total 100% 100% 100% 100% 100% 100% 100%
Online Advertising Revenue by Format - % Growth

2000 2001 2002 2003 2004 2005 2006
Search -- 248% 216% 182% 51% 34% 32%
Display Related -- -23% -27% -18% 17% 14% 26%
Classifieds -- 99% -21% 37% 40% 23% 43%
E-mail -- -22% 25% -9% -12% 31% 35%
Lead Generation/Referrals -- -50% -63% 21% 32% 682% 74%
Total -- -13% -16% 21% 32% 30% 35%
Note: Total dollar amounts differ slightly from reported historical numbers because the above totals are driven by percentage mix.
Source: Interactive Advertising Bureau (IAB)
Figure 52: U.S. Online Advertising Revenue by Pricing Model ($ in millions), 1998–2006
Online Advertising Revenue by Pricing Models
1998 1999 2000 2001 2002 2003 2004 2005 2006
Performance 77 322 820 856 1,262 2,689 3,947 5,142 7,933
CPM 941 1,840 3,526 3,424 2,705 3,125 4,043 5,769 8,102
Hybrid 902 2,438 3,854 2,854 2,043 1,453 1,636 1,630 844
Total 1,920 4,600 8,200 7,134 6,010 7,267 9,626 12,542 16,879
Online Advertising Revenue by Pricing Models - % Mix

1998 1999 2000 2001 2002 2003 2004 2005 2006
Performance 4% 7% 10% 12% 21% 37% 41% 41% 47%
CPM 49% 40% 43% 48% 45% 43% 42% 46% 48%
Hybrid 47% 53% 47% 40% 34% 20% 17% 13% 5%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100%
Online Advertising Revenue by Pricing Models - % Growth

1998 1999 2000 2001 2002 2003 2004 2005 2006
Performance -- 319% 155% 4% 47% 113% 47% 30% 54%
CPM -- 96% 92% -3% -21% 16% 29% 43% 40%
Hybrid -- 170% 58% -26% -28% -29% 13% 0% -48%
Total -- 140% 78% -13% -16% 21% 32% 30% 35%
Source: Interactive Advertising Bureau (IAB)
April 07, 2008 45

Figure 53: Total U.S. Measured Media Advertising by Category and Medium ($ in millions), 2006
Rank Measured Media U.S. Measured Media Breakout 2006
2006 2005 Category 2006 % Chg. Magazine Biz Pub Newspaper Outdoor TV Cable Nets Radio Internet
1 1 Automobile 19,799.0 -5.7 2,089.2 85.5 5,024.5 343.8 8,637.0 1,348.0 1,543.8 727.2
2 2 Retail 19,114.0 2.0 1,992.5 105.4 6,763.2 387.4 5,420.0 1,039.7 2,148.4 1,257.5
3 3 Telecom,internet,ISP 10,950.2 9.6 681.5 217.2 2,172.6 278.4 4,061.7 1,269.7 774.6 1,494.7
4 5 Medicine & remedies 9,192.9 9.0 2,730.1 56.4 279.5 22.7 4,038.7 1,382.0 304.1 379.3
5 6 General services 8,702.0 10.4 698.3 335.2 2,270.8 583.5 2,302.8 454.2 1,319.5 737.7
6 4 Financial services 8,689.0 2.1 927.9 260.9 1,891.3 245.2 2,224.3 932.3 725.0 1,481.9
7 7 Food, beverages & candy 7,225.0 -1.2 1,892.3 104.9 50.3 76.5 3,190.3 1,450.8 326.3 133.7
8 8 Personal care 5,732.0 1.2 2,347.5 40.2 29.4 13.5 2,345.5 796.7 53.9 105.5
9 10 Airlines, hotels, car rental 5,415.6 -1.3 1,233.7 250.5 1,412.9 331.9 876.1 515.4 342.9 452.2
10 9 Movie, video & music 5.379.9 -3.6 239.0 78.1 1,028.3 91.8 2,447.0 1,047.4 258.7 189.7
11 11 Restaurants 5,291.5 4.5 132.9 2.1 183.8 240.2 3,339.1 810.6 534.2 48.5
12 12 Media 5,050.5 2.5 1,527.3 216.8 1,269.0 246.5 266.1 67.2 741.1 716.4
13 16 Government, politics, religion 3,510.6 43.0 342.7 43.8 530.1 148.9 1,585.9 238.6 465.0 155.6
14 13 Insurance 3,446.2 19.2 220.4 57.2 385.9 113.3 1,499.7 635.0 383.6 151.2
15 15 Real estate 3,132.3 20.3 363.0 17.8 1,894.1 258.2 251.8 77.2 138.4 131.7
16 14 Apparel 2,911.7 6.8 2,105.2 81.1 59.6 28.7 353.4 223.4 20.8 39.4
17 17 Computers, software 2,509.8 13.5 451.3 714.6 226.4 49.2 381.8 167.7 62.8 456.0
18 19 Home Furnishings, appliances, electronics 2,213.6 7.6 882.4 187.3 114.1 17.0 551.6 307.8 68.8 84.6
19 18 Beer, wine & liquor 2,099.9 -4.9 505.4 14.8 54.2 163.9 734.4 340.5 225.7 61.0
20 21 Education 1,942.4 8.5 153.2 229.1 342.4 74.6 544.9 166.9 157.7 273.7
21 20 Home supplies & cleaners 1,938.0 4.0 358.3 9.5 5.8 2.6 978.5 525.9 27.6 29.8
22 22 Toys & games 1,253.4 -2.9 97.0 82.6 7.5 3.3 286.8 607.9 8.3 159.9
23 23 Hardware & home building 1,028.3 -1.3 368.0 151.5 103.8 8.6 169.1 168.8 32.2 26.3
24 25 Sporting goods 562.3 5.8 374.2 1.9 28.2 5.0 86.0 48.1 5.5 13.5
25 24 Gas & oil 524.0 -3.7 104.2 7.8 70.1 34.5 149.1 73.6 72.9 11.8
26 26 Pet food & pet care 490.1 -1.0 149.6 1.9 3.2 0.1 209.5 98.1 6.6 21.3
27 27 Office equipment 334.2 -8.5 102.1 43.0 25.1 2.2 94.1 36.4 20.9 10.4
28 28 Shipping & freight 326.8 -8.9 33.1 32.9 14.2 3.2 147.1 41.7 43.4 11.2
29 29 Cigarettes & tobacco 155.6 0.1 105.2 4.7 1.6 0.5 31.2 5.7 0.5 6.2
Direct response advertising 6,461.6 5.4 2,347.1 139.0 493.7 1.9 1,154.0 2,121.1 69.8 135.0
Miscellaneous 4,306.4 2.0 952.2 944.4 1,285.2 54.2 356.3 275.2 171.9 266.9
Total 149,688.7 3.6 26,506.7 4,518.1 28,020.8 3,831.3 48,713.8 17,273.5 11,054.9 9,769.8
Source: Advertising Age
Figure 54: Total U.S. Measured Media Advertising by Category and Medium – % Mix, ($ in millions), 2006
Rank Measured Media U.S. Measured Media Breakout in % terms 2006
2006 2005 Category 2006 % Chg. Magazine Biz Pub Newspaper Outdoor TV Cable Nets Radio Internet
1 1 Automobile 19,799.0 -5.7 10.55% 0.43% 25.38% 1.74% 43.62% 6.81% 7.80% 3.67%
2 2 Retail 19,114.0 2.0 10.42% 0.55% 35.38% 2.03% 28.36% 5.44% 11.24% 6.58%
3 3 Telecom,internet,ISP 10,950.2 9.6 6.22% 1.98% 19.84% 2.54% 37.09% 11.60% 7.07% 13.65%
4 4 Medicine & remedies 9,192.9 9.0 29.70% 0.61% 3.04% 0.25% 43.93% 15.03% 3.31% 4.13%
5 5 General services 8,702.0 10.4 8.02% 3.85% 26.10% 6.71% 26.46% 5.22% 15.16% 8.48%
6 6 Financial services 8,689.0 2.1 10.68% 3.00% 21.77% 2.82% 25.60% 10.73% 8.34% 17.05%
7 7 Food, beverages & candy 7,225.0 -1.2 26.19% 1.45% 0.70% 1.06% 44.16% 20.08% 4.52% 1.85%
8 8 Personal care 5,732.0 1.2 40.95% 0.70% 0.51% 0.24% 40.92% 13.90% 0.94% 1.84%
9 9 Airlines, hotels, car rental 5,415.6 -1.3 22.78% 4.63% 26.09% 6.13% 16.18% 9.52% 6.33% 8.35%
10 10 Movie, video & music 5.379.9 -3.6 4.44% 1.45% 19.11% 1.71% 45.48% 19.47% 4.81% 3.53%
11 11 Restaurants 5,291.5 4.5 2.51% 0.04% 3.47% 4.54% 63.10% 15.32% 10.10% 0.92%
12 12 Media 5,050.5 2.5 30.24% 4.29% 25.13% 4.88% 5.27% 1.33% 14.67% 14.18%
13 13 Government, politics, religion 3,510.6 43.0 9.76% 1.25% 15.10% 4.24% 45.17% 6.80% 13.25% 4.43%
14 14 Insurance 3,446.2 19.2 6.40% 1.66% 11.20% 3.29% 43.52% 18.43% 11.13% 4.39%
15 15 Real estate 3,132.3 20.3 11.59% 0.57% 60.47% 8.24% 8.04% 2.46% 4.42% 4.20%
16 16 Apparel 2,911.7 6.8 72.30% 2.79% 2.05% 0.99% 12.14% 7.67% 0.71% 1.35%
17 17 Computers, software 2,509.8 13.5 17.98% 28.47% 9.02% 1.96% 15.21% 6.68% 2.50% 18.17%
18 18 Home Furnishings, appliances, electronics 2,213.6 7.6 39.86% 8.46% 5.15% 0.77% 24.92% 13.90% 3.11% 3.82%
19 19 Beer, wine & liquor 2,099.9 -4.9 24.07% 0.70% 2.58% 7.81% 34.97% 16.22% 10.75% 2.90%
20 20 Education 1,942.4 8.5 7.89% 11.79% 17.63% 3.84% 28.05% 8.59% 8.12% 14.09%
21 21 Home supplies & cleaners 1,938.0 4.0 18.49% 0.49% 0.30% 0.13% 50.49% 27.14% 1.42% 1.54%
22 22 Toys & games 1,253.4 -2.9 7.74% 6.59% 0.60% 0.26% 22.88% 48.50% 0.66% 12.76%
23 23 Hardware & home building 1,028.3 -1.3 35.79% 14.73% 10.09% 0.84% 16.44% 16.42% 3.13% 2.56%
24 24 Sporting goods 562.3 5.8 66.55% 0.34% 5.02% 0.89% 15.29% 8.55% 0.98% 2.40%
25 25 Gas & oil 524.0 -3.7 19.89% 1.49% 13.38% 6.58% 28.45% 14.05% 13.91% 2.25%
26 26 Pet food & pet care 490.1 -1.0 30.52% 0.39% 0.65% 0.02% 42.75% 20.02% 1.35% 4.35%
27 27 Office equipment 334.2 -8.5 30.55% 12.87% 7.51% 0.66% 28.16% 10.89% 6.25% 3.11%
28 28 Shipping & freight 326.8 -8.9 10.13% 10.07% 4.35% 0.98% 45.01% 12.76% 13.28% 3.43%
29 29 Cigarettes & tobacco 155.6 0.1 67.61% 3.02% 1.03% 0.32% 20.05% 3.66% 0.32% 3.98%
Direct response advertising 6,461.6 5.4 36.32% 2.15% 7.64% 0.03% 17.86% 32.83% 1.08% 2.09%
Miscellaneous 4,306.4 2.0 22.11% 21.93% 29.84% 1.26% 8.27% 6.39% 3.99% 6.20%
Total 149,688.7 3.6 17.71% 3.02% 18.72% 2.56% 32.54% 11.54% 7.39% 6.53%
46 April 07, 2008

Figure 55: Top U.S. Advertisers (1–50) with Total Spend and Internet Spend ($ in millions)
Internet Advertising
Rank Total Ad Spending Total Internet Ad Spending As % of Total Advertising
2006 2005 Marketer Headquarters 2006 2005 %CHG 2006 2005 %CHG 2006 2005
1 1 Procter & Gamble Co. Cincinnati 4,898.0 4,587.9 6.8 54.0 33.5 61.1 1.10% 0.73%
2 5 AT&T San Antanio 3,344.7 2,653.6 26.0 168.7 56.2 200.3 5.04% 2.12%
3 2 General Motors Corp. Detroit 3,296.0 4,110.1 -19.8 118.2 110.5 7.0 3.59% 2.69%
4 3 Time Warner New York 3,088.8 3,518.3 -12.2 90.6 166.1 -45.4 2.93% 4.72%
5 7 Verizon Communications New York 2,821.8 2,481.3 13.7 123.6 144.0 -14.2 4.38% 5.80%
6 6 Ford Motors Co. Dearborn, Mich. 2,576.8 2,611.8 -1.3 99.1 55.0 80.1 3.85% 2.11%
7 9 GlaxoSmithKline Brentford, Middlesex, U.K. 2,444.2 2,249.8 8.6 15.1 14.1 7.3 0.62% 0.63%
8 8 Walt Disney Co. Burbank, Calif. 2,320.0 2,291.7 1.2 133.2 90.3 47.5 5.74% 3.94%
9 4 Johnson & Johnson New Brunswick, N.J. 2,290.5 2,669.4 -14.2 34.1 24.6 38.5 1.49% 0.92%
10 12 Unilever London/Rotterdam 2,098.3 1,943.5 8.0 27.9 13.4 108.5 1.33% 0.69%
11 14 Toyota Motor Corp. Toyota City, Japan 1,995.3 1,783.2 11.9 55.6 32.9 69.1 2.79% 1.84%
12 13 Sony Corp. Tokyo 1,994.0 1,801.8 10.7 73.6 44.1 67.0 3.69% 2.45%
13 10 DaimlerChrysler Auburn Hills, Mich./Stuttgart,Germany 1,952.2 2,181.2 -10.5 44.6 31.6 41.3 2.28% 1.45%
14 11 General Electric Co. Fairfield, Conn. 1,860.2 1,979.9 -6.0 60.8 36.8 65.2 3.27% 1.86%
15 16 Sprint Nextel Corp. Reston, Va. 1,775.2 1,715.2 3.5 37.5 26.6 40.7 2.11% 1.55%
16 17 McDonald's Corp. Oak Brook,Ill. 1,748.3 1,656.8 5.5 13.9 12.5 11.4 0.80% 0.75%
17 15 Sears Holdings Corp. Hoffman Estates, Ill. 1,652.8 1,715.3 -3.6 24.3 6.4 282.5 1.47% 0.37%
18 19 L'Oreal Clinchy, France 1,456.3 1,464.2 -0.5 7.8 6.9 12.3 0.54% 0.47%
19 22 Kraft Foods Northfield, Ill. 1,423.2 1,428.9 -0.4 22.9 -- -- 1.61% --
20 23 Federated Departmet Stores Cincinnati 1,361.2 1,346.7 1.1 4.5 2.8 60.5 0.33% 0.21%
21 24 Honda Motor Co. Tokyo 1,350.8 1,314.9 2.7 34.3 11.2 207.4 2.54% 0.85%
22 18 Bank of America Corp. Charlotte, N.C. 1,334.4 1,497.0 -10.9 42.7 24.5 73.9 3.20% 1.64%
23 21 Nissan Motor Co. Tokyo 1,328.9 1,441.8 -7.8 28.6 6.9 312.8 2.15% 0.48%
24 20 PepsiCo Purchase, N.Y. 1,322.7 1,461.0 -9.5 14.3 19.1 -25.2 1.08% 1.31%
25 25 Nestle Vevey, Switzerland 1,315.0 1,270.9 3.5 20.9 51.4 -59.4 1.59% 4.05%
26 28 News Corp. New York 1,244.5 1,166.4 6.7 55.7 47.6 17.0 4.48% 4.08%
27 30 J.C. Penny Co. Plano, Texas 1,162.3 1,084.9 7.1 33.1 32.5 1.9 2.85% 2.99%
28 34 Target Corp. Minneapolis 1,156.9 1,021.2 13.3 56.7 36.9 53.7 4.90% 3.61%
29 26 U.S. Government Washington 1,132.7 1,230.2 -7.9 43.7 30.5 43.1 3.86% 2.48%
30 29 Home Depot Atlanta 1,118.1 1,109.3 0.8 7.4 2.4 214.5 0.66% 0.21%
31 45 Pfizer New York 1,104.9 849.2 30.1 23.2 20.9 10.7 2.10% 2.47%
32 39 Berkshire Hathaway Omaha 1,093.4 919.6 18.9 13.9 2.2 529.0 1.27% 0.24%
33 41 Wyeth Madison, N.J. 1,076.8 892.7 20.6 17.8 19.0 -6.3 1.65% 2.13%
34 36 Wal-Mart Stores Bentonville, Ark. 1,072.6 970.3 10.5 61.2 34.2 78.8 5.71% 3.53%
35 38 JP Morgan Chase & Co. New York 1,062.5 922.2 15.2 27.8 31.2 -10.9 2.62% 3.38%
36 27 Novartis Basel, Switzerland 1,052.2 1,175.3 -10.5 27.3 25.5 7.0 2.59% 2.17%
37 33 Estee Lauder Cos. New York 1,031.3 1,039.0 -0.7 1.7 0.5 252.0 0.16% 0.05%
38 65 Merck & Co. Whitehouse Station, N.J. 1,024.2 538.6 90.2 17.9 7.5 137.8 1.75% 1.40%
39 35 Citigroup New York 1,012.2 1,000.5 1.2 24.8 33.7 -26.5 2.45% 3.37%
40 48 Astra Zeneca London 1,005.3 826.0 21.7 29.9 24.8 20.3 2.97% 3.01%
41 31 Viacom New York 934.1 1,075.5 -13.1 30.0 36.3 -17.3 3.21% 3.37%
42 43 Schering-Plough Corp. Kenilworth,N.J. 931.5 854.7 9.0 4.8 5.1 -5.8 0.52% 0.60%
43 32 American Express Co. New York 928.7 1,068.9 -13.1 80.8 28.1 188.0 8.70% 2.62%
44 44 General Mills Minneapolis 920.5 852.0 8.0 15.7 20.3 -22.6 1.71% 2.38%
45 46 Microsoft Corp. Redmond, Wash. 912.2 839.9 8.6 81.6 103.0 -20.8 8.95% 12.27%
46 42 Yum Brands Lousiville, Ky. 902.0 866.7 4.1 2.8 0.9 204.0 0.31% 0.11%
47 37 Dell Round Rock, Texas 882.5 945.8 -6.7 137.8 156.6 -12.0 15.61% 16.56%
48 50 Best Buy Co. Richfield, Minn. 878.7 823.5 6.7 31.6 13.5 134.7 3.60% 1.63%
49 49 Capital One Finance Corp. McLean, VA. 863.7 824.8 4.7 53.1 33.0 61.1 6.15% 4.00%
50 51 Lowe's Co. Mooresville, N.C. 838.5 778.2 7.7 19.5 8.0 145.0 2.33% 1.02%
April 07, 2008 47

Figure 56: Top U.S. Advertisers (51–100) – with Total Spend and Internet Spend ($ in millions)
Internet Advertising
Rank Total Ad Spending Total Internet Ad Spending As % of Total Advertising
2006 2005 Marketer Headquarters 2006 2005 %CHG 2006 2005 %CHG 2006 2005
51 47 Hewlett-Packard Co. Palo Alto, Calif. 828.8 831.8 -0.4 111.4 108.0 3.2 13.44% 12.98%
52 53 Deutsche Telekom Bonn, Germany 815.1 714.6 14.1 35.0 13.0 168.7 4.29% 1.82%
53 40 Anheuser-Busch Cos. St. Louis 813.4 919.2 -11.5 6.1 2.6 132.0 0.75% 0.29%
54 59 Hyundai Motors Co. Seoul 785.9 608.5 29.2 14.4 8.7 66.0 1.83% 1.43%
55 55 Kohl's Corp. Menomonee Falls, Wis. 765.9 646.6 18.5 4.0 4.5 -10.9 0.52% 0.69%
56 52 Kellog Co. Battle Creek, Mich 765.1 725.2 5.5 9.3 10.6 -12.3 1.22% 1.46%
57 71 IAC/InterActiveCorp New York 743.5 496.1 49.9 122.1 -- -- 16.42% --
58 54 Coca-Cola Co. Atlanta 740.8 711.2 4.2 21.3 5.9 258.4 2.88% 0.84%
59 61 Bristol-Myers Squibb Co. New York 691.1 585.4 18.1 17.1 7.9 115.9 2.47% 1.35%
60 58 Nike Beaverton.Ore. 678.4 608.6 11.5 11.0 3.0 268.9 1.62% 0.49%
61 56 Mars Inc. McLean, VA. 658.2 636.5 3.4 11.1 2.6 327.7 1.69% 0.41%
62 57 Cadbury Schweppes London 643.7 628.2 2.5 6.6 1.5 340.9 1.03% 0.24%
63 68 Victoria's Secret Corp. Columbus, Ohio 600.5 515.0 16.6 45.3 13.9 226.7 7.54% 2.69%
64 69 Visa International San Francisco 597.1 500.3 19.3 17.2 20.9 -17.7 2.88% 4.18%
65 62 SC Johnson Racine, Wis. 596.5 575.7 3.6 1.7 0.3 509.3 0.28% 0.05%
66 63 Clorox Co. Oakland, Calif. 584.2 572.4 2.1 8.8 2.6 240.8 1.51% 0.45%
67 70 Comcast Corp. Philadelphia 568.5 497.1 14.4 32.1 7.4 335.9 5.65% 1.48%
68 73 Campbell Soup Co. Camden, N.J. 564.3 484.0 16.6 4.1 3.1 34.3 0.73% 0.63%
69 75 Eli Lilly & Co. Indianapolis 561.0 475.3 18.0 9.2 9.1 0.9 1.64% 1.92%
70 79 Bayer Leverkusen, Germany 553.6 452.7 22.3 11.3 0.8 1,323.2 2.04% 0.18%
71 72 Doctor's Associates Milford, Conn. 539.8 486.8 10.9 2.3 2.4 -3.2 0.43% 0.49%
72 74 Safeway Pleasanton, Calif. 533.6 481.7 10.8 0.7 0.0 7,677.8 0.13% 0.00%
73 66 Kroger Co. Cincinnati 527.5 537.5 -1.9 1.0 0.8 24.2 0.19% 0.15%
74 64 IBM Corp. Armonk, N.Y. 516.5 547.0 -5.6 13.0 9.9 32.0 2.52% 1.80%
75 83 Circuit City Stores Richmond, Va. 498.2 426.5 16.8 49.4 50.3 -1.8 9.92% 11.79%
76 82 Gap Inc. San Francisco 489.4 432.1 13.3 5.8 5.3 9.4 1.19% 1.23%
77 76 MasterCard International Purchase, N.Y. 486.3 466.0 4.4 21.6 10.3 109.5 4.44% 2.21%
78 92 Allstate Corp. Northbrook, Ill. 476.9 394.0 21.0 18.6 20.3 -8.3 3.90% 5.15%
79 85 Vonage Holdings Corp. Holmdel, N.J. 465.1 413.7 12.4 185.7 275.7 -32.7 39.93% 66.65%
80 67 Sanofi-Aventis Paris 463.1 518.3 -10.7 8.8 8.2 6.8 1.90% 1.59%
81 87 Staples Framingham, MA 457.2 404.9 12.92 1.9 -- -- 0.42% --
82 80 Wells Fargo & Co. San Francisco, CA. 456.1 443.1 2.9 7.1 -- -- 1.56% --
83 90 eBay San Jose, CA 453.3 396.6 14.3 51.7 -- -- 11.41% --
84 86 Washington Mutual Seattle, WA 443.0 406.9 8.9 17.7 -- -- 4.00% --
85 77 Wendy's International Dublin, Ohio 435.2 453.4 -4.0 6.9 4.6 51.3 1.59% 1.01%
86 60 Volkswagen Wolfsburg, Germany 419.3 590.0 -28.9 19.5 19.9 -1.9 4.65% 3.37%
87 91 Diageo London 418.9 394.3 6.2 10.5 2.6 305.7 2.51% 0.66%
88 95 Mattel El Segundo, Calif. 394.1 383.6 2.7 2.8 1.7 61.2 0.71% 0.45%
89 156 Apple Cupertino, CA 383.7 219.5 74.8 14.6 -- -- 3.81% --
90 101 Burger King Corp. Miami 379.5 354.5 7.1 1.8 0.9 91.7 0.47% 0.26%
91 81 Abbot Laboratories Abbott Park, Ill 374.4 436.4 -14.2 3.3 2.5 33.7 0.88% 0.57%
92 78 SABMiller London 370.8 452.9 -18.1 4.5 4.5 -1.1 1.21% 1.00%
93 89 Molson Coors Brewing Co. Denver/Montreal 369.5 400.9 -7.8 6.5 2.3 183.6 1.76% 0.57%
94 84 CBS Corp. New York, NY 369.2 426.5 -13.4 13.9 -- -- 3.76% --
95 97 Reckitt Benckiser Sloth, Berkshire, U.K. 366.7 369.3 -0.7 0.6 0.6 -0.7 0.16% 0.16%
96 100 ConAgra Foods Omaha 366.2 355.8 2.9 0.6 1.0 -41.7 0.16% 0.29%
97 102 Qwest Communications International Denver, CO. 362.4 352.6 2.8 2.6 -- -- 0.72% --
98 103 Philips Electronics Amsterdam 350.8 337.2 4.0 3.5 8.1 -56.9 1.00% 2.41%
99 109 Office Depot Delray Beach, Fl. 342.7 314.4 9.0 12.5 -- -- 3.65% --
100 88 State Farm Mutual Auto Insurance Co. Bloomington, Ill 338.1 401.7 -15.8 33.9 15.5 118.0 10.03% 3.87%
Total 104,795.0 101,634.1 3.1 3,273.0 2,449.5 33.6 3.12% 2.41%
Figure 57: Domestic Search Share Comparison by Data Source, October 2007–February 2008
Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Provider comScore NetRatings Hitwise comScore NetRatings Hitwise comScore NetRatings Hitwise comScore NetRatings Hitwise comScore NetRatings Hitwise
Google 58.5% 55.5% 64.5% 58.6% 57.7% 65.1% 58.4% 56.3% 66.0% 58.5% 56.9% 66.0% 59.2% 58.7% 66.4%
Yahoo! 22.9% 18.8% 21.7% 22.4% 17.9% 21.2% 22.9% 17.7% 20.9% 22.2% 19.0% 20.9% 21.6% 17.6% 20.6%
MSN 9.7% 13.8% 7.4% 9.8% 12.0% 7.1% 9.8% 13.8% 7.0% 9.8% 12.1% 6.9% 9.6% 11.2% 7.0%
AOL 4.2% 3.7% NA 4.5% 4.5% NA 4.6% 4.7% NA 4.9% 4.7% NA 4.9% 5.2% NA
Ask Network 4.7% 4.1% 4.8% 4.6% 3.9% 4.6% 4.3% 3.2% 4.1% 4.5% 3.4% 4.2% 4.6% 3.4% 4.2%
Source: comScore Networks, NetRatings, Hitwise
48 April 07, 2008

Figure 58: Domestic Search Share, February 2008
Ask Network, 4.6%
Google Sites, 59.2%

MSN-Microsoft Sites,
9.6%
AOL, 4.9%
Yahoo! Sites, 21.6%
Source: comScore Networks, Lehman Brothers estimates
Figure 59: Global Search Share, February 2008
NHN, 2.5%
Baidu , 6.3%
Ask Network, 1.6%
Google Sites, 68.1%

AOL, 1.3%
Microsoft Sites, 4.1%
Yahoo! Sites, 16.2%
April 07, 2008 49

Figure 60: Domestic Search Share – Google and Yahoo!
60.0%
55.0%
Google, 59.2%
50.0%
45.0%
40.0%
35.0%
30.0%
Yahoo!, 21.6%
25.0%
20.0%
7
7
7
07
07
7
07
08
7
7
7
-0
-0
l-0
-0
-0
-0
-0
-0
-0
-0
p-
b-
b-
-
pr
ug
n
ec
n
ct
ay
ov
n
ar
Ju
Fe
Fe
Se
Ju
Ja
Ja
O
M
D
M
N
A
Google Sites Yahoo! Sites
Figure 61: Domestic Search Share – Microsoft, Ask.com, and AOL
18.0%
15.0%
Microsoft Sites, 9.6%
12.0%
9.0%
AOL, 4.9%
6.0%
3.0%
Ask Network, 4.6%
0.0%
7
7
7
07
7
07
07
07
08
08
7
7
-0
-0
l-0
-0
-0
-0
-0
-0
b-
b-
n-
n-
p-
n-
pr
ug
ec
ay
ct
ov
ar
Ju
Fe
Se
Fe
Ju
Ja
Ja
O
M
D
M
N
A
AOL MSN-Microsoft Sites Ask Network
50 April 07, 2008

Figure 62: U.S. Search Market Share and Growth, January 2007–February 2008
Total Searches Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 8,519,110,401 8,604,483,858 9,094,458,052 8,910,075,062 9,187,947,103 9,706,525,899 9,895,494,580 9,820,417,289 9,400,076,393 10,525,907,747 10,030,270,373 9,636,397,662 10,491,850,712 9,881,567,684
Google Sites 4,483,655,852 4,631,107,268 4,963,051,262 4,996,928,190 5,191,302,260 5,329,775,278 5,459,123,358 5,545,220,205 5,356,063,930 6,151,037,065 5,881,898,412 5,629,034,922 6,139,377,909 5,854,533,236
Yahoo! Sites 2,292,178,678 2,250,586,176 2,338,877,952 2,192,199,726 2,267,110,264 2,307,352,061 2,324,736,567 2,289,814,630 2,227,135,222 2,404,919,113 2,248,824,429 2,211,293,270 2,332,177,645 2,136,156,211
AOL 457,272,564 452,264,863 459,247,212 483,343,730 437,677,167 439,838,469 436,086,834 441,118,707 404,762,581 442,631,698 453,230,343 441,650,650 514,452,264 488,299,479
MSN-Microsoft Sites 889,998,489 871,035,322 924,974,018 840,896,424 874,211,385 1,180,981,364 1,213,927,571 1,105,913,080 968,568,291 1,036,165,953 983,765,779 939,632,703 1,030,367,682 952,775,597
Ask Network 396,004,819 399,490,229 408,307,608 396,706,992 417,646,027 448,578,727 461,620,250 438,350,667 443,546,368 491,153,919 462,551,410 414,786,117 475,475,212 449,803,162
M/M Change Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 2.0% 1.0% 5.7% -2.0% 3.1% 5.6% 1.9% -0.8% -4.3% 12.0% -4.7% -3.9% 8.9% -5.8%
Google Sites 3.9% 3.3% 7.2% 0.7% 3.9% 2.7% 2.4% 1.6% -3.4% 14.8% -4.4% -4.3% 9.1% -4.6%
Yahoo! Sites -0.3% -1.8% 3.9% -6.3% 3.4% 1.8% 0.8% -1.5% -2.7% 8.0% -6.5% -1.7% 5.5% -8.4%
AOL -1.6% -1.1% 1.5% 5.2% -9.4% 0.5% -0.9% 1.2% -8.2% 9.4% 2.4% -2.6% 16.5% -5.1%
MSN-Microsoft Sites 2.2% -2.1% 6.2% -9.1% 4.0% 35.1% 2.8% -8.9% -12.4% 7.0% -5.1% -4.5% 9.7% -7.5%
Ask Network -0.1% 0.9% 2.2% -2.8% 5.3% 7.4% 2.9% -5.0% 1.2% 10.7% -5.8% -10.3% 14.6% -5.4%
Total Quarterly Searches 1Q07 2Q07 3Q07 4Q07

Total 8,519,110,401 17,123,594,259 26,218,052,312 8,910,075,062 18,098,022,165 27,804,548,064 9,895,494,580 19,715,911,869 29,115,988,262 10,525,907,747 20,556,178,120 30,192,575,782 10,491,850,712 20,373,418,397
Google Sites 4,483,655,852 9,114,763,120 14,077,814,382 4,996,928,190 10,188,230,450 15,518,005,728 5,459,123,358 11,004,343,563 16,360,407,493 6,151,037,065 12,032,935,476 17,661,970,398 6,139,377,909 11,993,911,145
Yahoo! Sites 2,292,178,678 4,542,764,853 6,881,642,805 2,192,199,726 4,459,309,990 6,766,662,050 2,324,736,567 4,614,551,197 6,841,686,419 2,404,919,113 4,653,743,541 6,865,036,811 2,332,177,645 4,468,333,856
AOL 457,272,564 909,537,427 1,368,784,639 483,343,730 921,020,897 1,360,859,366 436,086,834 877,205,541 1,281,968,122 442,631,698 895,862,040 1,337,512,690 514,452,264 1,002,751,743
MSN-Microsoft Sites 889,998,489 1,761,033,811 2,686,007,830 840,896,424 1,715,107,809 2,896,089,173 1,213,927,571 2,319,840,651 3,288,408,942 1,036,165,953 2,019,931,733 2,959,564,436 1,030,367,682 1,983,143,279
Ask Network 396,004,819 795,495,048 1,203,802,656 396,706,992 814,353,019 1,262,931,746 461,620,250 899,970,917 1,343,517,285 491,153,919 953,705,329 1,368,491,446 475,475,212 925,278,374
Q/Q Change 1Q07 2Q07 3Q07 4Q07

Total 2.0% 2.3% 4.5% 4.6% 5.7% 6.1% 11.1% 8.9% 4.7% 6.4% 4.3% 3.7% -0.3% -0.9%
Google Sites 9.6% 9.8% 11.6% 11.4% 11.8% 10.2% 9.2% 8.0% 5.4% 12.7% 9.3% 8.0% -0.2% -0.3%
Yahoo! Sites -4.3% -4.9% -2.8% -4.4% -1.8% -1.7% 6.0% 3.5% 1.1% 3.4% 0.8% 0.3% -3.0% -4.0%
AOL -11.0% -8.8% -6.3% 5.7% 1.3% -0.6% -9.8% -4.8% -5.8% 1.5% 2.1% 4.3% 16.2% 11.9%
MSN-Microsoft Sites -3.2% -2.9% 0.1% -5.5% -2.6% 7.8% 44.4% 35.3% 13.5% -14.6% -12.9% -10.0% -0.6% -1.8%
Ask Network -9.0% -6.9% -3.8% 0.2% 2.4% 4.9% 16.4% 10.5% 6.4% 6.4% 6.0% 1.9% -3.2% -3.0%
Search Share Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Google Sites 52.6% 53.8% 54.6% 56.1% 56.5% 54.9% 55.2% 56.5% 57.0% 58.4% 58.6% 58.4% 58.5% 59.2%
Yahoo! Sites 26.9% 26.2% 25.7% 24.6% 24.7% 23.8% 23.5% 23.3% 23.7% 22.8% 22.4% 22.9% 22.2% 21.6%
AOL 5.4% 5.3% 5.0% 5.4% 4.8% 4.5% 4.4% 4.5% 4.3% 4.2% 4.5% 4.6% 4.9% 4.9%
MSN-Microsoft Sites 10.4% 10.1% 10.2% 9.4% 9.5% 12.2% 12.3% 11.3% 10.3% 9.8% 9.8% 9.8% 9.8% 9.6%
Ask Network 4.6% 4.6% 4.5% 4.5% 4.5% 4.6% 4.7% 4.5% 4.7% 4.7% 4.6% 4.3% 4.5% 4.6%
Y/Y Change Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total --- --- --- 29.3% 24.9% 26.4% 37.6% 28.4% 16.8% 26.0% 19.5% 15.4% 23.2% 14.8%
Google Sites --- --- --- 60.6% 53.1% 49.7% 64.3% 55.7% 38.7% 50.4% 39.6% 30.4% 36.9% 26.4%
Yahoo! Sites --- --- --- 7.8% 4.7% 2.2% 8.4% 0.3% -4.5% 0.4% -5.6% -3.8% 1.7% -5.1%
AOL --- --- --- -2.2% -8.3% -9.3% -7.8% 14.2% -6.6% -13.9% -6.1% -5.0% 12.5% 8.0%
MSN-Microsoft Sites --- --- --- -4.6% -6.8% 19.8% 35.7% 17.9% 5.8% 12.7% 10.0% 7.9% 15.8% 9.4%
Ask Network --- --- --- 6.8% 7.5% 14.5% 29.5% -8.4% -12.4% 12.9% 10.3% 4.7% 20.1% 12.6%
Quarterly Market Share 1Q07 2Q07 3Q07 4Q07

Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Google Sites 52.6% 53.2% 53.7% 56.1% 56.3% 55.8% 55.2% 55.8% 56.2% 58.4% 58.5% 58.5% 58.5% 58.9%
Yahoo! Sites 26.9% 26.5% 26.2% 24.6% 24.6% 24.3% 23.5% 23.4% 23.5% 22.8% 22.6% 22.7% 22.2% 21.9%
AOL 5.4% 5.3% 5.2% 5.4% 5.1% 4.9% 4.4% 4.4% 4.4% 4.2% 4.4% 4.4% 4.9% 4.9%
MSN-Microsoft Sites 10.4% 10.3% 10.2% 9.4% 9.5% 10.4% 12.3% 11.8% 11.3% 9.8% 9.8% 9.8% 9.8% 9.7%
Ask Network 4.6% 4.6% 4.6% 4.5% 4.5% 4.5% 4.7% 4.6% 4.6% 4.7% 4.6% 4.5% 4.5% 4.5%
Y/Y Query Growth - Quarterly 1Q07 2Q07 3Q07 4Q07

Total --- --- --- 29.3% 27.0% 26.8% 37.6% 32.9% 27.2% 26.0% 22.8% 20.3% 23.2% 19.0%
Google Sites --- --- --- 60.6% 56.7% 54.2% 64.3% 59.9% 52.3% 50.4% 44.9% 40.0% 36.9% 31.6%
Yahoo! Sites --- --- --- 7.8% 6.2% 4.8% 8.4% 4.2% 1.2% 0.4% -2.6% -3.0% 1.7% -1.6%
AOL --- --- --- -2.2% -5.2% -6.6% -7.8% 2.1% -0.8% -13.9% -10.1% -8.5% 12.5% 10.2%
MSN-Microsoft Sites --- --- --- -4.6% -5.7% 3.2% 35.7% 26.6% 19.6% 12.7% 11.4% 10.2% 15.8% 12.6%
Ask Network --- --- --- 6.8% 7.2% 9.7% 29.5% 7.7% 0.1% 12.9% 11.6% 9.4% 20.1% 16.3%
Note: Shaded cells represent intra-quarter quarterly comparisons
April 07, 2008 51

Figure 63: Global Search Market Share and Growth, January 2007–February 2008
Searches Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 39,271,472,000 38,694,282,000 45,488,285,000 43,275,654,000 45,625,287,000 46,952,761,000 47,107,205,000 46,740,210,000 46,640,845,000 51,666,583,000 50,244,495,000 48,589,823,000 52,316,984,000 48,269,655,000
Google Sites 25,950,403,000 25,750,059,000 28,865,015,000 28,079,236,000 29,852,035,000 30,272,310,000 29,738,081,000 30,051,734,000 31,037,600,000 34,349,551,000 33,503,030,000 32,316,035,000 35,464,484,000 32,849,799,000
Yahoo! Sites 8,131,394,000 7,762,525,000 8,403,888,000 7,648,882,000 7,915,866,000 7,990,425,000 8,267,802,000 8,217,840,000 7,893,794,000 8,440,644,000 8,155,221,000 8,228,126,000 8,501,574,000 7,811,186,000
Microsoft Sites 1,750,290,000 1,709,246,000 1,887,445,000 1,790,823,000 1,871,961,000 2,268,589,000 2,335,192,000 2,096,240,000 1,976,225,000 2,055,534,000 1,938,469,000 1,861,366,000 2,130,001,000 1,994,075,000
Ask Network 660,831,000 649,816,000 686,382,000 657,910,000 706,634,000 736,419,000 751,095,000 743,050,000 756,960,000 837,422,000 818,689,000 728,210,000 846,287,000 778,433,000
AOL 639,868,000 601,608,000 578,169,000 581,367,000 536,877,000 572,001,000 588,406,000 573,465,000 550,623,000 597,965,000 615,867,000 590,852,000 682,292,000 614,330,000
Baidu 2,138,686,000 2,221,028,000 2,989,118,000 2,629,753,000 2,786,308,000 3,205,715,000 3,484,004,000 3,253,213,000 2,955,795,000 3,741,321,000 3,637,055,000 3,428,278,000 3,296,143,000 3,030,778,000
NHN NA NA 2,078,268,000 1,887,683,000 1,955,606,000 1,907,302,000 1,942,625,000 1,804,668,000 1,469,848,000 1,644,146,000 1,576,164,000 1,436,956,000 1,396,203,000 1,191,054,000
Monthly Change Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 13.4% -1.5% 17.6% -4.9% 5.4% 2.9% 0.3% -0.8% -0.2% 10.8% -2.8% -3.3% 7.7% -7.7%
Google Sites 8.4% -0.8% 12.1% -2.7% 6.3% 1.4% -1.8% 1.1% 3.3% 10.7% -2.5% -3.5% 9.7% -7.4%
Yahoo! Sites 3.9% -4.5% 8.3% -9.0% 3.5% 0.9% 3.5% -0.6% -3.9% 6.9% -3.4% 0.9% 3.3% -8.1%
Microsoft Sites 8.4% -2.3% 10.4% -5.1% 4.5% 21.2% 2.9% -10.2% -5.7% 4.0% -5.7% -4.0% 14.4% -6.4%
Ask Network 7.6% -1.7% 5.6% -4.1% 7.4% 4.2% 2.0% -1.1% 1.9% 10.6% -2.2% -11.1% 16.2% -8.0%
AOL 0.3% -6.0% -3.9% 0.6% -7.7% 6.5% 2.9% -2.5% -4.0% 8.6% 3.0% -4.1% 15.5% -10.0%
Baidu --- 3.9% 34.6% -12.0% 6.0% 15.1% 8.7% -6.6% -9.1% 26.6% -2.8% -5.7% -3.9% -8.1%
NHN --- --- --- -9.2% 3.6% -2.5% 1.9% -7.1% -18.6% 11.9% -4.1% -8.8% -2.8% -14.7%
Quarterly 1Q07 2Q07 3Q07 4Q07

Total 39,271,472,000 77,965,754,000 123,454,039,000 43,275,654,000 88,900,941,000 135,853,702,000 47,107,205,000 93,847,415,000 140,488,260,000 51,666,583,000 101,911,078,000 150,500,901,000 52,316,984,000 100,586,639,000
Google Sites 25,950,403,000 51,700,462,000 80,565,477,000 28,079,236,000 57,931,271,000 88,203,581,000 29,738,081,000 59,789,815,000 90,827,415,000 34,349,551,000 67,852,581,000 100,168,616,000 35,464,484,000 68,314,283,000
Yahoo! Sites 8,131,394,000 15,893,919,000 24,297,807,000 7,648,882,000 15,564,748,000 23,555,173,000 8,267,802,000 16,485,642,000 24,379,436,000 8,440,644,000 16,595,865,000 24,823,991,000 8,501,574,000 16,312,760,000
Microsoft Sites 1,750,290,000 3,459,536,000 5,346,981,000 1,790,823,000 3,662,784,000 5,931,373,000 2,335,192,000 4,431,432,000 6,407,657,000 2,055,534,000 3,994,003,000 5,855,369,000 2,130,001,000 4,124,076,000
Ask Network 660,831,000 1,310,647,000 1,997,029,000 657,910,000 1,364,544,000 2,100,963,000 751,095,000 1,494,145,000 2,251,105,000 837,422,000 1,656,111,000 2,384,321,000 846,287,000 1,624,720,000
AOL 639,868,000 1,241,476,000 1,819,645,000 581,367,000 1,118,244,000 1,690,245,000 588,406,000 1,161,871,000 1,712,494,000 597,965,000 1,213,832,000 1,804,684,000 682,292,000 1,296,622,000
Baidu 2,138,686,000 4,359,714,000 7,348,832,000 2,629,753,000 5,416,061,000 8,621,776,000 3,484,004,000 6,737,217,000 9,693,012,000 3,741,321,000 7,378,376,000 10,806,654,000 3,296,143,000 6,326,921,000
NHN NA NA 2,078,268,000 1,887,683,000 3,843,289,000 5,750,591,000 1,942,625,000 3,747,293,000 5,217,141,000 1,644,146,000 3,220,310,000 4,657,266,000 1,396,203,000 2,587,257,000
Q/Q Change 1Q07 2Q07 3Q07 4Q07

Total 20.5% 17.4% 22.2% 10.2% 14.0% 10.0% 8.9% 5.6% 3.4% 9.7% 8.6% 7.1% 1.3% -1.3%
Google Sites 19.6% 16.0% 17.6% 8.2% 12.1% 9.5% 5.9% 3.2% 3.0% 15.5% 13.5% 10.3% 3.2% 0.7%
Yahoo! Sites 4.1% 0.9% 3.0% -5.9% -2.1% -3.1% 8.1% 5.9% 3.5% 2.1% 0.7% 1.8% 0.7% -1.7%
Microsoft Sites 2.5% 1.8% 6.7% 2.3% 5.9% 10.9% 30.4% 21.0% 8.0% -12.0% -9.9% -8.6% 3.6% 3.3%
Ask Network -2.3% -1.4% 2.8% -0.4% 4.1% 5.2% 14.2% 9.5% 7.1% 11.5% 10.8% 5.9% 1.1% -1.9%
AOL -8.7% -9.1% -9.2% -9.1% -9.9% -7.1% 1.2% 3.9% 1.3% 1.6% 4.5% 5.4% 14.1% 6.8%
Baidu --- --- --- 23.0% 24.2% 17.3% 32.5% 24.4% 12.4% 7.4% 9.5% 11.5% -11.9% -14.3%
NHN --- --- --- --- --- --- 2.9% -2.5% -9.3% -15.4% -14.1% -10.7% -15.1% -19.7%
Search Share Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Google Sites 66.1% 66.5% 63.5% 64.9% 65.4% 64.5% 63.1% 64.3% 66.5% 66.5% 66.7% 66.5% 67.8% 68.1%
Yahoo! Sites 20.7% 20.1% 18.5% 17.7% 17.3% 17.0% 17.6% 17.6% 16.9% 16.3% 16.2% 16.9% 16.3% 16.2%
Microsoft Sites 4.5% 4.4% 4.1% 4.1% 4.1% 4.8% 5.0% 4.5% 4.2% 4.0% 3.9% 3.8% 4.1% 4.1%
Ask Network 1.7% 1.7% 1.5% 1.5% 1.5% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.5% 1.6% 1.6%
AOL 1.6% 1.6% 1.3% 1.3% 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 1.3% 1.3%
Baidu 5.4% 5.7% 6.6% 6.1% 6.1% 6.8% 7.4% 7.0% 6.3% 7.2% 7.2% 7.1% 6.3% 6.3%
NHN NA NA 4.6% 4.4% 4.3% 4.1% 4.1% 3.9% 3.2% 3.2% 3.1% 3.0% 2.7% 2.5%
Quarterly Market Share 1Q07 2Q07 3Q07 4Q07

Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Google Sites 66.1% 66.3% 65.3% 64.9% 65.2% 64.9% 63.1% 63.7% 64.7% 66.5% 66.6% 66.6% 67.8% 67.9%
Yahoo! Sites 20.7% 20.4% 19.7% 17.7% 17.5% 17.3% 17.6% 17.6% 17.4% 16.3% 16.3% 16.5% 16.3% 16.2%
Microsoft Sites 4.5% 4.4% 4.3% 4.1% 4.1% 4.4% 5.0% 4.7% 4.6% 4.0% 3.9% 3.9% 4.1% 4.1%
Ask Network 1.7% 1.7% 1.6% 1.5% 1.5% 1.5% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6%
AOL 1.6% 1.6% 1.5% 1.3% 1.3% 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 1.3% 1.3%
Baidu --- --- 6.0% 6.1% 6.1% 6.3% 7.4% 7.2% 6.9% 7.2% 7.2% 7.2% 6.3% 6.3%
NHN --- --- 1.7% 4.4% 4.3% 4.2% 4.1% 4.0% 3.7% 3.2% 3.2% 3.1% 2.7% 2.6%
Y/Y Change Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total --- --- --- 47.5% 42.3% 42.4% 51.9% 51.8% 44.3% 58.5% 48.5% 40.3% 33.2% 24.7%
Google Sites --- --- --- 57.7% 50.3% 48.6% 51.8% 53.4% 48.7% 58.3% 46.5% 35.0% 36.7% 27.6%
Yahoo! Sites --- --- --- -2.8% -4.4% -7.5% -0.3% 1.5% -4.9% 8.1% 2.6% 5.1% 4.6% 0.6%
Microsoft Sites --- --- --- -6.4% -9.6% 7.5% 26.2% 14.7% 12.3% 20.4% 14.6% 15.3% 21.7% 16.7%
Ask Network --- --- --- 10.4% 12.5% 17.5% 25.0% 19.7% 10.7% 23.9% 25.4% 18.6% 28.1% 19.8%
AOL --- --- --- -50.0% -55.7% -53.5% -12.2% -13.6% -20.8% -14.6% -7.4% -7.4% 6.6% 2.1%
Baidu --- --- --- --- --- --- --- --- --- --- --- --- --- 36.5%
NHN --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Y/Y Change - Quarterly 1Q07 2Q07 3Q07 4Q07

Total --- --- --- 47.5% 44.8% 43.9% 51.9% 51.8% 49.3% 58.5% 53.4% 48.9% 33.2% 29.0%
Google Sites --- --- --- 57.7% 53.8% 52.0% 51.8% 52.6% 51.2% 58.3% 52.2% 46.2% 36.7% 32.1%
Yahoo! Sites --- --- --- -2.8% -3.6% -5.0% -0.3% 0.6% -1.3% 8.1% 5.3% 5.3% 4.6% 2.6%
Microsoft Sites --- --- --- -6.4% -8.1% -2.7% 26.2% 20.5% 17.8% 20.4% 17.5% 16.8% 21.7% 19.2%
Ask Network --- --- --- 10.4% 11.5% 13.5% 25.0% 22.3% 18.2% 23.9% 24.6% 22.7% 28.1% 24.0%
AOL --- --- --- -50.0% -52.9% -53.1% -12.2% -12.9% -15.6% -14.6% -11.1% -9.9% 6.6% 4.4%
Baidu --- --- --- --- --- --- --- --- --- --- --- --- 54.1% 45.1%
NHN --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Note: Shaded cells represent intra-quarter quarterly comparisons
52 April 07, 2008

Figure 64: Lehman Brothers Partnership Matrix, Part 1: Destination Site and Advertising Provider
Portal
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
YAHOO.COM Portal 132,174 Yahoo Yahoo Yahoo Yahoo
MSN.COM Portal 90,671 Microsoft Microsoft Microsoft Microsoft
AOL.COM Portal 81,173 Google Google Google AOL
ABOUT.COM Portal 39,349 -- Google Google --
GO.COM Portal 35,426 Yahoo Yahoo -- --
GLAM.COM Network Portal 29,136 Google Google Google Glam/Google
COMCAST.NET Portal 14,672 Google Google -- Yahoo
Search/Navigation
Feb-08 Graphical
GOOGLE.COM Portal 129,560 Google Google Google --
ASK.COM Search Engine 28,569 Ask.com Google/Ask -- --
MYWEBSEARCH.COM Search Engine 13,504 Ask.com Google/Ask -- --
ANSWERS.COM Search Engine 10,113 -- Google -- --
METACAFE.COM Video Search Engine 5,847 -- -- -- Google
FINDARTICLES.COM Search Engine 6,074 LookSmart LookSmart -- --
LYCOS.COM Search Engine 3,129 Ask.com Google/Ask -- --
INFOSPACE.COM Meta Search Engine 6,396 Google/Yahoo/Microsoft/Ask Google/Yahoo/Microsoft/Ask -- --
DOGPILE.COM Meta Search Engine #N/A Google/Yahoo/Microsoft/Ask Google/Yahoo/Microsoft/Ask -- --
ALTAVISTA.COM Search Engine 2,149 Yahoo Yahoo -- --
IWON.COM Search Engine 3,505 Google Google -- --
TECHNORATI.COM Search Engine 1,399 -- -- Google --
News/Information
Feb-08 Graphical
WEATHER.COM Weather 31,792 Yahoo Yahoo Seevast --
MSNBC.COM General News 29,070 Microsoft Microsoft Seevast --
CNN.COM General News 22,223 Google Google Google --
NYTIMES.COM Newspaper Website 12,250 Google Google Google --
FOXNEWS.COM General News 7,381 Microsoft Microsoft Quigo --
USATODAY.COM Newspaper Website 8,098 Yahoo Yahoo Quigo --
ABCNEWS.COM General News 7,349 -- -- Quigo --
WASHINGTONPOST.COM Newspaper Website 7,213 Google Google Google --
DIGG.COM Social News Ranking 5,546 -- Microsoft Microsoft --
CNET.COM Technology News 4,237 Search.com (Meta) Google Google --
ACCUWEATHER.COM Weather 3,157 Google Google Google --
CBSNEWS.COM General News 3,376 Yahoo Yahoo Yahoo --
TIME.COM General News 3,464 -- -- Quigo --
LATIMES.COM Newspaper Website 3,297 -- Google Quigo --
SALON.COM General News 1,749 Yahoo Yahoo Google --
--
Community
Feb-08 Graphical
MYSPACE.COM Social Networking 67,972 Google Google Google MySpace/Google
FACEBOOK.COM Social Networking 32,436 -- -- Microsoft Facebook/Microsoft
BEBO.COM Social Networking 4,784 Yahoo Yahoo -- Yahoo (UK, Ireland)
IVILLAGE.COM Women 4,571 Yahoo Yahoo Yahoo --
FRIENDSTER.COM Social Networking 2,496 Google Google Google Google
Retail/E-Commerce
Feb-08 Graphical
EBAY.COM Online Auctions 66,768 -- -- Yahoo Yahoo
AMAZON.COM Multicategory E-Commerce 44,926 Amazon (A9) Amazon (ClickRiver) -- Amazon
BIZRATE.COM Comparison Shopping 15,860 -- Google -- --
SHOPPING.COM Comparison Shopping 12,591 -- Google -- --
SHOPLOCAL.COM Comparison Shopping 7,077 -- Google -- --
SHOPZILLA.COM Comparison Shopping 11,045 -- Google -- --
DEALTIME.COM Comparison Shopping 6,201 -- Google -- --
PRICEGRABBER.COM Comparison Shopping 4,563 -- Google -- --
Business/Finance
Feb-08 Graphical
FORBES.COM Financial News 5,971 Eurekster Business.com Quigo Forbes/Yahoo
CNNMONEY.COM Financial News 5,613 Yahoo Yahoo Quigo --
BUSINESSWEEK.COM Financial News 1,979 -- Business.com IndustryBrains.com --
WSJ.COM Financial News 3,335 -- Microsoft Microsoft --
CNBC.COM Financial News 998 -- -- Microsoft Microsoft
Source: Company Web sites, Lehman Brothers, comScore Networks
April 07, 2008 53

Figure 65: Lehman Brothers Partnership Matrix, Part 2: Destination Site and Advertising Provider
Directories/Resources
Feb-08 Graphical
MAPQUEST.COM Maps 45,000 Google via AOL Google via AOL -- --
DICTIONARY.COM Reference 14,354 Google Google -- --
SWITCHBOARD.COM Directories 5,336 InfoSpace (Meta) InfoSpace (Meta) -- --
MATCH.COM Personals 4,312 Ask.com Google/Ask -- --
Entertainment
Feb-08 Graphical
YOUTUBE.COM Online Video 63,921 -- -- -- Google
IMDB.COM Movies 22,110 -- -- Seevast --
TICKETMASTER.COM Event Tickets 13,276 Ask.com Google/Ask -- --
CITYSEARCH.COM Local Directory 12,341 Ask.com Google/Ask -- --
MTV.COM Entertainment/Music 7,433 -- Yahoo Yahoo --
TMZ.COM Entertainment News 9,393 Google via AOL Google via AOL -- --
PEOPLE.COM Entertainment News 7,539 -- -- Quigo --
ABC.COM TV 8,537 Yahoo Yahoo -- --
NBC.COM TV 7,880 SLI Systems Yahoo -- --
VH1.COM Entertainment/Music 3,947 -- Yahoo Yahoo --
WARNERBROS.COM Multimedia 2,903 Yahoo Yahoo -- --
Viacom Sites Entertainment NA -- -- -- Viacom/Microsoft
ISP
Feb-08 Graphical
EARTHLINK.NET ISP 5,161 Google Google -- --
NETZERO.NET ISP 3,599 Yahoo Yahoo -- --
JUNO.COM ISP 1,936 Yahoo Yahoo -- --
Services
Feb-08 Graphical
HOTMAIL.COM Email 4,507 Microsoft Microsoft Microsoft Microsoft
BLOGGER.COM Blogs 39,050 Google Google -- --
FLICKR.COM Social Networking-Photo 13,389 Yahoo Yahoo -- --
EVITE.COM Online Invitation 5,776 -- Google via Ask.com -- --
Sports
Feb-08 Graphical
ESPN.COM Sports News 14,943 -- Quigo Quigo --
FOXSPORTS.COM Sports News 16,157 Microsoft Microsoft Seevast --
SI.COM Sports News 5,976 Yahoo Yahoo Quigo --
NASCAR.COM Sports News 5170 -- Seevast Seevast --
SPORTSLINE.COM Sports News 2,980 Google Google Google --
Other
Feb-08 Graphical
HOTJOBS.COM Career Resources 14,395 Yahoo Yahoo -- --
WEBMD.COM Health 12,459 -- Yahoo -- --
CARS.COM Automotive 5,486 Google -- -- Cars/Yahoo
Ziff-Davis Media Sites Technology & Videogame sites NA -- -- -- Ziff-Davis/Yahoo
International
Jan-08
Web Domain Type of Site Country Unique Visitors Natural Search Paid Search Contextual Ads
BAIDU.COM Homepage Search Engine China 66,711 Baidu -- --
SINA.COM Sites Portal China 58,104 Google Google --
YAHOO.CO.JP Portal Japan 50,233 Yahoo Yahoo --
BBC.CO.UK News Portal U.K. 42,868 BBC -- --
NAVER.COM Portal S. Korea 23,040 Naver Yahoo --
DAUM.NET Portal S. Korea 19,312 Google Google --
ALIBABA.COM Web Services Company China 18,331 Yahoo Yahoo --
TERRA.COM Portal Spain 4,745 Google --
Software
Company Provider Length of Deal Products Distributed

Adobe Yahoo! undisclosed Toolbar on Acrobat Reader
Adobe Google undisclosed Toolbar on Shockwave Player
DivX Yahoo! 2 years Toolbar & IE7 customized for Yahoo!
CA Yahoo! undisclosed Toolbar on home/home office products
OEM
Company Provider Deal Scope

DELL Google Google toolbar and desktop search
HP Yahoo! Yahoo! search toolbar in the US
HP AOL AOL customized homepage in the US, Toolbar and Search WW
ACER Yahoo! Yahoo! search toolbar & homepage
LENOVO Microsoft Windows Live services pre-loaded
GATEWAY Google Google toolbar and desktop search
Source: Company reports, Lehman Brothers, comScore Networks
54 April 07, 2008

Figure 66: Help Wanted Advertising Market Share Analysis, U.S. ($ in millions), 1998–2011E
1998 1999 2000 2001 2002 2003 2004 2005 2006(A) 2007(E) 2008(E) 2009(E) 2010(E) 2011(E)
Help Wanted Market - U.S.
Traditional Newspaper 7,702.1 8,026.0 8,712.6 5,704.7 4,387.5 3,977.4 4,576.3 5,126.5 4,741.1 3,769.9 2,916.4 2,551.8 2,296.7 2,067.0
Internet 182.0 411.0 740.0 877.0 798.0 859.0 1,161.0 1,601.3 2,079.2 2,431.3 2,482.2 2,651.5 2,832.8 3,026.7
Total Revenue 7,884.1 8,437.0 9,452.6 6,581.7 5,185.5 4,836.4 5,737.3 6,727.8 6,820.4 6,201.2 5,398.5 5,203.4 5,129.4 5,093.7
% Change
Traditional Newspaper -- 4.2% 8.6% -34.5% -23.1% -9.3% 15.1% 12.0% -7.5% -20.5% -22.6% -12.5% -10.0% -10.0%
Internet -- 125.8% 80.0% 18.5% -9.0% 7.6% 35.2% 37.9% 29.8% 16.9% 2.1% 6.8% 6.8% 6.8%
Total -- 7.0% 12.0% -30.4% -21.2% -6.7% 18.6% 17.3% 1.4% -9.1% -12.9% -3.6% -1.4% -0.7%
% Market Share
Traditional Newspaper 97.7% 95.1% 92.2% 86.7% 84.6% 82.2% 79.8% 76.2% 69.5% 60.8% 54.0% 49.0% 44.8% 40.6%
Internet 2.3% 4.9% 7.8% 13.3% 15.4% 17.8% 20.2% 23.8% 30.5% 39.2% 46.0% 51.0% 55.2% 59.4%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Internet Help Wanted Market - U.S. -- Major Players

Revenue
Monster (U.S.) -- -- 270.3 373.6 288.8 300.5 405.5 521.6 658.1 707.4 672.0 705.6 740.9 777.9
CareerBuilder -- -- 80.0 89.0 46.5 67.5 124.4 227.7 356.2 499.2 524.2 563.5 605.7 651.2
Other -- -- 389.7 414.4 462.7 491.1 631.1 852.0 1,065.0 1,224.8 1,286.0 1,382.4 1,486.1 1,597.6
Total 182.0 411.0 740.0 877.0 798.0 859.0 1,161.0 1,601.3 2,079.2 2,431.3 2,482.2 2,651.5 2,832.8 3,026.7
% Change
Monster (U.S.) -- -- -- 38.2% -22.7% 4.0% 35.0% 28.6% 26.2% 7.5% -5.0% 5.0% 5.0% 5.0%
CareerBuilder -- -- -- 11.3% -47.7% 45.0% 84.4% 83.1% 56.4% 40.2% 5.0% 7.5% 7.5% 7.5%
Other -- -- -- 6.3% 11.6% 6.1% 28.5% 35.0% 25.0% 15.0% 5.0% 7.5% 7.5% 7.5%
Total -- 125.8% 80.0% 18.5% -9.0% 7.6% 35.2% 37.9% 29.8% 16.9% 2.1% 6.8% 6.8% 6.8%
E = Lehman Brothers estimates A = Actual

Note: CareerBuilder revenue shown excludes revenue allocated directly to the contributing newspaper websites (approximately 35% of total in 2007).
Thus, the contributing newspaper websites' help wanted revenue is included in the other category.
Source: NAA, Forrester, Lehman Brothers Advertising & Publishing Analyst Craig Huber
Figure 67: Auto Classified Advertising Market Share, U.S. ($ in millions), 1998–2011E
1998 1999 2000 2001 2002 2003 2004 2005 2006(A) 2007(E) 2008(E) 2009(E) 2010(E) 2011(E)
Auto Classified Market - U.S.
Internet 21.5 38.7 65.8 111.8 190.1 304.2 446.9 625.6 782.0 899.3 989.3 1,088.2 1,169.8 1,257.5
Total Revenue 4,526.8 4,950.3 5,092.1 5,001.3 5,346.1 5,496.6 5,470.7 5,214.6 4,781.6 4,155.4 3,743.1 3,497.8 3,338.5 3,209.3
% Change
Traditional Newspaper -- 9.0% 2.3% -2.7% 5.5% 0.7% -3.2% -8.7% -12.8% -18.6% -15.4% -12.5% -10.0% -10.0%
Internet -- 80.0% 70.0% 70.0% 70.0% 60.0% 46.9% 40.0% 25.0% 15.0% 10.0% 10.0% 7.5% 7.5%
Total -- 9.4% 2.9% -1.8% 6.9% 2.8% -0.5% -4.7% -8.3% -13.1% -9.9% -6.6% -4.6% -3.9%
% Market Share
Internet 0.5% 0.8% 1.3% 2.2% 3.6% 5.5% 8.2% 12.0% 16.4% 21.6% 26.4% 31.1% 35.0% 39.2%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Figure 68: Real Estate Advertising Market Share Analysis, U.S. ($ in millions), 1998–2011E
1998 1999 2000 2001 2002 2003 2004 2005 2006(A) 2007(E) 2008(E) 2009(E) 2010(E) 2011(E)
Real Estate Market - U.S.
Internet 38.4 65.3 110.9 188.6 320.6 398.0 565.1 762.9 953.6 1,096.6 1,206.3 1,326.9 1,426.4 1,533.4
Total Revenue 3,132.7 3,181.6 3,277.8 3,700.4 3,989.1 4,351.7 4,786.6 5,402.2 6,109.1 5,093.0 4,362.2 4,088.3 3,911.7 3,770.1
% Change
Traditional Newspaper -- 0.7% 1.6% 10.9% 4.5% 7.8% 6.8% 9.9% 11.1% -22.5% -21.0% -12.5% -10.0% -10.0%
Internet -- 70.0% 70.0% 70.0% 70.0% 24.1% 42.0% 35.0% 25.0% 15.0% 10.0% 10.0% 7.5% 7.5%
Total -- 1.6% 3.0% 12.9% 7.8% 9.1% 10.0% 12.9% 13.1% -16.6% -14.4% -6.3% -4.3% -3.6%
% Market Share
Internet 1.2% 2.1% 3.4% 5.1% 8.0% 9.1% 11.8% 14.1% 15.6% 21.5% 27.7% 32.5% 36.5% 40.7%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
April 07, 2008 55

Figure 69: Select Internet Advertising and Usage Statistics in the U.S. and U.K. Markets, 2006 & 1H07 ($ in millions)
2006 1H 2007
US UK* US UK**
Total Advertising Market $291,964 $32,436 $149,817 $17,922
Internet Advertising $16,879 $3,715 $9,993 $2,628

Y/Y % Internet Advertising Growth 34.6% 41.6% 27.0% 41.3%
Online Advertising Penetration 5.8% 11.5% 6.7% 14.7%
Internet Advertising Split

Display $5,373 $836 $3,198 $565
% of Total 31.8% 22.5% 32.0% 21.5%
Search $6,799 $2,147 $4,097 $1,500

% of Total 40.3% 57.8% 41.0% 57.1%
Classifieds $3,059 $698 $1,699 $547

% of Total 18.1% 18.8% 17.0% 20.8%
Other $1,648 $33 $999 $16

% of Total 9.8% 0.9% 10.0% 0.6%
Total Internet Advertsing $16,879 $3,715 $9,993 $2,628

% of total 100.0% 100.0% 100.0% 100.0%
% Internet Media Consumption 19% 25% TBD 26%
Broadband Penetration 70% 89% 75% 90%
* $1.84 exchange rate used, the average for 2006

** $1.97 exchange rate used, the average for 1H07
Source: IAB UK, Lehman Brothers estimates
56 April 07, 2008

e-Commerce
April 07, 2008 57

Figure 70: U.S. E-Commerce by Category, 2003–11 Forecast ($ in millions)

2003 2004 2005 2006E 2007E 2008E 2009E 2010E 2011E
Apparel $6,922 $8,542 $11,150 $13,762 $16,420 $19,260 $22,213 $25,215 $28,211
General Apparel $5,139 $6,055 $7,863 $9,571 $11,290 $13,179 $15,213 $17,357 $19,566
Accessories $737 $870 $1,066 $1,333 $1,653 $1,984 $2,314 $2,631 $2,932
Footwear $1,046 $1,617 $2,220 $2,859 $3,478 $4,096 $4,686 $5,227 $5,713
Books $4,070 $4,378 $4,743 $5,268 $5,864 $6,371 $6,795 $7,150 $7,451
Trade/consumer $2,926 $3,078 $3,282 $3,621 $4,030 $4,378 $4,670 $4,914 $5,121
Academic $1,144 $1,300 $1,461 $1,648 $1,834 $1,992 $2,125 $2,236 $2,330
Computer hardware/software $13,274 $14,622 $16,221 $18,166 $20,517 $22,778 $25,018 $27,299 $29,671
Computer hardware $10,387 $11,442 $12,599 $14,131 $15,935 $17,659 $19,364 $21,100 $22,906
Computer software $1,783 $2,013 $2,356 $2,664 $3,092 $3,526 $3,973 $4,440 $4,935
Computer peripherals $1,104 $1,167 $1,265 $1,372 $1,491 $1,592 $1,680 $1,758 $1,829
Consumer electronics $4,525 $5,756 $7,796 $9,800 $11,940 $14,381 $17,117 $20,130 $23,392
Flowers/cards/gifts $4,223 $5,469 $6,811 $8,344 $10,322 $12,374 $14,407 $16,346 $18,147
Flowers $778 $1,129 $1,487 $1,833 $2,298 $2,787 $3,270 $3,721 $4,119
Cards $303 $440 $599 $723 $846 $968 $1,086 $1,196 $1,294
Gift cards and gift certificates $3,143 $3,900 $4,725 $5,788 $7,178 $8,619 $10,051 $11,429 $12,734
Cosmetics and fragrances $278 $406 $565 $760 $952 $1,139 $1,310 $1,459 $1,585
Over-the-counter personal care $519 $736 $982 $1,292 $1,621 $1,994 $2,401 $2,830 $3,269
Home furnishings $4,271 $5,953 $7,828 $10,204 $12,540 $15,041 $17,650 $20,315 $22,996
Furniture $1,578 $2,210 $3,045 $4,112 $5,191 $6,419 $7,770 $9,209 $10,696
Home décor and crafts $2,044 $2,916 $3,770 $4,929 $6,031 $7,167 $8,305 $9,429 $10,535
Linens $649 $828 $1,013 $1,163 $1,318 $1,456 $1,575 $1,678 $1,766
Appliances and tools $2,631 $3,670 $4,765 $5,904 $7,046 $8,261 $9,561 $10,965 $12,487
Tools/hardware $436 $726 $1,120 $1,574 $1,992 $2,501 $3,112 $3,832 $4,669
Garden supplies $416 $655 $916 $1,203 $1,482 $1,809 $2,183 $2,604 $3,070
Major appliances $825 $1,043 $1,209 $1,406 $1,594 $1,749 $1,873 $1,971 $2,049
Small appliances $955 $1,246 $1,519 $1,720 $1,978 $2,203 $2,394 $2,557 $2,698
Office supplies $2,721 $3,446 $4,330 $5,317 $6,279 $7,544 $8,880 $10,259 $11,656
Pet supplies $194 $294 $432 $527 $705 $928 $1,199 $1,517 $1,879
Jewelry/luxury goods $1,561 $2,388 $3,247 $4,049 $4,799 $5,627 $6,522 $7,469 $8,452
Music/video $4,658 $5,553 $6,667 $8,189 $9,945 $11,753 $13,656 $15,614 $17,593
Music $1,184 $1,344 $1,536 $1,796 $2,100 $2,329 $2,562 $2,798 $3,031
Video $3,474 $4,209 $5,131 $6,392 $7,845 $9,425 $11,094 $12,816 $14,562
Sporting goods and apparel $2,543 $3,559 $4,647 $5,758 $6,835 $8,021 $9,301 $10,654 $12,060
Sporting goods and equipment $1,701 $2,372 $3,009 $3,639 $4,228 $4,883 $5,602 $6,382 $7,217
Sporting apparel $841 $1,188 $1,638 $2,119 $2,607 $3,138 $3,699 $4,273 $4,843
Tickets $1,963 $2,832 $3,916 $5,115 $6,390 $7,897 $9,649 $11,651 $13,903
Movie tickets $297 $468 $655 $841 $1,026 $1,238 $1,477 $1,741 $2,028
Event tickets $1,666 $2,364 $3,261 $4,275 $5,364 $6,659 $8,172 $9,910 $11,874
Toys/video games $4,006 $5,076 $6,175 $7,451 $8,963 $10,444 $11,824 $13,060 $14,139
Toys $2,130 $2,663 $3,142 $3,728 $4,402 $5,035 $5,591 $6,055 $6,425
Baby products $779 $1,015 $1,305 $1,607 $1,935 $2,258 $2,557 $2,825 $3,057
Video games $1,097 $1,399 $1,728 $2,117 $2,625 $3,152 $3,675 $4,179 $4,656
Other* $4,602 $5,011 $5,457 $5,942 $6,368 $6,877 $7,490 $8,227 $9,100
General merchandise subtotal $62,960 $77,691 $95,731 $115,848 $137,506 $160,691 $184,994 $210,160 $235,991
Auto/auto parts $5,129 $7,173 $11,672 $15,930 $19,028 $22,250 $25,470 $28,568 $31,446
Food/beverage $3,424 $4,031 $4,931 $6,227 $7,236 $8,380 $9,671 $11,118 $12,728
Travel $50,466 $57,118 $64,714 $73,400 $84,600 $96,500 $108,700 $119,100 $129,413
Airline tickets $32,379 $35,810 $39,604 $43,800 $48,800 $54,200 $60,100 $63,700 $66,885
Car rentals $2,086 $2,430 $2,832 $3,300 $4,000 $4,600 $5,200 $5,800 $6,380
Full-service travel agents $773 $985 $1,255 $1,600 $2,200 $2,800 $3,300 $3,700 $4,052
Hotel reservations $15,229 $17,893 $21,023 $24,700 $29,600 $34,900 $40,100 $45,900 $52,097
Auto/grocery/travel subtotal $59,020 $68,322 $81,316 $95,557 $110,864 $127,130 $143,841 $158,786 $173,587
Total U.S. Online Retail $121,980 $146,013 $177,047 $211,405 $248,370 $287,821 $328,836 $368,946 $409,578
Note: 2006–11 estimates are pulled directly from Forrester’s five-year forecast. 2003–05 numbers are Lehman estimates derived using growth curves provided by Forrester in
both the October 2006 report as well as the previous report from September 2005.
Source: Forrester Research, Lehman Brothers estimates
58 April 07, 2008

Figure 71: U.S. E-Commerce Growth Rates by Category, 2004–11E

2004 2005 2006E 2007E 2008E 2009E 2010E 2011E
Online % Growth
Apparel 23% 31% 23% 19% 17% 15% 14% 12%

General Apparel 18% 30% 22% 18% 17% 15% 14% 13%
Accessories 18% 23% 25% 24% 20% 17% 14% 11%
Footwear 55% 37% 29% 22% 18% 14% 12% 9%
Books 8% 8% 11% 11% 9% 7% 5% 4%

Trade/consumer 5% 7% 10% 11% 9% 7% 5% 4%
Academic 14% 12% 13% 11% 9% 7% 5% 4%
Computer hardware/software 10% 11% 12% 13% 11% 10% 9% 9%

Computer hardware 10% 10% 12% 13% 11% 10% 9% 9%
Computer software 13% 17% 13% 16% 14% 13% 12% 11%
Computer peripherals 6% 8% 8% 9% 7% 6% 5% 4%
Consumer electronics 27% 35% 26% 22% 20% 19% 18% 16%
Flowers/cards/gifts 29% 25% 23% 24% 20% 16% 13% 11%

Flowers 45% 32% 23% 25% 21% 17% 14% 11%
Cards 45% 36% 21% 17% 14% 12% 10% 8%
Gift cards and gift certificates 24% 21% 23% 24% 20% 17% 14% 11%
Cosmetics and fragrances 46% 39% 34% 25% 20% 15% 11% 9%
Over-the-counter personal care 42% 33% 32% 26% 23% 20% 18% 15%
Home furnishings 39% 31% 30% 23% 20% 17% 15% 13%
Furniture 40% 38% 35% 26% 24% 21% 19% 16%
Home décor and crafts 43% 29% 31% 22% 19% 16% 14% 12%
Linens 28% 22% 15% 13% 10% 8% 7% 5%
Appliances and tools 39% 30% 24% 19% 17% 16% 15% 14%
Tools/hardware 67% 54% 41% 27% 26% 24% 23% 22%
Garden supplies 58% 40% 31% 23% 22% 21% 19% 18%
Major appliances 26% 16% 16% 13% 10% 7% 5% 4%
Small appliances 30% 22% 13% 15% 11% 9% 7% 6%
Office supplies 27% 26% 23% 18% 20% 18% 16% 14%
Pet supplies 52% 47% 22% 34% 32% 29% 27% 24%
Jewelry/luxury goods 53% 36% 25% 19% 17% 16% 15% 13%
Music/video 19% 20% 23% 21% 18% 16% 14% 13%

Music 14% 14% 17% 17% 11% 10% 9% 8%
Video 21% 22% 25% 23% 20% 18% 16% 14%
Sporting goods and apparel 40% 31% 24% 19% 17% 16% 15% 13%
Sporting goods and equipment 39% 27% 21% 16% 15% 15% 14% 13%
Sporting apparel 41% 38% 29% 23% 20% 18% 15% 13%
Tickets 44% 38% 31% 25% 24% 22% 21% 19%

Movie tickets 58% 40% 28% 22% 21% 19% 18% 16%
Event tickets 42% 38% 31% 25% 24% 23% 21% 20%
Toys/video games 27% 22% 21% 20% 17% 13% 10% 8%

Toys 25% 18% 19% 18% 14% 11% 8% 6%
Baby products 30% 29% 23% 20% 17% 13% 10% 8%
Video games 28% 24% 23% 24% 20% 17% 14% 11%
Other* 9% 9% 9% 7% 8% 9% 10% 11%

General merchandise subtotal 23% 23% 21% 19% 17% 15% 14% 12%
Auto/auto parts 40% 63% 36% 19% 17% 14% 12% 10%
Food/beverage 18% 22% 26% 16% 16% 15% 15% 14%
Travel 13% 13% 13% 15% 14% 13% 10% 9%

Airline tickets 11% 11% 11% 11% 11% 11% 6% 5%
Car rentals 17% 17% 17% 21% 15% 13% 12% 10%
Full-service travel agents 27% 27% 27% 38% 27% 18% 12% 10%
Hotel reservations 17% 17% 17% 20% 18% 15% 14% 14%
Auto/grocery/travel subtotal 16% 19% 18% 16% 15% 13% 10% 9%
Total U.S. Online Retail 19.7% 21.3% 19.4% 17.5% 15.9% 14.2% 12.2% 11.0%
April 07, 2008 59

Figure 72: U.S. E-Commerce as a Percentage of Total U.S. Retail, 2003–11E

Online as % of Total Category 2003 2004 2005 2006E 2007E 2008E 2009E 2010E 2011E
Apparel 3% 4% 5% 6% 8% 9% 10% 11% 12%

General Apparel 3% 4% 5% 5% 6% 7% 8% 9% 11%
Accessories 8% 9% 11% 13% 15% 17% 19% 20% 22%
Footwear 4% 6% 8% 10% 12% 14% 15% 16% 17%
Books 14% 15% 16% 17% 19% 20% 21% 22% 22%
Trade/consumer 16% 17% 17% 19% 20% 22% 23% 23% 24%
Academic 11% 12% 14% 15% 16% 17% 18% 19% 19%
Computer hardware/software 47% 48% 49% 51% 53% 55% 56% 56% 57%
Computer hardware 50% 51% 52% 54% 56% 58% 59% 59% 60%
Computer software 38% 39% 42% 43% 45% 47% 48% 49% 49%
Computer peripherals 38% 39% 41% 43% 45% 47% 48% 49% 49%
Consumer electronics 8% 9% 12% 14% 16% 18% 20% 22% 24%
Flowers/cards/gifts 8% 10% 12% 14% 16% 19% 22% 24% 25%

Flowers 4% 6% 8% 9% 11% 14% 16% 18% 20%
Cards 4% 6% 8% 9% 11% 12% 14% 15% 16%
Gift cards and gift certificates 11% 13% 15% 18% 21% 24% 26% 28% 30%
Cosmetics and fragrances 3% 4% 6% 8% 9% 11% 12% 13% 14%
Over-the-counter personal care 2% 3% 4% 5% 6% 7% 8% 9% 10%
Home furnishings 4% 5% 7% 8% 9% 11% 12% 13% 14%

Furniture 3% 4% 5% 7% 8% 10% 11% 12% 14%
Home décor and crafts 5% 6% 7% 9% 10% 11% 12% 13% 14%
Linens 8% 10% 12% 14% 15% 16% 17% 18% 19%
Appliances and tools 2% 3% 4% 4% 5% 5% 6% 6% 7%

Tools/hardware 1% 1% 2% 2% 3% 3% 4% 4% 5%
Garden supplies 1% 2% 2% 3% 3% 3% 4% 4% 5%
Major appliances 7% 8% 9% 11% 12% 13% 14% 14% 14%
Small appliances 15% 19% 23% 25% 28% 30% 32% 33% 33%
Office supplies 6% 7% 8% 9% 11% 12% 14% 15% 16%
Pet supplies 1% 1% 2% 2% 3% 3% 4% 5% 5%
Jewelry/luxury goods 3% 5% 6% 7% 9% 10% 11% 13% 14%
Music/video 10% 12% 13% 16% 18% 20% 23% 25% 27%
Music 9% 11% 12% 14% 16% 17% 19% 21% 23%
Video 11% 12% 14% 16% 19% 21% 24% 26% 28%
Sporting goods and apparel 3% 4% 5% 7% 8% 9% 10% 11% 12%

Sporting goods and equipment 3% 4% 5% 6% 7% 8% 9% 10% 11%
Sporting apparel 4% 5% 6% 8% 9% 11% 12% 14% 15%
Tickets 6% 7% 10% 12% 14% 16% 18% 20% 22%

Movie tickets 3% 5% 6% 7% 9% 10% 11% 13% 14%
Event tickets 6% 9% 11% 13% 15% 18% 20% 23% 25%
Toys/video games 10% 12% 15% 18% 21% 24% 26% 28% 30%
Toys 10% 13% 15% 18% 21% 24% 26% 28% 30%
Baby products 9% 12% 15% 18% 21% 24% 26% 28% 30%
Video games 11% 13% 15% 18% 21% 24% 26% 28% 30%
Other*
General merchandise subtotal 7% 8% 9% 11% 12% 14% 15% 17% 18%
Auto/auto parts 1% 1% 1% 2% 2% 3% 3% 3% 4%
Food/beverage 1% 1% 1% 1% 1% 1% 2% 2% 2%
Travel 21% 23% 26% 29% 34% 38% 42% 46% 49%
Airline tickets 27% 30% 32% 35% 39% 43% 47% 49% 51%
Car rentals 12% 14% 16% 19% 22% 26% 28% 31% 34%
Full-service travel agents 11% 13% 17% 21% 29% 36% 42% 47% 50%
Hotel reservations 16% 18% 21% 25% 29% 34% 38% 43% 48%
Auto/grocery/travel subtotal 4% 4% 5% 6% 7% 8% 9% 9% 10%
U.S. Online as a % of Total U.S. Retail 4.9% 5.7% 6.8% 7.9% 9.0% 10.2% 11.3% 12.4% 13.4%
60 April 07, 2008

Figure 73: U.S. Department of Commerce E-Commerce Data, by Quarter, 2000–4Q07 ($ in millions)
1Q00 2Q00 3Q00 4Q00 2000 1Q01 2Q01 3Q01 4Q01 2001 1Q02 2Q02 3Q02 4Q02 2002
Total Retail Spend 696,048 753,211 746,875 792,622 2,988,756 704,757 779,011 756,128 827,829 3,067,725 717,302 790,486 792,657 833,877 3,134,322
Y/Y Growth NA NA NA NA NA 1.3% 3.4% 1.2% 4.4% 2.6% 1.8% 1.5% 4.8% 0.7% 2.2%
Q/Q Growth -9.5% 8.2% -0.8% 6.1% NA -11.1% 10.5% -2.9% 9.5% NA -13.4% 10.2% 0.3% 5.2% NA
E-commerce Spend 5,624 6,139 6,993 9,212 27,968 8,062 8,040 8,006 11,188 35,296 10,043 10,568 11,302 14,906 46,819
Y/Y Growth NA NA NA NA NA 43.3% 31.0% 14.5% 21.5% 26% 24.6% 31.4% 41.2% 33.2% 33%
Q/Q Growth 5.8% 9.2% 13.9% 31.7% NA -12.5% -0.3% -0.4% 39.7% NA -10.2% 5.2% 6.9% 31.9% NA
E-Commerce as % of Retail 0.8% 0.8% 0.9% 1.2% 0.9% 1.1% 1.0% 1.1% 1.4% 1.2% 1.4% 1.3% 1.4% 1.8% 1.5%
1Q03 2Q03 3Q03 4Q03 2003 1Q04 2Q04 3Q04 4Q04 2004 1Q05 2Q05 3Q05 4Q05 2005
Total Retail Spend 741,060 819,232 830,692 874,493 3,265,477 794,720 870,834 872,340 936,446 3,474,340 835,280 931,513 939,788 986,849 3,693,430
Y/Y Growth 3.3% 3.6% 4.8% 4.9% 4.2% 7.2% 6.3% 5.0% 7.1% 6.4% 5.1% 7.0% 7.7% 5.4% 6.3%
Q/Q Growth -11.1% 10.5% 1.4% 5.3% NA -9.1% 9.6% 0.2% 7.3% NA -10.8% 11.5% 0.9% 5.0% NA
E-commerce Spend 12,984 13,629 14,607 18,795 60,015 17,074 17,378 18,321 23,571 76,344 20,839 21,467 22,556 28,416 93,278
Y/Y Growth 29.3% 29.0% 29.2% 26.1% 28% 31.5% 27.5% 25.4% 25.4% 27% 22.1% 23.5% 23.1% 20.6% 22.2%
Q/Q Growth -12.9% 5.0% 7.2% 28.7% NA -9.2% 1.8% 5.4% 28.7% NA -11.6% 3.0% 5.1% 26.0% NA
E-Commerce as % of Retail 1.8% 1.7% 1.8% 2.1% 1.8% 2.1% 2.0% 2.1% 2.5% 2.2% 2.5% 2.3% 2.4% 2.9% 2.5%
1Q06 2Q06 3Q06 4Q06 2006 1Q07 2Q07 3Q07 4Q07 2007
Total Retail Spend 899,329 993,153 984,776 1,027,047 3,904,305 934,619 1,030,508 1,016,550 1,078,565 4,060,242
Y/Y Growth 7.7% 6.6% 4.8% 4.1% 5.7% 3.9% 3.8% 3.2% 5.0% 4.0%
Q/Q Growth -8.9% 10.4% -0.8% 4.3% NA -9.0% 10.3% -1.4% 6.1% NA
E-commerce Spend 25,846 26,363 27,092 35,322 114,623 30,624 31,828 32,234 41,758 136,444
Y/Y Growth 24.0% 22.8% 20.1% 24.3% 22.9% 18.5% 20.7% 19.0% 18.2% 19.0%
Q/Q Growth -9.0% 2.0% 2.8% 30.4% NA -13.3% 3.9% 1.3% 29.5% NA
E-Commerce as % of Retail 2.9% 2.7% 2.8% 3.4% 2.9% 3.3% 3.1% 3.2% 3.9% 3.4%
Source: U.S. Department of Commerce
Figure 74: U.S. Department of Commerce E-Commerce Data, by Quarter, 2000–4Q07

$45,000
$40,000
$35,000
$30,000
Online Sales (MM)
$25,000
$20,000
$15,000
$10,000
$5,000
$0
00
00
00
00
01
01
01
01
02
02
02
02
03
03
03
03
04
04
04
04
05
05
05
05
06
06
06
06
07
07
07
07
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
Figure 75: U.S. E-Commerce as a Percentage of Total U.S. Retail, by Quarter, 2000–4Q07
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07
April 07, 2008 61

Figure 76: Top U.S. Online Retailers by Revenue ($ in millions) (1–50)

Rank Company 2004 2005 2006
1 Amazon.com Inc. 6,921 8,490 10,710
2 Staples Inc. 3,000 3,800 4,900
3 Office Depot Inc. 3,100 3,800 4,300
4 Dell Inc. 3,257 3,724 3,965
5 HP Home & Home Office 2,691 2,829 3,055
6 Office Max Inc. 2,200 2,567 2,849
7 Sears Holding Corp. 1,740 2,160 2,376
8 CDW Corp. 1,526 1,769 2,001
9 SonyStyle.com 1,597 1,625 1,690
10 Newegg.com 1,000 1,300 1,500
11 Best Buy Co. 959 1,267 1,425
12 J.C. Penney Co. Inc. 812 1,039 1,300
13 Wal-Mart Stores Inc. 782 1,050 1,260
14 QVC Inc. 739 1,017 1,257
15 Apple Computer Inc. 547 817 1,136
16 Victoria's Secret Direct 158 870 1,097
17 Circuit City Stores Inc. 577 832 1,000
18 Netflix Inc 506 688 997
19 Target Corp. 756 897 986
20 Williams-Sonoma Inc. 561 766 927
21 Costco Wholesale Corp. 377 534 880
22 Quixtar Inc. 748 800 880
23 L.L. Bean Inc. 523 747 825
24 Systemax Inc. 515 650 819
25 Overstock.com Inc. 495 804 796
26 IAC/InterActiveCorp. 303 614 792
27 Gap Inc. 563 595 730
28 Redcats USA 401 475 720
29 Avon Products Inc. 456 567 612
30 Macy's Group 300 450 608
31 Zappos.com Inc 184 370 597
32 PC Connection Inc. 271 383 514
33 BarnesandNoble.com 420 440 433
34 1-800-Flowers.com Inc. 307 361 430
35 Drugstore.com Inc. 360 399 416
36 Neiman Marcus Group 242 314 406
37 The Home Depot Inc. 164 352 404
38 Buy.com Inc. 291 346 397
39 Toys "R" Us Inc. 386 427 384
40 Nordstrom Inc. 201 290 377
41 Scholastic Corp. 220 270 342
42 CompUSA Inc. 268 293 316
43 Peapod LLC 183 240 300
44 Foot Locker Inc. 212 243 279
45 Oriental Trading Co. 160 213 264
46 Coldwater Creek Inc. 162 198 264
47 Saks Fifth Avenue 135 187 252
48 Musician's Friend Inc. 169 220 252
49 Blue Nile Inc. 169 203 252
50 FTD Inc. 181 216 249
Source: Internet Retailer, 2007
62 April 07, 2008

Figure 77: Top U.S. Online Retailers by Revenue ($ in millions) (51–100)

51 Blockbuster Inc. 8 143 248
52 Crate & Barrel 161 195 234
53 Spiegel Brands Inc. 191 204 230
54 Gateway Inc. 419 297 223
55 Eddie Bauer 222 229 218
56 American Eagle Outfitters 65 130 200
57 FreshDirect LLC 120 150 200
58 Army & Air Force 126 162 198
59 Lillian Vernon Corp. 108 153 198
60 Disney Direct 137 184 198
61 Recreational Equipment 111 164 195
62 The Talbots Inc. 83 106 191
63 J. Crew Group Inc. 122 160 189
64 ShopNBC.com 131 159 177
65 American Girl N/A 174 176
66 Xtraplus Corp N/A 170 175
67 Abercrombie & Fitch 110 159 174
68 Follett Higher Ed. 83 134 174
69 Lowe's Cos. Inc. 110 149 174
70 Abebooks Inc. 130 150 170
71 Walgreen Co. 113 143 170
72 Etronics Inc. 100 130 169
73 PC Mall Inc. 139 162 168
74 Hanover Direct Inc. 114 141 168
75 Harry and David 90 96 166
76 Northern Tool + Equip. 104 131 165
77 Nike Inc. 29 128 154
78 Bass Pro Outdoor 105 130 153
79 VistaPrint 59 91 152
80 Cabela's Inc 91 114 147
81 U.S. Auto Parts Network 36 98 145
82 Schwan's Home 120 127 137
83 CVS Corp. 93 113 136
84 MLB Advanced Media 70 116 135
85 Drs. Foster & Smith Inc. 90 115 133
86 Bidz.com Inc. 65 90 132
87 Market Day Corp. 99 118 131
88 SmartBargains.com 92 111 127
89 Crutchfield Corp. 108 117 125
90 dELiA*s Inc. 80 106 125
91 1-800 Contacts Inc. 106 119 124
92 eBags.com 73 103 124
93 Shutterfly Inc. N/A 84 123
94 RealPlayer Music Store 49 98 123
95 Sierra Trading Post Inc. 27 98 123
96 Restoration Hardware 54 76 122
97 J&R Electronics Inc. 85 100 120
98 Tiffany & Co. 100 110 120
99 Palm Inc. 93 118 120
100 Charming Shoppes Inc. 30 59 118
April 07, 2008 63

Figure 78: Top U.S. Online Retailers’ Revenue Growth Rates (1–50)
Rank Company 2005 2006
1 Amazon.com Inc. 23% 26%
2 Staples Inc. 27% 29%
3 Office Depot Inc. 23% 13%
4 Dell Inc. 14% 6%
5 HP Home & Home Office 5% 8%
6 Office Max Inc. 17% 11%
7 Sears Holding Corp. 24% 10%
8 CDW Corp. 16% 13%
9 SonyStyle.com 2% 4%
10 Newegg.com 30% 15%
11 Best Buy Co. 32% 12%
12 J.C. Penney Co. Inc. 28% 25%
13 Wal-Mart Stores Inc. 34% 20%
14 QVC Inc. 38% 24%
15 Apple Computer Inc. 49% 39%
16 Victoria's Secret Direct 452% 26%
17 Circuit City Stores Inc. 44% 20%
18 Netflix Inc 36% 45%
19 Target Corp. 19% 10%
20 Williams-Sonoma Inc. 37% 21%
21 Costco Wholesale Corp. 42% 65%
22 Quixtar Inc. 7% 10%
23 L.L. Bean Inc. 43% 10%
24 Systemax Inc. 26% 26%
25 Overstock.com Inc. 63% -1%
26 IAC/InterActiveCorp. 103% 29%
27 Gap Inc. 6% 23%
28 Redcats USA 18% 52%
29 Avon Products Inc. 24% 8%
30 Macy's Group 50% 35%
31 Zappos.com Inc 101% 61%
32 PC Connection Inc. 41% 34%
33 BarnesandNoble.com 5% -2%
34 1-800-Flowers.com Inc. 17% 19%
35 Drugstore.com Inc. 11% 4%
36 Neiman Marcus Group 30% 29%
37 The Home Depot Inc. 115% 15%
38 Buy.com Inc. 19% 15%
39 Toys "R" Us Inc. 11% -10%
40 Nordstrom Inc. 44% 30%
41 Scholastic Corp. 23% 27%
42 CompUSA Inc. 9% 8%
43 Peapod LLC 31% 25%
44 Foot Locker Inc. 15% 15%
45 Oriental Trading Co. 33% 24%
46 Coldwater Creek Inc. 22% 33%
47 Saks Fifth Avenue 38% 35%
48 Musician's Friend Inc. 30% 14%
49 Blue Nile Inc. 20% 24%
50 FTD Inc. 19% 15%
64 April 07, 2008

Figure 79: Top U.S. Online Retailers’ Revenue Growth Rates (51–100)
Rank Company 2005 2006
51 Blockbuster Inc. 1600% 74%
52 Crate & Barrel 21% 20%
53 Spiegel Brands Inc. 7% 13%
54 Gateway Inc. -29% -25%
55 Eddie Bauer 3% -5%
56 American Eagle Outfitters 100% 54%
57 FreshDirect LLC 25% 33%
58 Army & Air Force 29% 22%
59 Lillian Vernon Corp. 41% 30%
60 Disney Direct 35% 8%
61 Recreational Equipment 48% 19%
62 The Talbots Inc. 28% 80%
63 J. Crew Group Inc. 31% 18%
64 ShopNBC.com 21% 11%
65 American Girl N/A 1%
66 Xtraplus Corp N/A 3%
67 Abercrombie & Fitch 45% 9%
68 Follett Higher Ed. 61% 30%
69 Lowe's Cos. Inc. 35% 17%
70 Abebooks Inc. 15% 13%
71 Walgreen Co. 27% 19%
72 Etronics Inc. 30% 30%
73 PC Mall Inc. 17% 4%
74 Hanover Direct Inc. 24% 19%
75 Harry and David 7% 73%
76 Northern Tool + Equip. 26% 26%
77 Nike Inc. 342% 20%
78 Bass Pro Outdoor 24% 18%
79 VistaPrint 55% 67%
80 Cabela's Inc 25% 29%
81 U.S. Auto Parts Network 173% 47%
82 Schwan's Home 5% 8%
83 CVS Corp. 21% 20%
84 MLB Advanced Media 67% 16%
85 Drs. Foster & Smith Inc. 28% 16%
86 Bidz.com Inc. 38% 47%
87 Market Day Corp. 20% 11%
88 SmartBargains.com 20% 15%
89 Crutchfield Corp. 8% 7%
90 dELiA*s Inc. 32% 18%
91 1-800 Contacts Inc. 12% 5%
92 eBags.com 41% 20%
93 Shutterfly Inc. N/A 47%
94 RealPlayer Music Store 100% 26%
95 Sierra Trading Post Inc. 259% 25%
96 Restoration Hardware 43% 60%
97 J&R Electronics Inc. 18% 20%
98 Tiffany & Co. 10% 9%
99 Palm Inc. 27% 2%
100 Charming Shoppes Inc. 96% 101%
April 07, 2008 65

Figure 80: Top U.S. Online Retailers – Online Revenue as a Percentage of Total Revenue ($ in millions) (1–50)
Rank Company 2006 Online Revenue 2006 Total Revenue Online as % of Total Rev.
1 Amazon.com Inc. $10,710 $10,710 100.0%
2 Staples Inc. 4,900 18,200 26.9%
3 Office Depot Inc. 4,300 15,000 28.7%
4 Dell Inc. 3,965 57,900 6.8%
5 HP Home & Home Office 3,055 91,658 3.3%
6 Office Max Inc. 2,849 8,966 31.8%
7 Sears Holding Corp. 2,376 55,000 4.3%
8 CDW Corp. 2,001 6,800 29.4%
9 SonyStyle.com 1,690 63,541 2.7%
10 Newegg.com 1,500 1,500 100.0%
11 Best Buy Co. 1,425 30,800 4.6%
12 J.C. Penney Co. Inc. 1,300 19,903 6.5%
13 Wal-Mart Stores Inc. 1,260 348,650 0.4%
14 QVC Inc. 1,257 7,074 17.8%
15 Apple Computer Inc. 1,136 19,315 5.9%
16 Limited Brands Inc. 1,097 10,671 10.3%
17 Circuit City Stores Inc. 1,000 12,430 8.0%
18 Netflix Inc 997 997 100.0%
19 Target Corp. 986 59,490 1.7%
20 Williams-Sonoma Inc. 927 3,728 24.9%
21 Costco Wholesale Corp. 880 60,151 1.5%
22 Quixtar Inc. 880 1,118 78.7%
23 L.L. Bean Inc. 825 1,500 55.0%
24 Systemax Inc. 819 2,345 34.9%
25 Overstock.com Inc. 796 796 100.1%
26 IAC/InterActiveCorp. 792 2,933 27.0%
27 Gap Inc. 730 15,943 4.6%
28 Redcats USA 720 1,708 42.2%
29 Avon Products Inc. 612 8,764 7.0%
30 Macy's Group Inc. 608 26,970 2.3%
31 Zappos.com Inc 597 597 100.0%
32 PC Connection Inc. 514 1,636 31.4%
33 BarnesandNoble.com 433 5,300 8.2%
34 1-800-Flowers.com Inc. 430 782 55.0%
35 Drugstore.com Inc. 416 416 99.9%
36 Neiman Marcus Group 406 4,106 9.9%
37 The Home Depot Inc. 404 90,800 0.4%
38 Buy.com Inc. 397 397 100.1%
39 Toys "R" Us Inc. 384 11,275 3.4%
40 Nordstrom Inc. 377 8,600 4.4%
41 Scholastic Corp. 342 2,284 15.0%
42 CompUSA Inc. 316 4,700 6.7%
43 Peapod LLC 300 288 104.2%
44 Foot Locker Inc. 279 5,750 4.9%
45 Oriental Trading Co. 264 400 66.0%
46 Coldwater Creek Inc. 264 1,050 25.1%
47 Saks Fifth Avenue 252 2,940 8.6%
48 Musician's Friend Inc. 252 2,030 12.4%
49 Blue Nile Inc. 252 252 99.8%
50 FTD Inc. 249 465 53.5%
66 April 07, 2008

Figure 81: Top U.S. Online Retailers – Online Revenue as a Percentage of Total Revenue ($ in millions) (51–100)
Rank Company 2006 Online Revenue 2006 Total Revenue Online as % of Total Rev.
51 Blockbuster Inc. 248 4,030 6.2%
52 Crate & Barrel 234 1,100 21.3%
53 Spiegel Brands Inc. 230 459 50.0%
54 Gateway Inc. 223 3,981 5.6%
55 Eddie Bauer 218 1,013 21.5%
56 American Eagle Outfitters 200 2,794 7.2%
57 FreshDirect LLC 200 200 100.0%
58 Army & Air Force 198 8,474 2.3%
59 Lillian Vernon Corp. 198 398 49.9%
60 Disney Direct 198 2,511 7.9%
61 Recreational Equipment 195 1,164 16.8%
62 The Talbots Inc. 191 2,231 8.5%
63 J. Crew Group Inc. 189 1,152 16.4%
64 ShopNBC.com 177 764 23.2%
65 American Girl 176 440 40.0%
66 Xtraplus Corp 175 175 100.0%
67 Abercrombie & Fitch 174 3,318 5.2%
68 Follett Higher Ed. 174 2,000 8.7%
69 Lowe's Cos. Inc. 174 46,900 0.4%
70 Abebooks Inc. 170 170 100.0%
71 Walgreen Co. 170 47,409 0.4%
72 Etronics Inc. 169 169 100.0%
73 PC Mall Inc. 168 1,006 16.7%
74 Hanover Direct Inc. 168 416 40.3%
75 Harry and David 166 598 27.8%
76 Northern Tool + Equip. 165 750 22.0%
77 Nike Inc 154 15,000 1.0%
78 Bass Pro Outdoor 153 1,915 8.0%
79 VistaPrint 152 152 100.1%
80 Cabela's Inc 147 2,060 7.1%
81 U.S. Auto Parts Network 145 145 99.8%
82 Schwan's Home 137 4,000 3.4%
83 CVS Corp. 136 43,814 0.3%
84 MLB Advanced Media 135 264 51.0%
85 Drs. Foster & Smith Inc. 133 228 58.3%
86 Bidz.com Inc. 132 132 100.0%
87 Market Day Corp. 131 131 100.4%
88 SmartBargains.com 127 111 114.7%
89 Crutchfield Corp. 125 211 59.2%
90 dELiA*s Inc. 125 258 48.3%
91 1-800 Contacts Inc. 124 249 49.9%
92 eBags.com 124 103 120.6%
93 Shutterfly Inc. 123 123 100.3%
94 RealPlayer Music Store 123 395 31.1%
95 Sierra Trading Post 123 250 49.2%
96 Restoration Hardware 122 713 17.2%
97 J&R Electronics 120 400 30.0%
98 Tiffany & Co. 120 2,648 4.5%
99 Palm Inc. 120 1,579 7.6%
100 Charming Shoppes 118 3,068 3.9%
April 07, 2008 67

Figure 82: Top U.S. Online Retailers – Apparel/Accessories ($ in millions)

1 Victoria's Secret Direct $158 $870 $1,097
2 L.L. Bean Inc. 523 747 825
3 Gap Inc. 563 595 730
4 Redcats USA 401 475 720
5 Zappos.com Inc. 184 370 597
6 Neiman Marcus Group 242 314 406
7 Nordstrom Inc. 201 290 377
8 Foot Locker Inc. 212 243 279
9 Coldwater Creek Inc. 162 189 264
10 Saks Fifth Avenue 135 187 252
11 Spiegel Brands Inc. 191 204 230
12 Eddie Bauer 222 229 218
13 American Eagle Outfitters 65 130 200
14 The Talbots Inc. 83 106 191
15 J. Crew Group Inc. 122 160 189
16 Abercrombie & Fitch 110 159 191
17 Hanover Direct Inc. 114 141 168
18 Nike Inc. 29 128 154
19 dELiA*s Inc. 80 106 125
20 eBags.com 73 103 124
21 Sierra Trading Post Inc. 27 98 123
22 Charming Shoppes Inc. 30 59 118
23 Ralph Lauren Media LLC 50 85 114
24 Ann Taylor Stores Corp. 45 51 96
25 Blair Corp. 61 79 94
26 YOOX Group 9 63 84
27 Fingerhut Direct Marketing Inc. 39 52 82
28 Onlineshoes.com n/a 49 80
29 Blue fly Inc. 44 59 77
30 eLuxury.com 51 62 75
31 NormThomson Outfitter Inc. 61 70 74
32 The Orvis Co. Inc. 57 63 70
34 The Finish Line Inc. 42 60 64
33 ShoeMall.com (Mason Companies Inc.) 36 44 64
35 Shoes.com Inc. 18 35 63
36 Urban Outfitters Inc. 41 52 61
37 Frederick's of Hollywood Inc. 38 48 56
38 Hanna Anderson Corp. 43 47 55
39 Road Runner Sports Inc. 48 51 54
40 Coach Inc. 33 42 54
41 Fossil Inc. 25 36 41
42 Burlington Coat Factory Warehouse Corp. 35 37 39
68 April 07, 2008

Figure 83: Top U.S. Online Retailers – Computers/Electronics ($ in millions)

1 Dell Inc. $3,257 $3,724 $3,965
2 HP Home & Home Office 2,691 2,829 3,055
3 CDW Corp. 1,526 1,769 2,001
4 SonyStyle.com 1,597 1,625 1,690
5 Newegg.com 1,000 1,300 1,500
6 Best Buy Co. 959 1,267 1,425
7 Apple Computer Inc. 547 817 1,136
8 Circuit City Stores Inc. 577 832 1,000
9 Systemax Inc. 515 650 819
10 PC Connection Inc. 271 383 514
11 CompUSA Inc. 268 293 316
12 Gateway Inc. 419 297 223
13 Xtraplus Corp. n/a 170 175
14 Etronics Inc. 100 130 169
15 PC Mall Inc. 139 162 168
16 Crutchfield Corp. 108 117 125
17 J&R Electronics Inc. 85 100 120
18 Palm Inc. 93 118 120
19 Accoona Corp. n/a 109 115
20 eCOST.com Inc. 178 173 101
21 Ritz Interactive 86 83 99
22 B&H Photo-Video-Pro Audio 54 67 84
23 OneCall.com (Huppins Hifi, Photo and Video Inc.) 61 70 73
24 Comp-U-Plus 65 72 68
25 Abt Electronics Inc. 40 52 62
26 Panasonic Corp. of North America n/a 50 60
27 Computer Geeks 37 45 52
28 RadioShack 35 44 50
29 Outpost.com (Fry's Electonics Inc.) 36 41 44
30 SuperMediaStore.com 16 24 33
Figure 84: Top U.S. Online Retailers – Media (Books/CDs/DVDs) ($ in millions)

1 Netflix Inc $506 $688 $997
2 BarnesandNoble.com 420 440 433
3 Scholastic Corp. 220 270 342
4 Blockbuster Inc. 8 147 248
5 Follett Higher Ed. 83 134 174
6 Abebooks Inc. 130 150 170
7 Napster Inc. 35 85 109
8 Alibris Inc. 61 79 94
9 Infinity Resources 60 80 92
10 Audible.com n/a 63 82
11 Indigo books & Music 45 55 72
12 eCampus.com (A Book Co. LLC) 40 44 46
13 CD Universe (CLBL Inc.) 30 34 44
14 TimeLife.com 26 32 41
15 DVD empire 29 32 33
April 07, 2008 69

Figure 85: Top U.S. Online Retailers – Flowers/Gifts ($ in millions)

1 1-800-Flowers.com Inc. $307 $361 $430
2 FTD Inc. 181 216 249
3 Red Enevelope Inc. 57 75 91
4 Hallmark Cards 78 82 89
5 Potpourri Group Inc. 31 52 69
6 American Greeting Corp. 36 58 65
7 Celebrate Express Inc. 31 41 59
8 The Vermont Teddy Bear Co. 32 41 51
9 PersonalCreations.com (PC Acquisitions) 36 40 44
10 The Yankee Candle Co. Inc. 7 13 14
Figure 86: Top U.S. Online Retailers – Food/Drugs ($ in millions)

1 Drugstore.com Inc. $360 $399 $416
2 Peapod LLC 183 240 300
3 FreshDirect LLC 120 150 200
4 Walgreen Co. 113 143 170
5 Harry and David 90 96 166
6 Schwan's Home 120 127 137
7 CVS Corp. 93 113 136
8 Market Day Corp. 99 118 131
9 Omaha Steaks 80 97 106
10 NBTY Inc. 42 56 67
11 SimonDelivers.com 64 65 60
12 Safeway Inc. 36 43 46
13 Wine.com 36 39 41
Figure 87: Top U.S. Online Retailers – Hardware/Home Improvement ($ in millions)

1 The Home Depot Inc. $164 $352 $404
2 Lowe's Cos. Inc. 110 149 174
3 Northern Tool + Equip. 104 131 165
4 Improvement Direct Inc. 21 35 57
5 iFloor.com (Smooth Corp.) 47 50 54
6 Decorative Product Source Inc. 24 40 51
70 April 07, 2008

Figure 88: Top U.S. Online Retailers – Health/Beauty ($ in millions)

1 Quixtar Inc. $748 $800 $880
2 Avon Products Inc. 456 567 612
3 1-800 Contacts Inc. 106 119 124
4 Sephora USA LLC 57 85 111
5 Coastal Contacs 31 67 81
6 Bodybuilding.com (Higher Power Inc.) 33 47 65
7 Vitacost.com Inc. 27 37 60
Figure 89: Top U.S. Online Retailers – Housewares/Home Furnishings ($ in millions)

1 Williams-Sonoma Inc. $561 $766 $927
2 Crate & Barrel 161 195 234
3 Lillian Vernon Corp. 108 153 198
4 Restoration Hardware 54 76 122
5 Art.com Inc. 34 108 117
6 CSN Stores Inc. n/a 64 110
7 HomeDecor Products Inc 50 79 107
8 Bed Bath & Beyond Inc. 62 71 79
9 AJ Madison Inc. 42 57 74
10 Lamps Plus Inc. 38 48 74
11 Brookstone Inc. 45 50 68
12 Linens 'n Things Inc. 45 55 65
13 Furniture.com Inc 43 54 60
14 Thompson and Company of Tampa Inc. 53 62 59
15 Replacements Ltd. n/a 42 52
Figure 90: Top U.S. Online Retailers – Jewelry ($ in millions)

1 Blue Nile Inc. $169 $203 $252
2 Bidz.com Inc. 65 90 132
3 Tiffany & Co. 100 110 120
4 Ross-Simons Inc. 52 63 73
5 Jewelry Television (America's Collectible Network) 30 39 70
6 Ice.com 25 34 49
7 Zale Corp. 18 25 45
April 07, 2008 71

Figure 91: Top U.S. Online Retailers – Mass Merchant/Department Store ($ in millions)
1 Amazon.com Inc. $6,921 $8,490 $10,710
2 Sears Holding Corp. 1,740 2,160 2,376
3 J.C. Penney Co. Inc. 812 1,039 1,300
4 Wal-Mart Stores Inc. 782 1,050 1,260
5 QVC Inc. 739 1,017 1,257
6 Target Corp. 756 897 986
7 Costco Wholesale Corp. 377 534 880
8 Overstock.com Inc. 495 804 796
9 IAC/InterActiveCorp. 303 614 792
10 Macy's Group Inc. 300 450 608
11 Buy.com Inc. 291 346 397
12 Army & Air Force 126 162 198
13 ShopNBC.com 131 159 184
14 SmartBargains.com 92 111 127
15 NetShops Inc, 24 66 115
16 CafePress.com 69 87 95
17 Direct Marketing Services Inc. 45 55 69
18 The Shopping Channel, A Division of Roger Media 45 58 66
19 Kohl's Corp. 21 29 32
20 Boscov's Department Store LLC 16 20 25
Figure 92: Top U.S. Online Retailers – Office Supplies ($ in millions)

1 Staples Inc. $3,000 $3,800 $4,900
2 Office Depot Inc. 3,100 3,800 4,300
3 Office Max Inc. 2,200 2,567 2,849
4 Franklin Covey Co. 39 40 42
72 April 07, 2008

Figure 93: Top U.S. Online Retailers – Specialty/Non-Apparel ($ in millions)

1 Oriental Trading Co. $160 $213 $264
2 Musician's Friend Inc. 169 220 252
3 Disney Direct 137 184 198
4 VistaPrint 59 91 152
5 U.S. Auto Parts Network 36 98 145
6 MLB Advanced Media 70 116 135
7 Drs. Foster & Smith Inc. 90 115 133
8 Shutterfly n/a 84 123
9 RealPlayer Music Store 49 98 123
10 J.C. Whitney & Co. 82 90 101
11 PetMed Express Inc. 56 72 99
12 The Sharper Image 116 107 85
13 National Football League 53 46 70
14 PetSmart Inc. 39 49 54
15 AutoZone 33 47 52
16 PETCO Animal Supplies Inc. 43 44 48
17 Chelsea & Scott Ltd. 37 45 47
18 Discovery Communications Inc. 26 34 46
19 NASCAR.com Superstore 37 41 45
20 American Musical Supply Inc. 31 37 44
Figure 94: Top U.S. Online Retailers – Sporting Goods ($ in millions)

1 Recreational Equipment 111 164 $195
2 Bass Pro Outdoor 105 130 153
3 Cabela's Inc 91 114 147
4 Backcountry.com 27 52 82
5 Dick's Sporting Goods Inc, 46 60 75
6 The Sports Authority Inc. 51 55 59
7 Gear Direct.com (Speciality Sports Ventures) 26 53 53
8 Golfsmith International Holdings 21 34 37
9 Callaway Golf Interactive 22 26 32
10 Team Express Inc. 15 21 31
Figure 95: Top U.S. Online Retailers – Toys-Hobbies ($ in millions)

1 Toys "R" Us Inc. $386 $427 $384
2 American Girl n/a 174 176
3 eToys Direct Inc. 38 105 118
April 07, 2008 73

Figure 96: Top 100 Online Retail Satisfaction Index (1–50)

Satisfaction Score
Rank Website 2006 2007 % change
1 Netflix.com 85 85 0%
2 QVC.com 82 85 4%
3 Amazon.com 83 83 0%
4 BN.com 78 82 5%
5 DrsFosterSmith.com N/A 81 N/A
6 AmericanGirl.com N/A 79 N/A
7 MarketDay.com N/A 79 N/A
8 LLBean.com 80 79 -1%
9 HSN.com 78 79 1%
10 TigerDirect.com 78 79 1%
11 Zappos.com 78 79 1%
12 Apple.com 77 79 3%
13 Cabelas.com N/A 78 N/A
14 MusiciansFriend.com N/A 78 N/A
15 OrientalTrading.com N/A 78 N/A
16 Schwans.com N/A 78 N/A
17 Newegg.com 82 78 -5%
18 Avon.com 76 78 3%
19 Dell.com 76 78 3%
20 Blockbuster.com N/A 77 N/A
21 Shutterfly.com N/A 77 N/A
22 VictoriasSecret.com N/A 77 N/A
23 Quixtar.com 78 77 -1%
24 BassPro.com N/A 76 N/A
25 Crutchfield.com N/A 76 N/A
26 VistaPrint.com N/A 76 N/A
27 Drugstore.com 78 76 -3%
28 JCPenney.com 76 76 0%
29 Overstock.com 76 76 0%
30 shopping.hp.com 74 76 3%
31 Target.com 73 76 4%
32 1800Contacts.com N/A 75 N/A
33 AAFES.com N/A 75 N/A
34 DisneyDirect.com N/A 75 N/A
35 eBags.com N/A 75 N/A
36 HarryandDavid.com N/A 75 N/A
37 Walgreens.com N/A 75 N/A
38 Williams-Sonoma.com 79 75 -5%
39 Staples.com 77 75 -3%
40 Walmart.com 74 75 1%
41 ColdwaterCreek.com N/A 74 N/A
42 NorthernTool.com N/A 74 N/A
43 Scholastic.com N/A 74 N/A
44 OfficeDepot.com 75 74 -1%
45 CircuitCity.com 73 74 1%
46 AbeBooks.com N/A 73 N/A
47 CrateandBarrel.com N/A 73 N/A
48 Domestications.com N/A 73 N/A
49 EddieBauer.com N/A 73 N/A
50 LillianVernon.com N/A 73 N/A
Source: ForSee Results
74 April 07, 2008

Figure 97: Top 100 Online Retail Satisfaction Index (51–94)

Satisfaction Score
Rank Website 2006 2007 % change
51 Nike.com N/A 73 N/A
52 Peapod.com N/A 73 N/A
53 REI.com N/A 73 N/A
54 Talbots.com N/A 73 N/A
55 Chadwicks.com 78 73 -6%
56 Nordstrom.com 77 73 -5%
57 AE.com N/A 72 N/A
58 CVS.com N/A 72 N/A
59 FootLocker.com N/A 72 N/A
60 JCrew.com N/A 72 N/A
61 LaneBryant.com N/A 72 N/A
62 Gap.com 73 72 -1%
63 Sears.com 73 72 -1%
64 Costco.com 71 72 1%
65 dELiAs.com N/A 71 N/A
66 FTD.com N/A 71 N/A
67 OfficeMax.com N/A 71 N/A
68 Palm.com N/A 71 N/A
69 SmartBargains.com N/A 71 N/A
70 Spiegel.com N/A 71 N/A
71 1800Flowers.com 76 71 -7%
72 BestBuy.com 73 71 -3%
73 Buy.com 71 71 0%
74 CompUSA.com 71 71 0%
75 ToysRUs.com 71 71 0%
76 Abercrombie.com N/A 70 N/A
77 Bidz.com N/A 70 N/A
78 BlueNile.com N/A 70 N/A
79 CDW.com N/A 70 N/A
80 efollett.com N/A 70 N/A
81 eToys.com N/A 70 N/A
82 FreshDirect.com N/A 70 N/A
83 Lowes.com N/A 70 N/A
84 SaksFifthAvenue.com N/A 70 N/A
85 Shop.MLB.com N/A 70 N/A
86 Gateway.com 71 70 -1%
87 SonyStyle.com 69 70 1%
88 HomeDepot.com N/A 69 N/A
89 ShopNBC.com N/A 69 N/A
90 NeimanMarcus.com 76 69 -9%
91 Macys.com 69 69 0%
92 Etronics.com N/A 68 N/A
93 PCConnection.com N/A 67 N/A
94 PCMall.com N/A 67 N/A
Source: ForeSee Results
April 07, 2008 75

This page intentionally left blank
76 April 07, 2008

Company Information and Models
April 07, 2008 77

Figure 98: Yahoo! Snapshot

Strengths Biggest Concerns
- #1 in branded advertising, #2 in search, making Yahoo! well positioned to capitalize on the - Portal conundrum, what does Yahoo! want to be, and are its organizational changes
secular growth drivers of the Internet. sufficient to focus it around a few key strategic initiatives?
- Display: Can premium display return to its historic levels of growth given the increasing
- One of the largest platforms on the web with over 500 million users worldwide, giving Yahoo! popularity of user generated content, verticalization, and the willingness of advertisers to
scale, reach, and frequency of use. distribute ad dollars across premium and non-premium content? More display going through
networks?
- Diversified business model with a full suite of offerings including branded, network, search, - Search: Continuing share declines, increasing distribution costs leading to higher TAC, and
and subscription services leading to multiple cross-selling opportunities. limited overseas exposure may limit Yahoo!'s monetization improvements from Panama.
- Continued search and monetization improvements across its core O&O sites (US RPS
- Will its estimated $275 million in incremental '08 investment spending around its display
+20% in 4Q07) as Yahoo! improves ad relevancy and, importantly, monetization with
platform be sufficient to touch 20% of the online advertising demand over the next few years?
Panama.
- Display partnerships with eBay, Comcast, the newspaper consortium, and others extend
- Continued brain drain toward start-ups and other Internet companies.
Yahoo!'s premium display network and likely have lower TAC than search partnerships.
- Balance sheet has $2.5B in cash, plus ~$9.00 per share in Yahoo! Japan, Alibaba, and - Non-premium page views are growing fastest, and although monetization is improving, they
cash. are impacting overall display growth.
What to Watch For Guidance

- Whether Yahoo! can offset the impact of lower Fees revenue due to its renegotiated
broadband partnerships (namely AT&T) and a shrinking affiliate business through continued
strong results in its core O&O search and display business where display grew 19% and
search grew 15% in 4Q07. 1Q08 2008
- Can Yahoo! position itself for growth in EBITDA and have positive operating leverage in
2009 amid its investments in 2008? Revenues excluding TAC $1,280 - $1,380 $5,350-$5,950
Other cost of revenues $250-$280 $1,030-$1,150
- Has Yahoo!'s new strategic focus on: 1. starting points; 2. becoming a 'must buy' for
advertisers; and 3. delivering industry leading platforms, led to user growth, and increased
advertiser spend and fee growth. Gross Profit $1,030 - $1,100 $4,320-$4,800
Implied Operating Expenses $900-$990 $3,398-$3,488
- Can Panama lead to sustainable double digit RPS growth going forward? RPS on Yahoo!'s
U.S. O&O sites grew 20% in 4Q07. Operating Income $100-$110 $545-$655
Depreciation & Amortization $160-$180 $670-$750
- Whether Yahoo! can gain search share or will it continue to lose share to Google?
Stock compensation expense $140-$160 $510-$570
EBITDA $400-$450 $1,725-$1,975
- If Yahoo!'s display biz can build upon its distribution relationships with eBay, Comcast,
Implied EBITDA Margin
Bebo, and the newspaper consortium, in addition to its acquisition of Blue Lithium, and sign 31.3% - 32.0% - 32.6% 32.2% - 32.7% - 33.2%
other display syndication deals. (low-mid-high)
- Whether Yahoo! can continue to successfully accelerate its non-premium CPMs by adding
its non-premium (and some premium) inventory to the Right Media exchange while growing
overall CPMs without flooding the exchange. Cash Flow from Operations $1,075-$1,225
Free Cash Flow $850-$1,000
- Greater investment in: advertising platforms (Panama, RightMedia, and Blue Lithium);
product development (SmartAds, Yahoo! Mail, mobile, and marketing); partnerships (beyond Free Cash Conversion of EBITDA 79.1% - 80.4% - 81.6%
eBay, Comcast, and the newspapers); and talent.
- Whether Yahoo! will open up its home-page to potential third party content providers and
applications.
Capex $675-$775
- Whether the impact of continued restructuring and reorganization strategies improves

Yahoo!'s competitive edge, speed of innovation, and technology focus.
- Whether Yahoo!'s strategy of combining its search and display sales teams can drive
greater cross-selling and increased CPMs.
- Whether there will be additional structural changes as part of Yahoo!'s continual review of its
business model and projects.
78 April 07, 2008

Figure 99: Yahoo! Income Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Gross Revenues $5,257.7 $6,425.7 $1,671.9 $1,697.9 $1,767.5 $1,832.0 $6,969.3 $1,773.5 $1,795.6 $1,850.1 $1,957.3 $7,376.6 $8,044.1
Traffic Acquisition Costs (TAC) $1,561.7 $1,865.9 $488.8 $454.2 $484.9 $428.9 $1,856.7 $444.3 $426.3 $447.9 $413.1 $1,731.5 $1,629.1
Net Revenues excluding TAC $3,695.9 $4,559.8 $1,183.1 $1,243.8 $1,282.6 $1,403.1 $5,112.6 $1,329.3 $1,369.3 $1,402.3 $1,544.2 $5,645.1 $6,415.0
Other cost of revenues 534.5 803.2 222.9 226.5 252.7 269.3 971.4 272.5 278.0 290.3 316.6 1,157.3 1,347.2
Gross profit 3,161.5 3,756.6 960.2 1,017.3 1,029.9 1,133.8 4,141.1 1,056.8 1,091.4 1,112.0 1,227.7 4,487.8 5,067.9
Operating expenses
Sales & marketing 1,025.2 1,167.2 317.2 338.3 340.6 367.8 1,363.9 358.9 362.9 370.9 406.1 1,498.8 1,712.8
Product development 547.1 688.3 191.2 216.6 223.1 235.1 866.0 264.5 280.7 287.5 315.0 1,147.7 1,347.2
General & administrative 319.7 410.4 115.7 123.4 140.5 156.7 536.3 156.9 143.8 140.2 151.3 592.2 705.7
Payroll taxes on option exercises - - - - - - - - - - - - -
Stock compensation expense 52.5 424.9 140.0 128.8 145.5 158.1 572.4 140.0 130.0 135.0 150.0 555.0 527.3
Amortization of intangibles 109.2 124.8 27.1 25.2 30.0 24.8 107.1 28.0 33.0 33.0 33.0 127.0 133.4
Restructuring costs - - - - - - - - - - - - -
Acquisition costs - - - - - - - - - - - - -
Total operating expenses 2,053.7 2,815.6 791.2 832.3 879.7 942.6 3,445.7 948.3 950.4 966.6 1,055.5 3,920.8 4,426.2
Operating income 1,107.7 941.0 169.0 185.0 150.2 191.2 695.4 108.5 141.0 145.4 172.2 567.1 641.7
Other income, net 1,435.9 157.0 35.5 30.7 43.7 44.1 154.0 24.7 23.2 21.9 24.3 94.0 125.6
Income before taxes, acctg change 2,543.6 1,098.0 204.5 215.7 193.9 235.3 849.4 133.1 164.2 167.3 196.5 661.1 767.3
Provision for income taxes 767.8 458.0 92.4 87.7 78.7 78.5 337.3 59.9 73.9 75.3 88.4 297.5 306.9
Effective tax rate 30.2% 41.7% 45.2% 40.7% 40.6% 33.4% 39.7% 45.0% 45.0% 45.0% 45.0% 45.0% 40.0%
Earnings in equity interests 128.2 112.1 29.1 32.1 36.5 52.9 150.7 33.0 33.0 33.0 33.0 132.0 143.9
Minority interest (7.8) (0.7) 1.2 0.5 (0.5) (4.0) (2.9) - - - - - -
GAAP Net Income (loss) bf Cum. Effect 1,896.2 751.4 142.4 160.6 151.3 205.7 660.0 106.2 123.3 125.0 141.1 495.6 604.2
Accounting change/One-time items (1,030.8) - - - - - - - - - - - -
GAAP Net income (loss) 865.4 751.4 142.4 160.6 151.3 205.7 660.0 106.2 123.3 125.0 141.1 495.6 604.2
GAAP Net income (loss) per share $0.58 $0.52 $0.10 $0.11 $0.11 $0.15 $0.47 $0.08 $0.09 $0.09 $0.10 $0.35 $0.42
Basic shares outstanding 1,400.4 1,388.7 1,352.5 1,339.6 1,335.1 1,328.8 1,339.0 1,344.0 1,349.0 1,354.0 1,359.0 1,351.5 1,366.5
Diluted shares outstanding 1,486.5 1,457.9 1,418.2 1,403.8 1,395.1 1,394.7 1,402.9 1,399.7 1,404.7 1,409.7 1,414.7 1,407.2 1,422.2
Pro Forma Net Income Reconciliation:

GAAP Net Income 865.4 751.4 142.4 160.6 151.3 205.7 660.0 106.2 123.3 125.0 141.1 495.6 604.2
Tax effect (64.7) (210.2) (66.8) (61.6) (70.2) (73.2) (271.8) (67.2) (65.2) (67.2) (73.2) (272.8) (264.2)
Non-recurring items - (24.3) - - - - - - - - - - -
Pro Forma Net income (loss) 962.4 1,066.6 242.7 252.9 256.6 315.5 1,067.7 207.0 221.1 225.8 250.9 904.8 1,000.6
Pro Forma Net income (loss) per share $0.65 $0.73 $0.17 $0.18 $0.18 $0.23 $0.76 $0.15 $0.16 $0.16 $0.18 $0.64 $0.70
Diluted shares outstanding 1,486.5 1,457.9 1,418.2 1,403.8 1,395.1 1,394.7 1,402.9 1,399.7 1,404.7 1,409.7 1,414.7 1,407.2 1,422.2
EBITDA Reconciliation
Operating income (reported) 1,107.7 941.0 169.0 185.0 150.2 191.2 695.4 108.5 141.0 145.4 172.2 567.1 641.7
Depreciation & amortization 397.1 540.0 151.0 159.9 170.6 177.7 659.2 178.0 180.0 185.0 185.0 728.0 840.0
EBITDA 1,557.3 1,905.9 460.0 473.6 466.3 527.1 1,927.0 426.5 451.0 465.4 507.2 1,850.1 2,008.9
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Yr/Yr Growth
Net revenues 42.7% 23.4% 8.8% 10.8% 14.4% 14.3% 12.1% 12.4% 10.1% 9.3% 10.1% 10.4% 13.6%
Gross profit 42.3% 18.8% 5.4% 9.2% 14.3% 11.9% 10.2% 10.1% 7.3% 8.0% 8.3% 8.4% 12.9%
Sales and marketing 31.8% 13.8% 8.5% 17.7% 18.0% 23.0% 16.9% 13.2% 7.3% 8.9% 10.4% 9.9% 14.3%
Product development 48.4% 25.8% 6.3% 25.5% 36.2% 36.6% 25.8% 38.4% 29.6% 28.9% 34.0% 32.5% 17.4%
General and administrative 21.7% 28.4% 18.2% 13.8% 52.8% 39.8% 30.7% 35.5% 16.5% -0.2% -3.4% 10.4% 19.2%
Total operating expenses 33.0% 37.1% 11.5% 18.5% 25.9% 33.6% 22.4% 19.9% 14.2% 9.9% 12.0% 13.8% 12.9%
Operating income 63.2% -15.1% -16.0% -19.4% -25.8% -37.9% -26.1% -35.8% -23.8% -3.2% -10.0% -18.5% 13.2%
EBITDA 52.4% 22.4% 5.8% 3.7% -1.6% -2.5% 1.1% -7.3% -4.8% -0.2% -3.8% -4.0% 8.6%
GAAP EPS 62.9% -11.5% -6.2% 2.8% -1.3% -22.1% -8.7% -24.4% -23.3% -18.2% -32.4% -25.1% 20.6%
Pro Forma EPS 56.8% 13.0% 4.9% 8.8% 12.2% -6.1% 4.0% -13.6% -12.6% -12.9% -21.6% -15.5% 9.4%
Sequential Growth
Net revenues -3.7% 5.1% 3.1% 9.4% -5.3% 3.0% 2.4% 10.1%
% of Revenues
Other cost of revenues (non-TAC) 14.5% 17.6% 18.8% 18.2% 19.7% 19.2% 19.0% 20.5% 20.3% 20.7% 20.5% 20.5% 21.0%
Sales & marketing 27.7% 25.6% 26.8% 27.2% 26.6% 26.2% 26.7% 27.0% 26.5% 26.5% 26.3% 26.6% 26.7%
General and administrative 8.6% 9.0% 9.8% 9.9% 11.0% 11.2% 10.5% 11.8% 10.5% 10.0% 9.8% 10.5% 11.0%
Margins
Gross margin 85.5% 82.4% 81.2% 81.8% 80.3% 80.8% 81.0% 79.5% 79.7% 79.3% 79.5% 79.5% 79.0%
Operating margin 30.0% 20.6% 14.3% 14.9% 11.7% 13.6% 13.6% 8.2% 10.3% 10.4% 11.1% 10.0% 10.0%
EBITDA 42.1% 41.8% 38.9% 38.1% 36.4% 37.6% 37.7% 32.1% 32.9% 33.2% 32.8% 32.8% 31.3%
Operating Leverage/Flow-through 48.4% 40.4% 26.3% 13.8% -4.6% -7.6% 3.8% -22.9% -18.0% -0.8% -14.1% -14.5% 20.6%
April 07, 2008 79

Figure 100: Yahoo! Revenue Analysis, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Revenue Excluding TAC 3,695.9 4,559.8 1,183.1 1,243.8 1,282.6 1,403.1 5,112.6 1,329.3 1,369.3 1,402.3 1,544.2 5,645.1 6,415.0
Y/Y growth 42.7% 23.4% 8.8% 10.8% 14.4% 14.3% 12.1% 12.4% 10.1% 9.3% 10.1% 10.4% 13.6%
Q/Q growth -3.7% 5.1% 3.1% 9.4% -5.3% 3.0% 2.4% 10.1%
MARKETING SERVICES
Total Marketing Services Gross Revenue 4,594.0 5,627.2 1,468.6 1,486.0 1,541.6 1,590.0 6,086.2 1,570.8 1,622.3 1,672.4 1,765.1 6,630.6 7,217.1
Total Traffic Acquisition Costs (TAC) 1561.7 1865.9 488.8 454.2 482.9 428.8 1854.7 444.3 426.3 447.9 413.1 1731.5 1629.1
TAC as a % of Total Yahoo! Gross Marketing Services Revenue 33.2% 33.3% 30.6% 31.3% 27.0% 30.5% 28.3% 26.3% 26.8% 23.4% 26.1% 22.6%
Total Marketing Services Net Revenue 3,032.3 3,761.3 979.8 1,031.9 1,058.7 1,161.1 4,231.6 1,126.6 1,196.1 1,224.5 1,352.0 4,899.2 5,588.0
Y/Y growth 40.8% 24.0% 8.7% 10.6% 16.1% 14.4% 12.5% 15.0% 15.9% 15.7% 16.4% 15.8% 14.1%
Q/Q growth 5.3% 2.6% 9.7% -3.0% 6.2% 2.4% 10.4%
Marketing services revenue as % of total 82.0% 82.5% 82.8% 83.0% 82.5% 82.8% 82.8% 84.8% 87.3% 87.3% 87.6% 86.8% 87.1%
OWNED & OPERATED SITES

O&O Total Gross Revenue 2,413.6 3,070.7 819.7 892.6 921.2 1,035.4 3,668.8 1,010.3 1,096.7 1,121.5 1,259.9 4,488.4 5,235.4
O&O Total TAC 19.51 39.7 10.7 12.8 24.4 25.7 73.5 26.2 32.4 33.2 33.7 125.4 154.1
TAC as % of Yahoo O&O Gross Revenues 0.8% 1.3% 1.3% 1.4% 2.6% 2.5% 2.0% 2.6% 3.0% 3.0% 2.7% 2.8% 2.9%
O&O Total Net Revenue 2,394.1 3,031.0 809.0 879.8 896.8 1,009.7 3,595.3 984.1 1,064.4 1,088.3 1,226.3 4,363.1 5,081.2
Y/Y growth 41.9% 26.6% 13.9% 17.9% 22.3% 20.0% 18.6% 21.6% 21.0% 21.4% 21.4% 21.4% 16.5%
Q/Q growth -3.9% 8.7% 1.9% 12.6% -2.5% 8.2% 2.3% 12.7%
O&O Net Revs as % of Total Mktg Services Net Revs 79.0% 80.6% 82.6% 85.3% 84.7% 87.0% 85.0% 87.4% 89.0% 88.9% 90.7% 89.1% 90.9%
O&O SEARCH
Gross O&O Search Revenue 1,016.6 1,248.0 339.2 407.8 414.4 420.7 1,582.1 444.4 522.0 526.3 534.2 2,026.9 2,371.4
O&O Traffic Acquisition Costs 19.5 39.7 10.7 12.8 24.4 25.7 73.5 26.2 32.4 33.2 33.7 125.4 154.1
% O&O TAC of Gross Revenue 1.9% 3.2% 3.2% 3.1% 5.9% 6.1% 4.6% 5.9% 6.2% 6.3% 6.3% 6.2% 6.5%
O&O Search Net Revenue 997.1 1,208.3 328.5 395.0 390.0 395.0 1,508.6 418.2 489.6 493.1 500.6 1,901.5 2,217.3
Y/Y growth 52.7% 21.2% 8.2% 27.2% 33.9% 30.4% 24.8% 27.3% 23.9% 26.4% 26.7% 26.0% 16.6%
Q/Q growth 8.5% 20.2% -1.3% 1.3% 5.9% 17.1% 0.7% 1.5%
O&O DISPLAY 1,099.7 1,465.1 383.6 397.8 423.8 503.1 1,708.3 460.3 481.3 506.5 606.3 2,054.4 2,424.1
Y/Y growth 35.6% 33.2% 20.6% 13.0% 18.8% 19.4% 16.6% 20.0% 21.0% 19.5% 20.5% 20.3% 18.0%
Q/Q growth -10.4% 3.7% 6.5% 18.7% -8.5% 4.6% 5.2% 19.7%
O&O OTHER
Listings 166.4 189.6 50.6 51.5 49.0 50.0 201.0 55.1 55.1 52.4 53.5 216.1 233.4
Kelkoo 131.0 168.0 46.3 35.5 34.0 61.6 177.4 50.5 38.3 36.4 65.9 191.1 206.4
Total O&O Other Net Revenue 297.4 357.6 96.9 86.9 83.0 111.6 378.4 105.6 93.4 88.8 119.4 407.2 439.8
Y/Y growth 33.1% 20.3% 11.9% 8.7% 3.0% 1.0% 5.8% 9.0% 7.4% 7.0% 7.0% 7.6% 8.0%
Q/Q growth -12.3% -10.3% -4.6% 34.5% -5.4% -11.6% -4.9% 34.5%
AFFILIATE SITES
Affiliate Total Gross Revenue 2,180.4 2,556.5 648.9 593.5 620.4 554.6 2,417.4 560.5 525.6 550.9 505.2 2,142.2 1,981.8
Affiliate Total TAC 1,542.2 1,826.3 478.1 441.4 458.5 403.2 1,781.2 418.0 393.9 414.7 379.4 1,606.1 1,474.9
TAC as % of Yahoo Affiliate Gross Revenues 71.4% 73.7% 74.4% 73.9% 72.7% 73.7% 74.6% 74.9% 75.3% 75.1% 75.0% 74.4%
Affiliate Total Net Revenue 638.2 730.2 170.8 152.1 161.9 151.4 636.2 142.5 131.7 136.2 125.7 536.1 506.8
Y/Y growth 36.6% 14.4% -10.7% -18.7% -9.1% -12.9% -12.9% -16.6% -13.4% -15.9% -17.0% -15.7% -5.5%
Q/Q growth -1.7% -11.0% 6.4% -6.5% -5.9% -7.6% 3.4% -7.7%
Affiliate Net Revs as % of Total Mktg Services Net Revs 21.0% 19.4% 17.4% 14.7% 15.3% 13.0% 15.0% 12.6% 11.0% 11.1% 9.3% 10.9% 9.1%
AFFILIATE SEARCH
Gross Affiliate Search Revenue 2,180.4 2,558.3 644.1 586.4 609.9 539.3 2,379.6 541.1 504.3 524.5 474.6 2,044.4 1,840.0
Affiliate Search Traffic Acquisition Costs 1,542.2 1,826.3 476.4 438.3 453.7 395.8 1,764.2 408.5 383.2 401.2 363.5 1,556.5 1,398.4
% Affiliate TAC of Gross Revenue 71.4% 74.0% 74.7% 74.4% 73.4% 74.1% 75.5% 76.0% 76.5% 76.6% 76.1% 76.0%
Affiliate Search Net Revenue 638.2 732.0 167.7 148.1 156.2 143.4 615.4 132.6 121.0 123.3 111.0 487.9 441.6
Y/Y growth 36.6% NA -12.4% -20.8% -12.3% -18.3% -15.9% -20.9% -18.3% -21.1% -22.6% -20.7% -9.5%
Q/Q growth -4.5% -11.7% 5.5% -8.2% -7.6% -8.7% 1.8% -9.9%
AFFILIATE DISPLAY ADVERTISING

Gross Affiliate Display Revenue - 0.3 3.9 7.1 10.5 15.3 36.9 19.5 21.4 26.4 30.6 97.8 141.8
Affiliate Display Traffic Acquisition Costs - 0.0 1.64 3.13 4.85 7.34 17.0 9.54 10.68 13.45 15.91 49.6 76.57
% Affiliate Display TAC of Display Gross Revenue 42.0% 44.0% 46.0% 48.0% 46.0% 49.0% 50.0% 51.0% 52.0% 50.7% 54.0%
% Affiliate Display TAC of Overall Affiliate TAC 0.0% 0.3% 0.7% 1.1% 1.8% 1.0% 2.3% 2.7% 3.2% 4.2% 3.1% 5.2%
Affiliate Display Net Revenue - 0.3 2.3 4.0 5.7 8.0 19.9 9.9 10.7 12.9 14.7 48.2 65.2
Y/Y growth NA NA NA NA NA 2398.7% NA 339.7% 167.9% 126.9% 84.6% 142.3% 35.3%
Q/Q growth NA 77% 43% 40% 25% 8% 21% 14%
NET REVENUE SHARE BY SEGMENT

Search 53.9% 51.6% 50.7% 52.6% 51.6% 46.4% 50.2% 48.9% 51.1% 50.3% 45.2% 48.8% 47.6%
Display 36.3% 38.9% 39.4% 38.9% 40.6% 44.0% 40.8% 41.7% 41.1% 42.4% 45.9% 42.9% 44.5%
Other 9.8% 9.5% 9.9% 8.4% 7.8% 9.6% 8.9% 9.4% 7.8% 7.2% 8.8% 8.3% 7.9%
Total Net Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
O&O NET REVENUE SHARE BY SEGMENT
Search 41.6% 39.9% 40.6% 44.9% 43.5% 39.1% 42.0% 42.5% 46.0% 45.3% 40.8% 43.6% 43.6%
Display 45.9% 48.3% 47.4% 45.2% 47.3% 49.8% 47.5% 46.8% 45.2% 46.5% 49.4% 47.1% 47.7%
Other 12.4% 11.8% 12.0% 9.9% 9.3% 11.1% 10.5% 10.7% 8.8% 8.2% 9.7% 9.3% 8.7%
Total O&O Net Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
AFFILIATE NET REVENUE SHARE BY SEGMENT
Search 100.0% 100.2% 98.2% 97.4% 96.5% 94.7% 96.7% 93.0% 91.9% 90.5% 88.3% 91.0% 87.1%
Display 0.0% 0.0% 1.3% 2.6% 3.5% 5.3% 3.1% 7.0% 8.1% 9.5% 11.7% 9.0% 12.9%
Total O&O Net Revenue 100.0% 100.3% 99.5% 100.0% 100.0% 100.0% 99.9% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
FEES 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
AT&T (SBC) Access 188.6 244.9 66.2 67.1 69.1 71.0 273.5 42.0 7.3 7.6 7.9 64.7 63.7
Y/Y growth 44.5% 29.9% 17.1% 11.5% 9.6% 9.0% 11.7% -36.6% -89.1% -89.0% -88.9% -76.3% -1.6%
Monthly ARPU to Yahoo! $3.00 $2.99 $2.85 $2.75 $2.70 $2.65 $2.73 $1.50 $0.25 $0.25 $0.25 $0.54 $0.48
BT Access 62.2 86.4 22.7 22.7 23.1 23.4 91.9 23.7 24.0 24.2 24.4 96.4 104.0
Y/Y growth 226.4% 39.0% 11.7% 7.0% 4.3% 3.4% 6.5% 4.4% 5.5% 4.9% 4.4% 4.8% 8.0%
Rogers Cable Access 24.8 32.6 8.6 8.6 8.8 0.8 26.9 2.4 2.5 2.6 2.6 10.1 12.0
Y/Y growth 422.7% 31.4% 12.4% 8.3% 5.5% -90.2% -17.5% -71.7% -71.0% -70.9% 210.2% -62.3% 18.5%
Verizon Access 11.0 56.3 20.3 23.5 27.6 32.5 103.9 35.2 37.0 40.3 40.9 153.5 194.3
Y/Y growth NA NA 87.9% 83.2% 82.0% 85.7% 84.6% 73.9% 57.4% 46.0% 25.9% 47.7% 26.6%
Personals 90.9 105.8 29.5 30.3 29.9 29.8 119.5 33.0 33.6 32.9 33.1 132.7 146.0
Y/Y growth 22.4% 16.4% 13.0% 13.0% 13.0% 13.0% 13.0% 12.0% 11.0% 10.0% 11.0% 11.0% 10.0%
ARPU $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00
Other Premium Services 108.0 122.6 30.7 31.1 30.6 34.2 126.5 30.9 30.7 30.2 33.1 125.0 129.7
Y/Y growth 31.2% 13.6% 3.4% 3.5% 1.8% 4.0% 3.2% 0.8% -1.1% -1.3% -3.0% -1.2% 3.8%
ARPU $3.25 $3.22 $3.06 $3.03 $2.98 $2.95 $3.00 $2.85 $2.80 $2.75 $2.65 $2.76 $2.65
Musicmatch/Yahoo! Music Unlimited 61.0 74.4 18.2 18.9 22.3 26.9 86.3 20.4 21.1 24.9 30.1 96.6 107.2
Y/Y growth NA 21.9% 16.0% 16.0% 16.0% 16.0% 16.0% 12.0% 12.0% 12.0% 12.0% 12.0% 11.0%
Other Fees Revenue 117.3 75.5 7.0 9.7 12.5 23.4 52.5 15.0 17.0 15.0 20.0 67.0 70.0
Y/Y growth -6.5% -35.6% - - - -30.4% - - - 27.5% -
Total Fees Revenue 663.7 798.5 203.2 211.9 223.9 242.0 881.0 202.7 173.3 177.8 192.2 746.0 827.0
Y/Y growth 48.4% 20.3% 9.1% 11.7% 6.6% 13.8% 10.3% -0.3% -18.2% -20.6% -20.6% -15.3% 10.9%
Q/Q growth -4.5% 4.3% 5.7% 8.1% -16.2% -14.5% 2.6% 8.2%
Fees revenues as % of total 18.0% 17.5% 17.2% 17.0% 17.5% 17.2% 17.2% 15.2% 12.7% 12.7% 12.4% 13.2% 12.9%
80 April 07, 2008

Figure 101: Yahoo! Cash Flow Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Cash flows from operating activities

Net income 1,896.2 751.4 142.4 160.6 151.3 205.7 660.0 106.2 123.3 125.0 141.1 495.6 604.2
Adjustments
Tax benefits from stock-based compensation 759.5 529.7 67.7 97.0 6.0 (94.5) 76.1 40.0 40.0 40.0 40.0 160.0 160.0
Excess tax benefits from stock-based compensation - (597.1) (52.1) (82.4) - 134.5 - (120.0) (120.0) (120.0) (120.0) (480.0) (480.0)
Cumulative effect of accounting change - - - - - - - - - - - - -
Earnings in equity interests (128.2) (112.1) (29.1) (32.1) (36.5) (52.9) (150.7) (31.0) (31.0) (31.0) (31.0) (124.0) (143.9)
Minority interests in ops of consolidated subsidiaries 7.8 0.7 (1.2) (0.5) 0.5 4.0 2.9 - - - - - -
Noncash losses/impairments - - - - - - - - - - - - -
Other non-cash charges (including stock based compensation) (1,215.2) 422.7 94.8 99.8 87.5 64.8 346.9 140.0 130.0 135.0 150.0 555.0 527.3
Total Change in working capital (5.9) (163.7) 61.1 3.4 77.3 218.0 359.9 (69.9) (14.6) (18.2) (51.6) (154.3) (90.8)
Cash flows from operations 1,711.4 1,371.6 434.7 405.6 456.7 657.3 1,954.3 243.3 307.7 315.9 313.4 1,180.3 1,416.8
Cash flows from investing activities

Acquisition of PP&E (Capex, net) (408.9) (689.1) (118.0) (144.7) (147.2) (192.4) (602.3) (160.0) (180.0) (185.0) (200.0) (725.0) (848.3)
Purchases of marketable securities (7,023.8) (1,328.5) (570.3) (422.8) (112.0) - (1,105.0) - - - - - -
Proceeds from sales and maturities of marketable securities 7,342.0 1,951.3 728.0 616.8 510.7 388.3 2,243.7 - - - - - -
Acquisitions, net of cash acquired (1,698.2) (142.3) (11.6) (24.4) (319.5) (618.1) (973.6) - - - - - -
Proceeds from sales of other investments 1,006.1 - - - - - - - - - - - -
Investments, net - - - - - - - - - - - - -
Other (39.1) 14.9 (6.6) (13.3) (85.8) (29.6) (135.3) - - - - - -
Net cash from investing activities (821.9) (193.7) 21.5 11.6 (153.8) (451.8) (572.5) (160.0) (180.0) (185.0) (200.0) (725.0) (848.3)
Cash flows from financing activities

Proceeds from issuance of stock, net 746.8 318.1 71.9 131.8 40.2 131.2 375.1 - - - - - -
Excess tax benefits from stock-based compensation - 597.1 52.1 82.4 - (134.5) - 120.0 120.0 120.0 120.0 480.0 480.0
Repayment of Long Term Debt - - - - - - - - (749.6) - - (749.6) -
Repurchase of common stock (387.7) (1,782.1) (595.0) (420.1) (350.1) (220.7) (1,585.9) - - - - - -
Structured stock repurchases (611.4) (227.7) (250.0) - - - (250.0) - - - - - -
Other 1.7 - - (1.8) (12.2) (2.7) (16.6) - - - - - -
Net cash from financing activities (250.6) (1,094.6) (721.0) (207.7) (322.1) (226.7) (1,477.4) 120.0 (629.6) 120.0 120.0 (269.6) 480.0
Other (effect of exchange rate) (32.9) 56.9 4.0 7.2 21.3 7.2 39.7 - - - - - -
Net change in cash 606.0 140.2 (260.8) 216.7 2.1 (14.0) (55.9) 203.3 (501.9) 250.9 233.4 185.7 1,048.5
Cash & equivalents - BOP 823.7 1,429.6 1,569.8 1,309.0 1,525.8 1,527.9 1,569.8 1,513.9 1,717.2 1,215.3 1,466.2 1,513.9 1,699.6
Cash & equivalents - EOP 1,429.6 1,569.8 1,309.0 1,525.8 1,527.9 1,513.9 1,513.9 1,717.2 1,215.3 1,466.2 1,699.6 1,699.6 2,748.1
Average cash & marketable securities 3,332.7 3,139.8 2,957.2 2,563.1 2,563.1 2,465.1 2,315.8 2,190.3 2,432.4 2,456.3 3,073.4
Estimated annual interest rate 4.3% 3.9% 5.9% 6.9% 6.0% 4.0% 4.0% 4.0% 4.0% 3.8% 4.1%
Interest income on cash balance 35.5 30.7 43.7 44.1 154.0 24.7 23.2 21.9 24.3 94.0 125.6
Other (incl. Yahoo! Japan)
Other income 1435.9 157.0 35.5 30.7 43.7 44.1 154.0 24.7 23.2 21.9 24.3 94.0 125.6
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Working Capital Analysis:
Changes in:
Accounts receivable, net (272.4) (185.2) 40.2 3.2 (49.7) (82.4) (88.7) 71.9 (36.5) (59.6) (155.6) (179.9) (227.2)
Prepaid expenses and other assets (35.3) (189.0) 13.4 (25.9) 73.6 72.1 133.2 - - - - - -
Accounts payable 31.6 30.4 31.0 0.1 (19.0) 33.0 45.1 (43.2) (9.7) (4.0) 11.3 (45.7) 17.1
Accrued expenses and other liabilities 212.1 175.9 (34.7) 18.9 66.6 134.0 184.8 (75.7) 28.0 51.1 67.7 71.1 77.4
Deferred revenue 58.2 4.2 11.3 7.2 5.9 61.2 85.6 (22.9) 3.6 (5.6) 25.1 0.1 42.0
Changes in working capital (5.9) (163.7) 61.1 3.4 77.3 218.0 359.9 (69.9) (14.6) (18.2) (51.6) (154.3) (90.8)
Free Cash Flow Reconciliation

Cash flow from operations 1,711.4 1,371.6 434.7 405.6 456.7 657.3 1,954.3 243.3 307.7 315.9 313.4 1,180.3 1,416.8
Capex (408.9) (689.1) (118.0) (144.7) (147.2) (192.4) (602.3) (160.0) (180.0) (185.0) (200.0) (725.0) (848.3)
Change in LT deferred revenue/other (10.7) (12.9) - (15.2) - - (15.2) - - - - 0.0 -
Excess tax benefits from stock-based compensation - 597.1 52.1 82.4 - (134.5) - 120.0 120.0 120.0 120.0 480.0 480.0
Reported Free Cash Flow 1,291.8 1,266.7 368.8 328.1 309.6 330.4 1,336.9 203.3 247.7 250.9 233.4 935.3 1,048.5
% change 53.0% -1.9% 7.5% -8.3% 7.5% 18.9% 5.5% -44.9% -24.5% -19.0% -29.3% -30.0% 12.1%
Reported Free Cash Flow per share $0.87 $0.87 $0.26 $0.23 $0.22 $0.24 $0.95 $0.15 $0.18 $0.18 $0.17 $0.66 $0.74
Normalized Free Cash Flow Calculation

Reported Free Cash Flow 1,291.8 1,266.7 368.8 328.1 309.6 330.4 1,336.9 203.3 247.7 250.9 233.4 935.3 1,048.5
Points program revenue - - - - - - - - - - - - -
Restructuring costs - - - - - - - - - - - - -
Acquisition Related Costs - - - - - - - - - - - - -
Contract Termination fee (proceeds) - - - - - - - - - - - - -
Asset disposal - - - - - - - - - - - - -
Dividends received - - - - - - - - - - - - -
Sale of land - - - - - - - - - - - - -
Tax effect on supplemental items - - - - - - - - - - - - -
Normalized Free Cash Flow 1,291.8 1,266.7 368.8 328.1 309.6 330.4 1,336.9 203.3 247.7 250.9 233.4 935.3 1,048.5
% change 52.0% -1.9% 7.5% -8.3% 7.5% 18.9% 5.5% -44.9% -24.5% -19.0% -29.3% -30.0% 12.1%
Normalized Free Cash Flow per share $0.87 $0.87 $0.26 $0.23 $0.22 $0.24 $0.95 $0.15 $0.18 $0.18 $0.17 $0.66 $0.74
FCF conversion as % of EBITDA 82.9% 66.5% 80.2% 69.3% 66.4% 62.7% 69.4% 47.7% 54.9% 53.9% 46.0% 50.6% 52.2%
FCF conversion as % of sales 35.0% 27.8% 31.2% 26.4% 24.1% 23.5% 26.1% 15.3% 18.1% 17.9% 15.1% 16.6% 16.3%
Capex as % of EBITDA 26.3% 36.2% 25.7% 30.5% 31.6% 36.5% 31.3% 37.5% 39.9% 39.7% 39.4% 39.2% 42.2%
April 07, 2008 81

Figure 102: Yahoo! Discounted Cash Flow Analysis ($ in millions, except per share data)
1,000.0 1 2 3 4 5 6 7 2007E-2012E
2005A 2006A 2007A 2008E 2009E 2010E 2011E 2012E CAGR
Revenue 13.5 4,559.8 5,112.6 5,645.1 6,415.0 7,171.0 7,919.1 8,725.0 11.3%
% change -99.5% 33676.0% 12.1% 10.4% 13.6% 11.8% 10.4% 10.2%
EBITDA 1,557.3 1,905.9 1,927.0 1,850.1 2,008.9 2,212.0 2,428.9 2,661.9 6.7%
% change 52.4% 22.4% 1.1% -4.0% 8.6% 10.1% 9.8% 9.6%
Cash Taxes (51.0) (65.9) (84.9) (79.3) (107.4) (146.8) (194.1) (247.8)
Capex (408.9) (689.1) (602.3) (725.0) (848.3) (975.5) (1,092.5) (1,190.9)
Change in working capital (5.9) (163.7) 359.9 (154.3) (90.8) (78.1) (77.1) (77.6)
Unlevered free cash flow 1,091.5 987.2 1,599.7 891.5 962.4 1,011.7 1,065.2 1,145.7 -6.5%
% change 47.7% -9.6% 62.0% -44.3% 8.0% 5.1% 5.3% 7.6%
2005 PV of Cash Flow 1,091.5 885.4 1,286.8 643.1 622.7 587.0 554.3 534.7 #REF!
Per Share $0.73 $0.60 $0.87 $0.43 $0.42 $0.39 $0.37 $0.36
2006 PV of Cash Flow 987.2 1,434.7 717.0 694.3 654.5 618.1 596.2
Per Share $0.68 $0.98 $0.49 $0.48 $0.45 $0.42 $0.41
2007 PV of Cash Flow 1,599.7 799.5 774.1 729.8 689.1 664.8

Per Share $1.14 $0.57 $0.55 $0.52 $0.49 $0.47
2008 PV of Cash Flow 891.5 863.2 813.8 768.4 741.2

Per Share $0.63 $0.61 $0.58 $0.55 $0.53
#REF!
Terminal EBITDA multiple 12.0x 12.0x 12.0x 12.0x
Discount Rate 11.5% 11.5% 11.5% 11.5%
Terminal value 31,942.9 31,942.9 31,942.9 31,942.9
Implied Terminal FCF Multiple 27.9 27.9 27.9 27.9
Present value of FCF 6,205.6 5,702.1 5,257.1 4,078.0

Present value of terminal value 14,909.1 16,623.6 18,535.3 20,666.9
Implied Firm Value $21,114.6 $22,325.8 $23,792.5 $24,744.9
Plus: Cash 3,999.8 3,537.3 2,363.5 2,549.1

Less: Debt 750.0 749.9 0.0 0.0
Plus: Yahoo! Japan 4,694.9 4,694.9 5,051.3 5,051.3
Plus: Alibaba 1,600.0 1,760.0 3,600.0 3,600.0
Plus: Gmarket 68.2 69.6 103.4 105.4
Plus: Google Equity - - - -
Less: Minority Interest - - - -
Implied Equity Value $30,727.6 $31,637.6 $34,910.6 $36,050.8
Fully diluted shares outstanding 1,486.5 1,457.9 1,402.9 1,407.2
Equity Value Per Share $20.67 $21.70 $24.88 $25.62
82 April 07, 2008

Figure 103: Google Snapshot

- Worldwide leader in search with 68%+ share, including 59% in the U.S. and - Revenue growth is decelerating amid continued high expectations for Google's
75%+ in Europe. search business with little insight into the contribution from other growth initiatives.
- Strong monetization capability via relevancy-based model and continued -That Google's quality initiatives do not result in an increase in CPC sufficient
enhancements to its quality score algorithm drive enhanced user satisfaction. enough to offset a seemingly decline in sponsored clicks.
- EBITDA margins are likely to modestly decline as Google signs more network
- Broad distribution network, including AOL and Ask, increases network traffic and
partners leading to higher TAC, launches new products such as Open Social, and
stimulates keyword bidding market for Google Sites.
mobile platform Android, continues to invest in capex, and adds new hires.
- Diversified growth within search: U.S. & International, Google Sites & Google - Google has yet to materially monetize anything away from search, despite
Network , volume & monetization. investments in Google Apps, mobile, and other forms of traditional advertising.
- Key Drivers: 1) market share gains; 2) international; 3) better monetization; 4)

- Capex spending: Projecting $3.1B in '08.
product extensions…halo effect.
- Strong balance sheet: $11.6B in cash after factoring in DoubleClick acquisition in

- Industry pushback / integration risk related to Doubleclick acquisition.
a consolidating, competitive, capex-intensive space.
- Focus on technology and user experience. - Risk of employees leaving for start-ups.
- That Google becomes too big to manage effectively and it loses speed and
What to Watch For innovation.
- Google reported paid click and CPC growth to be announced on its 1Q08 - That anti-Google sentiment develops as Google gets too big, too strong, and has
earnings call scheduled for April 17. too much information.
- Continued search share gains in the U.S. and internationally, with international
representing faster growth, although growth at a decelerating pace.
- Continued monetization improvements from quality score updates, landing page

tweaks, and more relevant ads as coverage decreases.
- Whether Google can revert to International growth levels, specifically in the UK

where revenue increased 5% Q/Q in 4Q07 vs. 11% Q/Q in 4Q06. Seasonality
was more pronounced in 4Q07 than in previous years, although revenue growth in
1Q typically bounces back very strong.
- Whether TAC continues to rise based on fixed cost distribution deals with
MySpace, AOL, Ask, and others that are back-end loaded.
- Whether Google can effectively monetize social networking as it learns more

about user behavior, while not being a principal, and privacy concerns ease.
- If Google can meaningfully build out its Search/Ads/Apps strategy and diversify
its revenue streams.
- How quickly Google can integrate DoubleClick and DFP inventory with AdSense
for Content and start taking share in display.
- If Google can contain new hire growth, which it did in 4Q07 adding ~900 new
employees and successfully absorb the ~1200 net new DoubleClick employees.
- Usage and monetization effects from Universal Search.
- YouTube litigation & monetization: Where is its newly launched digital

fingerprinting product adoption, and what is the video model?
April 07, 2008 83

Figure 104: Google Income Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Gross Revenues $6,138.6 $10,604.9 $3,664.0 $3,872.0 $4,231.4 $4,826.7 $16,594.0 $5,107.9 $5,273.2 $5,567.2 $6,130.1 $22,078.3 $27,708.6
Traffic Acquisition Costs (TAC) $2,114.9 $3,308.8 $1,125.0 $1,147.9 $1,221.1 $1,439.8 $4,933.9 $1,528.4 $1,522.0 $1,578.0 $1,746.7 $6,375.2 $7,724.1
Net Revenues excluding TAC $4,023.6 $7,296.1 $2,538.9 $2,724.1 $3,010.2 $3,386.9 $11,660.1 $3,579.5 $3,751.2 $3,989.2 $4,383.3 $15,703.2 $19,984.5
Other cost of revenues 456.6 898.6 341.0 404.7 437.4 509.8 1,692.9 536.9 573.9 610.3 683.8 $2,405.0 3,197.5
Gross profit 3,567.1 6,397.5 2,197.9 2,319.4 2,572.8 2,877.1 9,967.2 3,042.6 3,177.2 3,378.8 3,699.5 13,298.2 16,787.0
Operating expenses
Research & development 484.0 941.1 287.6 375.1 418.1 469.4 1,550.2 497.6 536.4 570.5 640.0 2,244.4 3,037.6
Sales & marketing 439.7 790.1 275.3 319.2 350.9 384.2 1,329.6 415.2 457.6 490.7 517.2 1,880.8 2,538.0
General & administrative 335.3 658.2 230.0 278.9 288.0 337.5 1,134.4 364.4 386.4 402.9 447.1 1,600.8 2,018.4
Stock compensation expense 200.7 458.1 183.9 241.5 198.0 245.3 868.6 250.6 277.6 271.3 311.2 1,110.6 1,239.0
Total operating expenses 1,459.8 2,847.5 976.7 1,214.8 1,255.0 1,436.4 4,882.8 1,527.7 1,658.0 1,735.3 1,915.5 6,836.6 8,833.1
Operating income 2,107.3 3,550.0 1,221.2 1,104.6 1,317.8 1,440.7 5,084.4 1,514.9 1,519.2 1,643.5 1,784.0 6,461.6 7,953.8
PF Operating income 2,308.0 4,008.1 1,405.1 1,346.1 1,515.8 1,686.0 5,953.0 1,765.4 1,796.8 1,914.8 2,095.2 7,572.3 9,192.9
Other income, expense and other, net 124.4 461.0 130.7 137.1 154.4 167.3 589.6 160.8 136.9 150.2 165.8 613.7 768.6
One-time items (90.0) - - - - - - - - - - - -
Income before taxes 2,141.7 4,011.0 1,351.9 1,241.7 1,472.3 1,608.0 5,674.0 1,675.6 1,656.1 1,793.8 1,949.8 7,075.3 8,722.4
Provision for income taxes 676.3 933.6 349.8 316.6 402.3 401.6 1,470.3 454.1 443.8 484.3 506.9 1,889.2 2,398.7
GAAP Net Income (loss) 1,465.4 3,077.4 1,002.2 925.1 1,070.0 1,206.4 4,203.7 1,221.5 1,212.3 1,309.4 1,442.9 5,186.1 6,323.8
GAAP Diluted Income (loss) per share $5.02 $9.94 $3.18 $2.93 $3.38 $3.79 $13.29 $3.82 $3.77 $4.05 $4.44 $16.09 $19.20
Diluted shares outstanding 291.9 309.5 314.9 315.5 316.6 317.9 316.2 319.9 321.4 322.9 324.9 322.3 329.3
Non-recurring items:
One-time items 61.8 (154.0) - - - - - - - - - - -
Tax Effect (83.2) (100.3) (26.8) (43.0) (31.0) (42.3) (143.0) (45.1) (50.0) (48.8) (56.0) (199.9) (223.0)
PF Net Income (loss) 1,644.8 3,281.3 1,159.3 1,123.6 1,236.9 1,409.5 4,929.3 1,427.0 1,439.9 1,531.9 1,698.1 6,096.8 7,339.8
PF Diluted Income (loss) per share $5.64 $10.60 $3.68 $3.56 $3.91 $4.43 $15.59 $4.46 $4.48 $4.74 $5.23 $18.92 $22.29
Operating income (reported) 2,107.3 3,580.0 1,221.2 1,104.6 1,317.8 1,440.7 5,084.4 1,514.9 1,519.2 1,643.5 1,784.0 6,461.6 7,953.8
Depreciation & amortization 315.9 582.7 205.0 227.0 245.7 289.9 967.7 318.6 347.9 378.1 410.3 1,454.9 1,969.4
EBITDA 2,623.8 4,620.8 1,610.1 1,573.2 1,761.5 1,976.0 6,920.7 2,084.0 2,144.7 2,292.9 2,505.5 9,027.1 11,162.3
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
YEAR/YEAR GROWTH
Gross Revenues 92.5% 72.8% 62.6% 57.7% 57.3% 50.6% 56.5% 39.4% 36.2% 31.6% 27.0% 33.1% 25.5%
Traffic Acquisition Costs (TAC) 72.1% 56.4% 55.7% 46.2% 48.0% 47.6% 49.1% 35.9% 32.6% 29.2% 21.3% 29.2% 21.2%
Net Revenues 105.2% 81.3% 65.8% 63.0% 61.5% 51.9% 59.8% 41.0% 37.7% 32.5% 29.4% 34.7% 27.3%
Gross profit 106.0% 79.4% 62.6% 57.9% 56.6% 48.8% 55.8% 38.4% 37.0% 31.3% 28.6% 33.4% 26.2%
Operating income 150.5% 68.5% 64.4% 35.5% 41.5% 35.8% 43.2% 24.0% 37.5% 24.7% 23.8% 27.1% 23.1%
PF Operating Income 106.1% 73.7% 63.9% 45.6% 47.0% 41.1% 48.5% 25.6% 33.5% 26.3% 24.3% 27.2% 21.4%
EBITDA 105.0% 76.1% 60.6% 49.7% 48.9% 42.7% 49.8% 29.4% 36.3% 30.2% 26.8% 30.4% 23.7%
GAAP EPS 243.2% 98.0% 63.4% 26.1% 43.1% 15.4% 33.7% 20.0% 28.6% 20.0% 17.0% 21.0% 19.3%
PF EPS 131.3% 88.1% 60.1% 43.0% 49.4% 39.3% 47.1% 21.2% 25.8% 21.4% 17.9% 21.3% 17.8%
SEQUENTIAL GROWTH
Gross revenues 14.3% 5.7% 9.3% 14.1% 5.8% 3.2% 5.6% 10.1%
Traffic Acquisition Costs (TAC) 15.3% 2.0% 6.4% 17.9% 6.2% -0.4% 3.7% 10.7%
Net revenues 13.9% 7.3% 10.5% 12.5% 5.7% 4.8% 6.3% 9.9%
EBITDA 16.3% -2.3% 12.0% 12.2% 5.5% 2.9% 6.9% 9.3%
% OF NET REVENUES
Research & development 12.0% 12.9% 11.3% 13.8% 13.9% 13.9% 13.3% 13.9% 14.3% 14.3% 14.6% 14.3% 15.2%
Sales & marketing 10.9% 10.8% 10.8% 11.7% 11.7% 11.3% 11.4% 11.6% 12.2% 12.3% 11.8% 12.0% 12.7%
General & administrative 8.3% 9.0% 9.1% 10.2% 9.6% 10.0% 9.7% 10.2% 10.3% 10.1% 10.2% 10.2% 10.1%
Stock compensation expense 5.0% 6.3% 7.2% 8.9% 6.6% 7.2% 7.4% 7.0% 7.4% 6.8% 7.1% 7.1% 6.2%
% OF GROSS REVENUES
Traffic Acquisition Costs (TAC) 34.5% 31.2% 30.7% 29.6% 28.9% 29.8% 29.7% 29.9% 28.9% 28.3% 28.5% 28.9% 27.9%
Research & development 7.9% 8.9% 7.8% 9.7% 9.9% 9.7% 9.3% 9.7% 10.2% 10.2% 10.4% 10.2% 11.0%
Sales & marketing 7.2% 7.5% 7.5% 8.2% 8.3% 8.0% 8.0% 8.1% 8.7% 8.8% 8.4% 8.5% 9.2%
General & administrative 5.5% 6.2% 6.3% 7.2% 6.8% 7.0% 6.8% 7.1% 7.3% 7.2% 7.3% 7.3% 7.3%
Stock compensation expense 3.3% 4.3% 5.0% 6.2% 4.7% 5.1% 5.2% 4.9% 5.3% 4.9% 5.1% 5.0% 4.5%
MARGINS AS % OF NET REVENUES
Gross margin 88.7% 87.7% 86.6% 85.1% 85.5% 84.9% 85.5% 85.0% 84.7% 84.7% 84.4% 84.7% 84.0%
Net margin 36.4% 42.2% 39.5% 34.0% 35.5% 35.6% 36.1% 34.1% 32.3% 32.8% 32.9% 33.0% 31.6%
EBITDA 65.2% 63.3% 63.4% 57.8% 58.5% 58.3% 59.4% 58.2% 57.2% 57.5% 57.2% 57.5% 55.9%
Operating Leverage/Flow-through 65.2% 61.0% 60.3% 49.6% 50.5% 51.1% 52.7% 45.5% 55.7% 54.3% 53.1% 52.1% 49.9%
MARGINS AS % OF GROSS REVENUES
Gross margin 58.1% 60.3% 60.0% 59.9% 60.8% 59.6% 60.1% 59.6% 60.3% 60.7% 60.4% 60.2% 60.6%
Net margin 23.9% 29.0% 27.4% 23.9% 25.3% 25.0% 25.3% 23.9% 23.0% 23.5% 23.5% 23.5% 22.8%
EBITDA 42.7% 43.6% 43.9% 40.6% 41.6% 40.9% 41.7% 40.8% 40.7% 41.2% 40.9% 40.9% 40.3%
Operating Leverage/Flow-through 45.6% 44.7% 43.1% 36.9% 37.5% 36.5% 38.4% 32.8% 40.8% 39.8% 40.6% 38.4% 37.9%
84 April 07, 2008

Figure 105: Google Revenue Analysis, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Gross Revenues 6,138.6 10,604.9 3,664.0 3,872.0 4,231.4 4,826.7 16,594.0 5,107.9 5,273.2 5,567.2 6,130.1 22,078.3 27,708.6
GROSS REVENUE SEGMENT ANALYSIS

Google Web Sites - Gross Revenues 3,377.1 6,332.8 2,282.1 2,486.3 2,734.8 3,121.5 10,624.7 3,306.8 3,443.5 3,664.6 4,058.0 14,472.9 18,670.0
Y/Y growth 112.5% 87.5% 75.9% 73.6% 68.2% 57.9% 67.8% 44.9% 38.5% 34.0% 30.0% 36.2% 29.0%
Q/Q growth 15.4% 8.9% 10.0% 14.1% 5.9% 4.1% 6.4% 10.7%
Google Network Web Sites - Gross Revenues 2,687.9 4,159.8 1,345.3 1,352.1 1,454.7 1,635.8 5,787.9 1,715.3 1,690.1 1,760.2 1,905.7 7,071.3 8,344.2
Y/Y growth 72.9% 54.8% 44.9% 35.7% 40.3% 36.6% 39.1% 27.5% 25.0% 21.0% 16.5% 22.2% 18.0%
Q/Q growth 12.3% 0.5% 7.6% 12.5% 4.9% -1.5% 4.2% 8.3%
Total Gross Advertising Revenues 6,065.0 10,492.6 3,627.5 3,838.3 4,189.5 4,757.4 16,412.6 5,022.1 5,133.6 5,424.8 5,963.7 21,544.2 27,014.2
Y/Y growth 92.9% 73.0% 63.0% 58.0% 57.3% 49.8% 56.4% 38.4% 33.7% 29.5% 25.4% 31.3% 25.4%
Q/Q growth 14.3% 5.8% 9.1% 13.6% 5.6% 2.2% 5.7% 9.9%
Licensing & Other Gross Revenues 73.6 112.3 36.5 33.6 41.9 69.3 181.3 85.8 139.6 142.4 166.3 534.1 694.4
Y/Y growth 60.3% 52.7% 30.1% 24.8% 57.0% 126.6% 61.5% 135.0% 315.0% 240.0% 140.0% 194.6% 30.0%
Q/Q growth 19.4% -7.9% 24.5% 65.5% 23.8% 62.7% 2.0% 16.8%
Y/Y growth 92.5% 72.8% 62.6% 57.7% 57.3% 50.6% 56.5% 39.4% 36.2% 31.6% 27.0% 33.1% 25.5%
Q/Q growth 14.3% 5.7% 9.3% 14.1% 5.8% 3.2% 5.6% 10.1%
GROSS REVENUE SHARE BY SEGMENT

Google Web Sites - Gross Revenues 55.0% 59.7% 62.3% 64.2% 64.6% 64.7% 64.0% 64.7% 65.3% 65.8% 66.2% 65.6% 67.4%
Google Network Web Sites - Gross Revenues 43.8% 39.2% 36.7% 34.9% 34.4% 33.9% 34.9% 33.6% 32.1% 31.6% 31.1% 32.0% 30.1%
Total Gross Advertising Revenues 98.8% 98.9% 99.0% 99.1% 99.0% 98.6% 98.9% 98.3% 97.4% 97.4% 97.3% 97.6% 97.5%
Licensing & Other Gross Revenues 1.2% 1.1% 1.0% 0.9% 1.0% 1.4% 1.1% 1.7% 2.6% 2.6% 2.7% 2.4% 2.5%
Total Gross Revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
TAC ANALYSIS
Google Web Sites - TAC 89.9 174.1 73.1 86.9 105.4 125.4 390.8 135.6 144.6 155.7 174.5 610.4 840.2
TAC as % of Google Sites Gross Adv. Revenues 2.7% 2.7% 3.2% 3.5% 3.9% 4.0% 3.7% 4.1% 4.2% 4.3% 4.3% 4.2% 4.5%
Y/Y growth NA 93.7% 125.6% 136.6% 134.2% 109.0% 124.4% 85.4% 66.4% 47.8% 39.2% 56.2% 37.6%
Google Network Web Sites - TAC 2,025.0 3,134.6 1,051.9 1,061.0 1,115.8 1,314.4 4,543.1 1,392.8 1,377.4 1,422.3 1,572.2 5,764.7 6,883.9
TAC as % of Google Network Gross Adv. Revenues 75.3% 75.4% 78.2% 78.5% 76.7% 80.4% 78.5% 81.2% 81.5% 80.8% 82.5% 81.5% 82.5%
Y/Y growth 64.8% 54.8% 52.4% 41.8% 43.0% 43.6% 44.9% 32.4% 29.8% 27.5% 19.6% 26.9% 19.4%
Total Traffic Acquisition Costs (TAC) 2,114.9 3,308.8 1,125.0 1,148.0 1,221.1 1,439.8 4,933.9 1,528.4 1,522.0 1,578.0 1,746.7 6,375.2 7,724.1
TAC as a % of Total Gross Adv. Revenues 34.9% 31.5% 31.0% 29.9% 29.1% 30.3% 30.1% 30.4% 29.6% 29.1% 29.3% 29.6% 28.6%
Y/Y growth 72.1% 56.4% 55.7% 46.2% 48.0% 47.6% 49.1% 35.9% 32.6% 29.2% 21.3% 29.2% 21.2%
Total Net Revenues 4,023.7 7,296.2 2,538.9 2,724.0 3,010.2 3,386.9 11,660.1 3,579.5 3,751.2 3,989.2 4,383.3 15,703.2 19,984.5
NET REVENUE SEGMENT ANALYSIS

Google Web Sites (AdWords) - Net Revenues 3,287.2 6,158.7 2,209.0 2,399.4 2,629.4 2,996.2 10,233.9 3,171.2 3,298.9 3,508.8 3,883.5 13,862.4 17,829.9
Y/Y growth 106.9% 87.4% 74.6% 71.9% 66.3% 56.3% 66.2% 43.6% 37.5% 33.4% 29.6% 35.5% 28.6%
Q/Q growth 15.2% 8.6% 9.6% 13.9% 5.8% 4.0% 6.4% 10.7%
Google Network Web Sites (AdSense) - Net Revenues 662.9 1,025.2 293.4 291.0 339.0 321.4 1,244.8 322.5 312.7 338.0 333.5 1,306.6 1,460.2
Y/Y growth 103.6% 54.6% 23.3% 17.3% 32.0% 13.9% 21.4% 9.9% 7.4% -0.3% 3.8% 5.0% 11.8%
Q/Q growth 4.0% -0.8% 16.5% -5.2% 0.3% -3.0% 8.1% -1.3%
Total Net Advertising Revenues 3,950.1 7,183.9 2,502.4 2,690.4 2,968.4 3,317.6 11,478.7 3,493.7 3,611.5 3,846.8 4,217.0 15,169.0 19,290.1
Y/Y growth 106.3% 81.9% 66.5% 63.7% 61.5% 50.8% 59.8% 39.6% 34.2% 29.6% 27.1% 32.1% 27.2%
Q/Q growth 13.8% 7.5% 10.3% 11.8% 5.3% 3.4% 6.5% 9.6%
Licensing & Other Net Revenues 73.6 112.3 36.5 33.6 41.9 69.3 181.3 85.8 139.6 142.4 166.3 534.1 694.4
Y/Y growth 60.3% 52.7% 30.1% 24.8% 57.0% 126.6% 61.5% 135.0% 315.0% 240.0% 140.0% 194.6% 30.0%
Q/Q growth 19.4% -7.9% 24.5% 65.5% 23.8% 62.7% 2.0% 16.8%
Total Net Revenues 4,023.7 7,296.2 2,538.9 2,724.0 3,010.2 3,386.9 11,660.1 3,579.5 3,751.2 3,989.2 4,383.3 15,703.2 19,984.5
Y/Y growth 105.2% 81.3% 65.8% 63.0% 61.5% 51.9% 59.8% 41.0% 37.7% 32.5% 29.4% 34.7% 27.3%
Q/Q growth 13.9% 7.3% 10.5% 12.5% 5.7% 4.8% 6.3% 9.9%
NET REVENUE SHARE BY SEGMENT

Google Web Sites as % of Total Net Revs 81.7% 84.4% 87.0% 88.1% 87.3% 88.5% 87.8% 88.6% 87.9% 88.0% 88.6% 88.3% 89.2%
Google Network Web Sites as % of Total Net Revs 16.5% 14.1% 11.6% 10.7% 11.3% 9.5% 10.7% 9.0% 8.3% 8.5% 7.6% 8.3% 7.3%
Total Advertising Revenues as % of Total Net Revs 98.2% 98.5% 98.6% 98.8% 98.6% 98.0% 98.4% 97.6% 96.3% 96.4% 96.2% 96.6% 96.5%
Licensing & Other Revenue as % of Total Net Revs 1.8% 1.5% 1.4% 1.2% 1.4% 2.0% 1.6% 2.4% 3.7% 3.6% 3.8% 3.4% 3.5%
Total Net Revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Geographic Breakdown
($ millions) 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Y/Y growth 92.5% 72.8% 62.6% 57.7% 57.3% 50.6% 56.5% 39.4% 36.2% 31.6% 27.0% 33.1% 25.5%
Q/Q growth 14.3% 5.7% 9.3% 14.1% 5.8% 3.2% 5.6% 10.1%
United States 3,756.9 6,030.1 1,958.4 2,027.9 2,205.8 2,505.9 8,698.0 2,559.1 2,578.6 2,666.7 2,911.8 10,716.1 12,884.5
Y/Y growth 77.3% 60.5% 48.6% 42.7% 46.4% 40.4% 44.2% 30.7% 27.2% 20.9% 16.2% 23.2% 20.2%
Q/Q growth 9.7% 3.6% 8.8% 13.6% 2.1% 0.8% 3.4% 9.2%
U.S. revenues as % of Gross Revenues 61.2% 56.9% 53.4% 52.4% 52.1% 51.9% 52.4% 50.1% 48.9% 47.9% 47.5% 48.5% 46.5%
International 2,381.7 4,574.8 1,705.6 1,844.0 2,025.5 2,320.8 7,896.0 2,548.8 2,694.6 2,900.5 3,218.3 11,362.2 14,824.1
Y/Y growth 122.5% 92.1% 82.2% 78.2% 71.2% 63.4% 72.6% 49.4% 46.1% 43.2% 38.7% 43.9% 30.5%
Q/Q growth 20.1% 8.1% 9.8% 14.6% 9.8% 5.7% 7.6% 11.0%
International revenues as % of Gross Revenues 38.8% 43.1% 46.6% 47.6% 47.9% 48.1% 47.6% 49.9% 51.1% 52.1% 52.5% 51.5% 53.5%
Other Metrics
($ actual) 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Full-Time Headcount 5,680 10,674 12,238 13,786 15,916 16,805 16,805 17,905 19,005 20,405 21,405 21,405 25,805
Y/Y growth 88.0% 87.9% 80.2% 73.6% 69.7% 57.4% 57.4% 46.3% 37.9% 28.2% 27.4% 27.4% 20.6%
Q/Q growth 14.7% 12.6% 15.5% 5.6% 6.5% 6.1% 7.4% 4.9%
Absolute Sequential Change in Headcount 2,659 4,994 1,564 1,548 2,130 889 6,131 1,100 1,100 1,400 1,000 4,600 4,400
Annualized Gross Revenue/Average Full Time Employee $ 1,411,001 $ 1,296,920 $ 1,279,319 $ 1,190,281 $ 1,139,681 $ 1,180,081 $ 1,207,758 $ 1,177,277 $ 1,142,931 $ 1,130,100 $ 1,172,940 $ 1,155,632 $ 1,173,843
Annualized Net Revenue/Average Full Time Employee $ 924,873 $ 892,278 $ 886,502 $ 837,389 $ 810,782 $ 828,059 $ 848,653 $ 825,011 $ 813,041 $ 809,776 $ 838,717 $ 821,941 $ 846,621
Annualized EBITDA/Average Full Time Employee $ 603,112 $ 565,102 $ 562,174 $ 483,601 $ 474,448 $ 483,107 $ 503,708 $ 480,318 $ 464,859 $ 465,439 $ 479,413 $ 472,501 $ 472,879
Annualized Cash Opex/Average Full Time Employee $ 289,407 $ 292,213 $ 276,836 $ 299,185 $ 284,697 $ 291,207 $ 292,164 $ 294,364 $ 299,199 $ 297,188 $ 306,970 $ 299,708 $ 321,716
April 07, 2008 85

Figure 106: Google Cash Flow Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Cash flows from operating activities

Net income 1,465.4 3,077.4 1,002.2 925.1 1,070.0 1,206.4 4,203.7 1,221.5 1,212.3 1,309.4 1,442.9 5,186.1 6,323.8
Adjustments
Depreciation & amortization of PP&E 256.8 494.4 170.3 188.1 207.4 241.9 807.7 268.6 296.9 326.1 357.3 1,248.9 1,763.4
Amortization of warrants - - - - - - - - - - - -
In-process research & development 22.0 10.8 - 3.66 (3.66) - - - - - - - -
Stock-based compensation 200.7 458.1 183.9 241.5 198.0 245.3 868.6 250.6 277.6 271.3 311.2 1,110.6 1,239.0
Tax benefits from exercise of stock options and other 433.7 (581.7) (74.1) (105.7) (58.8) (140.6) (379.2) (80.0) (85.0) (87.0) (89.0) (341.0) (341.0)
One-time items - 1.7 (6.4) 2.7 (3.5) (32.5) (39.7) - - - - - -
Changes in working capital 43.7 42.3 (91.0) (60.7) 181.3 124.7 154.3 (126.2) (143.4) 263.4 53.5 47.4 151.2
Cash flows from operations 2,459.4 3,580.5 1,219.6 1,229.9 1,632.6 1,693.3 5,775.4 1,584.5 1,609.5 2,135.2 2,128.9 7,458.0 9,342.5
-31% -26%
Cash flows from investing activities
Purchases of PP&E (838.2) (1,902.8) (596.9) (575.1) (552.6) (678.2) (2,402.8) (715.9) (750.2) (797.8) (876.7) (3,140.6) (3,897.0)
Purchase of short-term investments (12,675.9) (26,681.9) (5,225.2) (2,118.7) (4,412.3) (4,240.9) (15,997.1) - - - - - -
Maturities and sales of short-term investments 10,257.2 23,107.1 5,079.4 1,937.8 4,501.8 4,140.5 15,659.5 - - - - - -
Acquisitions, net of cash acquired (86.5) (1,421.6) (34.4) (173.1) (615.6) (83.6) (906.7) (3,240.0) - - - (3,240.0) -
Change in other assets (14.8) - - (10.3) (11.0) (13.2) (34.5) (230.00) - - - (230.0) -
Net cash from investing activities (3,358.2) (6,899.2) (777.1) (939.3) (1,089.7) (875.4) (3,681.6) (4,185.9) (750.2) (797.8) (876.7) (6,610.6) (3,897.0)
Cash flows from financing activities

Proceeds from issuance of common stock 4,287.2 2,063.5 - - - - - - - - - - -
Proceeds from issuance of convertible preferred stock, net - - - - - - - - - - - - -
Proceeds from exercise of stock options, net 85.0 321.1 14.4 14.4 (9.8) 4.8 23.9 - - - - - -
Excess tax benefits from stock-based award activity 581.7 74.1 105.7 58.8 140.6 379.2 80.0 85.0 87.0 89.0 341.0 341.0
Proceeds from exercise of warrants - - - - - - - - - - - - -
Payments of notes receivable from stockholders - - - - - - - - - - - - -
Payments of principal on capital leases and equip. loans (1.4) - - - - - - - - - - - -
Net cash from financing activities 4370.8 2,966.4 88.5 120.1 49.0 145.4 403.1 80.0 85.0 87.0 89.0 341.0 341.0
Other (effect of exchange rate changes on cash & equivalents) (21.8) 19.7 5.7 1.6 20.8 12.0 40.0 - - - - - -
Net change in cash 3,450.3 (332.5) 536.7 412.3 612.8 975.2 2,536.9 (2,521.4) 944.2 1,424.4 1,341.2 1,188.4 5,786.5
Cash & equivalents - BOP 426.9 3,877.2 3,544.7 4,081.3 4,493.6 5,106.4 3,544.7 6,081.6 3,560.2 4,504.4 5,928.8 6,081.6 7,270.0
Cash & equivalents - EOP 3,877.2 3,544.7 4,081.3 4,493.6 5,106.4 6,081.6 6,081.6 3,560.2 4,504.4 5,928.8 7,270.0 7,270.0 13,056.5
2005A 2006A 3/07A 6/07A 9/07E 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Working Capital Analysis:
Changes in:
Accounts receivable, net (372.3) (624.0) (153.6) (171.5) (234.4) (277.8) (837.2) (56.8) (181.4) (132.4) (237.2) (607.8) (427.2)
Income taxes net 87.4 398.4 337.7 (4.30) 97.63 149.6 580.6 (100.0) 35.0 265.0 160.0 360.0 350.00
Prepaid revenue share, expenses and other assets (51.7) (289.2) (185.5) (22.0) (29.7) (61.4) (298.7) (63.3) (102.3) (19.5) (84.9) (270.0) (232.9)
Accounts payable 80.6 95.4 (29.3) (45.4) 94.8 50.0 70.1 (6.5) 24.5 27.0 23.6 68.6 69.0
Accrued expenses and other liabilities 166.8 291.5 (139.9) 160.8 185.6 212.4 418.9 54.0 39.9 59.4 113.7 267.0 167.3
Accrued revenue share 93.3 139.3 77.9 4.3 54.3 13.9 150.3 32.8 37.9 45.6 49.9 166.2 171.1
Deferred revenue 39.6 30.8 1.7 17.5 13.0 38.2 70.3 13.6 3.1 18.3 28.4 63.4 54.0
Changes in working capital 43.7 42.3 (91.0) (60.7) 181.3 124.7 154.3 (126.2) (143.4) 263.4 53.5 47.4 151.2
Capex Analysis:
Capex 838.2 1,902.8 596.9 575.1 552.6 678.2 2,402.8 715.9 750.2 797.8 876.7 3,140.6 3,897.0
Capex as % of net revenues 20.8% 26.1% 23.5% 21.1% 18.4% 20.0% 20.6% 20.0% 20.0% 20.0% 20.0% 20.0% 19.5%
Capex as % of operating cash flow 34.1% 53.1% 48.9% 46.8% 33.8% 40.1% 41.6% 45.2% 46.6% 37.4% 41.2% 42.1% 41.7%
Free Cash Flow Reconciliation

Cash flow from operations 2,459.4 3,580.5 1,219.6 1,229.9 1,632.6 1,693.3 5,775.4 1,584.5 1,609.5 2,135.2 2,128.9 7,458.0 9,342.5
Capex (838.2) (1,902.8) (596.9) (575.1) (552.6) (678.2) (2,402.8) (715.9) (750.2) (797.8) (876.7) (3,140.6) (3,897.0)
Excess tax benefits from stock-based award activity - - - - - - - - - - - - -
Free Cash Flow 1,621.2 1,677.7 622.7 654.8 1,080.0 1,015.0 3,372.6 868.6 859.2 1,337.4 1,252.2 4,317.4 5,445.5
% Y/Y change 146.4% 3.5% 29.8% 362.5% 110.9% 86.5% 101.0% 39.5% 31.2% 23.8% 23.4% 28.0% 26.1%
Free Cash Flow per share $5.55 $5.42 $1.98 $2.08 $3.41 $3.19 $10.67 $2.71 $2.67 $4.14 $3.85 $13.40 $16.54
FCF conversion as % of Cash Flow from Ops 65.9% 46.9% 51.1% 53.2% 66.2% 59.9% 58.4% 54.8% 53.4% 62.6% 58.8% 57.9% 58.3%
Y/Y change in CFO 151.7% 45.6% 47.9% 46.3% 62.6% 85.9% 61.3% 29.9% 30.9% 30.8% 25.7% 29.1% 25.3%
FCF as % of EBITDA 61.8% 36.3% 38.7% 41.6% 61.3% 51.4% 48.7% 41.7% 40.1% 58.3% 50.0% 47.8% 48.8%
86 April 07, 2008

Figure 107: Google Discounted Cash Flow Analysis ($ in millions, except per share data)
1,000.0 0 1 2 3 4 5 6 7 8 9 2007A-2012E
2003A 2004A 2005A 2006A 2007E 2008E 2009E 2010E 2011E 2012E CAGR
Net Revenues 939.4 1,960.6 4,023.6 7,296.1 11,660.1 15,703.2 19,984.5 24,349.9 28,124.7 31,674.8
% change 172.3% 108.7% 105.2% 81.3% 59.8% 34.7% 27.3% 21.8% 15.5% 12.6% 22.1%
EBITDA 638.5 1,279.8 2,623.8 4,620.8 6,920.7 9,027.1 11,162.3 13,277.6 15,034.1 16,619.2
% change 169.3% 100.4% 105.0% 76.1% 49.8% 30.4% 23.7% 19.0% 13.2% 10.5% 19.1%
Cash Taxes (241.0) (251.1) (676.3) (933.6) (1,470.3) (1,889.2) (2,398.7) (2,889.2) (3,337.9) (3,686.7)
Capex (176.8) (319.0) (838.2) (1,902.8) (2,402.8) (3,140.6) (3,897.0) (4,504.7) (4,921.8) (5,384.7)
Change in working capital (6.2) (253.2) 43.7 42.3 154.3 47.4 151.2 (68.3) (66.2) (73.9)
Unlevered free cash flow 214.5 456.4 1,153.1 1,826.7 3,201.9 4,044.7 5,017.9 5,815.4 6,708.3 7,473.9
% change 79.3% 112.8% 152.6% 58.4% 75.3% 26.3% 24.1% 15.9% 15.4% 11.4% 18.5%
2003 PV of Cash Flow 214.5 409.4 927.5 1,317.8 2,071.6 2,347.0 2,611.4 2,714.3 2,808.1 2,805.9
Per Share $0.82 $1.56 $3.53 $5.02 $7.89 $8.94 $9.95 $10.34 $10.70 $10.69
2004 PV of Cash Flow 456.4 1,034.2 1,469.3 2,309.9 2,616.9 2,911.7 3,026.4 3,131.0 3,128.6
Per Share $1.60 $3.62 $5.14 $8.08 $9.15 $10.18 $10.58 $10.95 $10.94
2005 PV of Cash Flow 1,153.1 1,638.3 2,575.5 2,917.8 3,246.5 3,374.5 3,491.1 3,488.4
Per Share $3.79 $5.39 $8.47 $9.60 $10.68 $11.10 $11.48 $11.48
2006 PV of Cash Flow 1,826.7 2,871.7 3,253.4 3,619.9 3,762.5 3,892.6 3,889.5
Per Share $5.83 $9.16 $10.38 $11.55 $12.00 $12.42 $12.41
2007 PV of Cash Flow 3,201.9 3,627.5 4,036.2 4,195.2 4,340.2 4,336.8

Per Share $10.13 $11.47 $12.76 $13.27 $13.73 $13.71
2008 PV of Cash Flow 4,044.7 4,500.4 4,677.7 4,839.3 4,835.5

Per Share $12.55 $13.96 $14.51 $15.02 $15.00
2009 PV of Cash Flow 5,017.9 5,215.6 5,395.9 5,391.6

Per Share $15.57 $16.18 $16.74 $16.73
Terminal EBITDA multiple 14.0x 14.0x 14.0x 14.0x 14.0x 14.0x 14.0x
Discount Rate 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5%
Terminal value 232,668.4 232,668.4 232,668.4 232,668.4 232,668.4 232,668.4 232,668.4
Implied Terminal FCF Multiple 31.1 31.1 31.1 31.1 31.1 31.1 31.1
Present value of FCF 18,227.4 20,084.4 21,885.2 23,116.3 23,737.9 22,897.6 21,021.0
Present value of terminal value 87,350.2 97,395.4 108,595.9 121,084.4 135,009.1 150,535.2 167,846.7
Implied Firm Value $105,577.6 $117,479.9 $130,481.1 $144,200.8 $158,747.1 $173,432.8 $188,867.7
Plus: Cash 334.7 2,132.3 8,034.2 11,243.9 14,218.6 15,407.0 21,193.5

Less: Debt - - - - - - -
Implied Equity Value $105,912.3 $119,612.2 $138,515.4 $155,444.7 $172,965.7 $188,839.8 $210,061.3
Fully diluted shares outstanding 262.6 285.9 304.0 313.5 316.2 322.3 329.3
Equity Value Per Share $403.38 $418.31 $455.68 $495.90 $547.00 $585.91 $637.90
April 07, 2008 87

Figure 108: eBay Snapshot

- Symbiotic, network effect business model within core eBay, PayPal, and
- Natural evolution of e-commerce toward multi-channel buying and selling
Skype
- Community of ~ 250 million registered users, 83 million active users; - Feb '08 fee changes in US, UK, & Germany may not be significant enough to
strong barriers to entry around core auction business reaccelerate core marketplace growth; addt'l changes may be necessary
- Annualized GMV of $60B; would be ~11th largest retailer in the world - Core growth: 4Q07 GMV +8% in U.S. and +8% international (ex FX)
- Low/no growth in the U.S. and Germany which make up ~70% of eBay’s
- Vertically integrated through PayPal; exploiting off eBay opportunity
business
- PayPal a key driver, but lower-margin business and could require increased
- Rebalancing initiatives improving ASPs and conversion rates investment in '08. Competition intensifying in payments space - Google Checkout
and potentially Amazon; 2/3 of PayPal biz on eBay platform
- Strong balance sheet: $5.0 billion in cash---bought back $3.2B of stock - Is there a novelty effect to online auctions? Do e-commerce shoppers want more
and another $2.8B to go---could also lever up convenience, speed, ease of use? It looks like Amazon is taking share
- Fixed price format growing faster than auctions--away from E15 strengths

1Q08 2008
- Impact of Feb '08 Fee Change on listings growth, ASPs, conversion
rates in key markets - US, UK, Germany Net Revenues $2.000B - $2.050B $8.500B - $8.750B
Y/Y revenue growth +13% - 16% +11% - 14%
- Whether new Finding technology (w/ Best Match as default) on
eBay.com meaningfully improves buyer experience, offsets potential
increase in listings post-fee reductions Operating Margin 0.24
Pro Forma Operating Margin 0.32
- Whether eBay can stimulate buyer demand by improving user
experience and trust/safety GAAP Diluted EPS $0.28 - $0.30 $1.27 - $1.31
Pro Forma Diluted EPS $0.37 - $0.39 $1.63 - $1.67
- Core growth: current numbers helped by FX, acquisitions, buybacks,
China deconsolidation, lower tax rate, advertising Non-cash charges and tax impact
GAAP Effective Tax Rate 21% - 22%
- Health of the Big 3: U.S., Germany, UK PF Effective Tax Rate 22% - 23%
Capex 6.5% - 7% of Revenue
- Continued share buybacks: repo’d $3.2B worth from 3Q06-4Q07; addt’l
$2.85B in authorizations Free Cash Flow $2.300B - $2.400B
- Potential to lever up and do bigger buyback; increased credit line from

$1B to $2B
- Increased presence of YHOO sponsored search results on null search &

within complementary listings, also graphical;GOOG sponsored search
overseas
- Comps: Listings comps easier into 1H08, but also lapping RPL
improvements
- Whether investors give eBay credit for non-GMV businesses, i.e.,

Shopping.com, Classifieds, Rent.com
88 April 07, 2008

Figure 109: eBay Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Net revenues 4,552,401 5,969,741 1,768,074 1,834,429 1,889,220 2,180,606 7,672,329 2,027,657 2,073,260 2,125,491 2,448,059 8,674,467 9,962,705
Cost of net revenues 818,104 1,205,960 380,375 401,859 437,389 496,507 1,716,130 470,416 485,143 518,620 555,709 2,029,888 2,420,937
Gross profit 3,734,297 4,763,781 1,387,699 1,432,570 1,451,831 1,684,099 5,956,199 1,557,240 1,588,117 1,606,871 1,892,349 6,644,578 7,541,768
Operating expenses
Sales and marketing 1,230,728 1,548,841 424,029 454,682 463,048 502,335 1,844,094 486,638 503,802 514,369 563,053 2,067,862 2,351,198
Product development 328,191 413,206 121,641 128,514 143,505 150,065 543,725 148,019 149,275 163,663 178,708 639,665 712,333
General and administrative 591,715 842,039 250,362 256,001 259,556 282,593 1,048,512 285,900 288,183 297,569 330,488 1,202,139 1,364,891
Payroll expense on employeee stock options 13,015 4,400 - - - - - - - - - - -
Patent litigation expense - - - - 1,390,938 - 1,390,938 - - - - - -
Amortization of acquired intangible assets 128,941 214,929 51,890 56,846 51,888 53,313 213,937 58,000 55,000 60,000 60,000 233,000 200,000
Incremental non-cash stock-based comp (FAS123) 317,410 71,950 79,621 80,589 69,653 301,813 100,000 100,000 100,000 100,000 400,000 414,000
Total operating expenses 2,292,590 3,340,825 919,872 975,664 2,389,524 1,057,959 5,343,019 1,078,556 1,096,260 1,135,601 1,232,250 4,542,666 5,042,422
Operating income 1,441,707 1,422,956 467,827 456,906 (937,693) 626,140 613,180 478,684 491,857 471,271 660,100 2,101,912 2,499,345
PF Operating income 1,615,435 1,960,614 593,445 594,664 593,444 754,979 2,536,532 636,684 646,857 631,271 820,100 2,734,912 3,113,345
Interest and other income, net 111,148 130,017 30,020 33,967 38,363 51,921 154,271 43,658 46,501 49,934 54,491 194,583 274,060
Interest expense (3,478) (5,916) (4,542) (2,734) (2,728) (6,596) (16,600) (3,000) (3,000) (3,000) (3,000) (12,000) (12,000)
Impairment of certain equity investments - - - - - - - - -
Total non-operating expenses, net 107,670 124,101 25,478 31,233 35,635 45,325 137,671 40,658 43,501 46,934 51,491 182,583 262,060
Income (loss) before income taxes and minority interests 1,549,377 1,547,057 493,305 488,139 (902,058) 671,465 750,851 519,343 535,358 518,205 711,590 2,284,495 2,761,405
Provision for income taxes (467,285) (421,418) (116,129) (112,315) (33,577) (140,579) (402,600) (114,255) (117,779) (114,005) (156,550) (502,589) (607,509)
Tax Rate 30.2% 27.2% 23.5% 23.0% -3.7% 20.9% 53.6% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0%
Minority interests in consolidated companies (49) (4) - - - - - - -
Cumulative effect of accounting change - - - - - - - - -
GAAP Net income (loss) 1,082,043 1,125,635 377,176 375,824 (935,635) 530,886 348,251 405,087 417,579 404,200 555,040 1,781,906 2,153,896
Basic income (loss) per share $0.79 $0.80 $0.28 $0.28 ($0.69) $0.39 $0.26 $0.30 $0.31 $0.30 $0.41 $1.32 $1.58
Diluted income (loss) per share $0.78 $0.79 $0.27 $0.27 ($0.69) $0.39 $0.25 $0.30 $0.31 $0.30 $0.41 $1.30 $1.57
Basic shares outstanding 1,361,656 1,399,251 1,366,915 1,361,046 1,354,786 1,352,077 1,358,706 1,352,077 1,352,077 1,352,077 1,352,077 1,352,077 1,359,077
Diluted shares outstanding 1,393,688 1,425,472 1,384,287 1,378,697 1,354,786 1,368,067 1,371,459 1,368,067 1,368,067 1,368,067 1,368,067 1,368,067 1,375,067
Payroll expense on employeee stock options 13,015 5,319 1,778 1,291 2,281 1,522 6,872 - - - - - -
Amortization of acquired intangible assets 128,941 214,929 51,890 56,846 51,888 53,313 213,937 58,000 55,000 60,000 60,000 233,000 200,000
Impairment of certain equity investments - - - - 1,390,938 - 1,390,938 - - - - - -
Opex adj. for non-cash stock based comp. 30,170 317,410 71,950 79,621 80,589 69,653 301,813 100,000 100,000 100,000 100,000 400,000 414,000
Cost of net revenues adjustment 1,602 - 5,441 4,351 9,792 - - - - -
Interest and other income adjustment (2,260) - - - - - - - - - - - -
Tax adjustment (50,517) (171,690) (42,315) (42,532) (31,721) (48,853) (165,421) (38,147) (37,552) (38,591) (39,558) (153,847) (185,711)
Other one-time items - - - - -
Minority interests - - - - -
PF Net income (loss) 1,202,994 1,491,603 460,479 471,050 563,781 610,872 2,106,182 524,941 535,027 525,609 675,482 2,261,059 2,582,185
PF basic income (loss) per share $0.88 $1.07 $0.34 $0.35 $0.41 $0.45 $1.54 $0.39 $0.40 $0.39 $0.50 $1.67 $1.90
PF diluted income (loss) per share $0.86 $1.05 $0.33 $0.34 $0.41 $0.45 $1.53 $0.38 $0.39 $0.38 $0.49 $1.65 $1.88
Basic shares outstanding 1,361,656 1,399,251 1,366,915 1,361,046 1,373,284 1,352,077 1,363,331 1,352,077 1,353,077 1,354,077 1,354,077 1,353,327 1,359,077
Diluted shares outstanding 1,393,688 1,425,472 1,384,287 1,378,697 1,373,284 1,368,067 1,376,084 1,368,067 1,369,067 1,370,067 1,370,067 1,369,317 1,375,067
PF Operating income 1,615,435 1,960,614 593,445 594,664 593,444 754,979 2,536,532 636,684 646,857 631,271 820,100 2,734,912 3,113,345
Depreciation 249,224 329,623 91,559 89,876 99,832 106,503 387,770 100,000 100,000 100,000 100,000 400,000 430,000
EBITDA 1,864,659 2,290,237 685,004 684,540 693,276 861,482 2,924,302 736,684 746,857 731,271 920,100 3,134,912 3,543,345
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Y/Y Growth
Net sales 39.2% 31.1% 27.2% 30.0% 30.4% 26.8% 28.5% 14.7% 13.0% 12.5% 12.3% 13.1% 14.9%
Cost of net revenues 33.2% 47.4% 41.4% 41.1% 42.1% 44.2% 42.3% 23.7% 20.7% 18.6% 11.9% 18.3% 19.3%
Total operating expenses 43.5% 45.7% 15.2% 19.8% 198.0% 14.3% 59.9% 17.3% 12.4% -52.5% 16.5% -15.0% 11.0%
Operating income 36.1% -1.3% 45.0% 46.7% -376.6% 39.2% -56.9% 2.3% 7.6% -150.3% 5.4% 242.8% 18.9%
PF Operating income 40.7% 21.4% 28.8% 29.2% 27.8% 31.3% 29.4% 7.3% 8.8% 6.4% 8.6% 7.8% 13.8%
GAAP Net income 39.0% 4.0% 51.9% 50.3% -433.1% 53.2% -69.1% 7.4% 11.1% -143.2% 4.5% 411.7% 20.9%
PF Net income 45.0% 24.0% 34.3% 34.3% 53.4% 41.9% 41.2% 14.0% 13.6% -6.8% 10.6% 7.4% 14.2%
EBITDA 39.5% 22.8% 28.7% 26.6% 26.5% 28.8% 27.7% 7.5% 9.1% 5.5% 6.8% 7.2% 13.0%
Sequential Growth
Net sales 2.8% 3.8% 3.0% 15.4% -7.0% 2.2% 2.5% 15.2%
% of Revenues
Margins
Gross margin 82.0% 79.8% 78.5% 78.1% 76.8% 77.2% 77.6% 76.8% 76.6% 75.6% 77.3% 76.6% 75.7%
Operating margin 31.7% 23.8% 26.5% 24.9% -49.6% 28.7% 8.0% 23.6% 23.7% 22.2% 27.0% 24.2% 25.1%
PF Operating margin 35.5% 32.8% 33.6% 32.4% 31.4% 34.6% 33.1% 31.4% 31.2% 29.7% 33.5% 31.5% 31.3%
EBITDA margin 41.0% 38.4% 38.7% 37.3% 36.7% 39.5% 38.1% 36.3% 36.0% 34.4% 37.6% 36.1% 35.6%
Operating Leverage (∆ in PF op inc / ∆ in revenues) 36.4% 24.4% 35.2% 31.7% 29.3% 39.1% 33.8% 16.7% 21.9% 16.0% 24.3% 19.8% 29.4%
April 07, 2008 89

Figure 110: eBay Segment Breakdown, 2005–09E ($ in thousands, except per share data)
Transaction Revenue Detail
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
TOTAL LISTINGS 1,876,800 2,365,300 588,400 559,100 555,600 637,200 2,340,300 629,270 614,159 606,774 669,060 2,519,263 2,664,902
Y/Y growth 33% 26% 2% -6% -5% 4% -1% 7% 10% 9% 5% 8% 6%
Q/Q growth -4% -5% -1% 15% -1% -2% -1% 10%
Conversion Rate 48.5% 46.0% 48.0% 49.7% 50.8% 49.9% 49.6% 48.0% 49.0% 50.0% 50.0% 49.3% 49.7%
Y/Y growth -3% -5% 4% 9% 10% 8% 8% 0% -1% -2% 0% -1% 1%
Average Selling Price (ASP) $48.69 $48.25 $50.52 $52.05 $51.05 $51.00 $51.16 $50.50 $51.57 $51.34 $51.45 $51.22 $51.77
Y/Y growth 0% -1% 7% 9% 9% 0% 6% 0% -1% 1% 1% 0% 1%
TOTAL GMV 44,299,000 52,473,000 14,281,000 14,464,000 14,395,000 16,213,000 59,353,000 15,264,767 15,524,860 15,566,222 17,227,881 63,583,730 68,544,174
Y/Y growth 30% 18% 14% 12% 14% 12% 13% 7% 7% 8% 6% 7% 8%
eBay Merchandise Take Rate 7.68% 8.01% 8.48% 8.55% 8.80% 8.76% 8.65% 8.54% 8.53% 8.68% 8.71% 8.62% 8.82%
Total Marketplaces Transaction Revenue 3,402,301 4,203,340 1,211,545 1,236,835 1,267,463 1,419,520 5,135,363 1,303,613 1,324,694 1,350,665 1,501,132 5,480,105 6,048,464
Y/Y growth 36% 24% 22% 24% 25% 18% 22% 8% 7% 7% 6% 7% 10%
Total Transaction Revenue Per Listing $1.81 $1.78 $2.06 $2.21 $2.28 $2.23 $2.19 $2.07 $2.16 $2.23 $2.24 $2.18 $2.27
Y/Y growth 3% -2% 20% 32% 31% 13% 23% 1% -2% -2% 1% -1% 4%
Q/Q growth 5% 7% 3% -2% -7% 4% 3% 1%
5.1%
US LISTINGS 916,587 1,061,900 258,400 243,100 254,400 280,600 1,036,500 272,870 264,979 270,936 294,630 1,103,415 1,164,103
Y/Y growth 18% 16% -2% -8% -2% 3.3% -2% 5.6% 9.0% 6.5% 5.0% 6.5% 5.5%
Q/Q growth -5% -6% 5% 10% -3% -3% 2% 9%
% of total listings 48.8% 44.9% 43.9% 43.5% 45.8% 44.0% 44.3% 43.4% 43.1% 44.7% 44.0% 43.8% 43.7%
Conversion Rate 49.3% 48.6% 52.1% 54.0% 52.9% 51.2% 52.5% 52.0% 53.0% 52.4% 51.0% 52.1% 52.5%
Y/Y growth 0% -1% 5% 11% 8% 9% 8% 0% -2% -1% 0% -1% 1%
Y/Y growth 1% 1% 5% 8% 4% -4% 3% 1% -1% 1% 2% 1% 1%
US GMV 21,958,809 25,233,000 6,736,000 6,700,000 6,729,000 7,330,000 27,495,000 7,165,577 7,092,163 7,183,705 7,813,588 29,255,033 31,474,442
Y/Y growth 19% 15% 8% 10% 10% 8% 9% 6% 6% 7% 7% 6% 8%
% of total GMV 50% 48% 47% 46% 47% 45% 46% 47% 46% 46% 45% 46% 46%
Take Rate 7.9% 8.3% 8.71% 8.82% 9.15% 8.91% 8.90% 8.80% 8.75% 9.00% 8.85% 8.85% 9.10%
US TRANSACTION REVENUE 1,737,039 2,105,312 586,751 590,712 615,734 652,979 2,446,176 630,571 620,564 646,533 691,503 2,589,171 2,864,174
Y/Y growth 30% 21% 16% 20% 18% 11% 16% 7% 5% 5% 6% 6% 11%
US Transaction Revenue Per Listing $1.90 $1.98 $2.27 $2.43 $2.42 $2.33 $2.36 $2.31 $2.34 $2.39 $2.35 $2.35 $2.46
Y/Y growth 10% 5% 18% 31% 21% 8% 19% 2% -4% -1% 1% -1% 5%
Q/Q growth 5% 7% 0% -4% -1% 1% 2% -2%
INTERNATIONAL LISTINGS 960,213 1,303,400 330,000 316,000 301,200 356,600 1,303,800 356,400 349,180 335,838 374,430 1,415,848 1,500,799
Y/Y growth 50% 36% 6% -5% -7% 5.3% 0.0% 8.0% 10.5% 11.5% 5.0% 8.6% 6.0%
Q/Q growth -3% -4% -5% 18% 0% -2% -4% 11%
% of total listings 51.2% 55.1% 56.1% 56.5% 54.2% 56.0% 55.7% 56.6% 56.9% 55.3% 56.0% 56.2% 56.3%
Conversion Rate 47.7% 43.9% 44.8% 46.4% 48.9% 48.8% 47.2% 45.0% 46.0% 48.0% 49.3% 47.1% 47.5%
Y/Y growth -5% -8% 4% 9% 11% 7% 8% 0% -1% -2% 1% 0% 1%
Y/Y growth 0% -2% 9% 10% 13% 3% 9% -1% -1% 0% 0% 0% 1%
INTERNATIONAL GMV 22,340,191 27,240,000 7,545,000 7,764,000 7,666,000 8,883,000 31,858,000 8,099,190 8,432,697 8,382,516 9,414,293 34,328,697 37,069,732
Y/Y growth 42% 22% 20% 14% 17% 16% 17% 7% 9% 9% 6% 8% 8%
% of total GMV 50% 52% 53% 54% 53% 55% 54% 53% 54% 54% 55% 54% 54%
Take Rate 7.454% 7.7% 8.28% 8.32% 8.50% 8.63% 8.44% 8.31% 8.35% 8.40% 8.60% 8.42% 8.59%
INTERNATIONAL TRANSACTION REVENUE 1,665,262 2,098,028 624,794 646,123 651,729 766,541 2,689,187 673,043 704,130 704,131 809,629 2,890,934 3,184,290
Y/Y growth 44% 26% 29% 28% 31% 25% 28% 8% 9% 8% 6% 8% 10%
INTERNATIONAL Transaction Revenue Per Listing $1.73 $1.61 $1.89 $2.04 $2.16 $2.15 $2.06 $1.89 $2.02 $2.10 $2.16 $2.04 $2.12
Y/Y growth -4% -7% 22% 34% 41% 19% 28% 0% -1% -3% 1% -1% 4%
Q/Q growth 5% 8% 6% -1% -12% 7% 4% 3%
Segment Breakdown
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
NET REVENUE BY TYPE
Transaction Net Revenues
U.S. Marketplaces 1,737,039 2,105,312 586,751 590,712 615,734 652,979 2,446,176 630,571 620,564 646,533 691,503 2,589,171 2,864,174
Y/Y growth 30% 21% 16% 20% 18% 11% 16% 7% 5% 5% 6% 6% 11%
Q/Q growth 0% 1% 4% 6% -74% -2% 4% 7%
% of Total Mkplaces Trans Rev 51% 50% 48% 48% 49% 46% 48% 48% 47% 48% 46% 47% 47%
International Marketplaces 1,665,262 2,098,028 624,794 646,123 651,729 766,541 2,689,187 673,043 704,130 704,131 809,629 2,890,934 3,184,290
Y/Y growth 44% 26% 29% 28% 31% 25% 28% 8% 9% 8% 6% 8% 10%
Q/Q growth 2% 3% 1% 18% -75% 5% 0% 15%
% of Total Mkplaces Trans Rev 38% 36% 52% 52% 51% 54% 52% 52% 53% 52% 54% 53% 53%
Total Marketplaces Transaction Rev. 3,402,301 4,203,340 1,211,545 1,236,835 1,267,463 1,419,520 5,135,363 1,303,613 1,324,694 1,350,665 1,501,132 5,480,105 6,048,464
Y/Y growth 36% 24% 22% 24% 25% 18% 22% 8% 7% 7% 6% 7% 10%
Q/Q growth 1% 2% 2% 12% -75% 2% 2% 11%
U.S. Payments Transaction Rev. 635,850 868,623 247,687 251,193 256,847 302,009 1,057,735 287,041 283,450 298,308 341,670 1,210,468 1,350,508
Y/Y growth 34% 37% 18% 22% 21% 25% 22% 16% 13% 16% 13% 14% 12%
Q/Q growth 3% 1% 2% 18% -5% -1% 5% 15%
% of Total Payments Trans Rev 63% 62% 59% 58% 57% 56% 58% 55% 54% 55% 52% 54% 50%
International Payments Transaction Rev. 366,065 533,201 171,305 181,101 191,105 237,292 780,804 234,852 241,457 244,070 315,387 1,035,766 1,350,508
Y/Y growth 76% 46% 44% 45% 50% 47% 46% 37% 33% 28% 33% 33% 30%
Q/Q growth 6% 6% 6% 24% -1% 3% 1% 29%
% of Total Payments Trans Rev 37% 38% 41% 42% 43% 44% 42% 45% 46% 45% 48% 46% 50%
Total Payments Transaction Rev. 1,001,915 1,401,824 418,992 432,294 447,952 539,301 1,838,539 521,893 524,907 542,378 657,057 2,246,235 2,701,016
Y/Y growth 47% 40% 28% 31% 32% 34% 31% 25% 21% 21% 22% 22% 20%
Q/Q growth 4% 3% 4% 20% -72% 1% 3% 21%
Communications Transaction Rev. 24,809 192,756 77,078 89,133 96,772 113,732 376,715 104,055 115,873 122,900 136,478 479,307 579,962
Y/Y growth 677% 119% 102% 93% 79% 95% 35% 30% 27% 20% 27% 21%
Q/Q growth 22% 16% 9% 18% -72% 11% 6% 11%
% of Comm. Trans revenue that is International 85% 85% 83% 83%
Total Transaction Revenue 4,429,025 5,797,920 1,707,615 1,758,262 1,812,187 2,072,553 7,350,617 1,929,561 1,965,474 2,015,944 2,294,667 8,205,646 9,329,442
Y/Y growth 39% 31% 26% 28% 29% 24% 27% 13% 12% 11% 11% 12% 14%
Q/Q growth 3% 3% 3% 14% -74% 2% 3% 14%
% of transaction revenue 89% 86% 141% 142% 143% 100% 100% 100% 100% 100% 100% 100% 100%
Advertising & other non-transaction rev 123,376 171,821 60,459 76,167 77,033 108,053 321,712 98,095 107,786 109,548 153,392 468,821 633,263
Y/Y growth 31% 39% 65% 96% 86% 96% 87% 62% 42% 42% 42% 46% 35%
Q/Q growth 10% 26% 1% 40% -70% 10% 2% 40%
Non Transaction Revenue Breakdown
U.S. Marketplaces 67,053 80,194 25,847 26,817 27,282 43,433 123,378 36,185 41,566 40,923 65,149 183,824 253,677
Y/Y growth 10% 20% 30% 42% 86% 62% 54% 40% 55% 50% 50% 49% 38%
% of adv & non-trans revenue 54% 47% 43% 35% 35% 40% 38% 37% 39% 37% 42% 39% 40%
International Marketplaces 29,783 50,756 12,808 26,900 25,887 39,554 105,150 34,582 36,315 37,536 53,398 161,832 223,328
Y/Y growth 83% 70% 31% 132% 51% 221% 107% 170% 35% 45% 35% 54% 38%
Payments 26,540 38,706 20,349 21,873 22,444 23,411 88,077 25,436 28,029 28,887 32,775 115,128 146,213
Y/Y growth 57% 46% 194% 160% 135% 69% 128% 25% 28% 29% 40% 31% 27%
Communications - 2,165 1,455 577 1,420 1,655 5,107 1,892 1,875 2,201 2,069 8,037 10,046
Y/Y growth NA NA NA NA NA -24% 136% 30% 225% 55% 25% 57% 25%
% of adv & non-trans revenue - 1% 2% 1% 2% 2% 2% 2% 2% 2% 1% 2% 2%
Total Advertising & Non-Transaction Rev. 123,376 171,821 60,459 76,167 77,033 108,053 321,712 98,095 107,786 109,548 153,392 468,821 633,263
Y/Y growth 31% 39% 65% 96% 86% 96% 87% 62% 42% 42% 42% 46% 35%
Total Net Revenue 4,552,401 5,969,741 1,768,074 1,834,429 1,889,220 2,180,606 7,672,329 2,027,657 2,073,260 2,125,491 2,448,059 8,674,467 9,962,705
Y/Y growth 39% 31% 27% 30% 30% 27% 29% 15% 13% 13% 12% 13% 15%
Q/Q growth 3% 4% 3% 15% -7% 2% 3% 15%
TYPE AS % OF TOTAL NET REVENUE

Transaction 97% 97% 97% 96% 96% 95% 96% 95% 95% 95% 94% 95% 94%
Advertising and other non-transaction rev 3% 3% 3% 4% 4% 5% 4% 5% 5% 5% 6% 5% 6%
Total Net Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
90 April 07, 2008

Figure 111: eBay Cash Flow Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Cash Flows from Operating Activities

Net income (loss) 1,082,043 1,125,635 377,176 375,824 (935,635) 530,886 348,251 405,087 417,579 404,200 555,040 1,781,906 2,153,896
Provision for doubtful accounts and authorized credits 89,499 100,729 24,795 20,452 21,601 29,613 96,461 30,000 30,000 30,000 35,000 125,000 143,750
Provision for transaction losses 73,773 126,439 35,937 33,832 31,079 38,407 139,255 42,242 42,265 48,401 67,435 200,343 248,778
Depreciation and amortization 378,165 544,552 143,449 146,722 151,720 159,816 601,707 158,000 155,000 160,000 160,000 633,000 630,000
Stock based compensation expense related to stock options 31,772 317,410 71,950 79,621 80,589 69,653 301,813 100,000 100,000 100,000 100,000 400,000 414,000
Tax benefit on the exercise of employee stock options 267,142 148,565 22,995 30,014 59,874 30,320 143,203 40,000 40,000 40,000 40,000 160,000 155,000
Excess tax benefits from stock-based compensation - (92,371) (13,773) (16,001) (39,252) (15,804) (84,830) (22,000) (22,000) (24,000) (24,000) (92,000) (92,000)
Impairment of certain equity investments - - - - 1,390,938 - 1,390,938 - -
Minority interests and other 49 4 - - - - - - -
Cumulative effect of accounting change - - - - - - - - -
Gain on sale of assets - - - - - - - - -
Changes in working capital:
Accounts receivable (151,993) (169,750) (12,676) (20,241) (53,399) (99,300) (185,616) (74,566) 53,416 (88,899) (95,103) (205,151) (203,726)
Funds receivable (132,606) (146,900) (23,278) (77,159) (63,295) 137,952 (25,780) (37,893) (143,000) (48,726) 111,988 (117,631) (166,840)
Other current assets (49,372) (443,530) (18,521) (4,352) (414,139) 20,735 (416,277) - - - - - -
Other non-current assets (4,611) 10,126 (22,364) (35,469) (21,236) (9,648) (88,717) - - - - - -
Deferred tax assets 91,690 (181,094) (42,032) (9,145) (17,757) (72,469) (141,403) - - - - - -
Accounts payable 564 32,986 8,407 153 4,147 24,247 36,954 (17,462) (2,322) 6,160 6,460 (7,164) 28,438
Due to customers and funds payable 251,870 575,137 24,974 93,572 302,271 (83,942) 336,875 155,775 (10,545) 83,552 120,187 348,969 130,513
Accrued expenses and other liabilities 17,012 (31,026) (40,503) 13,078 33,067 (24,467) (18,825) (137,311) 43,534 69,148 (269,690) (294,318) (79,730)
Deferred revenue and customer advances 3,646 47,859 14,176 2,358 10,943 10,330 37,807 (24,559) 3,192 3,656 22,580 4,869 27,890
Income taxes payable 61,248 283,016 13,780 21,326 87,970 46,217 169,293 - - - - - -
Net cash provided by (used in) operating activities 2,009,891 2,247,787 564,492 654,585 629,486 792,546 2,641,109 617,314 707,120 783,492 829,898 2,937,824 3,389,969
Cash Flows from Investing Activities

Purchases of property and equipment (338,281) (515,448) (85,413) (121,328) (119,293) (127,933) (453,967) (150,000) (150,000) (150,000) (150,000) (600,000) (681,000)
Proceeds from sale of corporate aircraft 28,290 - - - - - - - -
Purchases of investments (1,324,353) (583,263) (112,527) (47,616) (45,155) (65,378) (270,676) - -
Maturities and sales of investments 1,928,540 1,380,227 392,696 232,571 158,549 104,941 888,757 - -
Proceeds from sale of property and equipment (622) - - - - - - - -
Acquisitions, net of cash acquired (2,732,229) (45,505) (258,559) (61,636) - (543,370) (863,565) - -
Payments on notes receivable - - - - - - - - -
Purchases of other non-current assets (14,076) (7,158) 1,153 959 3,410 783 6,305 - -
Net cash provided by (used in) investing activities (2,452,731) 228,853 (62,650) 2,950 (2,489) (630,957) (693,146) (150,000) (150,000) (150,000) (150,000) (600,000) (681,000)
Cash Flows from Financing Activities

Proceeds from issuance of common stock, net 599,844 313,482 92,155 92,286 180,758 141,756 506,955 - -
Repurchases of common stock - (1,666,540) (331,085) (343,776) (495,838) (314,698) (1,485,397) (200,000) (300,000) (250,000) (200,000) (950,000) (500,000)
Payment of headquarter facility lease obligation (126,390) - - - - - - - -
Proceeds from (principal payments on) long-term debt (1,849) - - - - - - - -
Proceeds from issuance of common stock by subsidiaries - - - - - - - - -
Proceeds from notes payable - - - - - 200,220 200,220 - -
Partnership contributions - - - - - - - - -
Partnership distributions - - - - - - - - -
Excess tax benefits from stock-based compensation - 92,371 13,773 16,000 39,252 15,804 84,829 22,000 22,000 24,000 24,000 92,000 92,000
Net cash provided by (used in) financing activities 471,605 (1,260,687) (225,157) (235,490) (275,828) 43,082 (693,393) (178,000) (278,000) (226,000) (176,000) (858,000) (408,000)
Effect of exchange-rate on cash and equivalents (45,230) 133,255 27,532 29,294 143,073 103,929 303,828 - -
Net change in cash (16,465) 1,349,208 304,217 451,339 494,242 308,600 1,558,398 289,314 279,120 407,492 503,898 1,479,824 2,300,969
Cash & equivalents - BOP 1,330,045 1,313,580 2,662,788 2,967,005 3,418,344 3,912,586 2,662,788 4,221,186 4,510,500 4,789,620 5,197,112 4,221,186 5,701,010
Cash & equivalents - EOP 1,313,580 2,662,788 2,967,005 3,418,344 3,912,586 4,221,186 4,221,186 4,510,500 4,789,620 5,197,112 5,701,010 5,701,010 8,001,979
Free Cash Flow Calculation

Net cash provided by operating activities 2,009,891 2,247,787 564,492 654,585 629,486 792,546 2,641,109 617,314 707,120 783,492 829,898 2,937,824 3,389,969
Payment of headquarters facility lease obligations (126,390) - - - - - - - - - - - -
Purchases of fixed assets (net) (309,991) (515,448) (85,413) (121,328) (119,293) (127,933) (453,967) (150,000) (150,000) (150,000) (150,000) (600,000) (681,000)
Free Cash Flow 1,573,510 1,732,339 479,079 533,257 510,193 664,613 2,187,142 467,314 557,120 633,492 679,898 2,337,824 2,708,969
Y/Y Growth 59% 10% 6% 45% 32% 26% 26% -2% 4% 24% 2% 7% 16%
Q/Q Growth -10% 11% -4% 30% -79% 19% 14% 7%
Cumulative Free Cash Flow last four quarters 1,760,791 1,926,968 2,051,916 2,187,142 2,175,377 2,199,240 2,322,539 2,337,824
Operating Cash Flow Growth

Y/Y Growth 56% 12% -3% 27% 21% 27% 17% 9% 8% 24% 5% 11% 15%
Q/Q Growth -10% 16% -4% 26% -22% 15% 11% 6%
Capex 338,281 515,448 85,413 121,328 119,293 127,933 453,967 150,000 150,000 150,000 150,000 600,000 681,000
Capex as % of net revenue 7.4% 8.6% 4.8% 6.6% 6.3% 5.9% 5.9% 7.4% 7.2% 7.1% 6.1% 6.9% 6.8%
April 07, 2008 91

Figure 112: eBay Discounted Cash Flow Analysis ($ in thousands, except per share data)
Periods from Today 1 2 3 4 5 6 7 2007E-2012E
2006A 2007E 2008E 2009E 2010E 2011E 2012E CAGR
Revenue 5,969,741 7,672,329 8,674,467 9,962,705 11,346,908 12,748,240 14,038,456
% change 31.1% 28.5% 13.1% 14.9% 13.9% 12.3% 10.1% 12.8%
EBITDA 2,290,237 2,924,302 3,134,912 3,543,345 4,027,929 4,494,947 4,928,114

% change 22.8% 27.7% 7.2% 13.0% 13.7% 11.6% 9.6% 11.0%
Cash Taxes (421,418) (402,600) (502,589) (607,509) (721,565) (829,321) (951,398)

Capex (515,448) (453,967) (600,000) (681,000) (762,720) (854,246) (939,671)
Change in working capital (23,176) (295,689) (270,426) (263,455) (208,486) (206,713) (277,356)
Unlevered free cash flow $1,330,195 $1,772,046 $1,761,897 $1,991,381 $2,335,158 $2,604,667 $2,759,688
% change 16.0% 33.2% -0.6% 13.0% 17.3% 11.5% 6.0% 9.3%
2007 PV of Cash Flow $1,772,046 $1,573,123 $1,587,517 $1,662,119 $1,655,313 $1,565,921

Per Share $1.29 $1.15 $1.16 $1.21 $1.21 $1.14
2008 PV of Cash Flow $1,761,897 $1,778,019 $1,861,573 $1,853,950 $1,753,832

Per Share $1.29 $1.30 $1.36 $1.35 $1.28
Discount Rate 12.0% 12.0% 12.0%

Terminal EBITDA Multiple 11.0x 11.0x 11.0x
Terminal Value 54,209,252 54,209,252 54,209,252
Implied Terminal FCF Multiple 19.6x 19.6x 19.6x
Present value of FCF $10,094,515 $9,816,039 $9,009,272

Present value of terminal value 27,464,094 30,759,785 34,450,959
Implied Firm Value $37,558,609 $40,575,824 $43,460,231
Plus: Cash 3,495,486 5,035,692 6,515,511

Plus: Investments 405,312 620,312 620,312
Less: Debt - - -
Less: Minority Interest - - -
Implied Equity Value $41,459,407 $46,231,828 $50,596,054
Fully diluted shares outstanding 1,402,749 1,371,459 1,370,067
Equity Value Per Share $29.56 $33.71 $36.93
Figure 113: eBay Sum-of-the-Parts Analysis ($ in thousands, except per share data)
2008E
EBITDA
Revenue EBITDA Margin % Multiple 2008E
Consolidated Operations:
U.S. Marketplace Transaction 2,589,171 EBITDA -
International Marketplace Transaction 2,890,934 EBITDA
Global eBay Marketplaces Transaction 5,480,105 2,301,644 42.0% EBITDA 10.0x 23,016,439
PayPal Transaction 2,246,235 494,172 22.0% EBITDA 16.0x 7,906,746
Skype Transaction 479,307 28,758 6.0% EBITDA 14.0x 402,618
Advertising/Non-Transaction 468,821 234,410 50.0% EBITDA 12.0x 2,812,923
Corporate/Other 0.0 75,928 NA 11.2x 847,365
Total Consolidated Operations 8,674,467 3,134,912 36.1% 11.2x $34,986,091
Equity Investments
Mercado Libre - Latin America JV (18.5% interest post-IPO) 298,839
TomOnline - China JV (49% interest) 125,000
PChome Online - Taiwan JV (estimated 33% interest) 60,000
Craigslist.org (~25% interest) 25,000
GittiGidiyor - Turkey 5,000
Total Unconsolidated Operations $513,839
Total Asset Value of eBay $35,499,930

Less: Debt -
Plus: Cash $5,701,010
Value to Common Shareholders $41,200,939
Total shares outstanding 1,370,067
Value per eBay share $30.07
92 April 07, 2008

Figure 114: eBay Fee Changes—Auction-Style and Fixed Price, U.S. Only
Insertion Fees for Auction-style listings
Starting or Reserve Insertion Fee %
Price Current Insertion Fee (effective 2/20/08) Change
$0.01 - $0.99 $0.20 $0.15 -25%
$1.00 - $9.99 $0.40 $0.35 -13%
$10.00 - $24.99 $0.60 $0.55 -8%
$25.00 - $49.99 $1.20 $1.00 -17%
$50.00 - $199.99 $2.40 $2.00 -17%
$200.00 - $499.99 $3.60 $3.00 -17%
$500 or more $4.80 $4.00 -17%
Insertion Fees for Fixed Price listings

Starting or Reserve Insertion Fee %
Price Current Insertion Fee (effective 2/20/08) Change
$0.01 - $0.99 $0.20 NA
$1.00 - $9.99 $0.40 $0.35 -13%
$10.00 - $24.99 $0.60 $0.55 -8%
$25.00 - $49.99 $1.20 $1.00 -17%
$50.00 - $199.99 $2.40 $2.00 -17%
$200.00 - $499.99 $3.60 $3.00 -17%
$500 or more $4.80 $4.00 -17%
Final Value Fees on Fixed Price and Auction-style

Final Value Fees Current Final Value Fee Final Fee (effective 2/20/08)
Item not sold No Fee No change
$0.01 $25.00 5.25% of the closing value 8.75% of the closing value
5.25% of the initial $25.00
($1.31), plus 3.25% of the
($2.19), plus 3.5% of the
$25.01 - $1,000.00 remaining closing value
remaining closing value balance
balance ($25.01 to
($25.01 to $1,000.00)
$1,000.00)
($1.31), plus 3.25% of the 8.75% of the initial $25.00, plus
initial $25.01 - $1,000.00 3.50% of the initial $25.00 -
Equal to or Over
($31.69), plus 1.50% of the $1,000.00 plus 1.50% of the
$1,000.01
remaining closing value remaining closing value balance
balance ($1000.01 - closing ($1,000.01 - closing value)
value)
Source: eBay sites
April 07, 2008 93

Figure 115: Amazon Snapshot

- Has evolved from books to a virtual shopping mall; captures ~6% of U.S. - Valuation: 43x ‘08 EPS, 22x ’08 EV/EBITDA, 4.3% ’08 FCF yield, but trading more on
online retail ex-travel lack of liquidity and short interest
- Consumer-centric company with 76M active users - Tougher comps should result in profit growth slowdown in '08
- Virtual model results in lower overhead and invested capital, enables - Tech and content spending slowing, but profitability levels could remain low due to free
technology spending shipping, Prime, low prices, product-mix
- Turns inventory ~11-12 times per year, results in negative working capital
cash cycle - Is another round of investment needed in N-T?
- Investing in long-term loyalty via free shipping, Amazon Prime, low prices; - Media growth accelerating, but still 64% of biz and at risk of category shifting to digital;
has been paying off in last several quarters still very early with Unbox, MP3
- Amazon Prime gaining traction; driving incremental sales across - Competition continues to increase from search, comparison shopping, traditional
categories; accelerating revenue growth, increasing loyalty retailers shifting online
- Business benefitting from Prime, supplier efficiencies, int’l 3rd party, media
mix, lower tech & content spend
- Solid balance sheet: $3.0 billion in cash, $1.28B in debt---bought back

$500M in stock Aug ’06-2Q07 & addt’l $1B auth.

- Whether margins can move toward 10%; current stock price may already
factor this in 1Q08 2008
Net Sales $3.95B - $4.15B $18.75B-$19.75B
- Whether AMZN can keep top line growth around 30% and continue to take
share of e-commerce up 31% - 38% up 26%-33%
Implied Cons. Operating Inc. $210M - $255M $1.025B - $1.225B
- Whether Prime is driving incremental volume and loyalty Stock-based Comp. $55M $240M
Operating Income $155M - $200M $785M-$985M
- AMZN Prime effect overseas---launched in UK in early November; rolled
out in Japan Effective Tax Rate 30%
Cash taxes $75M
- Traction of 3rd party stores in Europe; helping margins Capex ~$300M
- Whether AMZN extends Endless/Shopbop off-platform model to other

categories, such as jewelry PF op. margin: low-mid-high 5.3% - 5.7% - 6.1% 5.5% - 5.8% - 6.2%
Free cash flow growth Trend similar to CSOI Y/Y
- Shareholder structure: top 5 own 46%---9% of shares out are short
- Traction in Services and Seller Platforms, i.e. EC2, S3, Fulfillment by

Amazon (FBA), etc. Launching web services overseas.
- Buying back stock at current levels?
- The trend around TTM average revenue/active shopper; up 18% Y/Y in

2007
94 April 07, 2008

Figure 116: Amazon Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Net sales 8,490,000 10,711,000 3,015,000 2,886,000 3,262,000 5,673,000 14,836,000 4,075,190 3,784,410 4,134,600 7,308,870 19,303,070 23,874,976
Cost of sales 6,452,000 8,256,000 2,296,000 2,185,000 2,500,000 4,503,000 11,484,000 3,127,841 2,893,499 3,175,129 5,822,573 15,019,042 18,640,240
Gross profit 2,038,000 2,455,000 719,000 701,000 762,000 1,170,000 3,352,000 947,349 890,911 959,471 1,486,297 4,284,028 5,234,736
Operating expenses
Fulfillment 727,901 912,000 253,000 248,000 285,000 467,000 1,253,000 342,316 321,675 355,576 606,636 1,626,203 1,981,623
Marketing 192,001 259,000 71,000 63,000 72,000 131,000 337,000 95,767 87,041 90,961 160,795 434,565 513,312
Technology and content 405,901 607,000 167,000 176,000 181,000 190,000 714,000 211,910 210,035 219,134 226,575 867,653 1,026,624
General and administrative 145,701 176,000 49,000 49,000 47,000 54,000 199,000 58,702 57,460 56,718 51,036 223,915 272,515
Stock-based compensation 87,696 101,000 34,000 46,000 51,000 54,000 185,000 55,000 60,000 60,000 65,000 240,000 247,200
Amortization of other intangibles 3,250 10,000 - 3,000 3,000 3,000 9,000 2,000 2,000 2,000 2,000 8,000 8,000
Restructuring related and other 44,000 - - - - - - - -
Total operating expenses 1,606,450 2,065,000 574,000 585,000 639,000 899,000 2,697,000 765,694 738,211 784,388 1,112,042 3,400,336 4,049,274
Operating income 431,550 390,000 145,000 116,000 123,000 271,000 655,000 181,655 152,700 175,083 374,255 883,692 1,185,463
PF Operating income 566,496 501,000 179,000 165,000 177,000 328,000 849,000 238,655 214,700 237,083 441,255 1,131,692 1,440,663
Interest income 44,000 60,000 20,000 20,000 23,000 28,000 91,000 28,960 28,805 32,221 40,687 130,673 148,195
Other income, net 2,000 (4,000) - (1,000) (1,000) 1,000 (1,000) - -
Remeasurement of 6.875% PEACS, other 42,000 11,000 (2,000) (5,000) (2,000) 2,000 (7,000) - -
Total non-operating expenses, net (4,000) (13,000) (1,000) (5,000) 1,000 10,000 5,000 9,730 9,575 12,991 21,457 53,753 121,932
Income (loss) before equity-method investees 427,550 377,000 144,000 111,000 124,000 281,000 660,000 191,385 162,274 188,074 395,712 937,445 1,307,395
Equity in losses of equity-method investees, net - - - - - - - - -
Income (loss) before income taxes 427,550 377,000 144,000 111,000 124,000 281,000 660,000 191,385 162,274 188,074 395,712 937,445 1,307,395
Provision (benefit) for income taxes 95,000 187,000 33,000 33,000 44,000 74,000 184,000 57,415 48,682 56,422 118,714 281,233 392,218
Effective Tax Rate 22.2% 49.6% 22.9% 29.7% 35.5% 26.3% 27.9% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0%
Income before change in acctg/ Fully Taxed Income 332,550 190,000 111,000 78,000 80,000 207,000 476,000 133,969 113,592 131,652 276,998 656,211 915,176
Cumulative effect of change in acctng principle 26,000 - - - - - - - - - - - -
GAAP Net income (loss) 358,550 190,000 111,000 78,000 80,000 207,000 476,000 133,969 113,592 131,652 276,998 656,211 915,176
Basic income (loss) per share $0.87 $0.46 $0.27 $0.19 $0.19 $0.50 $1.15 $0.32 $0.27 $0.31 $0.66 $1.57 $2.17
Diluted income (loss) per share $0.84 $0.45 $0.26 $0.19 $0.19 $0.48 $1.12 $0.31 $0.27 $0.31 $0.64 $1.53 $2.12
Basic shares outstanding 412,250 416,250 412,000 412,000 414,000 416,000 413,500 416,750 417,500 418,250 419,000 417,875 420,875
Diluted shares outstanding 425,500 424,500 420,000 423,000 425,000 427,000 423,750 427,750 428,500 429,250 430,000 428,875 431,875
Amortization of other intangibles 3,250 10,000 - 3,000 3,000 3,000 9,000 2,000 2,000 2,000 2,000 8,000 8,000
Restructuring related and other 44,000 - - - - - - - - - - - -
Remeasurement of 6.875% PEACS, other (42,000) (11,000) 2,000 5,000 2,000 (2,000) 7,000 - - - - - -
Equity in losses of equity-method investees, net - - - - - - - - - - - - -
Cum. Effect of change in acctg/Other one-time items (64,000) - - - - - - - - - - - -
PF Net income (loss) 387,496 290,000 147,000 132,000 136,000 262,000 677,000 190,969 175,592 193,652 343,998 904,211 1,170,376
PF basic income (loss) per share $0.94 $0.70 $0.36 $0.32 $0.33 $0.63 $1.64 $0.46 $0.42 $0.46 $0.82 $2.16 $2.78
PF diluted income (loss) per share $0.91 $0.68 $0.35 $0.31 $0.32 $0.61 $1.60 $0.45 $0.41 $0.45 $0.80 $2.11 $2.71
PF diluted fully-taxed EPS (normalized) $0.80 $0.73 $0.28 $0.25 $0.28 $0.51 $1.32 $0.38 $0.34 $0.38 $0.70 $1.80 $2.35
PF Operating income 566,496 501,000 179,000 165,000 177,000 328,000 849,000 238,655 214,700 237,083 441,255 1,131,692 1,440,663
Depreciation and other amortization 120,000 205,000 62,000 60,000 61,000 63,000 246,000 65,000 64,000 62,000 60,000 251,000 263,550
EBITDA 686,496 706,000 241,000 225,000 238,000 391,000 1,095,000 303,655 278,700 299,083 501,255 1,382,692 1,704,213
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Y/Y Growth
Net sales 22.7% 26.2% 32.3% 34.9% 41.4% 42.3% 38.5% 35.2% 31.1% 26.8% 28.8% 30.1% 23.7%
Gross profit 27.2% 20.5% 31.4% 37.7% 38.8% 37.6% 36.5% 31.8% 27.1% 25.9% 27.0% 27.8% 22.2%
Fulfillment 23.3% 25.3% 33.2% 36.3% 36.4% 41.1% 37.4% 35.3% 29.7% 24.8% 29.9% 29.8% 21.9%
Marketing 21.5% 34.9% 31.5% 21.2% 14.3% 45.6% 30.1% 34.9% 38.2% 26.3% 22.7% 29.0% 18.1%
Technology and content 61.6% 49.5% 21.0% 16.6% 16.0% 17.3% 17.6% 26.9% 19.3% 21.1% 19.2% 21.5% 18.3%
General and administrative 29.8% 20.8% 8.9% 11.4% -4.1% 42.1% 13.1% 19.8% 17.3% 20.7% -5.5% 12.5% 21.7%
Total cash operating expenses 32.3% 32.8% 26.5% 24.9% 22.6% 35.6% 28.1% 31.2% 26.2% 23.5% 24.1% 25.9% 20.4%
Operating income -2.0% -9.6% 36.8% 146.8% 207.5% 37.6% 67.9% 25.3% 31.6% 42.3% 38.1% 34.9% 34.1%
PF Operating income 15.6% -11.6% 49.2% 106.3% 145.8% 43.2% 69.5% 33.3% 30.1% 33.9% 34.5% 33.3% 27.3%
GAAP Net income -39.1% -47.0% 117.6% 254.5% 321.1% 111.2% 150.5% 20.7% 45.6% 64.6% 33.8% 37.9% 39.5%
PF Net income -1.9% -25.2% 116.2% 207.0% 172.0% 103.1% 133.4% 29.9% 33.0% 42.4% 31.3% 33.6% 29.4%
GAAP EPS -39.2% -46.9% 120.8% 260.9% 320.1% 108.8% 151.0% 18.5% 42.2% 62.9% 32.9% 36.2% 38.5%
PF EPS -2.1% -25.0% 119.3% 209.2% 171.4% 100.7% 133.9% 27.6% 31.3% 41.0% 30.4% 32.0% 28.5%
PF diluted FT EPS (normalized) 27.8% -8.1% 61.6% 121.6% 160.3% 50.9% 80.8% 35.5% 34.2% 37.6% 36.8% 36.0% 30.9%
EBITDA 21.3% 2.8% 50.6% 82.9% 76.3% 35.8% 55.1% 26.0% 23.9% 25.7% 28.2% 26.3% 23.3%
Sequential Growth
Net sales -24.4% -4.3% 13.0% 73.9% -28.2% -7.1% 9.3% 76.8%
% of Revenues
Cost of sales 76.0% 77.1% 76.2% 75.7% 76.6% 79.4% 77.4% 76.8% 76.5% 76.8% 79.7% 77.8% 78.1%
Fulfillment 8.6% 8.5% 8.4% 8.6% 8.7% 8.2% 8.4% 8.4% 8.5% 8.6% 8.3% 8.4% 8.3%
Marketing 2.3% 2.4% 2.4% 2.2% 2.2% 2.3% 2.3% 2.4% 2.3% 2.2% 2.2% 2.3% 2.2%
Margins
Gross margin 24.0% 22.9% 23.8% 24.3% 23.4% 20.6% 22.6% 23.2% 23.5% 23.2% 20.3% 22.2% 21.9%
PF Operating margin 6.7% 4.7% 5.9% 5.7% 5.4% 5.8% 5.7% 5.9% 5.7% 5.7% 6.0% 5.9% 6.0%
EBITDA margin 8.1% 6.6% 8.0% 7.8% 7.3% 6.9% 7.4% 7.5% 7.4% 7.2% 6.9% 7.2% 7.1%
PF Operating Profit/Gross Profit 27.8% 20.4% 24.9% 23.5% 23.2% 28.0% 25.3% 25.2% 24.1% 24.7% 29.7% 26.4% 27.5%
Operating Leverage (∆ PF op inc / ∆ Revenues) 4.9% -2.9% 8.0% 11.4% 11.0% 5.9% 8.4% 5.6% 5.5% 6.9% 6.9% 6.3% 6.8%
April 07, 2008 95

Figure 117: Amazon Segment Analysis, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
NET SALES
North America
Media 3,045,000 3,581,000 990,000 923,000 1,081,000 1,637,000 4,631,000 1,257,300 1,135,290 1,275,580 2,046,250 5,714,420 6,743,016
% change 17.6% 17.6% 21.5% 26.4% 37.7% 30.9% 29.3% 27.0% 23.0% 18.0% 25.0% 23.4% 18.0%
Electronics and other general merchandise 1,444,000 2,024,000 564,000 606,000 631,000 1,336,000 3,137,000 817,800 860,520 870,780 1,843,680 4,392,780 5,842,397
% change 28.0% 40.2% 50.8% 66.0% 54.3% 52.5% 55.0% 45.0% 42.0% 38.0% 38.0% 40.0% 33.0%
Other 222,000 264,000 68,000 72,000 76,000 111,000 327,000 89,760 90,000 91,200 130,980 401,940 474,289
% change 70.6% 18.9% 17.2% 16.1% 20.6% 37.0% 23.9% 32.0% 25.0% 20.0% 18.0% 22.9% 18.0%
Total North America Sales 4,711,000 5,869,000 1,622,000 1,601,000 1,788,000 3,084,000 8,095,000 2,164,860 2,085,810 2,237,560 4,020,910 10,509,140 13,059,702
% change 22.4% 24.6% 30.1% 38.4% 42.2% 39.7% 37.9% 33.5% 30.3% 25.1% 30.4% 29.8% 24.3%
International
Media 2,886,000 3,485,000 1,000,000 910,000 1,010,000 1,692,000 4,612,000 1,310,000 1,146,600 1,252,400 2,064,240 5,773,240 6,812,423
% change 14.8% 20.8% 31.1% 26.7% 33.4% 35.7% 32.3% 31.0% 26.0% 24.0% 22.0% 25.2% 18.0%
Electronics and other general merchandise 885,000 1,337,000 383,000 364,000 448,000 877,000 2,072,000 578,330 527,800 618,240 1,192,720 2,917,090 3,850,559
% change 58.5% 51.1% 44.5% 40.5% 54.5% 67.7% 55.0% 51.0% 45.0% 38.0% 36.0% 40.8% 32.0%
Other 8,000 20,000 10,000 11,000 16,000 20,000 57,000 22,000 24,200 26,400 31,000 103,600 152,292
% change 236.3% 150.0% 150.0% 120.0% 433.3% 150.0% 185.0% 120.0% 120.0% 65.0% 55.0% 81.8% 47.0%
Total International Sales 3,779,000 4,842,000 1,393,000 1,285,000 1,474,000 2,589,000 6,741,000 1,910,330 1,698,600 1,897,040 3,287,960 8,793,930 10,815,274
% change 22.9% 28.1% 35.0% 30.9% 40.4% 45.6% 39.2% 37.1% 32.2% 28.7% 27.0% 30.5% 23.0%
Total Consolidated Sales

Media 5,931,000 7,066,000 1,990,000 1,833,000 2,091,000 3,329,000 9,243,000 2,567,300 2,281,890 2,527,980 4,110,490 11,487,660 13,555,439
% change 16.2% 19.1% 26.1% 26.6% 35.6% 33.3% 30.8% 29.0% 24.5% 20.9% 23.5% 24.3% 18.0%
Electronics and other general merchandise 2,329,000 3,361,000 947,000 970,000 1,079,000 2,213,000 5,209,000 1,396,130 1,388,320 1,489,020 3,036,400 7,309,870 9,692,956
% change 38.1% 44.3% 48.2% 55.4% 54.4% 58.2% 55.0% 47.4% 43.1% 38.0% 37.2% 40.3% 32.6%
Other 230,000 284,000 78,000 83,000 92,000 131,000 384,000 111,760 114,200 117,600 161,980 505,540 626,581
% change 73.5% 23.5% 25.8% 23.9% 39.4% 47.2% 35.2% 43.3% 37.6% 27.8% 23.6% 31.7% 23.9%
Total Consolidated Sales 8,490,000 10,711,000 3,015,000 2,886,000 3,262,000 5,673,000 14,836,000 4,075,190 3,784,410 4,134,600 7,308,870 19,303,070 23,874,976
% change 22.7% 26.2% 32.3% 34.9% 41.4% 42.3% 38.5% 35.2% 31.1% 26.8% 28.8% 30.1% 23.7%
GROSS PROFIT
North America 1,267,000 1,525,000 439,000 434,000 460,000 698,000 2,031,000 567,193 544,396 570,578 884,600 2,566,768 3,147,388
% change 24% 20% 29% 40% 34% 31% 33% 29% 25% 24% 27% 26% 23%
% margin 26.9% 26.0% 27.1% 27.1% 25.7% 22.6% 25.1% 26.2% 26.1% 25.5% 22.0% 24.4% 24.1%
International 771,000 930,000 280,000 267,000 302,000 472,000 1,321,000 380,156 346,514 388,893 601,697 1,717,260 2,087,348
% change 33% 21% 36% 34% 47% 48% 42% 36% 30% 29% 27% 30% 22%
% margin 20.4% 19.2% 20.1% 20.8% 20.5% 18.2% 19.6% 19.9% 20.4% 20.5% 18.3% 19.5% 19.3%
Total Consolidated 2,038,000 2,455,000 719,000 701,000 762,000 1,170,000 3,352,000 947,349 890,911 959,471 1,486,297 4,284,028 5,234,736
% change 27% 20% 31% 38% 39% 38% 37% 32% 27% 26% 27% 28% 22%
% margin 24.0% 22.9% 23.8% 24.3% 23.4% 20.6% 22.6% 23.2% 23.5% 23.2% 20.3% 22.2% 21.9%
CASH OPERATING EXPENSES

North America 971,000 1,293,000 353,000 352,000 381,000 545,000 1,631,000 454,621 440,106 458,700 673,502 2,026,929 2,442,164
% change 38% 33% 27% 24% 19% 33% 26% 29% 25% 20% 24% 24% 20%
% of sales 20.6% 22.0% 21.8% 22.0% 21.3% 17.7% 20.1% 21.0% 21.1% 20.5% 16.8% 19.3% 18.7%
International 501,000 661,000 187,000 184,000 204,000 297,000 872,000 254,074 236,105 263,689 371,539 1,125,407 1,351,909
% change 22% 32% 26% 27% 31% 40% 32% 36% 28% 29% 25% 29% 20%
% of sales 13.3% 13.7% 13.4% 14.3% 13.8% 11.5% 12.9% 13.3% 13.9% 13.9% 11.3% 12.8% 12.5%
Total Consolidated 1,472,000 1,954,000 540,000 536,000 585,000 842,000 2,503,000 708,694 676,211 722,388 1,045,042 3,152,336 3,794,074
% change 32% 33% 26% 25% 23% 36% 28% 31% 26% 23% 24% 26% 20%
% of sales 17.3% 18.2% 17.9% 18.6% 17.9% 14.8% 16.9% 17.4% 17.9% 17.5% 14.3% 16.3% 15.9%
PF OPERATING INCOME
North America 296,000 232,000 86,000 82,000 79,000 153,000 400,000 112,573 104,291 111,878 211,098 539,839 705,224
% change -8% -22% 39% 228% 259% 24% 72% 31% 27% 42% 38% 35% 31%
% margin 6.3% 4.0% 5.3% 5.1% 4.4% 5.0% 4.9% 5.2% 5.0% 5.0% 5.3% 5.1% 5.4%
International 270,496 269,000 93,000 83,000 98,000 175,000 449,000 126,082 110,409 125,205 230,157 591,853 735,439
% change 60% -1% 60% 51% 96% 65% 67% 36% 33% 28% 32% 32% 24%
% margin 7.2% 5.6% 6.7% 6.5% 6.6% 6.8% 6.7% 6.6% 6.5% 6.6% 7.0% 6.7% 6.8%
Total Consolidated 566,496 501,000 179,000 165,000 177,000 328,000 849,000 238,655 214,700 237,083 441,255 1,131,692 1,440,663
% change 16% -12% 49% 106% 146% 43% 69% 33% 30% 34% 35% 33% 27%
% margin 6.7% 4.7% 5.9% 5.7% 5.4% 5.8% 5.7% 5.9% 5.7% 5.7% 6.0% 5.9% 6.0%
SHARE OF REVENUE BY CATEGORY

North America Sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Media 65% 61% 61% 58% 60% 53% 57% 58% 54% 57% 51% 54% 52%
Electronics and other general merchandise 31% 34% 35% 38% 35% 43% 39% 38% 41% 39% 46% 42% 45%
Other 5% 4% 4% 4% 4% 4% 4% 4% 4% 4% 3% 4% 4%
International Sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Media 76% 72% 72% 71% 69% 65% 68% 69% 68% 66% 63% 66% 63%
Other 0% 0% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Total Consolidated Sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Media 70% 66% 66% 64% 64% 59% 62% 63% 60% 61% 56% 60% 57%
Other 3% 3% 3% 3% 3% 2% 3% 3% 3% 3% 2% 3% 3%
SHARE OF REVENUE BY GEOGRAPHY
SHARE OF OPERATING INCOME BY GEOGRAPHY
SEASONALITY
Net Sales 100% 100% 20% 19% 22% 38% 100% 21% 20% 21% 38% 100% 100%
PF Operating Income 100% 100% 21% 19% 21% 39% 100% 21% 19% 21% 39% 100% 100%
96 April 07, 2008

Figure 118: Amazon Cash Flow Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006E 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E

Net income (loss) 359,000 190,000 111,000 78,000 80,000 207,000 476,000 133,969 113,592 131,652 276,998 656,211 915,176
Equity in losses of equity-method investees - - - - - - - - -
Amortization of goodwill, other intangibles 3,000 10,000 - 3,000 3,000 3,000 9,000 2,000 2,000 2,000 2,000 8,000 8,000
Non-cash restructuring-related and other 4,000 - - - - - - - -
(Gain) Losses on sale of marketable securities, net (1,000) (2,000) - - - - - - -
Remeasurement of PEACS and other (42,000) (10,000) 3,000 5,000 3,000 (1,000) 10,000 - -
Non-cash interest expense, deferred taxes and other 4,000 3,000 - - - - - - -
Deferred income taxes 71,000 23,000 2,000 (2,000) (2,000) (97,000) (99,000) 41,599 34,454 40,710 89,470 206,233 98,055
Excess tax benefit on stock awards (64,000) (24,000) (35,000) (34,000) (163,000) (256,000) (30,000) (35,000) (35,000) (125,000) (225,000) (250,000)
Cumulative effect of accounting change (26,000) - - - - - - - -
Changes in working capital: - -
Inventories (105,000) (282,000) 126,000 25,000 (223,000) (231,000) (303,000) 181,203 110,539 (166,738) (459,867) (334,863) (327,385)
Accounts receivable, net and other current assets (84,000) (103,000) 66,000 (10,000) (73,000) (237,000) (254,000) 93,722 5,773 (97,376) (393,449) (391,331) (288,418)
Accounts payable 275,000 402,000 (602,000) 82,000 304,000 1,144,000 928,000 (879,661) 52,554 202,772 1,483,770 859,435 977,310
Accrued expenses and other current liabilities 102,000 203,000 (58,000) 31,000 58,000 399,000 430,000 (63,210) 14,624 121,890 396,381 469,685 425,813
Increases to unearned revenue 156,000 206,000 45,000 64,000 56,000 79,000 244,000 - - - - - -
Amortization of previously unearned revenue (149,000) (181,000) (44,000) (48,000) (47,000) (71,000.00) (210,000) - -
Interest payable (41,000) - - - - - - - -
Net cash provided by (used in) operating activities 733,000 701,000 (279,000) 299,000 237,000 1,149,000 1,406,000 (400,378) 422,536 321,909 1,395,305 1,739,372 2,069,301
Total Change in Working Capital 154,000 245,000 (467,000) 144,000 75,000 1,083,000 835,000 (667,947) 183,490 60,548 1,026,836 602,927 787,320

Sales and maturities of marketable securities 836,000 1,844,000 784,000 161,000 210,000 115,000 1,270,000 - -
Purchases of marketable securities (1,386,000) (1,929,000) (514,000) (180,000) (83,000) (153,000) (930,000) - -
Purchases of fixed assets, incl. software, site devel. (203,000) (216,000) (34,000) (47,000) (69,000) (73,000) (223,000) (61,128) (56,766) (74,423) (109,633) (301,950) (382,000)
Proceeds from sale of subsidiary and other - - - (22,000) (24,000) (29,000) (75,000) - -
Investments in equity-method investees, other (24,000) (32,000) (1,000) - - - (1,000) - -
Net cash provided by (used in) investing activities (777,000) (333,000) 235,000 (88,000) 34,000 (140,000) 41,000 (61,128) (56,766) (74,423) (109,633) (301,950) (382,000)

Proceeds from exercise of stock options, other 61,000 35,000 9,000 - 35,000 12,000 56,000 - -
Excess tax benefit on stock awards 4,000 102,000 24,000 35,000 34,000 164,000 257,000 30,000 35,000 35,000 125,000 225,000 250,000
Common stock repurchased - (252,000) (248,000) (248,000) - -
Proceeds from issuance of common stock, net - - - 35,000 - - 35,000 - -
Proceeds from long-term debt, other 13,000 99,000 - - 33,000 3,000 36,000 - -
Repayment of long-term debt (271,000) (383,000) (17,000) - (29,000) (11,000) (57,000) - (900,000)
Repayment of capital lease obligation, other - - - (29,000) - - (29,000) - -
Financing costs - - - - - - - - -
Net cash provided by (used in) financing activities (193,000) (399,000) (232,000) 41,000 73,000 168,000 50,000 30,000 35,000 35,000 125,000 225,000 (650,000)
Effect of exchange-rate on cash and equivalents (53,000) 40,000 2,000 4,000 18,000 (4,000) 20,000 - -
Net change in cash (290,000) 9,000 (274,000) 256,000 362,000 1,173,000 1,517,000 (431,506) 400,770 282,486 1,410,672 1,662,422 1,037,301
Cash & equivalents - BOP 1,302,600 1,012,600 1,021,600 747,600 1,003,600 1,365,600 1,021,600 2,538,600 2,107,094 2,507,864 2,790,350 2,538,600 4,201,022
Cash & equivalents - EOP 1,012,600 1,021,600 747,600 1,003,600 1,365,600 2,538,600 2,538,600 2,107,094 2,507,864 2,790,350 4,201,022 4,201,022 5,238,323
Other cash flow information:

Fixed assets acquired under capital leases, other financing
Equity securities received for commercial agreements
Stock issued in connection with business acquisitions
Cash paid for interest 105,000 86,000 43,000 - 22,000 1,000 66,000
Cash paid for income tax 12,000 14,000 3,000 3,000 4,000 10,000 20,000

Operating cash flow 733,000 701,000 (279,000) 299,000 237,000 1,149,000 1,406,000 (400,378) 422,536 321,909 1,395,305 1,739,372 2,069,301
Purchases of fixed assets (203,000) (216,000) (34,000) (47,000) (69,000) (73,000) (223,000) (61,128) (56,766) (74,423) (109,633) (301,950) (382,000)
One time Items 40,000 - - - - - - - - - - - -
Free Cash Flow 570,000 485,000 (313,000) 252,000 168,000 1,076,000 1,183,000 (461,506) 365,770 247,486 1,285,672 1,437,422 1,687,301
% change 19.4% -14.9% NA 250.0% 147.1% 55.0% 143.9% 47.4% 45.1% 47.3% 19.5% 21.5% 17.4%
Cumulative Free Cash Flow last four quarters 521,000 701,000 801,000 1,183,000 1,034,494 1,148,264 1,227,750 1,437,422
% change -3.7% 68.9% 118.9% 143.9% 98.6% 63.8% 53.3% 21.5%
Free Cash Flow Conversion of Operating Cash Flow 78% 69% NA 84% 71% 94% 84% 83% 82%
Revenue 8,490,000 10,711,000 3,015,000 2,886,000 3,262,000 5,673,000 14,836,000 4,075,190 3,784,410 4,134,600 7,308,870 19,303,070 23,874,976
Capex 203,000 216,000 34,000 47,000 69,000 73,000 223,000 61,128 56,766 74,423 109,633 301,950 382,000
Y/Y Growth 128% 6% -26% -19% 11% 46% 3% 80% 21% 8% 50% 35% 27%
Capex as % of Revenue 2.4% 2.0% 1.1% 1.6% 2.1% 1.3% 1.5% 1.5% 1.5% 1.8% 1.5% 1.6% 1.6%
April 07, 2008 97

Figure 119: Amazon Discounted Cash Flow Analysis ($ in thousands, except per share data)
2007E-2012E
2006A 2007E 2008E 2009E 2010E 2011E 2012E CAGR
Net Sales 10,711,000 14,836,000 19,303,070 23,874,976 28,446,451 32,708,503 36,635,086 19.8%
% change 26.2% 38.5% 30.1% 23.7% 19.1% 15.0% 12.0%
EBITDA 706,000 1,095,000 1,382,692 1,704,213 2,074,215 2,428,869 2,769,435 20.4%

% change 2.8% 55.1% 26.3% 23.3% 21.7% 17.1% 14.0%
Cash Taxes (15,000) (25,000) (75,000) (294,164) (501,121) (615,775) (704,277)

Capex (216,000) (223,000) (301,950) (382,000) (455,143) (523,336) (604,479)
Change in working capital 245,000 835,000 602,927 787,320 783,256 825,647 797,018
Unlevered Free Cash Flow 720,000 1,682,000 1,608,669 1,815,369 1,901,207 2,115,405 2,257,698 6.1%
% change 15.1% 133.6% -4.4% 12.8% 4.7% 11.3% 6.7%
2006 PV of Cash Flow 720,000 1,501,786 1,282,421 1,292,144 1,208,251 1,200,338 1,143,820
Per Share $1.70 $3.54 $3.02 $3.04 $2.85 $2.83 $2.69
3,046,070.7
2007 PV of Cash Flow 1,682,000 1,436,311 1,447,201 1,353,242 1,344,378 1,281,078
Per Share $3.97 $3.39 $3.42 $3.19 $3.17 $3.02
2008 PV of Cash Flow 1,608,669 1,620,865 1,515,631 1,505,703 1,434,808

Per Share $3.74 $3.77 $3.52 $3.50 $3.34
2009 PV of Cash Flow 1,815,369 1,901,207 2,115,405 2,257,698

Per Share $4.28 $4.49 $4.99 $5.33
Terminal EBITDA multiple 12.0x 12.0x 12.0x 12.0x

Discount Rate 12.0% 12.0% 12.0% 12.0% 3,046,070.7
Terminal value 33,233,222 33,233,222 33,233,222 33,233,222
Implied Terminal FCF Multiple 14.7x 14.7x 14.7x 14.7x
Present value of FCF 8,348,759 8,544,210 7,685,676 6,077,007

Present value of terminal value 16,836,984 18,857,423 21,120,313 23,654,751
Implied Firm Value 25,185,744 27,401,633 28,805,989 29,731,758
Plus: Cash 2,019,000 3,112,000 4,774,022 5,811,323

Less: Debt 1,247,000 1,282,000 1,282,000 382,000
Implied Equity Value 25,957,744 29,231,633 32,298,011 35,161,081
Fully diluted shares outstanding 424,500 423,750 430,000 431,875
Equity Value Per Share $61.15 $68.98 $75.11 $81.41
98 April 07, 2008

Figure 120: IAC/InterActiveCorp Snapshot

- We believe that IAC's decision to split into five publicly traded companies (IAC,
HSN, Ticketmaster, Interval International, and Lending Tree) should ultimately help - Weakness in smaller biz: Lehnding Tree, EPI, Cornerstone masking solid trends
to unlock value in the shares. in HSN and Ticketmaster
- The two largest businesses, Retailing and Ticketing, generate solid FCF and fund - Will be challenging for HSN to close gap w/ QVC; operational issues, brand
investment in emerging properties recognition, scale, channel placement
- Ask.com's renewed search partnership with Google should provide incremental - Tough N-T macro trends around Lending; loan origination increases overall risk
upside to 2008 numbers and beyond. profile
- Multi-brand strategy with leading positions across a number of verticals such as

tickets and personals - IAC remains a complicated story in a challenging market
- Net L-T buyer of its own stock. Repurchased 15.6M shares in 2007, 6M YTD
2008; 44.8M shares remain under authorization - Whether HSN can continue to outperform given overall retail trends
- Strong balance sheet: $2.4 billion in cash & investments, and ~$1 billion in debt - No growth in 1Q08
- Valuation: currently trading at 5.4x 2008E EBITDA
What to Watch For
- Continued signs of improved performance at HSN
- Trends in the overall ticket & event mkt along with Ticketmaster pricing power &
rev splits
- Ticketmaster-LiveNation deal runs through end of 2008; Accounts for ~15% of

Ticketmaster revs
- Signs that Lending can survive macro environment
- Continued share buybacks; 7.6M 1Q07; 8M in 3Q; (none in 2Q or 4Q07).

Repurchased 6M shares post-4Q07, approx 45M left in authorization
- Potential for sponsored spins
- Easier comps starting 2Q08
- Shift of Ask from network to proprietary after Google quality clean-up
April 07, 2008 99

Figure 121: IAC/InterActiveCorp Income Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue 5,416.5 5,908.9 1,490.1 1,509.8 1,513.3 1,860.1 6,373.3 1,487.2 1,556.8 1,588.2 1,926.0 6,558.3 6,649.8
Cost of revenue 2,855.2 2,980.4 838.5 784.8 801.6 1,017.6 3,442.5 795.7 797.1 827.4 1,003.5 3,423.7 3,457.9
Gross profit 2,561.3 2,928.5 651.6 725.0 711.7 842.6 2,930.9 691.6 759.7 760.7 922.6 3,134.6 3,191.9
Selling and marketing expense 946.2 1,265.8 343.4 345.1 301.9 361.5 1,352.0 297.4 350.3 317.6 375.6 1,340.9 1,316.7
General and administrative expense 656.8 748.2 212.0 205.9 208.7 225.3 852.0 208.2 199.3 203.3 227.3 838.0 837.9
Other operating expense 85.2 114.2 37.0 28.0 14.8 33.1 112.9 24.5 29.4 11.4 20.2 85.5 87.3
Other (one-time expenses, restructuring, etc.) - - - - - - - - - - - - -
EBITDA 873.1 959.9 179.4 173.1 211.8 251.8 816.2 161.4 180.8 228.4 299.5 870.1 950.1
Amortization of cable distribution fees 70.4 67.5 1.2 1.2 1.2 1.2 4.9 0.5 0.5 0.5 0.5 2.0 -
Depreciation 133.7 150.5 37.8 38.7 39.3 40.6 156.4 40.6 40.6 41.1 41.1 163.3 168.0
Other adjustments 9.6 (0.1) - (0.2) (0.1) (0.1) (0.4) - - - - - -
EBITA 659.4 742.1 140.4 133.4 171.4 210.1 655.3 120.3 139.7 186.8 257.9 704.8 782.1
Amortization of non-cash distrib. & mktg - 37.1 0.5 24.0 13.1 16.6 54.1 11.0 11.0 10.5 10.5 43.0 -
Amortization of non-cash compensation 137.5 92.3 24.2 26.9 25.2 29.3 105.6 25.0 25.0 25.0 25.0 100.0 95.0
Goodwill impairment - 189.1 - - - 507.8 507.8 - - - - - -
Merger costs - - - - - - - - - - - - -
Operating income 335.3 240.8 85.5 52.2 102.0 (399.3) (159.6) 53.3 71.7 119.3 177.4 421.8 547.1
Interest income (expense), net 63.4 10.3 4.1 3.0 0.2 (1.0) 6.3 (1.1) 1.0 2.8 7.4 10.2 29.7
Equity in income of VUE 523.5 - - - - 16.7 16.7 - - - - - -
Equity in the income (loss) of affiliates and other 60.5 31.9 8.6 13.5 15.9 26.5 64.5 12.5 12.5 12.5 12.5 50.0 50.0
Income (loss) before taxes and minority interest 982.8 283.0 98.2 68.7 118.1 (357.2) (72.1) 64.7 85.3 134.7 197.3 482.0 626.8
Income tax expense (benefit) 389.8 119.2 37.5 23.0 47.4 30.1 138.0 25.2 33.2 52.5 77.0 188.0 244.5
Effective tax rate 39.7% 42.1% 38.2% 33.5% 40.1% -8.4% -191.4% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0%
Minority interest (2.3) 0.5 (0.1) 0.4 2.9 1.4 4.6 (2.0) (2.0) (2.0) (2.0) (8.0) (6.0)
Net Income (loss) from Continuing Operations 590.8 164.3 60.6 46.1 73.6 (385.9) (205.6) 37.5 50.0 80.1 118.4 286.0 376.3
Diluted income (loss) per share from continuing ops $1.68 $0.51 $0.20 $0.15 $0.25 ($1.36) ($0.72) $0.13 $0.18 $0.29 $0.43 $1.03 $1.36
One-time items 70.2 9.6 - 35.1 (1.6) - 33.5 - - - - - -
Income from discontinued operations 209.7 13.2 0.1 13.5 (1.6) 16.0 28.0 - - - - - -
Earnings before preferred dividends 870.6 187.1 60.7 94.7 70.4 (369.9) (144.1) 37.5 50.0 80.1 118.4 286.0 376.3
Preferred dividends (8.0) - - - - - - - - - - - -
Net earnings available to common shareholders 862.6 187.1 60.7 94.7 70.4 (369.9) (144.1) 37.5 50.0 80.1 118.4 286.0 376.3
Diluted earnings (loss) per share $2.45 $0.59 $0.20 $0.31 $0.24 ($1.31) ($0.50) $0.13 $0.18 $0.29 $0.43 $1.03 $1.36
Adjusted Net Income Calculation
Net income 862.7 187.1 60.7 94.7 70.4 (369.9) (144.1) 37.5 50.0 80.1 118.4 286.0 376.3
Amortization of non-cash distrib. & mktg - 37.1 0.5 24.0 13.1 16.6 54.1 11.0 11.0 10.5 10.5 43.0 -
Discontinued ops & other (283.2) 191.6 6.3 (50.5) (3.2) 507.8 460.4 - - - - - -
Equity in the income of VUE (545.4) - - - - (16.4) (16.4) - - - - - -
Equity in the income (loss) of affiliates and other - - - - - - - - - - - - -
Impact of income taxes and minority interest 106.7 (168.6) (21.2) (30.0) (25.8) (83.8) (160.8) (24.8) (25.2) (25.0) (29.8) (104.7) (87.0)
Adjusted Net Income 464.8 522.3 100.7 95.3 110.8 139.4 446.2 79.7 92.8 122.7 169.1 464.3 524.4
Adjusted EPS $1.31 $1.60 $0.32 $0.31 $0.36 $0.46 $1.46 $0.27 $0.32 $0.42 $0.58 $1.59 $1.81
Adjusted shares outstanding 356.0 327.3 310.8 309.3 305.2 299.8 306.3 292.3 292.3 292.3 291.3 292.1 290.1
Y/Y GROWTH
Revenue 29.5% 9.1% 10.3% 5.7% 7.4% 8.1% 7.9% -0.2% 3.1% 4.9% 3.5% 2.9% 1.4%
Cost of revenue 19.2% 4.4% 24.1% 9.2% 13.4% 15.7% 15.5% -5.1% 1.6% 3.2% -1.4% -0.5% 1.0%
Gross profit 43.5% 14.3% -3.5% 2.1% 1.4% 0.2% 0.1% 6.1% 4.8% 6.9% 9.5% 7.0% 1.8%
Selling and marketing NA 33.8% 9.6% 6.6% 2.7% 8.0% 6.8% -13.4% 1.5% 5.2% 3.9% -0.8% -1.8%
General and administrative NA 13.9% 21.6% 9.4% 9.4% 15.6% 13.9% -1.8% -3.2% -2.6% 0.9% -1.6% 0.0%
EBITDA 38.4% 9.9% -14.3% -21.9% -6.3% -16.9% -15.0% -10.1% 4.5% 7.8% 18.9% 6.6% 9.2%
EBITA 57.7% 12.5% -6.8% -18.1% 2.0% -19.3% -11.7% -14.3% 4.8% 9.0% 22.8% 7.6% 11.0%
SEQUENTIAL GROWTH
Revenue -13.4% 1.3% 0.2% 22.9% -20.0% 4.7% 2.0% 21.3%
EBITA -46.1% -5.0% 28.5% 22.6% -42.8% 16.2% 33.7% 38.0%
EBITDA -40.8% -3.5% 22.4% 18.9% -35.9% 12.1% 26.3% 31.1%
% OF REVENUES
Cost of sales 52.7% 50.4% 56.3% 52.0% 53.0% 54.7% 54.0% 53.5% 51.2% 52.1% 52.1% 52.2% 52.0%
Selling and marketing expense 17.5% 21.4% 23.0% 22.9% 20.0% 19.4% 21.2% 20.0% 22.5% 20.0% 19.5% 20.4% 19.8%
General and administrative expense 12.1% 12.7% 14.2% 13.6% 13.8% 12.1% 13.4% 14.0% 12.8% 12.8% 11.8% 12.8% 12.6%
Other operating expenses 1.6% 1.9% 2.5% 1.9% 1.0% 1.8% 1.8% 1.7% 1.9% 0.7% 1.1% 1.3% 1.3%
MARGINS
Gross margin 47.3% 49.6% 43.7% 48.0% 47.0% 45.3% 46.0% 46.5% 48.8% 47.9% 47.9% 47.8% 48.0%
Operating margin 6.2% 4.1% 5.7% 3.5% 6.7% -21.5% -2.5% 3.6% 4.6% 7.5% 9.2% 6.4% 8.2%
EBITA margin 12.2% 12.6% 9.4% 8.8% 11.3% 11.3% 10.3% 8.1% 9.0% 11.8% 13.4% 10.7% 11.8%
EBITDA margin 16.1% 16.2% 12.0% 11.5% 14.0% 13.5% 12.8% 10.8% 11.6% 14.4% 15.5% 13.3% 14.3%
Operating leverage (∆EBITA / ∆Revenue) 19.5% 16.8% -7.4% -36.3% 3.2% -36.0% -18.7% 703.7% 13.5% 20.6% 72.6% 26.8% 84.5%
100 April 07, 2008

Figure 122: IAC/InterActiveCorp Segment Breakdown – Revenue and EBITA, 2005–09E

($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
REVENUE
Retailing
U.S. 2,671.0 2,933.4 685 701 700 905 2,992 694 710 718 923 3,046 3,138
Total Retailing 2,671.0 2,933.4 685 701 700 905 2,992 694 710 718 923 3,046 3,138
Transactions
Ticketmaster 950.1 1,085.4 310 303 301 355 1,269 310 339 345 406 1,399 1,260
Lending & Real Estate 425.5 485.5 113 114 77 52 356 68 74 61 48 251 239
Service Magic (Home Services) 41.0 63.8 22 25 25 22 93 25 29 27 24 105 115
Total Services 1,416.6 1,634.7 445 442 403 429 1,718 402 442 433 478 1,755 1,614
Media & Advertising

IAC Search and Media 371.6 470.4 147 152 170 203 672 152 168 182 202 704 793
Citysearch, Evite, Other 48.5 73.8 21 22 20 23 86 22 23 22 25 92 96
Total Media & Advertising 213.5 544.2 168 174 190 227 759 174 190 203 228 795 889
Membership & Subscriptions

Interval (Vacations) 272.8 288.7 86 86 96 92 360 104 99 103 96 401 431
Match.com 249.5 311.2 82 87 89 91 349 90 95 98 96 379 393
Entertainment (Discounts) 219.0 196.7 21 19 33 110 183 19 18 32 104 173 169
Intra-Sector Elimination (1.5) 0.0 0 0 0 0 0 - - - - - -
Total Membership & Subscriptions 739.8 796.6 190 191 218 293 892 212 211 233 296 953 994
Emerging Businesses 1.1 7.5 4 5 8 16 33 6 7 6 6 25 34

Intersegment Eliminations (5.1) (7.6) (1) (4) (6) (9) (21) (2) (3) (5) (5) (15) (20)
TOTAL REVENUE 5,036.7 5,908.8 1,490 1,510 1,513 1,860 6,373 1,487 1,557 1,588 1,926 6,558 6,650
EBITA
Retailing
U.S. 277 269 40 38 47 85 211 39 43 50 90 222 238
Total Retailing 277 269 40 38 47 85 211 39 43 50 90 222 238
Transactions
Ticketmaster 219 264 72 59 62 71 264 63 68 69 77 277 252
Lending & Real Estate 64 42 (4) (4) (7) (28) (43) (12) (10) (4) (3) (28) (2)
Service Magic (Home Services) 11 16 6 7 5 2 21 5 6 6 4 21 22
Total Services 294 323 74 62 60 45 241 57 63 71 78 270 272
Media & Advertising

Total Media & Advertising 31 58 17 12 28 31 88 22 23 32 37 113 147

Interval (Vacations) 111 116 39 34 34 32 139 40 38 39 35 152 164
Match.com 48 64 8 20 30 21 78 9 21 28 23 82 87
Entertainment (Discounts) 18 14 (13) (14) (1) 37 9 (14) (14) (2) 25 (6) 3
Total Membership & Subscriptions 176 193 34 40 62 89 226 35 45 65 84 229 254
Emerging Businesses (12) (16) (3) 3 (5) (7) (12) (4) (7) (7) (7) (25) (25)
Corporate (106) (86) (23) (22) (21) (33) (99) (28) (27) (24) (25) (104) (104)
Subtotal 659 742 140 133 171 210 655 120 140 187 258 705 782
Intersegment Eliminations - - - - - - - - -
TOTAL EBITA 659 742 140 133 171 210 655 120 140 187 258 705 782
April 07, 2008 101

Figure 123: IAC/InterActiveCorp Segment Breakdown – Growth Rates and Margins, 2005–09E
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
REVENUE GROWTH
Retailing
U.S. 40% 10% 2% 1% 2% 3% 2% 1% 1% 3% 2% 2% 3%
Total Retailing 19% 10% 2% 1% 2% 3% 2% 1% 1% 3% 2% 2% 3%
Transactions
Ticketmaster 24% 14% 26% 3% 13% 27% 17% 0% 12% 14% 14% 10% -10%
Lending & Real Estate 124% 14% -10% -7% -37% -55% -27% -40% -35% -20% -8% -29% -5%
Service Magic (Home Services) NA 56% 54% 58% 33% 43% 46% 15% 14% 10% 9% 12% 10%
Total Services 13% 15% 15% 2% -1% 5% 5% -10% 0% 8% 11% 2% -8%
Media & Advertising

IAC Search and Media 66% 27% 42% 33% 46% 49% 43% 3% 10% 7% 0% 5% 13%
Citysearch, Evite, Other 16% 52% 48% 27% 5% 0% 17% 4% 3% 10% 9% 6% 5%
Total Media & Advertising NA 155% 43% 33% 40% 42% 39% 4% 9% 7% 1% 5% 12%

Interval (Vacations) 6% 6% 10% 20% 36% 35% 25% 20% 15% 7% 4% 11% 8%
Match.com 26% 25% 12% 11% 11% 14% 12% 9% 10% 10% 6% 9% 4%
Entertainment (Discounts) 0% -10% -13% -3% 4% -9% -7% -8% -7% -4% -5% -5% -2%
Intra-Sector Elimination NA NA NA NA NA NA NA NA NA NA NA NA NA
Total Membership & Subscriptions 10% 8% 8% 13% 20% 9% 12% 12% 10% 7% 1% 7% 4%
TOTAL REVENUE 20% 17% 10% 6% 7% 8% 8% 0% 3% 5% 4% 3% 1%
EBITA GROWTH
Retailing
U.S. 42% -3% -33% -37% -18% -7% -22% -2% 11% 6% 6% 5% 7%
Total Retailing 39% -3% -33% -37% -18% -7% -22% -2% 11% 6% 6% 5% 7%
Transactions
Ticketmaster 33% 21% 9% -22% 9% 8% 0% -11% 15% 11% 9% 5% -9%
Lending & Real Estate 198% -34% -145% -138% -157% -340% -201% 230% 166% -48% -90% NA -92%
Service Magic (Home Services) NA 44% 94% 61% -10% -20% 29% -16% -15% 3% 109% 1% 7%
Total Services 45% 10% -3% -31% -20% -44% -25% -23% 2% 18% 75% 12% 1%
Media & Advertising

Total Media & Advertising NA 91% 48% 9% 74% 55% 50% 26% 95% 14% 19% 29% 30%

Match.com 74% 33% 40% 13% 53% 0% 23% 1% 9% -4% 12% 4% 6%
Entertainment (Discounts) -20% -21% NA NA NA -23% -36% NA NA NA -32% -162% -161%
Total Membership & Subscriptions 26% 10% 29% 47% 47% -8% 17% 1% 12% 5% -6% 1% 11%
TOTAL EBITA 58% 13% -7% -18% 2% -19% -12% -14% 5% 9% 23% 8% 11%
EBITA MARGIN
Retailing
U.S. 10.4% 9.2% 5.8% 5.5% 6.7% 9.4% 7.0% 5.6% 6.0% 7.0% 9.8% 7.3% 7.6%
Total Retailing 10.4% 9.2% 5.8% 5.5% 6.7% 9.4% 7.0% 5.6% 6.0% 7.0% 9.8% 7.3% 7.6%
Transactions
Ticketmaster 23.0% 24.4% 23.1% 19.5% 20.5% 20.0% 20.8% 20.5% 20.0% 20.0% 19.0% 19.8% 20.0%
Lending & Real Estate 15.0% 8.7% -3.1% -3.4% -9.2% -54.3% -12.0% -17.0% -14.0% -6.0% -6.0% -11.3% -1.0%
Service Magic (Home Services) 27.4% 25.2% 28.7% 28.1% 22.0% 9.1% 22.2% 21.0% 21.0% 20.5% 17.5% 20.1% 19.5%
Total Services 20.7% 19.7% 16.7% 14.1% 14.9% 10.4% 14.1% 14.2% 14.4% 16.3% 16.4% 15.4% 16.9%
Media & Advertising

Total Media & Advertising 14.3% 10.7% 10.2% 6.7% 14.5% 13.8% 11.6% 12.4% 12.0% 15.5% 16.3% 14.2% 16.5%

Interval (Vacations) 40.6% 40.2% 45.0% 39.7% 35.6% 34.2% 38.5% 39.0% 38.0% 38.0% 37.0% 38.0% 38.0%
Match.com 19.2% 20.4% 10.2% 22.6% 33.1% 23.1% 22.5% 9.5% 22.6% 29.0% 24.3% 21.6% 22.0%
Entertainment (Discounts) 8.0% 7.1% -62.8% -71.4% -4.2% 33.5% 4.9% -75.0% -80.0% -7.0% 24.0% -3.2% 2.0%
Total Membership & Subscriptions 23.8% 24.3% 18.1% 21.0% 28.5% 30.5% 25.3% 16.3% 21.3% 28.0% 28.3% 24.0% 25.5%
Emerging Businesses NA NA NA NA NA NA NA NA NA NA NA NA NA
Corporate NA NA NA NA NA NA NA NA NA NA NA NA NA
TOTAL EBITA MARGIN 13.1% 12.6% 9.4% 8.8% 11.3% 11.3% 10.3% 8.1% 9.0% 11.8% 13.4% 10.7% 11.8%
102 April 07, 2008

Figure 124: IAC/InterActiveCorp Segment Breakdown – Share of Revenue and EBITA, 2005–09E
REVENUE
Retailing
U.S. 53% 50% 46% 46% 46% 49% 47% 47% 46% 45% 48% 46% 47%
Total Retailing 53% 50% 46% 46% 46% 49% 47% 47% 46% 45% 48% 46% 47%
Transactions
Ticketmaster 19% 18% 21% 20% 20% 19% 20% 21% 22% 22% 21% 21% 19%
Lending & Real Estate 8% 8% 8% 8% 5% 3% 6% 5% 5% 4% 2% 4% 4%
Service Magic (Home Services) 1% 1% 1% 2% 2% 1% 1% 2% 2% 2% 1% 2% 2%
Total Services 28% 28% 30% 29% 27% 23% 27% 27% 28% 27% 25% 27% 24%
Media & Advertising

Ask.com 7% 8% 10% 10% 11% 11% 11% 10% 11% 11% 11% 11% 12%
Other Media & Services 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Total Media & Advertising 4% 9% 11% 12% 13% 12% 12% 12% 12% 13% 12% 12% 13%

Match.com 5% 5% 6% 6% 6% 5% 5% 6% 6% 6% 5% 6% 6%
Entertainment (Discounts) 4% 3% 1% 1% 2% 6% 3% 1% 1% 2% 5% 3% 3%
Intra-Sector Elimination 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Emerging Businesses 0% 0% 0% 0% 1% 1% 1% 0% 0% 0% 0% 0% 1%
Intersegment Eliminations 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
TOTAL REVENUE 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
EBITA
Retailing
U.S. 42% 36% 28% 29% 28% 41% 32% 32% 30% 27% 35% 32% 30%
Total Retailing 42% 36% 28% 29% 28% 41% 32% 32% 30% 27% 35% 32% 30%
Transactions
Ticketmaster 33% 36% 51% 44% 36% 34% 40% 53% 48% 37% 30% 39% 32%
Lending & Real Estate 10% 6% -2% -3% -4% -13% -7% -10% -7% -2% -1% -4% 0%
Service Magic (Home Services) 2% 2% 4% 5% 3% 1% 3% 4% 4% 3% 2% 3% 3%
Total Services 45% 44% 53% 47% 35% 21% 37% 48% 45% 38% 30% 38% 35%
Media & Advertising

Total Media & Advertising 5% 8% 12% 9% 16% 15% 13% 18% 16% 17% 14% 16% 19%

Match.com 7% 9% 6% 15% 17% 10% 12% 7% 15% 15% 9% 12% 11%
Entertainment (Discounts) 3% 2% -9% -10% -1% 18% 1% -12% -10% -1% 10% -1% 0%
Emerging Businesses -2% -2% -2% 2% -3% -4% -2% -3% -5% -4% -3% -4% -3%
Corporate -16% -12% -16% -17% -12% -16% -15% -23% -19% -13% -10% -15% -13%
Sub Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Intersegment Eliminations 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
TOTAL EBITA 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
April 07, 2008 103

Figure 125: IAC/InterActiveCorp Breakdown – Retailing, 2005–09E ($ in millions, except per share data)
Retailing U.S.
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
FTEs - end of period 91.5 89.1 89.8 89.5 89.8 90.8 90.8 90.8 90.8 90.8 90.8 90.8 90.8
FTEs - average 91.7 89.0 89.5 89.7 89.7 90.3 90.0 90.8 90.8 90.8 90.8 90.8 90.8
Y/Y growth 4.1% -3.0% -1.5% -0.2% 1.6% 2.5% 1.2% 1.5% 1.3% 1.3% 0.6% 0.9% 0.0%
Revenue per average home $21.73 $22.33 $5.37 $4.90 $5.35 $6.76 $22.33 $5.50 $5.04 $5.50 $6.92 $22.97 $23.77
Y/Y growth 0.4% 2.8% 0.5% -0.8% -0.1% 1.7% 0.0% 2.5% 3.0% 2.8% 2.4% 2.9% 3.5%
HSN U.S. Revenue 1,992 1,987 480 439 480 610 2,009 499 458 500 628 2,085 2,158
% change 4.5% -0.3% -1.0% -1.0% 1.5% 4.3% 1.1% 4.0% 4.3% 4.1% 3.0% 3.8% 3.5%
Cornerstone Brands & Shoebuy 679 947 205 262 220 295 983 195 252 218 295 960 980
Y/Y growth NA NA 9.0% 3.8% 3.4% 0.9% 3.9% -5.0% -4.0% -1.0% 0.0% -2.3% 2.0%
# Catalogs Mailed 336 421 103 109 85 104 401
Y/Y growth 25.3% -7.2% -1.8% -8.9% -2.0% -4.8%
Total U.S. Retailing Revenue 2,671 2,933 685 701 700 905 2,992 694 710 718 923 3,046 3,138
Y/Y growth 40.1% 9.8% 1.8% 0.7% 2.1% 3.1% 2.0% 1.3% 1.2% 2.5% 2.0% 1.8% 3.0%
Cost of goods sold 1,647 1,804 432 436 438 574 1,880 439 442 450 585 1,916 1,961
Gross profit 1,024 1,129 254 266 262 331 1,113 256 268 268 339 1,130 1,177
% gross margin 38.3% 38.5% 37.0% 37.9% 37.4% 36.6% 37.2% 36.8% 37.7% 37.3% 36.7% 37.1% 37.5%
Total U.S. EBITA 277 269 40 38 47 85 211 39 43 50 90 222 238

Y/Y growth 42.1% -2.7% -32.5% -36.5% -17.7% -7.4% -21.7% -2.3% 10.9% 6.5% 6.1% 5.5% 7.3%
% EBITA margin 10.4% 9.2% 5.8% 5.5% 6.7% 9.4% 7.0% 5.6% 6.0% 7.0% 9.8% 7.3% 7.6%
Depreciation 41 37 9 9 9 9 35 9 9 9 9 36 36
HSN cable distribution fees 62 67 1 1 1 1 5 1 1 1 1 2 -
EBITDA 380 374 50 48 57 95 250 48 52 60 100 260 274
Y/Y growth 26.7% -1.5% -44.5% -47.2% -33.7% -10.9% -33.1% -2.3% 7.8% 4.5% 5.1% 4.0% 5.5%
% EBITDA margin 14.2% 12.7% 7.2% 6.9% 8.2% 10.5% 8.4% 7.0% 7.3% 8.3% 10.8% 8.5% 8.7%
Operating Metrics
Units shipped 50.7 55.3 12.9 12.9 13.0 17.1
Y/Y growth 25.2% 1.6% -0.8% -1.5% 3.6%
Average price point $57.72 $58.72 $59.39 $60.74 $61.01 $59.16
Y/Y growth 12.7% 1.1% 1.4% 5.1% 1.5%
% of sales on the Internet 26% 28% 31% 32% 32% 35%

Return rate 16.6% 17.7% 18.4% 18.9% 18.9% 17.9%
TOTAL RETAILING
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Retailing Revenue 2,671 2,933 685 701 700 905 2,992 694 710 718 923 3,046 3,138
Y/Y growth 18.8% 9.8% 1.8% 0.7% 2.1% 3.1% 2.0% 1.3% 1.2% 2.5% 2.0% 1.8% 3.0%
Total Retailing EBITA 277 269 40 38 47 85 211 39 43 50 90 222 238
Y/Y growth 39.0% -2.7% -32.5% -36.5% -17.7% -7.4% -21.7% -2.3% 10.9% 6.5% 6.1% 5.5% 7.3%
% margin 10.4% 9.2% 5.8% 5.5% 6.7% 9.4% 7.0% 5.6% 6.0% 7.0% 9.8% 7.3% 7.6%
Depreciation 48 37 9 9 9 9 35 9 9 9 9 36 36
Cable distribution fees 70 67 1 1 1 1 5 1 1 1 1 2 -
Total Retailing EBITDA 395 374 50 48 57 95 250 48 52 60 100 260 274
104 April 07, 2008

Figure 126: IAC/InterActiveCorp Breakdown – Transactions, 2005–09E

Ticketmaster Model
$ and tickets in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Tickets Sold 119.4 128.2 35.9 33.2 34.4 38.8 142.3 34.8 35.7 37.5 42.7 150.7 137.2
Y/Y growth 21.5% 7.4% 14.7% 1.2% 11.3% 16.9% 11.0% -3.0% 7.6% 9.0% 10.0% 5.9% -9.0%
Revenue per ticket sold $7.96 $8.47 $8.63 $9.12 $8.76 $9.14 $8.91 $8.89 $9.48 $9.20 $9.51 $9.28 $9.19
Y/Y growth 1.8% 6.4% 10.0% 1.3% 1.9% 8.7% 5.3% 3.0% 4.0% 5.0% 4.0% 4.1% -1.0%
Total Revenue 950 1,085 310 303 301 355 1,269 310 339 345 406 1,399 1,260
Y/Y growth 23.7% 14.2% 26.1% 2.6% 13.5% 27.1% 16.9% -0.1% 11.9% 14.5% 14.4% 10.3% -9.9%
EBITA 219 264 72 59 62 71 264 63 68 69 77 277 252
Y/Y growth 33.1% 20.9% 8.8% -22.3% 8.5% 8.1% -0.4% -11.4% 14.8% 11.4% 8.6% 5.2% -9.1%
% EBITA margin 23.0% 24.4% 23.1% 19.5% 20.5% 20.0% 20.8% 20.5% 20.0% 20.0% 19.0% 19.8% 20.0%
Depreciation 37 38 10 10 10 11 42 11 11 11 11 44 45
EBITDA 255 303 81 69 72 82 305 74 79 80 88 321 297
Y/Y growth 29.2% 18.5% 8.0% -19.0% 8.7% 9.3% 0.8% -8.5% 13.8% 10.6% 7.0% 5.3% -7.7%
% EBITDA margin 26.9% 27.9% 26.3% 22.9% 24.0% 23.2% 24.1% 24.1% 23.2% 23.2% 21.7% 23.0% 23.5%
Operating Metrics
Total Average Ticket Price (incl. charges) $52.22 $54.99 $57.83 $58.52 $55.20 $62.71 $58.69 $60.14 $61.45 $59.07 $66.47 $61.98 $63.22
Y/Y growth 2.9% 5.3% 14.8% -3.6% 6.0% 11.1% 6.7% 4.0% 5.0% 7.0% 6.0% 5.6% 2.0%
Total Gross Transaction Value 6,236 7,050 2,076 1,943 1,899 2,433 8,351 2,094 2,195 2,215 2,837 9,341 8,670
Y/Y growth 25.0% 13.1% 31.7% -2.4% 18.0% 29.8% 18.5% 0.9% 13.0% 16.6% 16.6% 11.9% -7.2%
Offline tickets sold 54.5 52.9 14.0 12.3 12.0 12.8 51.1 11.1 11.4 12.4 13.7 48.6 41.1
Y/Y growth 15.7% -3.0% 4.0% -10.8% -5.0% -1.1% -3.3% -20.4% -6.9% 2.8% 6.7% -4.9% -15.3%
% tickets sold offline 45.6% 41.2% 39.0% 37.0% 35.0% 33.0% 35.9% 32.0% 32.0% 33.0% 32.0% 32.2% 30.0%
Online tickets sold 65.0 75.3 21.9 20.9 22.4 26.0 91.2 23.7 24.3 25.1 29.0 102.1 96.0
Y/Y growth 26.9% 16.0% 22.7% 9.9% 22.6% 28.4% 21.0% 8.1% 16.1% 12.4% 11.6% 12.0% -6.0%
% tickets sold online 54.4% 58.8% 61.0% 63.0% 65.0% 67.0% 64.1% 68.0% 68.0% 67.0% 68.0% 67.8% 70.0%
Lending and Real Estate

$ in millions, loans in thousands
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Revenue 426 486 113 114 77 52 356 68 74 61 48 251 239

Y/Y growth 124.2% 14.1% -9.7% -7.2% -37.0% -54.9% -26.7% -40.0% -35.0% -20.0% -8.0% -29.4% -5.0%
EBITA 64 42 (4) (4) (7) (28) (43) (12) (10) (4) (3) (28) (2)
Y/Y growth 198.2% -33.8% -144.9% -138.2% -156.8% -339.8% -201.2% 229.9% 166.0% -48.1% -89.8% -33.5% -91.6%
% EBITA margin 15.0% 8.7% -3.1% -3.4% -9.2% -54.3% -12.0% -17.0% -14.0% -6.0% -6.0% -11.3% -1.0%
Depreciation 7 12 3 3 2 2 10 3 3 3 3 12 14
EBITDA 71 54 (1) (1) (5) (26) (33) (9) (7) (1) 0 (16) 12
Y/Y growth 182.5% -23.3% -106.2% -110.0% -130.3% -282.5% -160.6% 1120.9% 467.2% -85.4% -100.5% -49.7% -170.4%
% EBITDA margin 16.6% 11.1% -0.6% -1.1% -6.1% -50.1% -9.2% -12.6% -10.0% -1.1% 0.3% -6.6% 4.9%
Note: Lending Tree not consolidated within IACI financials until August, 2003. Historicals prior to this date do not impact IACI overall.
Service Magic (Home Services)

$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue 41 64 22 25 25 22 93 25 29 27 24 105 115

Y/Y growth NA 55.7% 53.8% 58.1% 33.5% 43.1% 46.5% 15.0% 14.0% 10.0% 9.0% 12.0% 10.0%
EBITA 11 16 6 7 5 2 21 5 6 6 4 21 22
Y/Y growth NA NA 93.8% 61.4% -10.0% -20.0% 28.6% -15.9% -14.7% 2.7% 108.9% 1.4% 6.9%
% EBITA margin 27.4% 25.2% 28.7% 28.1% 22.0% 9.1% 22.2% 21.0% 21.0% 20.5% 17.5% 20.1% 19.5%
Depreciation 1 2 1 1 1 1 3 1 1 1 1 2 2
EBITDA 12 18 7 8 6 3 23 6 7 6 5 23 24
Y/Y growth NA NA 91.4% 60.4% -6.2% -6.7% 30.9% -14.7% -14.8% -0.9% 67.1% -1.3% 6.3%
% EBITDA margin 29.7% 27.9% 31.0% 30.4% 24.8% 12.8% 24.9% 23.0% 22.7% 22.3% 19.6% 22.0% 21.2%
TOTAL TRANSACTIONS
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Transactions Revenue 1,417 1,635 445 442 403 429 1,718 402 442 433 478 1,755 1,614
Y/Y growth 12.5% 15.4% 15.5% 1.8% -0.8% 4.6% 5.1% -9.5% -0.1% 7.6% 11.4% 2.1% -8.0%
Total Transactions EBITA 294 323 74 62 60 45 241 57 63 71 78 270 272
Y/Y growth 44.7% 9.9% -3.3% -31.3% -20.3% -44.1% -25.2% -23.1% 2.0% 17.7% 75.4% 11.8% 0.9%
% EBITA margin 20.7% 19.7% 16.7% 14.1% 14.9% 10.4% 14.1% 14.2% 14.4% 16.3% 16.4% 15.4% 16.9%
Depreciation 44 52 13 13 14 14 54 15 15 15 15 58 61
Total Transactions EBITDA 338 375 87 76 74 59 296 72 78 85 93 328 333
Y/Y growth 31.1% 10.8% -3.1% -26.7% -16.8% -36.3% -21.0% -18.0% 3.1% 15.8% 57.5% 10.9% 1.5%
% EBITDA margin 23.9% 22.9% 19.7% 17.1% 18.3% 13.8% 17.2% 17.8% 17.6% 19.7% 19.5% 18.7% 20.6%
April 07, 2008 105

Figure 127: IAC/InterActiveCorp Breakdown – Media and Advertising, 2005–09E

IAC Search and Media
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Proprietary Queries (Bil) (Lehman est.) 7,008 8,461 2,048 2,506 2,501 2,626 9,681 2,314 2,807 2,801 2,914 10,837 11,920
Y/Y growth 43.6% 20.7% 9.0% 18.0% 15.0% 15.0% 14.4% 13.0% 12.0% 12.0% 11.0% 11.9% 10.0%
Q/Q growth -10.3% 22.4% -0.2% 5.0% -76.1% 21.3% -0.2% 4.1%
Revenue Per Thoursand Queries (RPQ) $35 $33 $39 $33 $34 $37 $36 $36 $36 $37 $37 $37 $40
Y/Y growth -14.7% -4.4% 11.9% -3.1% 7.1% 12.7% 7.0% -8.8% 9.8% 8.7% -1.0% 2.1% 10.0%
Q/Q growth 19.0% -16.9% 3.9% 9.8% 0.6% 0.0% 2.8% 0.0%
Total Proprietary Search Revenue 245 283 81 82 85 98 346 83 101 104 108 396 479
Y/Y growth 22.5% 15.4% 22.0% 14.3% 23.2% 29.7% 22.4% 3.1% 23.0% 21.7% 22.0% 14.3% 21.0%
Q/Q growth 6.7% 1.6% 3.7% 15.3% -15.1% 21.3% 2.6% 4.1%
Proprietary Rev. as % of IAC Search/Media 66.0% 60.2% 55.0% 54.0% 50.1% 48.3% 51.5% 54.8% 60.3% 57.0% 53.3% 56.3% 60.4%
Network Syndication Search Revenue 126 187 66 70 85 105 326 69 66 78 95 308 314
Y/Y growth 444.1% 48.3% 78.2% 65.8% 78.8% 73.1% 73.9% 4.0% -5.0% -8.0% -10.0% -5.6% 2.0%
Q/Q growth 8.9% 5.8% 21.2% 23.9% -78.9% -3.3% 17.4% 21.2%
Network Rev. as % of IAC Search/Media 34.0% 39.8% 45.0% 46.0% 49.9% 51.7% 48.5% 45.2% 39.7% 43.0% 46.7% 43.7% 39.6%
IAC Search & Media 372 470 147 152 170 203 672 152 168 182 202 704 793
Y/Y growth 66.3% 26.6% 42.2% 33.4% 45.8% 49.0% 42.9% 3.5% 10.1% 6.9% -0.4% 4.7% 12.7%
Q/Q growth 7.7% 3.5% 11.7% 19.6% -77.4% 10.1% 8.4% 11.4%
IAC Search & Media as % of Total M&A -- 86.4% 87.4% 87.4% 89.6% 89.7% 88.6% 87.4% 88.1% 89.3% 88.8% 88.5% 89.2%
CitySearch, Evite, Other Revenue 48 74 21 22 20 23 86 22 23 22 25 92 96

Y/Y growth 24.2% 52.1% 48.5% 26.9% 4.8% -0.1% 16.8% 4.0% 3.0% 10.0% 9.0% 6.5% 5.0%
Q/Q growth -9.5% 3.5% -9.4% 17.7% -74.5% 2.5% -3.2% 16.6%
Licensing Revenue - - - - - - - - - - - - -
Y/Y growth NA NA NA NA NA NA NA NA NA NA NA NA NA
Q/Q growth NA NA NA NA NA NA NA NA
TOTAL MEDIA & ADVERTISING

$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Media & Advertising Revenue 213 544 168 174 190 227 759 174 190 203 228 795 889
Y/Y growth NA 154.9% 42.9% 32.5% 40.1% 41.8% 39.4% 3.6% 9.2% 7.2% 0.6% 4.9% 11.8%
Q/Q growth 5.2% 3.5% 9.1% 19.4% -77.0% 9.2% 7.1% 12.0%
Total Media & Advertising EBITA 31 58 17 12 28 31 88 22 23 32 37 113 147
Y/Y growth NA 90.7% 48.3% 9.3% 73.6% 55.2% 50.4% 25.5% 94.9% 14.3% 19.0% 28.9% 29.8%
Q/Q growth -14.4% -32.0% 135.9% 13.0% -75.4% 5.7% 38.3% 17.8%
% EBITA margin 14.3% 10.7% 10.2% 6.7% 14.5% 13.8% 11.6% 12.4% 12.0% 15.5% 16.3% 14.2% 16.5%
Depreciation 13 28 8 8 8 8 31 8 8 8 8 32 34
Total Media & Advertising EBITDA 44 86 25 19 35 39 119 30 31 40 45 145 181
Y/Y growth NA 96.4% 34.8% 11.5% 54.4% 42.2% 37.6% 19.3% 58.8% 12.3% 15.4% 22.4% 24.6%
% EBITDA margin 20.5% 15.8% 14.8% 11.1% 18.5% 17.3% 15.6% 17.0% 16.2% 19.4% 19.8% 18.2% 20.3%
Incremental EBITDA margin 12.7% 4.7% 22.8% 17.4% 15.1% 79.9% 71.0% 31.7% 483.4% 71.9%
106 April 07, 2008

Figure 128: IAC/InterActiveCorp Breakdown – Membership and Subscriptions, 2005–09E

($ in millions)
Interval (Vacations)
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue 273 289 86 86 96 92 360 104 99 103 96 401 431

Y/Y growth 6.2% 5.8% 9.8% 20.3% 36.4% 35.0% 24.8% 20.0% 15.0% 7.0% 4.0% 11.3% 7.5%
EBITA 111 116 39 34 34 32 139 40 38 39 35 152 164
Y/Y growth 22.8% 4.7% 13.7% 28.2% 26.7% 11.7% 19.6% 3.9% 10.1% 14.1% 12.5% 9.9% 7.4%
% EBITA margin 40.6% 40.2% 45.0% 39.7% 35.6% 34.2% 38.5% 39.0% 38.0% 38.0% 37.0% 38.0% 38.0%
Depreciation 7 8 2 2 2 2 8 2 2 2 2 8 8
EBITDA 118 124 41 36 36 34 147 42 40 41 37 161 172
Y/Y growth 19.7% 4.7% 12.7% 26.7% 26.0% 12.3% 18.9% 4.1% 9.6% 12.8% 10.8% 9.1% 7.1%
% EBITDA margin 43.3% 42.8% 47.2% 42.0% 37.9% 36.7% 40.8% 41.0% 40.0% 40.0% 39.1% 40.0% 39.9%
Match (Personals)
$ in millions, subs in thousands
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Paid Subscribers (end of period) 1,189.4 1,275.9 1,338.9 1,312.8 1,308.8 1,286.5 1,286.5 1,370.4 1,396.0 1,375.9 1,277.8 1,277.8 1,334.0
Y/Y growth 21.0% 7.3% 1.1% 1.3% -0.8% 0.8% 0.8% 2.3% 6.3% 5.1% -0.7% -0.7% 4.4%
Average Subscribers 1,086.1 1,232.7 1,307.4 1,325.9 1,310.8 1,297.7 1,281.2 1,328.4 1,383.2 1,386.0 1,326.8 1,282.1 1,305.9
Monthly Subscription Fee $19.15 $21.04 $21.01 $21.77 $22.66 $23.27 $22.68 $22.48 $22.86 $23.56 $24.20 $24.62 $25.11
Y/Y growth 11.5% 9.9% 8.1% 9.3% 10.8% 14.1% 7.8% 7.0% 5.0% 4.0% 4.0% 8.5% 2.0%
Revenue 250 311 82 87 89 91 349 90 95 98 96 379 393
Y/Y growth 26.0% 24.7% 12.4% 10.6% 11.0% 14.1% 12.0% 8.7% 9.5% 10.0% 6.3% 8.6% 3.9%
EBITA 48 64 8 20 30 21 78 9 21 28 23 82 87
Y/Y growth 73.5% 32.7% 40.0% 13.3% 52.8% 0.0% 23.5% 1.3% 9.4% -3.7% 12.0% 4.3% 5.9%
% EBITA margin 19.2% 20.4% 10.2% 22.6% 33.1% 23.1% 22.5% 9.5% 22.6% 29.0% 24.3% 21.6% 22.0%
Depreciation 8 7 2 2 2 2 8 2 2 2 2 8 8
EBITDA 56 71 10 21 32 23 86 11 23 30 25 90 95
Y/Y growth 32.5% 26.3% 32.5% 12.6% 45.8% 1.8% 21.4% 3.5% 9.8% -3.3% 10.7% 4.5% 5.6%
Operating Metrics
New registrations 20,555 22,141 5,527 6,348 5,805 5,445 23,125 5,776 6,633 5,979 5,663 24,051 24,532
Y/Y growth 11.3% 7.7% 5.6% 5.1% 5.0% 2.0% 4.4% 4.5% 4.5% 3.0% 4.0% 4.0% 2.0%
New subscriptions 1,983 2,113 480 552 522 490 2,045 502 590 520 481 2,094 1,914
Y/Y growth 11.5% 6.5% -4.5% -2.7% -0.5% -5.4% -3.3% 4.7% 6.9% -0.4% -1.8% 2.4% -8.6%
Conversion rate of registered to new subs 9.6% 9.5% 8.7% 8.7% 9.0% 9.0% 8.8% 8.7% 8.9% 8.7% 8.5% 8.7% 7.8%
Churned Subscribers 1,776.8 2,026.7 416.7 578.4 526.5 512.4 2,033.9 418.6 564.7 540.4 579.5 2,103.1 1,857.3
Monthly Churn rate 7.9% 10.2% 9.6% 9.5% 7.8% 9.6% 9.4% 10.4% 9.7%
Entertainment (Discounts)
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue 219 197 21 19 33 110 183 19 18 32 104 173 169

Y/Y growth 0.5% -10.2% 2.0% -3.1% 3.9% -9.5% -7.1% -8.0% -7.0% -4.0% -5.0% -5.4% -2.0%
EBITA 18 14 (13) (14) (1) 37 9 (14) (14) (2) 25 (6) 3
Y/Y growth NA -20.6% -5.1% -18.7% -64.1% -23.5% -36.0% 9.9% 4.2% 59.8% -32.0% -162.3% -161.1%
% EBITA margin 8.0% 7.1% -62.8% -71.4% -4.2% 33.5% 4.9% -75.0% -80.0% -7.0% 24.0% -3.2% 2.0%
Depreciation 5 6 1 1 1 1 5 2 2 2 2 6 6
EBITDA 22 20 (12) (12) (0) 38 14 (13) (13) (1) 27 0 9
Y/Y growth -13.3% -12.1% -6.5% -19.2% -95.8% -23.2% -28.1% 10.2% 3.0% 637.8% -30.2% -96.8% 1977.0%
% EBITDA margin 10.2% 10.0% -56.0% -64.6% -0.3% 34.6% 7.7% -67.1% -71.5% -2.3% 25.4% 0.3% 5.5%
TOTAL MEMBERSHIP & SUBSCRIPTIONS

$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Intra-Sector Elimination (2) - - - - - - - -
Total Membership & Subscriptions Revenue 740 797 190 191 218 293 892 212 211 233 296 953 994
Y/Y growth 10.2% 7.7% 7.8% 13.1% 19.6% 8.8% 11.9% 12.0% 10.4% 6.5% 1.3% 6.8% 4.3%
Total Membership & Subscriptions EBITA 176 193 34 40 62 89 226 35 45 65 84 229 254
Y/Y growth 26.0% 9.8% 29.4% 47.3% 46.9% -8.2% 16.9% 1.1% 11.7% 4.7% -6.0% 1.2% 11.0%
% EBITA margin 23.8% 24.3% 18.1% 21.0% 28.5% 30.5% 25.3% 16.3% 21.3% 28.0% 28.3% 24.0% 25.5%
Depreciation 20 21 5 5 6 6 21 6 6 6 6 22 23
Total Membership & Subscriptions EBITDA 197 214 39 45 68 95 247 40 50 71 89 251 276
Y/Y growth 17.8% 9.0% 24.8% 39.8% 40.7% -7.2% 15.4% 2.4% 11.5% 4.4% -5.6% 1.5% 10.1%
% EBITDA margin 26.6% 26.9% 20.7% 23.7% 31.0% 32.4% 27.7% 19.0% 23.9% 30.4% 30.2% 26.3% 27.8%
April 07, 2008 107

Figure 129: IAC/InterActiveCorp Cash Flow Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E

Earnings before preferred dividends 876.2 187.1 62.1 96.0 71.8 (373.9) (144.1) 37.5 50.0 80.1 118.4 286.0 376.3
Less: discontinued operations (277.8) (22.8) 3.8 (52.5) 3.2 (16.0) (61.5) - - - - - -
Earnings from continuing operations 598.4 164.3 65.9 43.5 75.0 (389.9) (205.6) 37.5 50.0 80.1 118.4 286.0 376.3
Depreciation and amortization 335.7 333.2 69.4 67.7 70.4 96.3 303.8 71.6 72.6 73.1 86.1 303.3 308.0
Amortization of non-cash distribution and marketing - 37.1 0.5 24.0 13.1 16.6 54.1 11.0 11.0 10.5 10.5 43.0 -
Amortization of non-cash compensation expense 137.5 92.3 24.2 26.9 25.2 29.3 105.6 25.0 25.0 25.0 25.0 100.0 95.0
Amortization of cable distribution fees 70.4 29.6 1.2 1.2 1.2 1.2 4.9 0.5 0.5 0.5 0.5 2.0 -
Amortization of deferred financing costs - - - - - - - - - - - -
Deferred income taxes (1,068.8) 7.0 1.7 (6.0) 5.1 (65.9) (65.1) - - - - - -
Non-cash interest income (17.6) - - - - - - - - - - - -
Minority interest 2.2 (0.5) (7.7) (1.6) (6.0) 10.8 (4.6) - - - - - -
Goodwill impariment - 189.1 - - - 507.8 507.8 - - - - - -
Increase in cable distribution fees (24.0) (16.9) - - - - - - - - - - -
Gain on loans held for sale & other (567.8) (254.7) (48.6) (47.1) (30.5) (59.3) (185.5) - - - - - -
Changes in working capital: -
Accounts receivable (60.6) (61.1) 17.6 2.7 (29.4) (59.4) (68.5) (58.2) 60.2 (70.5) 27.2 (41.3) (73.8)
Loans available for sale (166.3) 247.5 (16.3) 236.6 95.4 85.1 400.8 75.0 75.0 75.0 75.0 300.0 330.0
Inventories 1.8 (25.5) (31.3) 5.7 (60.9) 71.8 (14.8) 13.4 (8.8) (10.3) (10.0) (15.6) (38.1)
Prepaids and other assets (34.1) (15.0) (13.4) 2.9 (21.3) (63.5) (95.4) - - - - - -
Accounts payable and accrued liabilities 606.6 23.2 (92.7) 7.1 25.3 63.9 3.5 (56.2) 24.0 33.7 13.6 15.1 (16.7)
Deferred revenue 33.6 31.0 19.5 5.7 (9.6) 12.7 28.4 (16.2) 1.1 1.8 1.6 (11.6) (0.4)
Funds collected by Ticketmaster on behalf of clients, net 70.9 2.6 43.3 (11.0) 24.8 14.9 72.1 (30.8) 14.4 20.2 8.2 11.9 24.5
Other, net 9.8 45.1 12.4 2.6 15.8 6.7 37.5 - - - - - -
Net cash provided by (used in) operating activities (72.3) 828.384 45.6 360.9 193.5 279.1 879.1 72.6 325.0 239.1 356.0 992.7 1,004.8

Acquisitions and deal costs, net of cash acquired (693.4) (117.6) (54.6) (130.9) (0.0) (6.4) (191.9) (450.0) - - - (450.0) -
Capital expenditures (241.5) (243.6) (52.8) (51.6) (55.1) (72.4) (231.9) (55.0) (57.6) (58.8) (71.3) (242.7) (246.0)
Decrease (increase) in long-term investments and notes receivable (32.4) (20.7) (0.3) (221.4) 101.6 (110.6) (230.6) - - - - - -
Purchases of marketable securities (2,158.7) (934.5) (166.2) (359.4) (195.4) (62.8) (783.8) - - - - - -
Proceeds from sale of marketable securities 3,124.1 1,551.0 283.3 363.2 574.5 256.1 1,477.1 - - - - - -
Proceeds from sale of VUE and other 2,065.3 267.6 - - - 19.8 19.8 - - - - - -
Other, net 21.9 (6.8) 0.0 14.6 2.7 (3.3) 14.1 - - - - - -
Net cash provide by (used in) investing activities 2,085.5 495.5 9.5 (385.4) 428.2 20.5 72.8 (505.0) (57.6) (58.8) (71.3) (692.7) (246.0)

Borrowings 80.0 - - - - - - - - - - -
Increase in warehouse loans payable 162.8 (23.8) 62.4 (188.3) (68.6) (64.6) (259.0) (50.0) (50.0) (50.0) (50.0) (200.0) (100.0)
Principal payments on long-term obligations (400.2) (12.3) (11.5) (8.6) (0.5) (1.0) (21.6) - (115.0) - - (115.0) -
Purchase of treasury stock by IAC and subsidiaries (1,848.3) (983.2) (322.6) - (220.4) - (542.9) (145.5) - - - (145.5) -
Issuance of common stock, net of withholding taxes for options (19.9) 111.8 19.6 12.4 2.5 (15.8) 18.7 - - - - - -
Redemption of preferred stock (655.7) - - - - - - - - - - - -
Preferred dividends (9.6) - - - - - - - - - - - -
Other, net (14.5) 15.9 (7.9) 6.2 3.8 2.2 4.4 - - - - - -
Net cash provided by (used in) financing activities (2,705.3) (891.7) (259.9) (178.2) (283.2) (79.2) (800.6) (195.5) (165.0) (50.0) (50.0) (460.5) (100.0)
Net change in cash (692.2) 432.3 (204.8) (202.7) 338.5 220.4 151.4 (627.9) 102.4 130.3 234.8 (160.5) 658.8
Total cash provided by discontinued operations 706.7 (22.7) (5.8) 2.7 (6.9) (7.5) (17.5) - - - - - -
Effect of exchange-rate on cash and equivalents (27.1) 31.8 3.6 4.5 21.3 (6.2) 23.3 - - - - - -
Net (decrease) increase in cash and cash equivalents (12.6) 441.4 (207.0) (195.5) 352.9 206.7 157.2 (627.9) 102.4 130.3 234.8 (160.5) 658.8
Cash & equivalents - BOP 999.7 987.1 1,428.4 1,221.5 1,026.0 1,378.9 1,428.4 1,585.6 957.7 1,060.0 1,190.4 1,585.6 1,425.1
Cash & equivalents - EOP 987.1 1,428.4 1,221.5 1,026.0 1,378.9 1,585.6 1,585.6 957.7 1,060.0 1,190.4 1,425.1 1,425.1 2,083.9

Net cash provided by operating activities (72.3) 828.4 45.6 360.9 193.5 279.1 879.1 72.6 325.0 239.1 356.0 992.7 1,004.8
% of Revenue 4.5% 4.1% 3.5% 3.4% 3.6% 3.9% 3.6% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7%
Increase in warehouse loans payable 162.8 (23.8) 62.4 (188.3) (68.6) (64.6) (259.0) (50.0) (50.0) (50.0) (50.0) (200.0) (100.0)
Tax payments related to the sale of VUE interests 862.6 3.1 17.5 - 29.2 (6.8) 39.9 - -
Preferred dividends paid (9.6) - - - - - - - -
Free Cash Flow 702.1 564.1 72.7 121.1 99.0 135.3 428.0 (32.4) 217.4 130.3 234.8 550.0 658.8
% change 101.7% -19.7% -3.0% -44.3% 64.3% -36.1% -24.1% -144.6% 79.5% 31.7% 73.5% 28.5% 19.8%
108 April 07, 2008

Figure 130: IAC/InterActiveCorp Sum-of-the-Parts Analysis ($ in millions, except per share data)
2008E
2008E Metric Multiple Value
Retailing (HSN, Cornerstone, Shoebuy) 260 EBITDA 5.5x 1,431
Ticketmaster 321 EBITDA 8.0x 2,570
Interval (Vacations) 161 EBITDA 7.0x 1,124
IAC Search & Media, Other (Ask, Citysearch, Evite, other) 145 EBITDA 9.0x 1,306
Match.com (Personals) 90 EBITDA 7.0x 630
LendingTree & Real Estate 251 Revenue 0.0x -
Service Magic 23 EBITDA 7.5x 172
Entertainment (Discounts) 173 Revenue 0.4x 69
Corporate/Other (114) EBITDA 7.4x (846)
Total Consolidated Operations 7.4x $6,457
Equity Investments
Jupiter Shop Channel (home shopping in Japan)---30% stake 483
TM Mexico---33.3% stake 110
Front Line Management Group, Inc. ("Front Line") (United States) -- 45.99% stake 90
TVSN Holdings (home shopping in China)---21% stake 25
Evolution Artists, Inc. ("iLike.com") (U.S.) -- 40% stake 10
DJ/IAC Online Ventures, LLC (United States) -- 50% stake -
Beijing Gehua Ticketmaster Ticketing Co., Ltd. (China) -- 40% stake -
Medem, Inc. (United States) -- 36.46% stake -
Points (Canada)---3.17% stake -
MerchantCircle Inc. (United States) -- 16.48% stake -
Total Unconsolidated Operations $718
Total Asset Value of InterActiveCorp $7,174
Less: Debt & Preferred 831

Plus: Cash 1,752
Value to Common Shareholders $8,095
Total shares outstanding 291
Value per InterActiveCorp share $27.79
Current IACI Share price: $21.70

Upside to SOP Value: 28.0%
DCF 2008 Value: $36.49
Upside to DCF Value: 68.1%
April 07, 2008 109

Figure 131: Expedia Snapshot

- Largest player in online travel, ultimately the Internet's most lucrative e- - Sustainability of domestic bookings growth: reaccelerated to 8% Y/Y
commerce category. growth in 2Q07, followed by 13% growth in 3Q07, and 18% in 4Q07.
-Large scale brings more leverage in negotiating with suppliers. - International hotel business will likely become more competitive.
- Strong FCF with merchant model: $625M in 2007 -- 7.9% FCF yield;
- Need to spend aggressively on marketing long-term.
4.2% ex-WC.
- International Opportunity: 22% penetration in Europe and 12% in Asia- - Increased competition from suppliers, travel search engines, tour
Pacific vs 47% of travel booked online in the U.S during 2006. operators in Europe, and other third-party distributors.
- High margin media and advertising business. - Macro travel trends.
- Continued stabilization of supplier economics. Revenues per air ticket

- LDD EBITA growth in 2008.
should be flattish in 2008 and hotel economics may be stabilizing.
- Heavy sales & marketing investments -- we project 37%+ of revenues. - Selling and Marketing expense expected to be up Y/Y in 2008.
- Macro travel trends; is Expedia countercyclical? - G&A expense expected to be similar percent of revenue in 2008 as 2007.
- Travel trends: airlines pricing, load factors, hotel ADRs, occupancy - Technology and Content expenses expected to increase Y/Y in 2008.
- Can EXPE close the hotel gap in Europe with PCLN? - Modest Gross Margin expansion in 2008.
- Media & Advertising strength, high margins---7% of revs, 15% of EBITDA
110 April 07, 2008

Figure 132: Expedia Income Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue 2,119.5 2,237.6 550.5 689.9 759.6 665.3 2,665.3 649.6 780.1 847.9 744.7 3,022.3 3,388.6
Cost of revenue 470.7 494.2 120.4 143.0 150.5 145.6 559.5 139.7 162.3 166.2 160.1 628.2 704.8
Gross profit 1,648.7 1,743.3 430.1 546.9 609.1 519.7 2,105.8 510.0 617.8 681.7 584.6 2,394.1 2,683.7
Selling and marketing expense 697.5 770.3 219.0 253.1 276.6 231.3 980.1 261.1 289.4 311.2 264.4 1,126.1 1,263.9
General & administrative expense 211.5 252.8 68.5 68.7 75.7 76.5 289.4 81.2 79.6 85.6 87.1 333.5 376.1
Technology & content expense 112.3 121.3 38.2 38.0 44.0 46.7 166.9 46.8 45.2 50.9 52.9 195.8 216.9
Amortization of non-cash distrib. & mktg 12.6 9.6 - - - - - - - - - - -
Impairment of intangible asset - 47.0 - - - - - - - - - - -
Depreciation - - - - - - - - - - - - -
Merger costs - - - - - - - - - - - - -
Operating income 397.1 351.3 67.3 153.6 179.8 128.3 529.1 87.8 174.6 207.0 146.7 616.2 725.4
Interest income (expense), net 41.0 14.8 (3.9) 0.7 (1.1) (9.2) (13.5) 0.7 5.7 7.8 7.9 22.1 52.7
Equity income (loss) in affiliates and other 11.1 - - - - - - - - - - - -
Other income, net (36.4) 18.8 (5.5) 5.94 (13.89) (5.15) (18.6) - - - - - -
Income (loss) before taxes and minority interest 412.8 384.9 57.9 160.2 164.8 114.0 497.0 88.6 180.3 214.8 154.6 638.3 778.0
Income tax expense (benefit) 186.0 139.5 23.6 64.1 65.5 49.9 203.1 33.7 68.5 81.6 58.8 242.6 295.6
Minority interest 0.8 (0.5) 0.5 0.0 0.3 1.2 2.0 0.5 0.2 0.3 0.8 1.8 1.8
Net Income 227.7 244.9 34.8 96.1 99.6 65.4 295.9 55.4 112.0 133.5 96.7 397.5 484.2
Adjusted Net Income Calculation
Net income 227.7 244.9 34.8 96.1 99.6 65.4 295.9 55.4 112.0 133.5 96.7 397.5 484.2
Amortization 230.4 200.7 37.1 33.5 33.0 36.9 140.4 33.0 29.0 27.0 33.5 122.5 101.5
One-time items 29.5 38.9 1.4 (8.4) 2.3 0.6 (4.0) - - - - - -
Minority interest (1.8) (0.9) (0.2) (0.2) (0.1) (0.2) (0.7) - - - - 0.0 -
Income taxes (71.0) (93.1) (13.7) (7.0) (11.7) (8.1) (40.5) (12.5) (11.0) (10.3) (12.7) (46.6) (38.6)
Adjusted Net Income 414.7 390.5 59.3 114.0 123.1 94.6 391.1 75.9 130.0 150.2 117.4 473.5 547.1
Adjusted EPS $1.18 $1.09 $0.18 $0.35 $0.39 $0.31 $1.22 $0.25 $0.42 $0.48 $0.37 $1.52 $1.74
Adjusted shares outstanding 351.9 358.4 329.7 327.3 318.9 306.3 320.5 309.3 311.3 313.3 314.3 312.0 314.0
EBITA and EBITDA Reconciliation

Amortization and other 230.4 247.7 37.1 33.5 33.0 36.9 140.4 33.0 29.0 27.0 33.5 122.5 101.5
EBITA 627.4 599.0 104.4 187.1 212.8 165.2 669.5 120.8 203.6 234.0 180.2 738.7 826.8
Depreciation 50.4 48.8 14.4 13.7 15.3 16.1 59.5 15.0 14.5 15.5 16.0 61.0 61.5
EBITDA 677.9 647.8 118.8 200.8 228.1 181.3 729.0 135.8 218.1 249.5 196.2 799.7 888.3
Y/Y GROWTH
Revenue 15.0% 5.6% 11.5% 15.3% 23.7% 25.2% 19.1% 18.0% 13.1% 11.6% 11.9% 13.4% 12.1%
Cost of revenue 20.6% 5.0% 3.7% 12.7% 14.6% 21.3% 13.2% 16.0% 13.5% 10.4% 10.0% 12.3% 12.2%
Gross profit 13.5% 5.7% 13.8% 16.0% 26.2% 26.4% 20.8% 18.6% 13.0% 11.9% 12.5% 13.7% 12.1%
Selling and marketing 6.8% 10.4% 11.9% 29.6% 30.4% 38.4% 27.2% 19.2% 14.3% 12.5% 14.3% 14.9% 12.2%
General & administrative expense 31.4% 19.5% 7.6% 10.3% 28.0% 13.0% 14.5% 18.6% 15.8% 13.2% 13.9% 15.3% 12.8%
Technology & content expense 32.1% 8.0% 28.0% 27.3% 40.0% 54.8% 37.6% 22.5% 19.1% 15.6% 13.3% 17.3% 10.8%
EBITDA 13.4% -4.4% 19.3% 2.5% 18.1% 13.9% 12.5% 14.4% 8.6% 9.4% 8.2% 9.7% 11.1%
EBITA 13.3% -4.5% 17.9% 1.6% 18.2% 13.0% 11.8% 15.7% 8.8% 10.0% 9.1% 10.3% 11.9%
SEQUENTIAL GROWTH
Revenue 3.6% 25.3% 10.1% -12.4% -2.4% 20.1% 8.7% -12.2%
EBITA -28.6% 79.2% 13.7% -22.4% -26.9% 68.5% 14.9% -23.0%
Selling and marketing 31.0% 15.6% 9.3% -16.4% 12.9% 10.8% 7.5% -15.0%
% OF REVENUES
Cost of sales 22.2% 22.1% 21.9% 20.7% 19.8% 21.9% 21.0% 21.5% 20.8% 19.6% 21.5% 20.8% 20.8%
Selling and marketing expense 32.9% 34.4% 39.8% 36.7% 36.4% 34.8% 36.8% 40.2% 37.1% 36.7% 35.5% 37.3% 37.3%
General & administrative expense 10.0% 11.3% 12.4% 10.0% 10.0% 11.5% 10.9% 12.5% 10.2% 10.1% 11.7% 11.0% 11.1%
Technology & content expense 5.3% 5.4% 6.9% 5.5% 5.8% 7.0% 6.3% 7.2% 5.8% 6.0% 7.1% 6.5% 6.4%
MARGINS
Gross margin 77.8% 77.9% 78.1% 79.3% 80.2% 78.1% 79.0% 78.5% 79.2% 80.4% 78.5% 79.2% 79.2%
EBITA margin 29.6% 26.8% 19.0% 27.1% 28.0% 24.8% 25.1% 18.6% 26.1% 27.6% 24.2% 24.4% 24.4%
EBITDA margin 32.0% 29.0% 21.6% 29.1% 30.0% 27.3% 27.4% 20.9% 28.0% 29.4% 26.3% 26.5% 26.2%
Operating leverage (∆EBITA / ∆Revenue) 26.7% -24.1% 28.0% 3.1% 22.5% 14.1% 16.5% 16.6% 18.3% 24.0% 18.9% 19.4% 24.1%
April 07, 2008 111

Figure 133: Expedia Segment Breakdown, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue 2,119 2,238 551 690 760 665 2,665 650 780 848 745 3,022 3,389
Y/Y growth 15.0% 5.6% 11.5% 15.3% 23.7% 25.2% 19.1% 18.0% 13.1% 11.6% 11.9% 13.4% 12.1%
Q/Q Growth 3.6% 25.3% 10.1% -12.4% -2.4% 20.1% 8.7% -12.2%
EBITA 628 599 104 187 213 165 669 121 204 234 180 739 827
Y/Y growth 13.3% -4.5% 17.9% 1.6% 18.2% 13.0% 11.8% 15.7% 8.8% 10.0% 9.1% 10.3% 11.9%
% margin 29.6% 26.8% 19.0% 27.1% 28.0% 24.8% 25.1% 18.6% 26.1% 27.6% 24.2% 24.4% 24.4%
Depreciation 50.4 49 14 14 15 16 60 15 15 16 16 61 62
EBITDA 678 648 119 201 228 181 729 136 218 250 196 800 888
Y/Y growth 13.4% -4.5% 19.3% 2.5% 18.1% 13.9% 12.5% 14.4% 8.6% 9.4% 8.2% 9.7% 11.1%
% margin 32.0% 29.0% 21.6% 29.1% 30.0% 27.3% 27.4% 20.9% 28.0% 29.4% 26.3% 26.5% 26.2%
GROSS BOOKINGS
North America 12,065 12,737 3,559 3,723 3,519 3,136 13,937 4,075 4,077 3,818 3,387 15,357 16,508
Y/Y Growth 15.8% 5.6% 1.1% 8.1% 13.4% 17.6% 9.4% 14.5% 9.5% 8.5% 8.0% 10.2% 7.5%
Q/Q Growth 33.5% 4.6% -5.5% -10.9% 29.9% 0.0% -6.3% -11.3%
% of total bookings 78% 74% 71% 71% 68% 68% 70% 68% 68% 66% 66% 67% 64%
Europe 2,515 3,001 1,032 1,035 1,163 994 4,224 1,404 1,325 1,442 1,218 5,388 6,681
Y/Y Growth 6.8% 19.3% 32.3% 37.6% 46.8% 46.8% 40.8% 36.0% 28.0% 24.0% 22.5% 27.6% 24.0%
Q/Q Growth 52.4% 0.3% 12.4% -14.5% 41.2% -5.6% 8.9% -15.6%
Other 972 1,424 425 466 465 466 1,822 536 569 558 550 2,212 2,610
Y/Y Growth NA 46.5% 22.5% 26.6% 27.4% 35.5% 27.9% 26.0% 22.0% 20.0% 18.0% 21.4% 18.0%
Q/Q Growth 23.5% 9.6% -0.2% 0.2% 14.9% 6.2% -1.9% -1.5%
Total Gross Bookings 15,552 17,162 5,016 5,224 5,147 4,596 19,983 6,014 5,970 5,818 5,154 22,957 25,800
Y/Y Growth 21.7% 10.4% 7.9% 14.4% 20.8% 24.7% 16.4% 19.9% 14.3% 13.0% 12.1% 14.9% 12.4%
Q/Q Growth 36.0% 4.1% -1.5% -10.7% 30.9% -0.7% -2.5% -11.4%
NET REVENUE
North America NA 1,666 407 506 535 451 1,898 456 546 573 484 2,060 2,196
Y/Y Growth NA 6.5% 10.8% 18.8% 19.3% 13.9% 12.3% 8.0% 7.1% 7.3% 8.5% 6.6%
Q/Q Growth 7.5% 24.5% 5.7% -15.6% 1.1% 19.7% 4.8% -15.4%
% of total revenue 74% 74% 73% 70% 68% 71% 70% 70% 68% 65% 68% 65%
Europe NA 452 110 145 183 169 607 149 185 225 207 766 955
Y/Y Growth NA 29.0% 29.5% 36.6% 39.7% 34.2% 35.2% 27.9% 22.9% 22.5% 26.2% 24.7%
Q/Q Growth -9.1% 31.8% 26.2% -7.7% -12.0% 24.7% 21.3% -8.0%
% of total revenue 20% 20% 21% 24% 25% 23% 23% 24% 27% 28% 25% 28%
Other NA 119 34 39 42 45 160 44 48 50 53 196 238
Y/Y Growth 25.9% 30.0% 40.0% 40.6% 34.5% 30.7% 23.9% 19.6% 18.5% 22.7% 21.0%
Q/Q Growth 6.3% 14.7% 7.7% 7.1% -1.2% 8.7% 3.9% 6.2%
% of total revenue 5% 6% 6% 6% 7% 6% 7% 6% 6% 7% 6% 7%
Total Net Revenue 2,119 2,238 551 690 760 665 2,665 650 780 848 745 3,022 3,389
Y/Y Growth 15.0% 5.6% 11.5% 15.3% 23.7% 25.2% 19.1% 18.0% 13.1% 11.6% 11.9% 13.4% 12.1%
Q/Q Growth 3.6% 25.3% 10.1% -12.4% -2.4% 20.1% 8.7% -12.2%
% of total revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
NET REVENUE AS % OF CURRENT PERIOD BOOKINGS

North America NA 13.1% 11.4% 13.6% 15.2% 14.4% 13.6% 11.2% 13.4% 15.0% 14.3% 13.4% 13.3%
Europe NA 15.1% 10.7% 14.0% 15.7% 17.0% 14.4% 10.6% 14.0% 15.6% 17.0% 14.2% 14.3%
Other NA 8.4% 8.0% 8.4% 9.0% 9.7% 8.8% 8.3% 8.5% 9.0% 9.7% 8.9% 9.1%
Total 13.6% 13.0% 11.0% 13.2% 14.8% 14.5% 13.3% 10.8% 13.1% 14.6% 14.4% 13.2% 13.1%
NET REVENUE AS % OF PREVIOUS PERIOD BOOKINGS

North America NA NA 15.2% 14.2% 14.4% 12.8% NA 3.3% 13.4% 14.0% 12.7% NA NA
Europe NA NA 16.2% 14.1% 17.7% 14.5% NA 3.5% 13.2% 17.0% 14.4% NA NA
Other NA NA 9.9% 9.2% 9.0% 9.7% NA 2.4% 9.0% 8.8% 9.6% NA NA
Total NA NA 14.9% 13.8% 14.5% 12.9% NA 3.3% 13.0% 14.2% 12.8% NA NA
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 12/08E 12/08E 12/08E 12/08E 2008E 2009E
GROSS BOOKINGS BY BRAND
Expedia 12,303 13,667 4,039 4,129 3,976 3,621 15,765 4,751 4,657 4,527 4,072 18,006 20,124
Y/Y Growth 24.6% 11.1% 9.2% 14.3% 18.1% 21.3% 15.4% 17.6% 12.8% 13.8% 12.5% 14.2% 11.8%
Q/Q Growth 35.3% 2.2% -3.7% -8.9% 31.2% -2.0% -2.8% -10.0%
% of total gross bookings 79% 80% 81% 79% 77% 79% 79% 79% 78% 78% 79% 78% 78%
Hotels.com 1,889 2,259 612 696 730 579 2,617 782 836 826 670 3,114 3,612
Y/Y Growth 6.4% 19.6% 5.2% 12.1% 21.7% 27.0% 15.8% 27.7% 20.1% 13.2% 15.7% 19.0% 16.0%
Q/Q Growth 34.2% 13.7% 4.9% -20.7% 35.0% 6.9% -1.1% -18.9%
Other 1,360 1,236 365 399 441 396 1,601 481 478 465 412 1,837 2,064
Y/Y Growth 21.4% -9.1% -0.5% 20.9% 50.5% 61.0% 29.5% 31.8% 19.7% 5.5% 4.1% 14.7% 12.4%
Q/Q Growth 48.4% 9.3% 10.5% -10.2% 21.5% -0.7% -2.5% -11.4%
GROSS BOOKINGS BY AGENCY/MERCHANT

Agency 9,104 10,151 2,910 3,025 2,866 2,703 11,504 3,410 3,433 3,258 2,990 13,091 14,448
Y/Y Growth 23.9% 11.5% 7.9% 10.9% 15.9% 19.9% 13.3% 17.2% 13.5% 13.7% 10.6% 13.8% 10.4%
Q/Q Growth 29.1% 4.0% -5.3% -5.7% 26.2% 0.7% -5.1% -8.2%
Merchant 6,448 7,011 2,106 2,199 2,281 1,893 8,479 2,604 2,537 2,560 2,165 9,866 11,352
Y/Y Growth 18.8% 8.7% 7.8% 19.7% 27.6% 32.1% 20.9% 23.7% 15.4% 12.2% 14.4% 16.4% 15.1%
Q/Q Growth 46.9% 4.4% 3.7% -17.0% 37.6% -2.6% 0.9% -15.4%
EBITA
North America - 735 164 227 239 192 822
Y/Y Growth - - 11.6% 7.1% 17.2% 11.6% 11.8%
Q/Q Growth - - -4.7% 38.4% 5.3% -19.7%
% of total EBITA - 123% 156% 121% 112% 116% 123%
% Net Revenue 44% 40% 45% 45% 43% 43%
Europe - 158 26 43 68 71 208
Y/Y Growth - - 73.3% 7.5% 41.7% 29.1% 31.6%
Q/Q Growth - - -52.7% 65.4% 58.1% 4.4%
% of total EBITA - 26% 25% 23% 32% 43% 31%
% Net Revenue 35% 24% 30% 37% 42% 34%
Other - (295) (85) (83) (94) (97) (359)
Y/Y Growth - - - - - - -
Q/Q Growth - - - -
% of total EBITA - -49% -81% -44% -44% -58% -54%
% Net Revenue - - - - - -
Total EBITA - 598 105 187 213 166 671
Y/Y Growth - 19.3% 1.6% 18.3% 13.7% 12.2%
Q/Q Growth -28.1% 78.1% 13.9% -22.1%
% of total EBITA 100% 100% 100% 100% 100% 100%
% Net Revenue 27% 19% 27% 28% 25% 25%
112 April 07, 2008

Figure 134: Expedia Cash Flow Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E

Net income 228.7 244.9 34.8 96.1 99.6 65.4 295.9 55.4 112.0 133.5 96.7 397.5 484.2
Amortization of non-cash distribution and marketing 12.6 9.6 - - - - - - - - - - -
Amortization of non-cash compensation expense 91.7 80.3 15.9 14.0 14.4 18.6 62.8 18.0 15.0 14.0 20.0 67.0 73.7
Amortization of deferred financing costs - - - - - - - - - - - - -
Deferred income taxes 16.1 (10.7) 4.4 (3.7) (4.0) 1.7 (1.6) - - - - - -
Unrealized loss on derivative instruments 6.0 (8.1) 1.4 3.2 1.4 (0.2) 5.7 - - - - -
Equity in (income) losses of unconsolidated affiliates (1.7) (2.5) 1.3 2.3 0.3 (1.2) 2.6 - - - - - -
Minority interest (0.8) 0.5 (0.5) (0.0) (0.3) (1.2) (2.0) - - - - - -
Other 33.9 10.9 2.2 (4.0) (13.5) (64.7) (80.0) - - - - - -
Changes in working capital:
Accounts and notes receivable (21.8) (32.1) (71.6) (21.9) (0.9) 50.1 (44.4) (134.8) 12.7 (17.0) 53.3 (85.7) (19.0)
Prepaids and other assets (22.5) (20.7) (58.1) (12.7) 32.18 6.30 (32.4) - - - - - -
Accounts payable and accrued liabilities 293.6 123.1 91.0 205.8 78.5 (222.5) 152.8 44.2 102.0 61.4 (91.8) 115.8 201.0
Deferred revenue 1.7 3.2 1.3 1.1 0.97 (1.80) 1.6 - - - - - -
Deferred merchant bookings 45.1 59.5 480.4 71.3 (199.7) (138.0) 213.9 462.8 (18.8) (120.4) (113.6) 210.0 78.8
Other, net - - - - - - - - - - - - -
Total change in working capital 296.1 132.9 442.9 243.6 (89.0) (306.0) 291.5 372.2 96.0 (76.0) (152.1) 240.1 260.8
Net cash provided by (used in) operating activities 859.2 617.4 538.1 384.6 42.7 (253.3) 712.1 475.6 251.4 100.0 (5.9) 821.1 907.9
Change in working capital as % of operating cash flow 35% 22% 82% 63% NA NA 41% 78% 38% -76% 2557% 29% 29%

Acquisitions and deal costs, net of cash acquired 10.5 (32.5) (39.9) (19.8) - - (59.6) - - - - - -
Purchases of marketable securities (0.1) - - - - - - - - - - - -
Proceeds from sale of business to a related party 13.2
Proceeds from sale of marketable securities 1.0 - - - - - - - - - - - -
(Increase) decrease in long-term investments and notes receivable (0.4) (1.5) (28.5) (1.1) (0.1) (3.5) (33.2) - - - - - -
Transfers (to) from IAC (757.2) - - - - - - - - - - - -
Other, net (2.9) - - - - - - - - - - - -
Net cash provide by (used in) investing activities (801.3) (113.5) (86.7) (41.5) (18.7) (32.6) (179.5) (30.0) (35.0) (35.0) (45.0) (145.0) (156.6)

Short-term borrowings 230.7 (231.0) - - - 585.0 585.0 - - - - - -
Proceeds from issuance of long-term debt - 495.3 - - - - - - - - - -
Changes in restricted cash and cash equivalents (9.5) 4.6 (9.5) (2.1) 1.0 4.1 (6.5) - - - - - -
Principal payments on long-term obligations - - - - - - - - - - - - -
Purchase of treasury stock - - - - - - - - - - - - -
Proceeds from sale of subsidiary stock, including stock options 29.1 35.3 8.3 26.6 10.5 9.6 55.0 - - - - - -
Excess tax benefit on equity awards - 1.3 0.8 0.8 1.1 93.0 95.7 - - - - - -
Treasury stock activity - (295.7) (666.5) (1.5) (728.0) (1.2) (1,397.2) - - - - - -
Withholding taxes for stock option excercises (86.6) - - - - (121.2) (121.2) - - - - - -
Contribution from (distribution to) IAC, net (52.8) - - - - - - - - - - - -
Other, net (4.4) - 0.4 - 498.8 (500.0) (0.8) - - - - - -
Net cash provided by (used in) financing activities 106.5 9.8 (666.5) 23.7 (216.7) 69.4 (790.0) - - - - - -
Effect of exchange-rate on cash and equivalents (8.6) 42.1 (0.4) 6.9 17.8 (2.7) 21.5 - - - - - -
Net change in cash 155.7 555.9 (215.6) 373.7 (174.9) (219.1) (235.9) 445.62 216.44 65.03 (50.95) 676.1 751.3
Cash & equivalents - BOP 141.7 297.4 853.3 637.7 1,011.4 836.5 853.3 617.4 1,063.0 1,279.4 1,344.5 617.4 1,293.5
Cash & equivalents - EOP 297.4 853.3 637.7 1,011.4 836.5 617.4 617.4 1,063.0 1,279.4 1,344.5 1,293.5 1,293.5 2,044.8

Net cash provided by operating activities 859 617.4 538 385 43 (253) 712 476 251 100 (6) 821 908
Capital expenditures (52) (93) (18) (21) (19) (29) (87) (30) (35) (35) (45) (145) (157)
Free Cash Flow 806.9 524.8 519.7 363.9 24.1 (282.3) 625.4 445.6 216.4 65.0 (50.9) 676.1 751.3
% change 7.7% -35.0% 20.1% 51.4% NA NA 19.2% -14.3% -40.5% 169.9% NA 8.1% 11.1%
as % of EBITDA 119% 81% 438% 181% 11% -156% 86% 328% 99% 26% -26% 85% 85%
April 07, 2008 113

Figure 135: Orbitz Snapshot

- Growth in the online travel space is attractive. According to
PhoCusWright, 47% of U.S. travel was booked online in 2006, versus just
- Marketing and expenses associated with the Austin platform rollout to
17% in Europe and Asia-Pacific. This compares to 59% of U.S. travel that
support the shift to non-air and international segments are likely to weigh
is expected to be booked online in 2008, versus approximately 29% in
on near-term profitability.
Europe and Asia-Pacific and represents a projected 2006A-2008E CAGR
of 24% in online travel bookings in these areas combined.
- With the commoditization of online travel offerings, there is always the

- International presence, while still a relatively small portion of Orbitz's
possibility of downward pressure on fees that Orbitz may receive which
business, provides a foundation for continued expansion.
could impact profits.
- Margin expansion potential as business continues to shift to a larger - Online travel industry dynamics can change rapidly, as the space is
percentage of higher-margin non-air. We project 17% adjusted EBITDA directly affected by fluctuations in the overall travel industry and the macro
margin in 2008, growing to 19% in 2010. economy.
- Healthy market position. In 2007, Orbitz had gross bookings of $10.8

billion, compared with $19.9 billion at Expedia, $10.9 billion at Travelocity, - Orbitz faces competition from a variety of sources, including other OTAs,
and $4.8 billion at Priceline.com. We wait to see if Orbitz is successful in Internet promotions, metasearch companies, suppliers, and offline travel
gaining additional share of the online travel market as its marketing efforts companies.
and Austin rollout continue.
- Advanced product offerings such as OrbitzTLC which provides mid-air

alerts, mobile access, hotel alerts, pre-trip e-mails and Traveler Update, a
- Complicated financials, lack of near-term guidance.
user-generated service that allows travelers to share real-time traveler
information via the Internet or mobile devices.

- Continue to shift toward higher-margin non-air categories, namely hotels
and dynamic packaging. In 2007, 26% of gross bookings and 56% of - Cost of Revenues: 17-18% range for balance of 2007
revenues were from the non-air segment.
- Continue to expand internationally. During 2007, 14% of gross bookings

- 9-12% increase in WW gross bookings and revenue going forward
and 21% of revenues were from the international segment.
- Austin, Orbitz's global technology platform, is expected to create more

operational efficiencies and improve coversion rates across all divisions
- Steady, modest increase in non-air mix
and geographies. Austin was rolled out to ebookers in the UK during July,
and is expected to roll out to the rest of Europe over the next 18 months.
- Travelport relationship: Currently travelport owns ~60% of Orbitz, and is

also the company's GDS provider and utilitzes certain technologies of - EBITDA margins mid-20s range over next 4-5 yrs
Orbitz.
- We look to see if Orbitz can successfully rollout a White Label business

and take share from Expedia, which has traditionally been the category
leader.
114 April 07, 2008

Figure 136: Orbitz Income Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Gross Bookings 7,435.0 10,025.0 2,941.0 2,993.0 2,637.0 2,356.0 10,927.0 2,908.1 3,083.8 2,805.1 2,603.8 11,400.8 12,381.0
Revenue 686.0 752.0 212.0 229.0 221.0 197.0 859.0 213.0 231.7 230.0 212.6 887.3 953.5
Costs of revenue 101.0 113.0 38.0 42.0 36.0 41.0 157.0 40.5 41.7 36.8 36.1 155.1 166.9
Gross profit 585.0 639.0 174.0 187.0 185.0 156.0 702.0 172.5 190.0 193.2 176.4 732.2 786.6
Selling, General, & Administrative 517.0 579.0 152.0 176.0 149.0 126.0 603.0 144.9 154.5 149.0 138.2 586.6 619.8
Impairment of goodwill and intangibles 400.0 122.0 - - - - - - - - - - -
Other - - - - - - - - - - - - -
Total operating expenses 995.0 756.0 165.0 188.0 166.0 141.0 660.0 162.9 172.5 168.0 158.2 661.6 709.8
Operating income (410.0) (117.0) 9.0 (1.0) 19.0 15.0 42.0 9.7 17.4 25.2 18.3 70.6 76.9
Interest income (expense), net (22.0) (27.0) (19.0) (28.0) (19.0) (17.0) (83.0) (12.6) (11.6) (11.3) (11.5) (47.0) (42.4)
Equity income (loss) in affiliates and other - - - - - - - - - - - - -
Other income, net 2.0 0.0 - - - - - - - - - - -
Income (loss) before taxes and minority interest (430.0) (144.0) (10.0) (29.0) 0.0 (2.0) (41.0) (2.9) 5.8 13.8 6.8 23.6 34.5
Income tax expense (benefit) (42.0) 2.0 - 3.0 32.0 8.0 43.0 (1.1) 2.2 5.2 2.5 8.8 12.9
Effective tax rate 9.8% -1.4% 0.0% -10.3% NM NM NM 37.5% 37.5% 37.5% 37.5% 37.5% 37.5%
Minority interest - - - - - (1.0) (1.00) - - - - - -
GAAP Net Income (loss) (388.0) (146.0) (10.0) (32.0) (32.0) (11.0) (85.0) (1.8) 3.7 8.6 4.2 14.7 21.6
Basic income (loss) per share ($1.76) ($0.12) ($0.39) ($0.39) ($0.13) ($1.02) ($0.02) $0.04 $0.10 $0.05 $0.17 $0.25
Diluted income (loss) per share ($1.71) ($0.12) ($0.37) ($0.38) ($0.13) ($1.02) ($0.02) $0.04 $0.10 $0.05 $0.17 $0.25
Basic shares outstanding 82.9 82.9 82.9 83.0 83.1 83.0 83.7 84.3 84.9 85.5 84.6 86.3
Diluted shares outstanding 85.6 85.6 85.6 83.1 83.2 83.0 83.8 84.4 85.0 85.6 84.7 86.4
Pro Forma Adj. Net Income Calculation
Net income (loss) (146.0) (10.0) (32.0) (32.0) (11.0) (85.0) (1.8) 3.7 8.6 4.2 14.7 21.6
Amortization of intangibles 12.0 5.0 5.0 5.0 5.0 20.0 4.9 4.9 5.1 5.4 20.3 21.6
Interest on debt (40.0) 3.0 14.0 3.0 - 20.0 - - - - - -
Non-cash interest 19.0 3.0 3.0 5.0 3.0 14.0 4.0 4.0 4.0 4.0 16.0 18.5
Stock based compensation 6.0 1.0 2.0 0.5 4.0 7.5 3.5 3.5 3.5 3.5 14.0 18.0
Other adjustments 173.0 8.0 22.0 6.0 4.0 40.0 (2.1) (2.1) (2.1) (2.1) (8.3) (14.0)
Minority interest - - - - - - - - - - - -
Tax Effect (book tax rate) (17.0) 2.0 - 32.0 5.0 39.0 (2.4) (2.4) (2.5) (2.6) (9.7) (9.6)
PF Adjusted Net Income (loss) 7.0 12.0 14.0 19.5 10.0 55.5 6.1 11.6 16.7 12.5 47.0 56.1
PF Adjusted Diluted EPS $0.07 $0.16 $0.15 $0.23 $0.12 $0.66 $0.07 $0.14 $0.20 $0.15 $0.55 $0.65
Adjusted diluted shares outstanding 85.6 85.6 85.6 83.1 83.2 84.4 83.8 84.4 85.0 85.6 84.7 86.4
EBITDA Reconciliation:
Net Income (loss) -- reported (388.0) (146.0) (10.0) (32.0) (32.0) (11.0) (85.0) (1.8) 3.7 8.6 4.2 14.7 21.6
Interest expense 22.0 27.0 19.0 28.0 19.0 17.0 83.0 12.6 11.6 11.3 11.5 47.0 42.4
Provision for income taxes (42.0) 2.0 - 3.0 32.0 8.0 43.0 (1.1) 2.2 5.2 2.5 8.8 12.9
EBITDA (330.0) (62.0) 22.0 11.0 36.0 29.0 98.0 27.7 35.4 44.2 38.3 145.6 166.9
Adjusted EBITDA Reconciliation:

EBITDA (62.0) 22.0 11.0 36.0 29.0 98.0 27.7 35.4 44.2 38.3 145.6 166.9
Goodwill and intangible impairment expense 122.0 - - - - - - - - - - -
Purchase acctg adjustments 39.0 6.0 - - - 6.0 -
Corp. alllocations and other corp costs 13.0 3.0 22.0 3.0 0.0 28.0 -
Global platform expense (Austin) 5.0 2.0 2.0 3.0 1.0 8.0 -
Stock based compensation 6.0 1.0 2.0 1.0 4.0 8.0 3.5 3.5 3.5 3.5 14.0 18.0
Restructuring and moving expenses 7.0 - - 1.0 1.0 2.0 -
Travelport corp solutions adjustments (3.0) - - - 2.0 2.0 0.4 0.4 0.4 0.4 1.7
Public company costs (14.0) (4.0) (3.0) (1.0) - (8.0) (2.5) (2.5) (2.5) (2.5) (10.0) (14.0)
Adjusted EBITDA 113.0 30.0 34.0 43.0 37.0 144.0 29.1 36.9 45.6 39.7 151.3 170.9
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Y/Y GROWTH
Gross Bookings 274.2% 34.8% 20.9% 9.4% 8.5% -2.9% 9.0% -1.1% 3.0% 6.4% 10.5% 4.3% 8.6%
Revenue 181.1% 9.6% 16.5% 10.6% 20.1% 10.1% 14.2% 0.5% 1.2% 4.1% 7.9% 3.3% 7.5%
Cost of goods sold 134.9% 11.9% 31.0% 44.8% 20.0% 64.0% 38.9% 6.5% -0.7% 2.2% -11.9% -1.2% 7.6%
Gross profit 191.0% 9.2% 13.7% 5.1% 20.1% 1.3% 9.9% -0.8% 1.6% 4.4% 13.1% 4.3% 7.4%
Selling, General, & Administrative 138.2% 12.0% 4.8% 15.8% 5.7% -10.6% 4.1% -4.7% -12.2% 0.0% 9.7% -2.7% 5.7%
Total operating expenses 284.2% -24.0% 2.5% -34.5% 7.1% -7.8% -12.7% -1.3% -8.2% 1.2% 12.2% 0.2% 7.3%
Adjusted EBITDA NA NA 200.0% -5.6% 22.9% 15.6% 27.4% -3.0% 8.4% 6.0% 7.3% 5.0% 13.0%
SEQUENTIAL GROWTH
Revenue 18.4% 8.0% -3.5% -10.9% 8.1% 8.8% -0.7% -7.6%
Adjusted EBITDA -6.3% 13.3% 26.5% -14.0% -21.3% 26.6% 23.6% -12.9%
% OF REVENUES
Cost of revenues 14.7% 15.0% 17.9% 18.3% 16.3% 20.8% 18.3% 19.0% 18.0% 16.0% 17.0% 17.5% 17.5%
Selling, General, & Administrative 75.4% 77.0% 71.7% 76.9% 67.4% 64.0% 70.2% 68.0% 66.7% 64.8% 65.0% 66.1% 65.0%
Depreciation & amortization 11.4% 7.3% 6.1% 5.2% 7.7% 7.6% 6.6% 8.4% 7.8% 8.3% 9.4% 8.5% 9.4%
MARGINS
Gross margin 85.3% 85.0% 82.1% 81.7% 83.7% 79.2% 81.7% 81.0% 82.0% 84.0% 83.0% 82.5% 82.5%
Operating margin -59.8% -15.6% 4.2% -0.4% 8.6% 7.6% 4.9% 4.6% 7.5% 10.9% 8.6% 8.0% 8.1%
Adj. EBITDA Margin NA 15.0% 14.2% 14.8% 19.5% 18.8% 16.8% 13.7% 15.9% 19.8% 18.7% 17.0% 17.9%
Operating leverage (∆EBITDA / ∆Revenue) NA NA 66.7% -9.1% 21.6% 27.8% 29.0% -86.7% 107.5% 28.7% 17.3% 25.7% 29.6%
April 07, 2008 115

Figure 137: Orbitz Segment Breakdown, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Revenue 686.0 752.0 212.0 229.0 221.0 197.0 859.0 213.0 231.7 230.0 212.6 887.3 953.5
Y/Y Growth 181.1% 9.6% 16.5% 10.6% 20.1% 10.1% 14.2% 0.5% 1.2% 4.1% 7.9% 3.3% 7.5%
Q/Q Growth 18.4% 8.0% -3.5% -10.9% 8.1% 8.8% -0.7% -7.6%
Total Gross Bookings 7,435.0 10,025.0 2,941.0 2,993.0 2,637.0 2,356.0 10,927.0 2,908.1 3,083.8 2,805.1 2,603.8 11,400.8 12,381.0
Y/Y Growth 274.2% 34.8% 20.9% 9.4% 8.5% -2.9% 9.0% -1.1% 3.0% 6.4% 10.5% 4.3% 8.6%
Q/Q Growth 21.2% 1.8% -11.9% -10.7% 23.4% 6.0% -9.0% -7.2%
GROSS BOOKINGS
Air Bookings 5,392.0 7,443.0 2,151.0 2,245.0 1,923.8 1,760.0 8,079.8 2,086.5 2,289.9 2,027.7 1,918.4 8,322.5 8,871.7
Y/Y Growth 303.0% 38.0% 19.5% 9.5% 8.8% -4.1% 8.6% -3.0% 2.0% 5.4% 9.0% 3.0% 6.6%
% of Total Bookings 72.5% 74.2% 73.1% 75.0% 73.0% 74.7% 73.9% 71.7% 74.3% 72.3% 73.7% 73.0% 71.7%
Non-Air + Other Bookings 2,043.0 2,582.0 790.0 749.0 713.2 596.0 2,848.2 821.6 793.9 777.4 685.4 3,078.3 3,509.3
Y/Y Growth 214.8% 26.4% 25.0% 9.2% 7.5% 0.7% 10.3% 4.0% 6.0% 9.0% 15.0% 8.1% 14.0%
Y/Y Growth 274.2% 34.8% 20.9% 9.4% 8.5% -2.9% 9.0% -1.1% 3.0% 6.4% 10.5% 4.3% 8.6%
Q/Q Growth 21.2% 1.8% -11.9% -10.7% 23.4% 6.0% -9.0% -7.2%
BOOKINGS BY REGION
Domestic Bookings 6,334.0 8,748.0 2,530.0 2,597.0 2,262.0 2,004.0 9,393.0 2,469.0 2,639.8 2,392.7 2,213.2 9,714.7 10,499.1
Y/Y Growth 255.4% 38.1% 18.8% 7.5% 8.2% -5.2% 7.4% -2.4% 1.6% 5.8% 10.4% 3.4% 8.1%
International Bookings 1,101.0 1,277.0 411.0 396.0 375.0 352.0 1,534.0 439.1 444.1 412.3 390.6 1,686.1 1,881.9
Y/Y Growth 437.1% 16.0% 35.6% 23.8% 10.3% 12.1% 20% 6.8% 12.1% 10.0% 11.0% 9.9% 11.6%
Y/Y Growth 274% 35% 20.9% 9.4% 8.5% -2.9% 9.0% -1.1% 3.0% 6.4% 10.5% 4.3% 8.6%
REVENUE
Air Revenue 323.0 355.0 99.0 103.0 92.0 81.0 375.0 93.9 103.0 91.2 84.4 372.6 381.5
Y/Y Growth 275.6% 9.9% 11.2% 7.3% 8.2% -4.7% 5.6% -5.2% 0.0% -0.8% 4.2% -0.6% 2.4%
Revenue Take Rate % 6.0% 4.8% 4.6% 4.6% 4.8% 4.6% 4.6% 4.5% 4.5% 4.5% 4.4% 4.5% 4.3%
% of Total Revenue 47% 47% 46.7% 45.0% 41.6% 41.1% 44% 44.1% 44.5% 39.7% 39.7% 42.0% 40.0%
Non-Air + Other Revenue 363.0 397.0 113.0 126.0 129.0 116.0 484.0 119.1 128.6 138.8 128.2 514.7 572.0
Y/Y Growth 129.7% 9.4% 21.5% 13.5% 30.3% 23.4% 21.9% 5.4% 2.1% 7.6% 10.5% 6.3% 11.1%
% of Total Revenue 53% 53% 53.3% 55.0% 58.4% 58.9% 56% 55.9% 55.5% 60.3% 60.3% 58.0% 60.0%
Total Revenue 686.0 752.0 212.0 229.0 221.0 197.0 859.0 213.0 231.7 230.0 212.6 887.3 953.5
Y/Y Growth 181.1% 9.6% 16.5% 10.6% 20.1% 10.1% 14.2% 0.5% 1.2% 4.1% 7.9% 3.3% 7.5%
REVENUE BY REGION
Domestic Revenue 542.0 611.0 166.0 185.0 175.0 153.0 679.0 163.4 182.6 180.6 165.8 692.3 729.4
Y/Y Growth 150.9% 12.7% 12.9% 10.8% 15.9% 4.8% 11.1% -1.6% -1.3% 3.2% 8.4% 2.0% 5.4%
% of Total Revenue 79.0% 81.3% 78.3% 80.8% 79.2% 77.7% 79.0% 76.7% 78.8% 78.5% 78.0% 78.0% 76.5%
International Revenue 144.0 141.0 46.0 44.0 46.0 44.0 180.0 49.6 49.1 49.5 46.8 195.0 224.1
Y/Y Growth 414.3% -2.1% 31.4% 10.0% 39.4% 33.3% 27.7% 7.9% 11.6% 7.5% 6.3% 8.3% 14.9%
% of Total Revenue 21% 19% 21.7% 19.2% 20.8% 22.3% 21.0% 23.3% 21.2% 21.5% 22.0% 22.0% 23.5%
Total Revenue 686.0 752.0 212.0 229.0 221.0 197.0 859.0 213.0 231.7 230.0 212.6 887.3 953.5
Y/Y Growth 181.1% 9.6% 16.5% 10.6% 20.1% 10.1% 14.2% 0.5% 1.2% 4.1% 7.9% 3.3% 7.5%
116 April 07, 2008

Figure 138: Orbitz Base Financials, 2005–09E ($ in millions, except per share data)
-adjusts for Travelbag, purchase accounting, and Travelport corporate solutions to arrive at base financials; excludes FX impacts
2005A 3/06A 6/06A 9/06A 12/06A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
GROSS BOOKINGS
Reported Gross Bookings 7,435 2,432 2,735 2,431 2,427 10,025 2,941 2,993 2,637 2,356 10,927 2,908 3,084 2,805 2,604 11,401 12,381
Y/Y Growth NA NA NA NA NA 34.8% 20.9% 9.4% 8.5% -2.9% 9.0% -1.1% 3.0% 6.4% 10.5% 4.3% 8.6%
Adjustments:
Travelbag Total NA 60 55 63 67 245 66 58 12 - 136 - - - - - -
Travelbag Air NA 50 46 52 55 203 55 49 10 - 114 - - - - - -
Travelbag Non-Air NA 10 9 11 12 42 11 9 2 - 22 - - - - - -
Adjusted Gross Bookings (BASE) NA 2,372 2,680 2,368 2,360 9,780 2,875 2,935 2,625 2,356 10,791 2,908 3,084 2,805 2,604 11,401 12,381
Y/Y Growth NA NA NA NA NA NA 21.2% 9.5% 10.9% -0.2% 10.3% 1.2% 5.1% 6.9% 10.5% 5.7% 8.6%
REVENUE
Total Revenue Reported 686 182 207 184 179 752 212 229 221 197 859 213 232 230 213 887 953
Y/Y Growth NA NA NA NA NA 9.6% 16.5% 10.6% 20.1% 10.1% 14.2% 0.5% 1.2% 4.1% 7.9% 3.3% 7.5%
Adjustments:
Purchase Accounting Add-Back (+) NA - - 21 18 39 6 - - - 6 - - - - - -
Travelport corporate solutions NA 1 2 - 1 4 - - - - - - - - - - -
Travelbag Total NA 7 6 8 7 28 7 6 2 - 15 - - - - - -
Travelbag Air NA 3 4 5 4 16 4 3 1 - 8 - - - - - -
Travelbag Non-Air NA 4 2 3 3 12 3 3 1 - 7 - - - - - -
Adjusted Revenue (BASE) NA 174 199 197 189 759 211 223 219 197 850 213 232 230 213 887 953
Y/Y Growth NA NA NA NA NA NA 21.3% 12.1% 11.2% 4.2% 12.0% 1.0% 3.9% 5.0% 7.9% 4.4% 7.5%
Revenue Margin/Take Rate NA 7.3% 7.4% 8.3% 8.0% 7.8% 7.3% 7.6% 8.3% 8.4% 7.9% 7.3% 7.5% 8.2% 8.2% 7.8% 7.7%
ADJUSTED EBITDA
Reported Adjusted EBITDA 90 10 36 35 32 113 30 34 43 37 144 29 37 46 40 151 171
Y/Y Growth NA NA NA NA NA 25.6% 200.0% -5.6% 22.9% 15.6% 27.4% -3.0% 8.4% 6.0% 7.3% 5.0% 13.0%
Adjustments:
Travelbag NA (2) - 3 1 2 (1) (1) - - (2) - - - - - -
Tecnovate NA 1 1 1 1 4 1 1 - - 2 - - - - - -
Adj. EBITDA Ex-T'bag & Tecnovate (BASE) NA 11 35 31 30 107 30 34 43 37 144 29 37 46 40 151 171
Y/Y Growth NA NA NA NA NA NA 172.7% -2.9% 38.7% 23.3% 34.6% -3.0% 8.4% 6.0% 7.3% 5.0% 13.0%
Adjusted EBITDA Margin Base NA 6.3% 17.6% 15.7% 15.9% 14.1% 14.2% 15.2% 19.6% 18.8% 16.9% 13.7% 15.9% 19.8% 18.7% 17.0% 17.9%
April 07, 2008 117

Figure 139: Netflix Snapshot

- Industry (NFLX + BBI) had net loss of subscribers in 3Q (NFLX +286k, BBI -500k),
- Leadership position in online DVD rental market with ~71% share---7.5M
and 4Q showed signif Y/Y deceleration. Is by-mail DVD rental business maturing?
subs vs. Blockbuster at ~3.0M
Slowing?
- Netflix digital limited by content & portability---Partnership with LG device is a start,

- High quality service and proprietary technology lead to scale, cost
but will partnerships be with the right platforms/devices. Consumer adoption? High
leadership advantages, and barriers to entry
content/encoding costs
- Digital content likely to remain limited in N-T as a majority of catalog - BBI strategy: 1) Total Access/By-Mail remains key part of "triple-play" strategy, with
content remains in L-T pay TV contracts --> lengthens DVD lifespan by-mail, in-store and digital delivery
- Cable VOD day & date releases gaining some momentum, Comcast increasing HD
- Well-run company with ability to balance growth and profitability
content for VOD, but still very early
- Headline risk as competing digital platforms, including AAPL rentals, AMZN Unbox,
- Churn and usage should decline as lower priced plans gain traction with
are launched and content improves, and as content producers explore new distribution
more casual movie watchers
channels
- Addt'l $100M stock buyback program in place for 2008. Repurchased

- NFLX's primary levers are price and digital
$100M in '07.
- Reaching critical mass of subscribers at >5% HH penetration---driving

stronger word-of-mouth advertising and further closures of traditional retail
rental stores

- Stabilization in pricing for NFLX/BBI -- or are further price wars coming in
'08? 1Q08 2008
Revenue $324M - $328M $1,345M - $1,385M
- Is 2008 subscriber growth conservative? Will the price reductions at
NFLX/increases at BBI continue to slow churn at NFLX? GAAP net income $10M - $14M $75M - $83M
GAAP EPS $0.15 - $0.22 $1.18 - $1.30
- Will heavy usage subscribers weigh on profitability? Ending subscribers 8.16M - 8.26M 8.9M - 9.5M
- Adoption of LG/NFLX device; Other device partners in '08 to get "Watch

Instantly" to TV
- BBI digital strategy; Apple rental adoption, AppleTV adoption; Amazon

Unbox adoption
118 April 07, 2008

Figure 140: Netflix Income Statement, 2005–09E ($ in millions, except per share data)
Revenues
Subscription 682.2 996.7 305.3 303.7 294.0 302.4 1,205.3 326.0 339.8 346.5 363.6 1,375.9 1,640.1
DVD & Advertising Sales --- - - - - - - - - - - - -
Total Net Revenues $682.2 $996.7 $305.3 $303.7 $294.0 $302.4 $1,205.3 $326.0 $339.8 $346.5 $363.6 $1,375.9 $1,640.1
Cost of Sales
Revenue sharing 126.2 152.4 43.4 43.7 40.2 41.4 168.8 46.0 47.6 46.4 47.6 187.6 213.2
DVD amortization 91.8 134.0 47.0 48.4 45.8 52.0 193.2 63.2 59.0 59.3 64.6 246.0 314.6
Postage & packaging 174.3 246.0 74.8 74.4 72.0 73.8 295.0 78.2 83.3 84.9 85.4 331.8 380.5
Amortization of intangibles 1.4 0.3 0.1 1.0 5.6 1.5 8.1 - - - - - -
Total Cost of subscription revenue 393.8 532.6 165.2 167.6 163.7 168.7 665.1 187.4 189.8 190.6 197.6 765.4 908.3
Fulfillment 70.8 93.4 29.6 29.0 30.6 31.3 120.6 31.9 33.0 36.7 38.9 140.5 170.6
DVD & Advertising Sales - - - - - - - - - - - - -
Total Cost of Sales 464.6 626.1 194.8 196.6 194.4 200.0 785.7 219.3 222.8 227.3 236.5 905.9 1,078.9
Gross profit 217.7 370.6 110.5 107.1 99.6 102.4 419.6 106.7 117.1 119.2 127.1 470.0 561.2
Operating expenses
Technology and development 30.9 44.8 15.0 18.1 17.2 17.5 67.7 18.6 21.4 22.2 23.6 85.8 105.0
Marketing 142.0 223.4 71.6 44.7 48.6 51.2 216.1 54.6 46.9 50.7 56.0 208.2 221.1
General and administrative 29.4 30.1 10.8 12.5 11.4 12.1 46.8 12.4 13.3 13.5 14.2 53.3 62.3
Restructuring related and other (gain on disposal of DVDs) (2.0) (4.8) (0.9) (9.3) (2.3) (1.7) (14.2) (2.5) (2.5) (2.5) (2.5) (10.0) (11.0)
Stock-based compensation 14.3 12.7 2.8 2.8 3.1 3.2 12.0 3.3 3.0 3.0 2.1 11.4 10.8
Amortization of other intangibles - - - - - - - - -
Operating income (ex. stock comp) 17.3 77.1 14.0 41.1 24.7 23.4 103.1 23.6 38.0 35.3 35.7 132.6 183.8
Interest income 5.8 15.9 5.4 5.0 5.1 4.9 20.3 3.1 3.2 3.5 3.7 13.5 18.4
Interest expense (0.4) - - - - - - - - - - - -
Total non-operating income (expenses) 5.3 15.9 5.4 5.0 5.1 4.9 20.3 3.1 3.2 3.5 3.7 13.5 18.4
Pre-tax income 8.3 80.3 16.6 43.2 26.6 25.1 111.5 23.4 38.2 35.7 37.3 134.7 191.4
Income tax provision (33.7) 31.2 6.7 17.7 10.9 9.3 44.5 9.4 15.3 14.3 14.9 53.9 76.6
Income tax rate NA 38.9% 40.5% 40.8% 40.9% 37.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%
GAAP Net income (loss) 42.0 49.1 9.9 25.6 15.7 15.8 67.0 14.0 22.9 21.4 22.4 80.8 114.8
GAAP Basic income (loss) per share $0.79 $0.78 $0.14 $0.38 $0.24 $0.24 $1.00 $0.23 $0.38 $0.35 $0.37 $1.32 $1.87
GAAP Diluted income (loss) per share $0.64 $0.71 $0.14 $0.37 $0.23 $0.24 $0.97 $0.22 $0.36 $0.34 $0.36 $1.28 $1.81
Basic shares outstanding 53.5 62.6 68.7 68.0 66.5 65.2 67.1 61.7 61.2 61.2 61.2 61.3 61.5
Non-GAAP Fully Taxed EPS Reconciliation:

GAAP Pre-tax net income 8.3 80.3 16.6 43.2 26.6 25.1 111.5 23.4 38.2 35.7 37.3 134.7 191.4
Stock-based compensation 14.3 12.7 2.8 2.8 3.1 3.2 12.0 3.3 3.0 3.0 2.1 11.4 10.8
Restructuring related and other 3.2 - - (7.0) - - (7.0) - - - - - -
Non-GAAP Pre-tax income 25.9 93.0 19.4 39.1 29.8 28.3 116.5 26.7 41.2 38.7 39.4 146.1 202.2
Tax effect 12.1 36.2 7.8 16.0 12.2 10.5 46.4 10.7 16.5 15.5 15.8 58.5 80.9
Non-GAAP Fully taxed net income (loss) 13.7 56.8 11.5 23.1 17.6 17.8 70.0 16.0 24.7 23.2 23.7 87.7 121.3
Non-GAAP Fully taxed basic income (loss) per share $0.26 $0.91 $0.17 $0.34 $0.26 $0.27 $1.04 $0.26 $0.40 $0.38 $0.39 $1.43 $1.97
Non-GAAP Fully taxed diluted income (loss) per share $0.21 $0.82 $0.16 $0.33 $0.26 $0.27 $1.02 $0.25 $0.39 $0.37 $0.38 $1.39 $1.92
EBITDA Reconciliation:
Operating Income 3.0 64.4 11.2 38.3 21.6 20.1 91.2 20.3 35.0 32.3 33.6 121.2 173.0
Depreciation of PP&E 9.1 15.9 4.6 5.1 5.8 5.9 21.4 6.0 6.0 6.0 6.0 24.0 28.0
Amortization of DVD Library 96.9 141.2 49.4 51.0 48.2 54.8 203.4 66.5 62.1 62.4 68.0 258.9 327.7
Amortization of Intangibles 1.0 0.1 0.0 0.0 0.0 0.1 0.2 - - - - - -
Stock-based comp, other non-cash charges 17.5 12.7 2.8 2.8 3.1 3.2 12.0 3.3 3.0 3.0 2.1 11.4 10.8
EBITDA 127.5 234.2 68.1 97.2 78.7 84.1 328.1 96.1 106.1 103.6 109.7 415.6 539.5
EBITDA (excluding add-back of DVD Amortization) 30.6 93.1 18.6 46.2 30.4 29.4 124.7 29.6 44.0 41.3 41.7 156.6 211.8
GROWTH AND MARGINS

Y/Y GROWTH
Total Revenue 34.8% 46.1% 36.2% 26.9% 14.9% 9.1% 20.9% 6.8% 11.9% 17.9% 20.2% 14.2% 19.2%
Revenue sharing 53.7% 20.7% 11.2% 18.1% 4.8% 9.1% 10.7% 6.0% 8.8% 15.4% 15.0% 11.2% 13.7%
DVD amortization 22.6% 46.0% 82.2% 59.8% 33.1% 19.8% 44.2% 34.5% 21.8% 29.3% 24.1% 27.3% 27.9%
Postage & packaging 52.1% 41.1% 21.9% 21.7% 15.5% 20.7% 19.9% 4.6% 11.9% 17.9% 15.8% 12.5% 14.7%
Fulfillment 25.0% 32.0% 36.0% 33.5% 31.1% 17.9% 29.1% 7.8% 13.5% 19.8% 24.4% 16.5% 21.4%
Gross profit 25.7% 70.3% 45.2% 20.3% 2.3% -5.3% 13.2% -3.5% 9.3% 19.7% 24.1% 12.0% 19.4%
Marketing 44.9% 57.3% 36.6% -3.8% -17.4% -22.1% -3.3% -23.8% 4.8% 4.4% 9.4% -3.7% 6.2%
Total cash operating expenses 47.5% 47.4% 40.3% 19.5% -1.3% -7.8% 7.3% -12.2% 8.3% 11.9% 16.2% 6.2% 11.3%
Operating income -84.6% 2055.0% NA 60.2% 26.4% 7.7% 41.5% 81.2% -8.5% 49.7% 67.2% 33.0% 42.7%
Operating income (ex stock comp) -51.8% 345.3% 73.2% 52.3% 22.0% 7.1% 33.8% 68.5% -7.5% 43.0% 53.0% 28.6% 38.6%
Pre-tax income -61.7% 863.6% 129.0% 56.7% 22.5% 5.5% 38.8% 41.4% -11.6% 34.1% 49.1% 20.8% 42.1%
GAAP net income 94.6% 16.8% 124.0% 50.1% 23.1% 6.2% 36.4% 42.4% -10.3% 36.2% 42.0% 20.7% 42.1%
EBITDA (excluding add back of DVD Amortization) -30.1% 203.9% 59.2% 49.9% 25.2% 12.0% 33.9% 58.9% -4.8% 35.6% 42.2% 25.6% 35.2%
Q/Q GROWTH
Total revenue 10.1% -0.5% -3.2% 2.9% 7.8% 4.3% 2.0% 4.9%
% OF REVENUES
Revenue sharing as a % of subscription revenue 18.5% 15.3% 14.2% 14.4% 13.7% 13.7% 14.0% 14.1% 14.0% 13.4% 13.1% 13.6% 13.0%
DVD amortization as a % of subscription revenue 13.5% 13.4% 15.4% 15.9% 15.6% 17.2% 16.0% 19.4% 17.4% 17.1% 17.8% 17.9% 19.2%
Postage & packaging as a % of subscription revenue 25.6% 24.7% 24.5% 24.5% 24.5% 24.4% 24.5% 24.0% 24.5% 24.5% 23.5% 24.1% 23.2%
Total cost of subscription rev as a % of subscription rev. 57.7% 53.4% 54.1% 55.2% 55.7% 55.8% 55.2% 57.5% 55.9% 55.0% 54.4% 55.6% 55.4%
Fulfillment 10.4% 9.4% 9.7% 9.6% 10.4% 10.3% 10.0% 9.8% 9.7% 10.6% 10.7% 10.2% 10.4%
Total Cost of sales 68.1% 62.8% 63.8% 64.7% 66.1% 66.1% 65.2% 67.3% 65.6% 65.6% 65.1% 65.8% 65.8%
Technology and development 4.5% 4.5% 4.9% 6.0% 5.9% 5.8% 5.6% 5.7% 6.3% 6.4% 6.5% 6.2% 6.4%
Marketing 20.8% 22.4% 23.5% 14.7% 16.5% 16.9% 17.9% 16.7% 13.8% 14.6% 15.4% 15.1% 13.5%
MARGINS
Gross margin 31.9% 37.2% 36.2% 35.3% 33.9% 33.9% 34.8% 32.7% 34.4% 34.4% 34.9% 34.2% 34.2%
Operating margin (ex. stock comp) 2.5% 7.7% 4.6% 13.5% 8.4% 7.7% 8.6% 7.2% 11.2% 10.2% 9.8% 9.6% 11.2%
EBITDA margin 18.7% 23.5% 22.3% 32.0% 26.8% 27.8% 27.2% 29.5% 31.2% 29.9% 30.2% 30.2% 32.9%
EBITDA margin (excluding add back of DVD Amortization) 4.5% 9.3% 6.1% 15.2% 10.4% 9.7% 10.3% 9.1% 12.9% 11.9% 11.5% 11.4% 12.9%
Operating Leverage/Flow-through -7.5% 19.9% 8.5% 23.9% 16.1% 12.5% 15.1% 53.2% -6.2% 20.6% 20.2% 18.7% 20.9%
April 07, 2008 119

Figure 141: Netflix Subscriber and Revenue Analysis, 2005–09E ($ in millions, except per share data)
SUBSCRIBER & REVENUE ANALYSIS 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Subscribers: Beginning of Period 2,610 4,179 6,316 6,797 6,742 7,028 6,316 7,479 8,227 8,449 8,774 7,479 9,340
Plus: Gross Additions 3,729 5,250 1,520 1,028 1,297 1,495 5,340 1,854 1,439 1,556 1,839 6,689 7,291
Y/Y Growth 37.3% 40.8% 10.4% -3.9% -1.0% 0.1% 1.7% 22.0% 40.0% 20.0% 23.0% 25.3% 9.0%
Q/Q Growth 0.5% -32.4% 26.2% 15.3% 6.7% -22.4% 8.1% 18.1%
Less: Cancellations 2,160 3,113 1,039 1,083 1,011 1,044 4,177 1,106 1,218 1,231 1,274 4,828 5,358
Y/Y Growth 35.6% 44.1% 50.6% 41.2% 23.7% 24.4% 34.2% 6.4% 12.5% 21.7% 22.0% 15.6% 11.0%
Q/Q Growth 23.8% 4.2% -6.6% 3.3% 5.9% 10.1% 1.0% 3.5%
Monthly Churn (cancels/(BOP subs + gross sub adds)) 4.5% 4.1% 4.4% 4.6% 4.2% 4.1% 4.3% 4.0% 4.2% 4.1% 4.0% 4.1% 4.0%
Net additions 1,569 2,137 481 (55) 286 451 1,163 748 221 326 565 1,861 1,933
TOTAL SUBSCRIBERS, END OF PERIOD 4,179 6,316 6,797 6,742 7,028 7,479 7,479 8,227 8,449 8,774 9,340 9,340 11,273
Y/Y Growth 60.1% 51.1% 39.7% 30.4% 24.1% 18.4% 18.4% 21.0% 25.3% 24.8% 24.9% 24.9% 20.7%
Q/Q Growth 7.6% -0.8% 4.2% 6.4% 10.0% 2.7% 3.9% 6.4%
Average Subscribers 3,395 5,248 6,557 6,770 6,885 7,254 6,898 7,853 8,338 8,611 9,057 8,409 10,306
Free Subscribers: end of period 153 162 121 133 183 153 153 145 158 198 161 161 169
% Change Y/Y 23.4% 5.9% -8.3% -12.5% 5.8% -5.6% -5.6% 20.0% 19.0% 8.0% 5.0% 5.0% 5.0%
Free subscribers as a % of ending subscribers 3.7% 2.6% 1.8% 2.0% 2.6% 2.0% 2.0% 1.8% 1.9% 2.3% 1.7% 1.7% 1.5%
Paid Subscribers: end of period 4,026 6,154 6,676 6,609 6,845 7,326 7,326 8,082 8,290 8,577 9,179 9,179 11,104
Y/Y Growth 61.9% 52.9% 41.0% 31.7% 24.7% 19.0% 19.0% 21.1% 25.4% 25.3% 25.3% 25.3% 21.0%
Q/Q Growth 8.5% -1.0% 3.6% 7.0% 10.3% 2.6% 3.5% 7.0%
Average Paid Subscribers 3,256 5,090 6,415 6,643 6,727 7,086 6,740 7,704 8,186 8,434 8,878 8,252 10,141
Subscriber breakdown
Free Subscribers as % of subs 3.7% 2.6% 1.8% 2.0% 2.6% 2.0% 2.0% 1.8% 1.9% 2.3% 1.7% 1.7% 1.5%
Paid Subscriber as % of subs 96.3% 97.4% 98.2% 98.0% 97.4% 98.0% 98.0% 98.2% 98.1% 97.7% 98.3% 98.3% 98.5%
Total Subscribers 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Subscription revenue per average paid sub (monthly) $17.46 $16.32 $15.83 $15.24 $14.57 $14.22 $14.89 $14.10 $13.84 $13.70 $13.65 $13.89 $13.48
Y/Y Growth -18.3% -6.5% -7.2% -6.9% -10.3% -10.4% -8.7% -10.9% -9.2% -6.0% -4.0% -6.7% -3.0%
Q/Q Growth -0.3% -3.7% -4.4% -2.4% -0.8% -1.9% -1.0% -0.3%
TOTAL SUBSCRIPTION REVENUE $682.2 $996.7 $304.6 $303.7 $294.0 $302.3 $1,204.6 $326.0 $339.8 $346.5 $363.6 $1,375.9 $1,640.1
Y/Y Growth 36.3% 46.1% 35.9% 26.9% 14.9% 9.0% 20.9% 7.0% 11.9% 17.8% 20.3% 14.2% 19.2%
Q/Q Growth 9.9% -0.3% -3.2% 2.8% 7.8% 4.3% 2.0% 4.9%
DVD & ADVERTISING SALES REVENUE

Y/Y Growth
Q/Q Growth
TOTAL REVENUE $682.2 $996.7 $304.6 $303.7 $294.0 $302.3 $1,204.6 $326.0 $339.8 $346.5 $363.6 $1,375.9 $1,640.1
Y/Y Growth 34.8% 46.1% 35.9% 26.9% 14.9% 9.0% 20.9% 7.0% 11.9% 17.8% 20.3% 14.2% 19.2%
Q/Q Growth 9.9% -0.3% -3.2% 2.8% 7.8% 4.3% 2.0% 4.9%
MARKETING EXPENSES
Number of New Subscribers 3,729 5,250 1,520 1,028 1,297 1,495 5,340 1,854 1,439 1,556 1,839 6,689 7,291
Subscriber Acquisition Cost (SAC) - consolidated $37.87 $43.01 $47.46 $44.02 $37.91 $34.60 $41.00 $29.43 $32.57 $32.60 $30.45 $31.26 $30.32
Y/Y Growth 4.8% 13.6% 23.4% 0.2% -16.4% -21.9% -4.7% -38.0% -26.0% -14.0% -12.0% -23.7% -3.0%
Q/Q Growth 7.1% -7.2% -13.9% -8.7% -15.0% 10.7% 0.1% -6.6%
Calculated Marketing Expense 142.0 225.5 72.1 45.3 49.2 51.7 218.3 54.6 46.9 50.7 56.0 208.2 221.1
Y/Y Growth 44.9% 58.8% 36.2% -3.8% -17.2% -21.8% -3.2% -24.4% 3.6% 3.2% 8.2% -4.6% 6.2%
Q/Q Growth 9.0% -37.3% 8.7% 5.2% 5.5% -14.1% 8.2% 10.3%
Reported marketing expense 72.1 45.3 49.1 51.7
120 April 07, 2008

Figure 142: Netflix Cash Flow Statement, 2005–09E ($ in millions, except per share data)
Net income (loss) 42.0 49.1 9.9 25.6 15.7 15.8 67.0 14.0 22.9 21.4 22.4 80.8 114.8
Adjustments to reconcile net income (loss) to net cash
Depreciation of property and equipment 9.1 15.9 4.6 5.1 5.8 5.9 21.4 6.0 6.0 6.0 6.0 24.0 28.0
Amortization of DVD library 96.9 141.2 49.4 51.0 48.2 54.8 203.4 66.5 62.1 62.4 68.0 258.9 327.7
Amortization of intangible assets 1.0 0.1 0.0 0.0 0.0 0.1 0.2 - -
Noncash charges for equity instruments granted - - (0.1) 0.0 0.0 0.1 0.0 - -
Stock-based compensation expense 14.3 12.7 2.8 2.8 3.1 3.2 12.0 3.3 3.0 3.0 2.1 11.4 10.8
Stock option income tax benefits - (13.2) (4.1) (12.0) (5.2) (5.0) (26.2) (6.0) (6.0) (6.0) (6.0) (24.0) (24.0)
Loss on disposal of short term investments - - (0.1) (0.0) (0.2) (0.3) (0.7) - - - - - -
Loss on disposal of property and equipment - (0.0) - - 0.1 0.0 0.1 - - - - - -
Gain on disposal of DVD's (3.6) (9.1) (2.6) (5.2) (3.9) (2.9) (14.6) (4.0) (4.0) (4.0) (4.0) (16.0) (16.0)
Non-cash interest expense 0.0 - - - - - - - - - - - -
Deferred income taxes (34.9) 16.2 (0.3) (0.5) (0.3) 0.4 (0.7) - - - - - -
Changes in Working Capital
Prepaid expenses and other current assets (4.9) (7.1) (10.3) 5.7 0.1 0.2 (4.3) (3.2) (0.7) (0.3) (0.1) (4.4) (6.3)
Accounts payable 8.2 3.2 11.4 (17.8) 6.0 (2.5) (2.9) (6.7) 4.2 8.9 5.5 11.9 14.9
Accrued expenses 12.4 17.6 7.7 14.2 11.4 (0.6) 32.8 9.2 5.3 4.5 (2.7) 16.3 12.9
Deferred revenue 16.6 21.1 (5.4) (3.7) (4.2) 15.3 2.0 13.1 3.6 1.7 0.8 19.2 15.7
Deferred rent 0.2 0.3 0.1 0.0 0.7 (0.1) 0.7 - - - - - -
Change in Working Capital 32.6 35.1 3.5 (1.6) 14.1 12.4 28.3 12.4 12.4 14.8 3.4 43.0 37.1
Net cash provided by (used in) operating activities 157.5 247.9 63.0 65.1 77.6 84.408 290.1 92.2 96.5 97.6 91.9 378.2 478.5

Purchases of short term investments - - (264.2) (53.9) (52.0) (35.2) (405.3) - -
Proceeds from sale of short term investments - - 95.4 28.7 41.3 35.5 200.8 - -
Purchases of property and equipment (27.7) (27.3) (18.0) (9.0) (7.4) (9.9) (44.3) (10.4) (10.9) (11.1) (11.6) (44.0) (45.9)
Acquisition of intangible asset (0.5) (0.6) - - - (0.6) (0.6) - -
Acquisitions of DVD library (111.4) (169.5) (68.5) (57.4) (39.5) (56.4) (221.8) (78.2) (71.4) (69.3) (76.4) (295.3) (364.1)
Proceeds from sale of DVD's 5.8 12.9 5.6 7.4 4.8 3.9 21.7 7.5 7.5 7.5 7.5 30.0 27.5
Deposits and other assets 0.6 (1.3) (0.1) 0.3 0.6 (0.5) 0.3 - - - - - -
Net cash provide by (used in) investing activities (133.2) (185.9) (249.8) (83.9) (52.2) (63.192) (449.1) (81.2) (74.7) (72.9) (80.5) (309.3) (382.5)

Proceeds from issuance of common stock 13.4 113.0 0.8 2.7 0.4 5.7 9.6 - -
Proceeds from issuance of stock via employee plans - - - - - - - - -
Net Proceeds from issuance of sub. notes / warrants - - - - - - - - -
Repurchase of Common stock - - - (30.2) (35.3) (34.3) (99.9) (100.0) (100.0) -
Proceeds from issuance of notes payable - - - - - - - - -
Excess tax benefits from stock-based compensation - 13.2 4.1 12.0 5.2 5.0 26.2 6.0 6.0 6.0 6.0 24.0 24.0
Principal payments on notes payable & capital leases (0.1) - - - - - - - -
Net cash provided by (used in) financing activities 13.3 126.2 4.8 (15.5) (29.7) (23.6) (64.0) (94.0) 6.0 6.0 6.0 (76.0) 24.0
Effect of exchange rate changes 0.2 - - - - - - - -
Cash & equivalents - BOP 174.5 212.3 400.4 218.5 184.2 179.8 400.4 177.4 94.5 122.2 152.9 177.4 170.3
Net change in cash 37.8 188.2 (182.0) (34.3) (4.4) (2.4) (223.0) (82.9) 27.7 30.7 17.4 (7.1) 120.0
Cash & equivalents - EOP 212.3 400.4 218.5 184.2 179.8 177.4 177.4 94.5 122.2 152.9 170.3 170.3 290.3

Operating cash flow 157.5 247.9 63.0 65.1 77.6 84.4 290.1 92.2 96.5 97.6 91.9 378.2 478.5
Purchases of fixed assets (property and equipment) (27.7) (27.3) (18.0) (9.0) (7.4) (9.9) (44.3) (10.4) (10.9) (11.1) (11.6) (44.0) (45.9)
Acquisitions of DVD library (111.4) (169.5) (68.5) (57.4) (39.5) (56.4) (221.8) (78.2) (71.4) (69.3) (76.4) (295.3) (364.1)
Proceeds from sale of DVD's 5.8 12.9 5.6 7.4 4.8 3.9 21.7 7.5 7.5 7.5 7.5 30.0 27.5
Deposits and other assets 0.6 (1.3) (0.1) 0.3 0.6 (1.0) 0.3 - - - - - -
Free Cash Flow 24.7 62.6 (18.0) 6.5 36.1 21.0 46.1 11.1 21.7 24.7 11.4 68.9 96.0
% change Y/Y -29% 153% -254% 17% 61% -7% -26% -162% 237% -32% -46% 50% 39%
Free Cash Flow per share $0.34 $0.91 ($0.25) $0.09 $0.53 $0.31 $0.67 $0.17 $0.34 $0.39 $0.18 $1.09 $1.51
Cash Flow Statement Assumptions

Acquisitions of DVDs
Revenue 682.2 996.7 305.3 303.7 294.0 302.4 1,205.3 326.0 339.8 346.5 363.6 1,375.9 1,640.1
Acquisitions of DVDs 111.4 169.5 68.5 57.4 39.5 56.4 221.8 78.2 71.4 69.3 76.4 295.3 364.1
Y/Y Growth 8% 52% 130% 24% 6% 0% 31% 14% 24% 76% 35% 33% 23%
Acquisitions of DVDs as a % of revenue 16.3% 17.0% 22.4% 18.9% 13.4% 18.7% 18.4% 24.0% 21.0% 20.0% 21.0% 21.5% 22.2%
Amortization of DVD library

Acquisitions of DVDs 111.4 169.5 68.5 57.4 39.5 56.4 221.8 78.2 71.4 69.3 76.4 295.3 364.1
Average DVD library balance 54.8 81.0 109.5 114.0 114.1 123.4 118.7 138.3 148.8 156.9 164.6 150.6 187.0
Amortization of DVD library 96.9 141.2 49.4 51.0 48.2 54.8 203.4 66.5 62.1 62.4 68.0 258.9 327.7
Amortization of DVD library as a % of Acquisition of DVDs 86.9% 83.3% 72.1% 88.9% 122.3% 97.1% 91.7% 85.0% 87.0% 90.0% 89.0% 87.7% 90.0%
Amortization of DVD library as a % of Avg DVD library balance 44.2% 43.6% 45.1% 44.7% 42.3% 44.4% 42.8% 48.1% 41.7% 39.7% 41.3% 43.0% 43.8%
Capex
Revenue 682.2 996.7 305.3 303.7 294.0 302.4 1,205.3 326.0 339.8 346.5 363.6 1,375.9 1,640.1
Capex 27.7 27.3 18.0 9.0 7.4 9.9 44.3 10.4 10.9 11.1 11.6 44.0 45.9
Capex as a % of revenue 4.1% 2.7% 5.9% 3.0% 2.5% 3.3% 3.7% 3.2% 3.2% 3.2% 3.2% 3.2% 2.8%
April 07, 2008 121

Figure 143: Blue Nile Snapshot

- Internet is in the early stages of impacting the $60B jewelry market; Blue Still early in macro cycle; high-end consumer being impacted
Nile well positioned to benefit
- Contractual agreements with suppliers for exclusive online merchandise

Valuation still challenging: 38x 2008 P/E, but 5.5% FCF Yield
provide barrier to entry
- Access to inventory creates a competitive advantage versus both traditional - Tough top-line comps and macro could lead to flat 1Q08 growth
and online jewelers
- Low capex, high inventory turns, & favorable payment terms lead to strong - We think it is likely that AMZN will ultimately become a competitor through an
free cash flow generation alternative brand
- International expansion into the UK and Canada provide additional revenue - Higher commodities costs could negatively impact gross margins; not passing on
streams; now shipping to 12 new international markets--Japan site next? to consumers
- Strong balance sheet with $123 million in cash & equivalents at YE '07 - Rising online advertising prices, particularly in sponsored search, could weigh on
traffic generation
- $150M share repurchase authorization; we'd expect company to be a buyer - Real time inventory purchase requirements means the company is more subject to
in near-term pricing changes
- ASPs may trend lower as company expands offering in non-engagement diamond

and non-diamond jewelry

- Mix-shift toward non-engagement, non-diamond could drive higher gross
margins 1Q08 2008
Net Sales ~$68M ~$352M
- Enhanced international focus; potential entry into Japan Y/Y Growth (implied) 0% 10%
Net Income per diluted share $0.11 - $0.14 ~$1.04

- Double digit top-line growth with macro challenges and steady increases in
online marketing costs Adjusted EBITDA (implied) ~$33.3M
Y/Y Growth (implied) 10%
- Gross margin stability amid potential inflation of input costs (platinum, gold,
etc) Effective Tax Rate 35.0% 35.0%
Capex $2.5M
- Whether conversion rates can continue to improve with traffic gains Stock Comp $0.07 $0.29
- Demand at higher price points -- has been weak in '08 thus far -- $25K+ =
15% of business
- Closings of traditional jewelry stores/independents
122 April 07, 2008

Figure 144: Blue Nile Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 1Q07A 2Q07A 3Q07A 4Q07A 2007A 1Q08E 2Q08E 3Q08E 4Q08E 2008E 2009E
Net Sales 203,169 251,587 67,910 72,093 67,355 111,906 319,264 69,902 78,639 76,516 129,384 354,440 396,105
Cost of Sales 158,025 200,761 54,661 57,150 53,998 88,251 254,060 56,271 62,125 60,983 101,566 280,945 314,507
Gross profit 45,144 50,826 13,249 14,943 13,357 23,655 65,204 13,631 16,514 15,533 27,817 73,495 81,598
Operating expenses
Selling, General, and Administrative 27,095 34,269 9,564 9,909 9,744 13,575 42,792 11,254 11,639 11,309 15,526 49,728 54,662
Restructuring charges - - - - - - - - - - - - -
Operating income (loss) 18,049 16,557 3,685 5,034 3,613 10,080 22,412 2,377 4,876 4,224 12,291 23,767 26,935
Interest income 2,499 3,323 973 803 947 1,037 3,760 1,085 839 795 943 3,661 3,730
Interest expense - - - - - - - - - - - - -
Other income 5 100 203 12 13 187 415 - - - - - -
Other income, net 2,504 3,423 1,176 815 960 1,224 4,175 1,085 839 795 943 3,661 3,730
Income (loss) before income taxes- EBT 20,553 19,980 4,861 5,849 4,573 11,304 26,587 3,461 5,714 5,018 13,235 27,429 30,665
Provision (benefit) for income taxes 7,400 6,916 1,698 2,068 1,601 3,761 9,128 1,211 2,000 1,756 4,632 9,600 10,733
Effective Tax Rate 36.0% 34.6% 34.9% 35.4% 35.0% 33.3% 34.3% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%
Net Income (loss) Attr. to Common (GAAP) 13,153 13,064 3,163 3,781 2,972 7,543 17,459 2,250 3,714 3,262 8,602 17,829 19,932
PF Net Income (loss) Attr. to Common 13,153 15,899 3,994 4,676 3,872 8,669 21,212 3,420 4,949 4,497 9,902 22,769 25,613
PF Diluted income (loss) per share $0.71 $0.92 $0.24 $0.28 $0.23 $0.51 $1.26 $0.20 $0.29 $0.27 $0.59 $1.35 $1.52
Operating income (loss) 18,049 16,557 3,685 5,034 3,613 10,080 22,412 2,377 4,876 4,224 12,291 23,767 26,935
Depreciation and other amortization 1,717 1,868 391 385 408 588 1,772 500 500 500 500 2,000 2,160
Stock-based compensation -- 4,339 1,277 1,385 1,385 1,688 5,735 1,800 1,900 1,900 2,000 7,600 8,740
EBITDA 19,766 22,764 5,353 6,804 5,406 12,356 29,919 4,677 7,276 6,624 14,791 33,367 37,835
Y/Y GROWTH
Total Revenue 20.0% 23.8% 34.0% 26.7% 26.5% 23.3% 26.9% 2.9% 9.1% 13.6% 15.6% 11.0% 11.8%
Gross profit 19.9% 12.6% 28.1% 31.7% 28.1% 26.5% 28.3% 2.9% 10.5% 16.3% 17.6% 12.7% 11.0%
Selling, general and administrative expenses 18.9% 26.5% 24.6% 27.9% 17.8% 28.4% 24.9% 17.7% 17.5% 16.1% 14.4% 16.2% 9.9%
Operating income 21.5% -8.3% 38.3% 39.8% 67.3% 24.0% 35.4% -35.5% -3.1% 16.9% 21.9% 6.0% 13.3%
Pre-Tax Income (Loss) - EBT 31.5% -2.8% 33.2% 27.6% 61.5% 26.8% 33.1% -28.8% -2.3% 9.7% 17.1% 3.2% 11.8%
GAAP Net income 31.7% -0.7% 34.3% 20.7% 62.9% 31.1% 33.6% -28.9% -1.8% 9.8% 14.0% 2.1% 11.8%
GAAP EPS 26.6% 7.0% 48.0% 27.6% 60.6% 29.2% 37.3% -30.3% -3.1% 10.3% 15.1% 2.0% 11.3%
EBITDA 20.8% 15.2% 33.1% 35.1% 38.3% 26.1% 31.4% -12.6% 6.9% 22.5% 19.7% 11.5% 13.4%
SEQUENTIAL GROWTH
Net sales -25.2% 6.2% -6.6% 66.1% -37.5% 12.5% -2.7% 69.1%
Cost of Sales -24.1% 4.6% -5.5% 63.4% -36.2% 10.4% -1.8% 66.5%
Gross profit -29.2% 12.8% -10.6% 77.1% -42.4% 21.2% -5.9% 79.1%
% OF REVENUES
Cost of Sales 77.8% 79.8% 80.5% 79.3% 80.2% 78.9% 79.6% 80.5% 79.0% 79.7% 78.5% 79.3% 79.4%
Selling, General, and Administrative 13.3% 13.6% 14.1% 13.7% 14.5% 12.1% 13.4% 16.1% 14.8% 14.8% 12.0% 14.0% 13.8%
MARGINS
Gross margin 22.2% 20.2% 19.5% 20.7% 19.8% 21.1% 20.4% 19.5% 21.0% 20.3% 21.5% 20.7% 20.6%
Net margin 6.5% 5.2% 4.7% 5.2% 4.4% 6.7% 5.5% 3.2% 4.7% 4.3% 6.6% 5.0% 5.0%
EBITDA margin 9.7% 9.0% 7.9% 9.4% 8.0% 11.0% 9.4% 6.7% 9.3% 8.7% 11.4% 9.4% 9.6%
Operating Leverage (∆ Oper income / ∆ Revenues) 9.4% -3.1% 5.9% 9.4% 10.3% 9.2% 8.7% -65.7% -2.4% 6.7% 12.7% 3.9% 7.6%
April 07, 2008 123

Figure 145: Blue Nile Cash Flow Statement, 2005–09E ($ in thousands, except per share data)

Net income (loss) 13,153 13,064 3,163 3,781 2,972 7,543 17,459 2,250 3,714 3,262 8,602 17,829 19,932
Depreciation and amortization 1,717 1,868 391 385 408 588 1,772 500 500 500 500 2,000 2,160
Loss on disposal of assets 11 5 - (6) - (2) (8) - -
Stock based compensation 342 4,434 1,304 1,419 1,406 1,703 5,832 1,800 1,900 1,900 2,000 7,600 8,740
Warrant-based interest expense - - - - -
Restructuring charge - - - - -
Deferred income taxes 7,062 2,654 (459) (104) (246) (598) (1,407) - -
Excess tax benefit from exercise of stock options - 2,567 656 1,998 1,956 391 5,001 (400) (400) (400) (400) (1,600) (1,600)
Changes in working capital: -
Receivables, net (849) 236 396 (334) (625) (1,372) (1,935) 2,038 (428) (329) (2,104) (823) (1,146)
Inventories, net (1,850) (2,852) (876) 823 (630) (5,608) (6,291) 634 2,185 (277) (4,214) (1,671) (1,189)
Prepaid expenses and other assets (41) 88 201 (2,043) (1,503) 3,039 (306) - - - - - -
Accounts Payable 12,382 16,468 (28,425) 4,301 (2,167) 45,532 19,241 (32,041) 10,660 (3,272) 48,764 24,110 27,868
Accrued liabilities (452) 2,194 (2,476) (658) 954 4,414 2,234 (3,398) 769 (187) 4,652 1,837 1,686
Deferred rent (203) (208) (56) (39) 93 (135) (137) - - - - - -
Total Change in Working Capital 8,987 15,704 (31,236) 2,050 (3,878) 45,870 12,806 (32,767) 13,185 (4,065) 47,099 23,452 27,219
Net cash provided by (used in) operating activities 31,272 40,518 (26,181) 9,523 2,618 55,495 41,455 (28,617) 18,899 1,197 57,801 49,281 56,451

Purchases of property and equipment (1,072) (1,908) (193) (1,873) (1,511) (1,320) (4,897) (559) (629) (612) (906) (2,706) (3,169)
Purchases of intangible assets - - - - - -
Proceeds from the sale of property and equipment 8 1 10,000 (9,992) - 15 23 - -
Purchases of marketable securities (156,870) (75,030) (20,094) (136) - - (20,230) - -
Proceeds from the sale of marketable securities 156,000 98,000 40,000 - - 40,000 - -
Transfers to restricted cash (119) 2 120 - - 120 - -
Net cash provide by (used in) investing activities (2,053) 21,065 (10,287) 28,119 (1,511) (1,305) 15,016 (559) (629) (612) (906) (2,706) (3,169)

Proceeds from sale of mandatorily redeemable preferred - - - - -
Proceeds from sale of common stock, net of issuance costs - - - - - -
Purchase of restricted and common stock (17,372) (57,387) (13,532) - - (6,464) (19,996) (15,000) (15,000) (15,000) (15,000) (60,000) (40,000)
Net repayments on line of credit - - - - - -
Payments on subordinated party note payable - - - - - -
Borrowings on related party note payable - - - - - -
Payments on notes payable to related party - - - - - -
Payments on notes payable - - (22) (22) - -
Payments on capital lease - - - - - -
Excess tax benefit from exercise of stock options 172 48 272 1,279 248 1,847 400 400 400 400 1,600 1,600
Proceeds from warrant and stock option exercises 575 2,251 656 2,012 2,698 509 5,875 - -
Net cash provided by (used in) financing activities (16,797) (54,964) (12,828) 2,284 3,977 (5,729) (12,296) (14,600) (14,600) (14,600) (14,600) (58,400) (38,400)
Effect of exchange-rate on cash and equivalents - - (5) 50 33 78

Net change in cash 12,422 6,619 (49,296) 39,921 5,134 48,494 44,253 (43,776) 3,670 (14,015) 42,295 (11,825) 14,882
Cash & equivalents - BOP 59,499 71,921 78,540 29,244 69,165 74,299 78,540 122,793 79,017 82,687 68,672 122,793 110,968
Cash & equivalents - EOP 71,921 78,540 29,244 69,165 74,299 122,793 122,793 79,017 82,687 68,672 110,968 110,968 125,850
Capex Analysis
Capex (1,072) (1,908) (193) (1,873) (1,511) (1,320) (4,897) (559) (629) (612) (906) (2,706) (3,169)
Capex as % of revenues 0.5% 0.8% 0.3% 2.6% 2.2% 1.2% 1.5% 0.8% 0.8% 0.8% 0.7% 0.8% 0.8%

Operating cash flow 31,272 40,518 (26,181) 9,523 2,618 55,495 41,455 (28,617) 18,899 1,197 57,801 49,281 56,451
Purchases of fixed assets (1,072) (1,908) (193) (1,873) (1,511) (1,320) (4,897) (559) (629) (612) (906) (2,706) (3,169)
Free Cash Flow 30,200 38,610 (26,374) 7,650 1,107 54,175 36,558 (29,176) 18,270 585 56,895 46,575 53,282
Y/Y growth 8.2% 27.8% NA 14.4% -78.9% 15.1% -5.3% NA 138.8% -47.2% 5.0% 27.4% 14.4%
Cumulative Free Cash Flow last four quarters NA NA 32,620 33,582 29,445 36,558 NA 33,756 44,376 43,854 46,575 NA NA
Y/Y growth NA 10.1% 14.9% 4.0% -5.3% NA 3.5% 32.1% 48.9% 27.4% NA NA
Free Cash Flow Conversion of Operating Cash Flow 97% 95% 101% 80% 42% 98% 88% 102% 97% 49% 98% 95% 94%
Free Cash Flow Conversion of EBITDA 153% 170% -493% 112% 20% 438% 122% -624% 251% 9% 385% 140% 141%
Free Cash Flow Conversion of Revenue (FCF Margin) 15% 15% -39% 11% 2% 48% 11% -42% 23% 1% 44% 13% 13%
124 April 07, 2008

Figure 146: Greenfield Online Snapshot

- Well-positioned to benefit from the secular shift of market research toward the Internet. - Continued survey pricing pressure and increased competition.
- Full-service market research firms could build or acquire internal panels, reducing dependency
- Ciao provides exposure to high growth, high margin comparison shopping business.
on Greenfield.
- Online data collection model can be highly scalable. Company has returned to solid double-
- Client consolidation.
digit growth in global survey business.
- Sizable market opportunity: about $3B-$4B of the $20B+ worldwide market research - Clients are market research firms, so Greenfield does not have a direct relationship with the end-
industry is spent on fieldwork. user.
- Diversifying from panel toward real-time sampling. - Any potential deceleration in Ciao Europe business.

- Whether NA & Europe survey businesses can drive sustainable growth amidst pricing
pressure. 2008
- Whether Ciao can maintain its leadership position in European comparision shopping versus
eBay's Shopping.com, Yahoo!'s Kelkoo, etc. Revenues $143M-$153M (+11%-19%).
- Progress of Ciao launch in U.S. Gross Margins 74% - 75%
- Continued cost cutting , lean operations. Adjusted EBITDA (implied) $38.6M-$42.8M
- Is Ciao U.S. spending the right amount of money? Adjusted EBITDA Margin 27%-28%
--$2M revenues with $800K operating loss in 2008
Depreciation & Amortization $13.7M-$14.2M
- Whether Ciao can maintain organic traffic generation, strong growth in Europe.
Stock Based Compensation $2.7M-$3.5M
Effective Tax Rate 29%-31%
April 07, 2008 125

Figure 147: Greenfield Online Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Net sales 89,179 100,342 27,469 30,826 32,325 38,393 129,013 32,191 35,601 37,567 44,859 150,218 172,458
Cost of Sales 24,327 24,086 7,139 8,258 8,624 8,692 32,713 8,370 9,505 9,580 10,093 37,548 42,769
Gross profit 64,852 76,256 20,330 22,568 23,701 29,701 96,300 23,821 26,096 27,988 34,765 112,670 129,688
Operating expenses
Selling, general and administrative 40,683 44,730 12,980 14,208 14,737 19,512 61,437 15,484 16,376 16,830 19,827 68,518 76,744
Panel acquisition expenses 3,762 5,527 1,048 778 859 648 3,333 1,223 926 1,014 897 4,060 5,001
Depreciation and Amortization 6,965 9,225 2,153 2,168 2,242 2,289 8,852 2,414 2,563 2,630 2,916 10,523 12,417
Research and Development 2,836 3,864 1,132 1,004 1,175 1,198 4,509 1,352 1,210 1,277 1,346 5,186 6,208
Impairment and restructuring charge 91,305 236 - - - - - - - - - - -
Total operating expenses 145,551 63,582 17,313 18,158 19,013 23,647 78,131 20,474 21,076 21,751 24,986 88,287 100,370
Operating income (80,699) 12,674 3,017 4,410 4,688 6,054 18,169 3,348 5,020 6,236 9,779 24,383 29,318
Interest income (Expense) (507) 109 143 408 355 702 1,608 200 172 218 268 858 1,577
Other income, net (54) (310) (23) (6) (241) (270) - - - - - -
Total non-operating expenses, net (561) (201) 120 402 114 702 1,338 200 172 218 268 858 1,577
Pre-tax income (81,260) 12,473 3,137 4,812 4,802 6,756 19,507 3,548 5,192 6,454 10,047 25,241 30,895
Provision for Taxes (15,746) 4,019 1,178 1,712 1,479 2,197 6,566 1,064 1,558 1,936 3,014 7,572 10,195
Reported tax rate NA 32.2% 37.6% 35.6% 30.8% 32.5% 33.7% 30.0% 30.0% 30.0% 30.0% 30.0% 33.0%
Net income (65,514) 8,454 1,959 3,100 3,323 4,559 12,941 2,484 3,634 4,518 7,033 17,669 20,700
Reported EPS to diluted ($2.67) $0.33 $0.07 $0.11 $0.12 $0.17 $0.48 $0.09 $0.13 $0.17 $0.26 $0.65 $0.75
Operational EPS to diluted $0.45 $0.33 $0.07 $0.11 $0.12 $0.17 $0.48 $0.09 $0.13 $0.17 $0.26 $0.65 $0.75
Fully taxed EPS to diluted $0.24 $0.33 $0.07 $0.11 $0.12 $0.17 $0.48 $0.09 $0.13 $0.17 $0.26 $0.65 $0.75
Pro forma fully diluted shares outstanding 24,558 25,698 26,461 27,004 27,088 27,239 27,041 27,241 27,243 27,245 27,247 27,244 27,444
Operating Income (80,698) 12,674 3,017 4,410 4,688 6,491 18,606 3,348 5,020 6,236 9,779 24,383 29,318
Other adjustments 92,288 494 (23) (6) (241) 596 326 - - - - - -
Depreciation and other amortization 9,347 12,180 2,941 2,990 3,154 3,299 12,384 3,139 3,332 3,419 3,791 13,680 16,142
EBITDA 20,937 25,348 5,935 7,394 7,601 10,386 31,316 6,487 8,352 9,655 13,570 38,063 45,460
Stock Compensation charges 878 2,524 901 742 908 914 3,465 825 800 850 875 3,350 3,350
Adjusted EBITDA 21,815 27,872 6,836 8,136 8,509 11,300 35,244 7,312 9,152 10,505 14,445 41,413 48,810
Y/Y Growth
Net sales 100.7% 12.5% 27.6% 26.1% 29.9% 30.2% 28.6% 17.2% 15.5% 16.2% 16.8% 16.4% 14.8%
Gross profit 94.5% 17.6% 27.2% 19.5% 25.4% 32.1% 26.3% 17.2% 15.6% 18.1% 17.1% 17.0% 15.1%
Selling, general and administrative 89.6% 9.9% 36.1% 32.6% 27.0% 51.5% 37.4% 19.3% 15.3% 14.2% 1.6% 11.5% 12.0%
Panel acquisition expenses 63.6% 46.9% -38.6% -36.8% -36.4% -47.7% -39.7% 16.7% 19.0% 18.1% 38.5% 21.8% 23.2%
Depreciation and Amortization 383.7% 32.4% -7.0% -9.7% -7.6% 10.0% -4.0% 12.1% 18.2% 17.3% 27.4% 18.9% 18.0%
Research and Development 183.0% 36.2% 20.3% 22.3% 20.8% 6.1% 16.7% 19.4% 20.6% 8.7% 12.3% 15.0% 19.7%
Total operating expenses 455.6% -56.3% 18.0% 19.5% 15.9% 36.5% 22.9% 18.3% 16.1% 14.4% 5.7% 13.0% 13.7%
Operating income -1228.5% -115.7% 128.9% 19.1% 88.0% 17.3% 43.4% 11.0% 13.8% 33.0% 61.5% 34.2% 20.2%
Pre-tax income -1425.9% -115.3% 160.8% 34.3% 89.3% 31.2% 56.4% 13.1% 7.9% 34.4% 48.7% 29.4% 22.4%
Net income -1245.8% -112.9% 132.9% 37.5% 80.3% 29.7% 53.1% 26.8% 17.2% 36.0% 54.3% 36.5% 17.2%
Adjusted EBITDA 112.0% 27.8% 31.8% 11.8% 26.2% 30.4% 26.4% 7.0% 12.5% 23.5% 27.8% 17.5% 17.9%
Sequential Growth
Net sales -6.8% 12.2% 4.9% 18.8% -16.2% 10.6% 5.5% 19.4%
% of Revenues
Cost of sales 27.3% 24.0% 26.0% 26.8% 26.7% 22.6% 25.4% 26.0% 26.7% 25.5% 22.5% 25.0% 24.8%
Selling, general and administrative 45.6% 44.6% 47.3% 46.1% 45.6% 50.8% 47.6% 48.1% 46.0% 44.8% 44.2% 45.6% 44.5%
Panel acquisition expenses 4.2% 5.5% 3.8% 2.5% 2.7% 1.7% 2.6% 3.8% 2.6% 2.7% 2.0% 2.7% 2.9%
Depreciation and Amortization 7.8% 9.2% 7.8% 7.0% 6.9% 6.0% 6.9% 7.5% 7.2% 7.0% 6.5% 7.0% 7.2%
Research and Development 3.2% 3.9% 4.1% 3.3% 3.6% 3.1% 3.5% 4.2% 3.4% 3.4% 3.0% 3.5% 3.6%
Margins
Gross margin 72.7% 76.0% 74.0% 73.2% 73.3% 77.4% 74.6% 74.0% 73.3% 74.5% 77.5% 75.0% 75.2%
Operating margin -90.5% 12.6% 11.0% 14.3% 14.5% 15.8% 14.1% 10.4% 14.1% 16.6% 21.8% 16.2% 17.0%
Pre-tax income margin -91.1% 12.4% 11.4% 15.6% 14.9% 17.6% 15.1% 11.0% 14.6% 17.2% 22.4% 16.8% 17.9%
Net income margin -73.5% 8.4% 7.1% 10.1% 10.3% 11.9% 10.0% 7.7% 10.2% 12.0% 15.7% 11.8% 12.0%
Net income to common margin -73.5% 8.4% 7.1% 10.1% 10.3% 11.9% 10.0% 7.7% 10.2% 12.0% 15.7% 11.8% 12.0%
Adjusted EBITDA margin 24.5% 27.8% 24.9% 26.4% 26.3% 29.4% 27.3% 22.7% 25.7% 28.0% 32.2% 27.6% 28.3%
Operating Leverage (∆ EBITDA / ∆ Revenues) 25.8% 54.3% 27.8% 13.5% 23.7% 29.5% 25.7% 10.1% 21.3% 38.1% 48.6% 29.1% 33.3%
Figure 148: Greenfield Online Sum-of-the-Parts Analysis ($ in thousands, except per share date)
2008E
2008E 2008E EBITDA EBITDA
Sales EBITDA Mgn Multiple 2008E
North American Survey Solutions 77,032 12,710 16.5% 7.5x 95,327
Ciao/European Survey Solutions 26,775 6,961 26.0% 7.0x 48,730
Ciao Comparison Shopping 46,411 21,741 46.8% 14.0x 304,379
Total Consolidated Operations 150,218 41,413 27.6% 10.8x $448,435
Total Greenfield EV $448,435
Less: Debt 972

Plus: Cash 66,639
Value to Common Shareholders $514,102
Total shares outstanding 27,244
Value per Greenfield Online share $18.87
126 April 07, 2008

Figure 149: Greenfield Online Segment Breakdown, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
REVENUE
North American Survey Solutions Sales 63,886 60,353 15,454 17,108 18,219 19,678 70,459 17,154 18,819 19,768 21,292 77,032 83,965
% Y/Y change 43.8% -5.5% 13.9% 15.3% 18.6% 18.7% 16.7% 11.0% 10.0% 8.5% 8.2% 9.3% 9.0%
% Q/Q change -6.8% 10.7% 6.5% 8.0% -12.8% 9.7% 5.0% 7.7%
Ciao Internet Survey Solutions Sales 16,686 20,152 5,255 6,223 5,927 6,983 24,388 5,844 6,889 6,431 7,611 26,775 29,318
% Y/Y change NA 20.8% 15.4% 15.5% 34.2% 20.6% 21.0% 11.2% 10.7% 8.5% 9.0% 9.8% 9.5%
% Q/Q change -9.3% 18.4% -4.8% 17.8% -16.3% 17.9% -6.6% 18.4%
Total Survey Solutions Sales 80,572 80,505 20,709 23,331 24,146 26,661 94,847 22,998 25,708 26,198 28,903 103,807 113,283
% Y/Y change 81.4% -0.1% 14.3% 15.4% 22.0% 19.2% 17.8% 11.1% 10.2% 8.5% 8.4% 9.4% 9.1%
% Q/Q change -7.4% 12.7% 3.5% 10.4% -13.7% 11.8% 1.9% 10.3%
Ciao Comparison Shopping Sales 8,607 19,837 6,760 7,495 8,179 11,732 34,166 9,194 9,893 11,369 15,956 46,411 59,174
% Y/Y change NA 83.7% 98.4% 77.1% 60.7% 65.0% 72.2% 36.0% 32.0% 39.0% 36.0% 35.8% 27.5%
% Q/Q change -4.9% 10.9% 9.1% 43.4% -21.6% 7.6% 14.9% 40.3%
TOTAL SALES 89,179 100,342 27,469 30,826 32,325 38,393 129,013 32,191 35,601 37,567 44,859 150,218 172,458
% Y/Y change 43.8% 12.5% 27.6% 26.1% 29.9% 30.2% 28.6% 17.2% 15.5% 16.2% 16.8% 16.4% 14.8%
% Q/Q change -6.8% 12.2% 4.9% 18.8% -16.2% 10.6% 5.5% 19.4%
SEGMENT OPERATING INCOME

North American Survey Operating Income 16,917 13,931 2,839 3,448 4,403 4,051 14,741
% Y/Y change NA -17.7% -5.9% 8.2% 48.5% -15.0% 5.8%
% Q/Q change -40.4% 21.5% 27.7% -8.0%
Operating Margin 26.5% 23.1% 18.4% 20.2% 24.2% 20.6% 20.9%
Ciao Internet Survey Operating Income 8,301 10,183 1,863 2,066 1,888 3,624 9,441
% Y/Y change NA 22.7% 5.5% -38.3% -20.1% 34.1% -7.3%
% Q/Q change -31.1% 10.9% -8.6% 91.9%
Total Survey Solutions Operating Income 25,218 24,114 4,702 5,514 6,291 7,675 24,182
% Y/Y change NA -4.4% -1.7% -15.6% 18.1% 2.8% 0.3%
% Q/Q change -37.0% 17.3% 14.1% 22.0%
Ciao Comparison Shopping Operating Income 4,237 11,258 3,983 4,205 4,165 5,990 18,343
% Y/Y change NA 165.7% 141.4% 59.2% 33.2% 56.0% 62.9%
% Q/Q change 3.7% 5.6% -1.0% 43.8%
TOTAL SEGMENT OPERATING INCOME 29,455 35,372 8,685 9,719 10,456 13,665 42,525
% Y/Y change NA 20.1% 35.0% 5.9% 23.7% 20.9% 20.2%
% Q/Q change -23.2% 11.9% 7.6% 30.7%
Overall Backlog Information

Backlog as of … 2/8/07 5/10/07
Days into the quarter 39 40
Total days in quarter 90 91
% of Quarter 43.3% 44.0%
Backlog 21,000 25,000
% of Total Revenue 76.4% 81.1%
Survey Backlog Information

Backlog as of … 2/7/07 5/10/07 8/8/07 11/7/07 2/7/08
Days into the quarter 40 40 39 38 40
Total days in quarter 91 91 92 92 92
% of Quarter 44.0% 44.0% 42.4% 41.3% 43.5%
Backlog 15,000 18,000 19,000 20,000 16,000

% of Survey Revenue 72.4% 77.2% 78.7% 75.0% 69.6%
* as of 3Q07, Backlog excludes expected comparison shopping and advertising revenues
April 07, 2008 127

Figure 150: Greenfield Online Cash Flow Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07E 2007E 3/08E 6/08E 9/08E 12/08E 2008E 2009E

Net income (loss) (65,959) 8,454 1,959 3,100 3,323 4,559 12,941 2,484 3,634 4,518 7,033 17,669 20,700
Deferred income tax provision (18,392) 147 (132) (1,049) (132) - (1,313) - - - - - -
Amortization of contract asset - - - - - - - - - - - - -
Stock-based compensation 872 2,524 901 742 908 914 3,465 825 800 850 875 3,350 3,350
Non-cash interest expense (income) - - - - - - - - - - - - -
Impairment and restructuring 92,795 236 - - - - - - -
Loss on disposal of property and equipment 55 73 (16) (16) - - - - - -
Gain on sale of Custom Research Business - - - - - - - - -
Provision for doubtful accounts and other 575 59 65 212 228 505 - - - - - -
Amortization of debt discount - - - - - - - - -
Changes in working capital: 4,368 (239) 640 1,572 (4,110) (3,170) (5,068) (312) 1,152 734 (1,303) 271 (688)
Accounts receivable (350) (4,215) 858 (791) 134 (5,611) (5,410) 2,765 (304) (348) (3,680) (1,566) (2,039)
Deferred projects costs (286) 288 (91) (152) 98 - (145) - - - - - -
Other current assets 443 (122) (21) (78) (759) (1,092) (1,950) 366 (304) (663) (1,167) (1,768) (620)
Additions (refunds) of security deposits (242) 514 26 148 (21) 153 - - - - - -
Accounts payable (805) 929 (421) 150 406 551 686 (182) 333 473 1,453 2,077 328
Accrued expenses 3,919 1,071 (619) 339 1,007 2,986 3,713 (3,043) 1,315 1,319 2,070 1,661 1,597
Other assets 1,564 (36) - (97) (2) (99) - - - - - -
Payments for management change - (435) (108) (111) (95) (314) - - - - - -
Payments for restructuring charges - (583) - - - - - - - - -
Income taxes payable - 2,299 1,124 1,876 (4,861) (1,861) - - - - - -
Deferred project revenues 125 51 (108) 288 (17) (4) 159 (218) 112 (48) 20 (133) 46
Net cash provided by (used in) operating activities 23,661 23,434 6,374 7,567 3,355 5,164 22,460 6,135 8,919 9,521 10,395 34,970 39,504

Purchases of marketable securities (8,249) (20,569) (5,223) (4,056) (8,326) (17,605) - - - - - -
Sales of marketable securities 25,649 5,695 6,421 3,970 10,391 - - - - - -
Proceeds from sale of Custom Research Business - - - - - - - - -
Expenses paid in connection with Custom sale - - - - - - - - -
Security deposits, other - - - - - - - - -
Acquisitions, net of cash acquired (113,645) - - - - - - - -
Proceeds from sale of property and equipment 11 30 - 1 22 23 - - - - - -
Additions to property, equipment, and intangibles (5,474) (4,923) (1,709) (2,449) (3,090) (3,114) (10,362) (2,000) (3,000) (3,500) (3,000) (11,500) (9,000)
Net cash provided by (used in) investing activities (101,708) (19,767) (6,932) (83) (7,424) (3,114) (17,553) (11,500) (9,000)

Proceeds from issuance of capital stock 4,200 - - - - - - - -
Proceeds from borrowings under debt/credit facility 18,848 - - - - - - - -
Repayments under credit facility (18,848) - - - - - - - -
Other long-term liabilities (65) (49) 40 (52) - (12) - - - - - -
Contribution to capital 27 - - - - - - - -
Increase (decrease) in book overdraft - - - - - - - - -
Proceeds from borrowings under bridge notes - - - - - - - - -
Repayments under term loan - - - - - - - - -
Proceeds of options exercised 244 387 625 1,603 1,845 4,073 - - - - - -
Proceeds of employee stock purchase plan 151 127 38 40 37 115 - - - - - -
Repayment of Series C-2 Preferred - - - - - - - - -
Repayment of Series B Preferred - - - - - - - - -
IPO Proceeds - - - - - - - - -
Proceeds from subscriptions receivable from mgmt - - - - - - - - -
Principal payments under capital lease obligations (1,622) (4,309) (9) (10) (3) (22) - - - - - -
Net cash provided by (used in) financing activities 2,935 (3,844) 694 1,581 1,879 - 4,154 - - - - - -
Effect of exchange-rate on cash and equivalents (347) 427 62 849 824 - - - - - - -
Net change in cash (75,459) 250 198 9,914 (1,366) 2,050 9,061 6,135 8,919 9,521 10,395 23,470 30,504
Cash & equivalents - BOP 96,082 20,623 20,873 21,071 30,985 29,619 20,873 31,669 37,804 46,723 56,244 29,934 53,404
Cash & equivalents - EOP 20,623 20,873 21,071 30,985 29,619 31,669 29,934 37,804 46,723 56,244 66,639 53,404 83,908

Operating cash flow 23,661 23,434 6,374 7,567 3,355 5,164 22,460 6,135 8,919 9,521 10,395 34,970 39,504
Purchases of equipment/software through capital leases (1,622) (263) - - - - - - - - - - -
Purchases of fixed assets (5,474) (4,923) (1,709) (2,449) (3,090) (3,114) (10,362) (2,000) (3,000) (3,500) (3,000) (11,500) (9,000)
Free Cash Flow 16,565 18,248 4,665 5,118 265 2,050 12,098 4,135 5,919 6,021 7,395 23,470 30,504
% change 927.6% 10.2% 17.1% 29.8% -94.0% -65.1% -33.7% -11.4% 15.6% 2171.9% 260.7% 94.0% 30.0%
Cumulative Free Cash Flow last four quarters 16,565 18,248 18,928 20,103 15,930 12,098 12,098 11,568 12,369 18,125 23,470 23,470 30,504
Free Cash Flow Conversion of EBITDA 76% 65% 68% 63% 3% 18% 34% 57% 65% 57% 51% 57% 62%
Special/One-Time Items - - - - - - - - - - -
Normalized Free Cash Flow 16,565 18,248 4,665 5,118 265 2,050 12,098 4,135 5,919 6,021 7,395 23,470 30,504
Normalized Free Cash Flow Conversion of EBITDA 76% 65% 68% 63% 3% 18% 34% 57% 65% 57% 51% 57% 62%
128 April 07, 2008

Figure 151: Harris Interactive Snapshot

- The leader in transitioning market research to the Internet. - Continued challenges in healthcare (the company's largest research group)
vertical.
- Company has sophisticated, highly scalable technology platform and six - Long-term trackers and multi-national contracts slowing conversion from bookings
years of online research experience. to revenue.
- Strong consulting business with deep vertical expertise---potential price - The company's lack of footprint in certain geographies has limited opportunities,
increases going forward. with globalization a focus moving forward.
-Well-established brand name through Harris Poll.
- Integration of recent acquisitions in Germany, Canada, and Asia. 2008

Net Sales low end of $258M - $265M
- Large market opportunity: about $9B-$10B of the $23B spent on market
research could move online---currently at $1.9B worldwide. EPS $0.17-$0.18 (as of FY1Q08)
- Competition from larger traditional research companies like TNS' NFO

Worldwide and WPP's Kantar Group. Adjusted EBITDA $30M - $31M (as of FY1Q08)
- Trends within major verticals: healthcare, CLM, technology. Adjusted EBITDA Margin ~12% (as of FY1Q08)
- How quickly new salespeople can ramp.
- Health of big Pharma industry.
April 07, 2008 129

Figure 152: Harris Interactive Income Statement, Fiscal 2005–09E ($ in millions, except per share data)
FY05 FY06 1QFY07 2QFY07 3QFY07 4QFY07 FY07 1QFY08 2QFY08 3QFY08 4QFY08 FY08 FY09
F05A F06A 9/06A 12/06A 3/07A 6/07A F07A 9/07E 12/07E 3/08E 6/08E F08E F09E
Net sales $197.0 $212.2 $48.0 $56.6 $52.6 $57.1 $211.8 $59.9 $68.2 $62.9 $70.6 $261.7 $273.1
Cost of Sales 93.3 102.1 23.2 27.3 26.8 28.1 103.3 28.9 32.7 31.8 34.5 127.9 132.5
Gross profit 103.6 110.1 24.8 29.2 25.7 29.0 108.5 31.0 35.5 31.1 36.2 133.8 140.7
Operating expenses
Sales & Marketing 20.5 20.5 4.6 5.3 5.6 5.5 21.2 5.5 6.1 6.2 6.5 24.4 24.0
General & Administrative 65.6 68.2 17.4 17.0 17.0 17.5 68.7 21.4 20.2 20.1 21.3 83.1 86.0
Depreciation and Amortization 7.4 7.2 1.7 1.6 1.6 1.9 6.8 2.5 2.5 2.5 2.5 10.0 10.0
Restructuring related and other 1.1 0.3 - (0.4) - (0.0) (0.5) - - - - - -
Operating income $9.0 $13.9 $1.0 $5.8 $1.5 $4.2 $12.3 $1.6 $6.6 $2.3 $5.8 $16.3 $20.6
Interest income 0.7 1.5 0.6 0.6 0.6 0.5 2.2 0.6 0.9 0.9 0.9 3.2 2.7
Interest expense (0.1) (0.0) - - - (0.3) (0.3) (0.5) (0.7) (0.8) (0.8) (2.7) (2.0)
Total non-operating expenses, net 0.6 1.5 0.6 0.6 0.6 0.2 2.0 0.0 0.2 0.1 0.1 0.4 0.7
Inc before Income Taxes 9.6 15.4 1.6 6.4 2.1 4.4 14.3 1.6 6.8 2.4 6.0 16.8 21.3
Provision for Taxes 5.1 6.2 0.7 2.7 0.9 1.0 5.3 0.7 2.8 1.0 2.5 7.0 8.8
Tax Rate 52.8% 40.3% 41.8% 43.1% 43.7% 24.0% 37.3% 41.5% 41.5% 41.5% 41.5% 41.5% 41.5%
Pre-tax income per share $0.16 $0.25 $0.03 $0.11 $0.04 $0.08 $0.25 $0.03 $0.13 $0.04 $0.11 $0.32 $0.40
Income (loss) before change in accounting 4.5 9.2 0.9 3.6 1.2 3.3 9.0 0.9 4.0 1.4 3.5 9.8 12.5
Income (loss) from discontinued operations (3.0) - - - - - - - - - - - -
GAAP Net income (loss) $1.6 $9.2 $0.9 $3.6 $1.2 $3.3 $9.0 $0.9 $4.0 $1.4 $3.5 $9.8 $12.5
Fully Taxed EPS - Continued Operations $0.07 $0.15 $0.02 $0.06 $0.02 $0.06 $0.16 $0.02 $0.08 $0.03 $0.07 $0.18 $0.23
Operating Income 9.0 13.9 1.0 5.8 1.5 4.2 12.3 1.6 6.6 2.3 5.8 16.3 20.6
Depreciation and other amortization 7.4 7.2 1.7 1.6 1.6 1.9 6.8 2.5 2.5 2.5 2.5 10.0 10.0
EBITDA $16.4 $21.1 $2.7 $7.4 $3.1 $6.0 $19.1 $4.1 $9.1 $4.8 $8.3 $26.3 $30.6
Stock based compensation - 3.1 1.0 0.9 0.9 0.7 3.5 0.9 0.9 0.9 1.0 3.7 3.9
Adjusted EBITDA $16.4 $24.2 $3.8 $8.3 $4.0 $6.7 $22.6 $5.0 $10.0 $5.7 $9.3 $30.0 $34.5
Y/Y Growth
Net sales 42.2% 7.7% -1.8% 3.2% 0.6% -2.8% -0.2% 24.7% 20.6% 19.7% 23.7% 23.5% 4.4%
Gross profit 40.2% 6.2% -2.2% 6.4% -7.3% -2.6% -1.4% 25.2% 21.3% 21.1% 24.7% 23.4% 5.1%
Sales & Marketing 72.7% 0.0% -6.2% 7.1% 9.2% 0.6% 3.0% 19.7% 16.5% 11.3% 18.5% 15.3% -1.4%
General & Administrative 49.2% 4.0% 5.7% 1.2% 1.4% -4.2% 0.8% 23.0% 18.7% 18.3% 21.7% 21.0% 3.5%
Total operating expenses 54.2% 3.0% 3.0% 2.5% 3.2% -3.1% 1.3% 22.3% 18.2% 16.5% 20.9% 19.7% 2.4%
Operating income -31.9% 53.9% -49.4% 45.6% -64.0% 4.3% -11.3% 53.7% 15.4% 54.3% 40.0% 32.6% 26.1%
GAAP Net income -94.7% 481.2% -24.8% 54.2% -54.4% 3.7% -2.7% 1.2% 9.9% 20.4% 5.2% 9.5% 27.2%
GAAP EPS -95.0% 475.4% -22.1% 61.7% -51.1% 20.3% 6.6% 13.7% 22.2% 30.9% 5.2% 16.3% 27.2%
Pre-tax income -30.2% 60.1% -27.9% 51.1% -54.3% -6.5% -7.3% 0.7% 6.9% 15.8% 36.7% 17.4% 27.2%
Pre-tax EPS -34.5% 58.5% -25.2% 58.4% -51.0% 8.5% 1.5% 13.0% 18.9% 25.9% 36.7% 24.8% 27.2%
Fully taxed EPS -51.0% 100.7% -22.1% 61.7% -51.1% 20.3% 6.6% 13.7% 22.2% 30.9% 5.2% 16.3% 27.2%
EBITDA -9.4% 28.7% -30.5% 28.0% -47.0% 4.4% -9.5% 48.7% 24.0% 54.8% 38.2% 37.9% 16.2%
% of Revenues
Cost of sales 47.4% 48.1% 48.4% 48.3% 51.1% 49.2% 48.8% 48.2% 48.0% 50.5% 48.8% 48.9% 48.5%
Sales & Marketing 10.4% 9.7% 9.6% 9.3% 10.6% 9.6% 10.0% 9.2% 9.0% 9.9% 9.2% 9.3% 8.8%
General & Administrative 33.3% 32.1% 36.3% 30.1% 32.4% 30.7% 32.4% 35.8% 29.6% 32.0% 30.2% 31.8% 31.5%
Margins
Gross margin 52.6% 51.9% 51.6% 51.7% 48.9% 50.8% 51.2% 51.8% 52.0% 49.5% 51.2% 51.1% 51.5%
Pre-tax income margin 4.9% 7.3% 3.3% 11.3% 3.9% 7.6% 6.7% 2.7% 10.0% 3.8% 8.4% 6.4% 7.8%
EBITDA margin 8.3% 9.9% 5.7% 13.0% 5.9% 10.6% 9.0% 6.8% 13.4% 7.6% 11.8% 10.1% 11.2%
Operating Leverage (∆ EBITDA / ∆ Revenues) -2.9% 30.9% NA 92.5% -896.7% -15.2% 525.7% 11.2% 15.2% 16.3% 17.0% 14.5% 37.2%
Adjusted EBITDA margin 8.3% 11.4% 7.9% 14.7% 7.6% 11.8% 10.7% 8.3% 14.7% 9.0% 13.2% 11.5% 12.6%
130 April 07, 2008

Figure 153: Harris Interactive Segment Breakdown, Fiscal 2005–09E ($ in millions, except per share data)
F05A F06A 9/06A 12/06A 3/07A 6/07A F07A 9/07E 12/07E 3/08E 6/08E F08E F09E
NET SALES
United States
Non-Internet 52.2 56.7 11.4 14.0 12.8 11.2 49.5 11.8 14.3 13.4 11.9 51.3 52.8
% change 73.5% 8.5% -6.9% -3.2% -11.0% -27.9% -12.8% 3.0% 2.0% 4.0% 6.5% 3.8% 2.8%
Internet 97.7 112.1 24.3 28.4 27.3 30.2 110.3 25.4 29.8 28.7 31.9 115.9 119.6
% change 19.3% 14.7% -1.9% -2.7% -2.5% 0.4% -1.6% 4.5% 5.0% 5.0% 5.7% 5.1% 3.2%
Total U.S. Sales $150.0 $168.8 $35.8 $42.4 $40.1 $41.4 $159.7 37.2 44.1 42.0 43.8 $167.2 $172.3
% change 33.8% 12.6% -3.6% -2.9% -5.4% -9.2% -5.4% 4.0% 4.0% 4.7% 5.9% 4.7% 3.1%
International
Non-Internet 34.9 32.7 7.0 9.4 8.1 10.0 34.5 15.3 17.1 14.5 18.6 65.5 70.1
% change 34.3% -6.4% -18.9% 17.5% 22.0% 5.7% 5.4% 120.0% 82.0% 80.0% 85.0% 90.1% 7.0%
Internet 11.6 13.3 4.5 4.0 3.5 5.7 17.6 7.4 7.0 6.4 8.2 29.0 30.7
% change 165.4% 14.6% 39.3% 25.6% 7.9% 52.9% 32.3% 65.0% 75.0% 85.0% 45.0% 64.8% 6.0%
Total International Sales $46.5 $46.0 $11.4 $13.4 $11.5 $15.7 $52.0 22.7 24.1 20.9 26.8 $94.5 $100.8
% change 53.1% -1.1% -3.1% 19.9% 17.4% 18.9% 13.2% 98.6% 79.9% 81.5% 70.6% 81.5% 6.7%
Other Revenue 0.5 - - - - - - - -
Total Consolidated Sales

Non-Internet 87.2 89.4 18.4 23.4 20.9 21.2 83.9 27.1 31.3 27.9 30.5 116.8 122.9
% change 55.3% 2.6% -11.9% 4.2% -0.7% -15.1% -6.1% 47.3% 34.1% 33.3% 43.7% 39.2% 5.2%
Internet 109.3 125.4 28.8 32.4 30.7 35.9 127.8 32.8 36.9 35.1 40.1 144.8 150.3
% change 26.7% 14.7% 2.8% 0.1% -1.4% 6.2% 2.0% 13.9% 13.7% 14.0% 11.9% 13.3% 3.8%
Total Consolidated Sales $196.5 $214.8 $47.2 $55.8 $51.7 $57.1 $211.8 $59.9 $68.2 $62.9 $70.6 $261.7 $273.1
% change 38.0% 9.3% -3.5% 1.8% -1.0% -2.9% -1.4% 27.0% 22.2% 21.7% 23.7% 23.6% 4.4%
SHARE OF REVENUE BY CATEGORY

United States Sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Non-Internet 35% 34% 32% 33% 32% 27% 31% 32% 32% 32% 27% 31% 31%
Internet 65% 66% 68% 67% 68% 73% 69% 68% 68% 68% 73% 69% 69%
Non-Internet 75% 71% 61% 70% 70% 64% 66% 68% 71% 69% 69% 69% 70%
Internet 25% 29% 39% 30% 30% 36% 34% 32% 29% 31% 31% 31% 30%
Non-Internet 44% 42% 39% 42% 40% 37% 40% 45% 46% 44% 43% 45% 45%
Internet 56% 58% 61% 58% 59% 63% 60% 55% 54% 56% 57% 55% 55%
SHARE OF REVENUE BY GEOGRAPHY

United States 76% 79% 76% 76% 78% 73% 75% 62% 65% 67% 62% 64% 63%
International 24% 21% 24% 24% 22% 27% 25% 38% 35% 33% 38% 36% 37%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
SHARE OF CATEGORY BY GEOGRAPHY

Non-Internet 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
United States 60% 63% 62% 60% 61% 53% 59% 43% 46% 48% 39% 44% 43%
International 40% 37% 38% 40% 39% 47% 41% 57% 54% 52% 61% 56% 57%
Internet 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
United States 89% 89% 85% 88% 89% 84% 86% 78% 81% 82% 80% 80% 80%
International 11% 11% 15% 12% 11% 16% 14% 22% 19% 18% 20% 20% 20%
United States 76% 79% 76% 76% 78% 73% 75% 62% 65% 67% 62% 64% 63%
International 24% 21% 24% 24% 22% 27% 25% 38% 35% 33% 38% 36% 37%
April 07, 2008 131

Figure 154: Harris Interactive Cash Flow Statement, Fiscal 2005–09E ($ in millions, except per share data)
F05A F06A 9/06A 12/06A 3/07A 6/07E F07E 9/07E 12/07E 3/08E 6/08E F08E F09E

Net income (loss) 1.6 9.5 0.9 3.6 1.2 3.3 9.0 0.9 4.0 1.4 3.5 9.8 12.5
Income (loss) from discontinued operations 4.1 - - - - - - - - - - - -
Stock-based compensation - 3.1 1.0 0.9 0.9 0.7 3.5 0.9 0.9 0.9 1.0 3.7 3.9
Cash outflows for restr. and asset impair. 0.5 (0.3) - (0.4) - - (0.4) - - - - - -
Amort. of def. comp and mktbl sec./other 0.8 1.1 1.0 2.6 (0.8) - 2.8 - - - - - -
Changes in working capital: 3.2 7.3 (2.9) 0.2 (0.1) (4.3) (7.1) 8.8 12.3 (5.7) 1.0 16.4 20.0
Accounts receivable, net and other (6.2) (0.1) 3.2 (8.7) 9.1 (2.4) 1.2 5.3 6.2 (6.7) 2.0 6.9 1.0
Prepaids, other 3.6 3.6 0.5 0.0 (0.5) (4.3) (4.3) (1.1) (2.3) 2.3 1.8 0.9 1.8
Accounts payable 1.7 1.8 (1.5) (0.8) (2.7) (0.1) (5.2) 6.9 (2.7) (0.3) (0.7) 3.2 8.4
Accrued expenses and other current 3.4 (0.8) (3.9) 3.6 (3.0) 3.9 0.6 (5.8) 5.1 1.8 (1.0) 0.1 6.1
Billings in excess of cost 0.8 2.8 (1.2) 6.1 (2.8) (1.5) 0.6 3.4 6.0 (2.7) (1.3) 5.4 2.7
Net cash provided by (used in) operating activities 17.5 27.9 1.7 8.5 2.8 1.6 14.7 13.2 19.7 (0.9) 8.0 39.9 46.3

Purchase of marketable securities, acquisitions (48.1) (49.2) (28.3) (11.2) (19.2) - (58.7) (24.1) - - - (24.1) -
Proceeds from maturities & sales of mktbl sec., other 47.5 27.0 34.4 29.1 37.4 - 100.9 - - - - - -
Net cash provide by (used in) investing activities (14.0) (24.3) 5.3 16.7 17.3 (1.4) 37.9 (25.9) (1.8) (1.8) (1.8) (31.1) (7.0)

Repurchase of common stock (11.0) (2.2) (27.5) (41) - - - - - -
Decrease in short-term borrowings - - - - - - - - - - - - -
Principal payments on long-term debt (6.1) - - - - - - - - - - - -
Issuance of common stock and stock options, other 2.3 (5.4) 0.2 0.6 0.7 19.6 21.1 - - - - - -
Net cash provided by (used in) financing activities (3.8) (5.4) (10.8) (1.6) (26.8) 19.6 (19.7) - - - - - -
Effect of exchange-rate on cash and equivalents 0.2 0.2 (0.0) 0.2 0.0 - 0.2 - - - - - -
Net cash from discontinued operations 0.7
Net change in cash 0.6 (1.7) (3.8) 23.9 (6.7) 19.8 33.1 (12.7) 17.9 (2.6) 6.2 8.8 39.3
Cash & equivalents - BOP 12.5 13.1 11.4 7.6 31.5 24.8 11.4 44.6 31.9 49.8 47.2 44.6 53.4
Cash & equivalents - EOP 13.1 11.422 7.6 31.5 24.8 44.6 44.6 31.9 49.8 47.2 53.4 53.4 92.7
Average Cash Balance 41.5 31.2 67.4 88.3 103.7 107.2 77.5
Annualized Interest Rate 4.0% 4.0% 3.3% 4.0% 3.3% 3.3% 3.5%
Calculated Interest Income 0.4 0.3 0.7 0.6 0.9 0.9 0.9 3.2 2.7
Average Debt Balance 1.1 1.0 1.0 20.6 20.6 20.6 20.6 20.6
Interest Expense on Debt 8.5% 8.0% 9.8% 9.3% 9.8% 9.8% 9.6%
Calculated Interest Expense (0.1) (0.5) (0.7) (0.8) (0.8) (2.7) (2.0)

Operating cash flow 17.5 27.9 1.7 8.5 2.8 1.6 14.7 13.2 19.7 (0.9) 8.0 39.9 46.3
Purchases of fixed assets (9.4) (2.1) (0.8) (1.1) (0.9) (1.4) (4.3) (1.8) (1.8) (1.8) (1.8) (7.0) (7.0)
Free Cash Flow 8.1 25.7 0.9 7.4 1.9 0.2 10.4 11.4 17.9 (2.6) 6.2 32.9 39.3
% change -47.8% 217.7% 8.7% -26.5% -78.7% -96.9% -59.7% 1158.3% 143.0% -238.3% 3289.8% 217.5% 19.4%
132 April 07, 2008

Figure 155: Alloy Snapshot

- Targets the youth market through various platforms including: 1) - Inconsistent operational performance and limited track record as a standalone
newspaper and radio; 2) event marketing; 3) location media; 4) print and company.
interactive.
- Alloy places ~90% of national college newspaper advertising and is the - Has yet to reap benefits from Sconex acquisition; investing in product development
leader in on-campus marketing. and user experience.
- Relatively defensible position in out-of-home market on college and high - Model shifting away from youth/college market to more out-of-home, potentially
school campuses. increases growth profile but also results in higher margin for error.
- Alloy Media and Marketing should be more focused as a standalone - Larger media companies targeting youth market more aggressively through web
company. properties.
- Heavy investment in Channel One.

- Company must balance investment and growth opportunities with
continued cost-cutting efforts. 2007 2008
Revenues $225M - $240M
- Acquisition of Sconex, a social networking website aimed at high school
students, in March 2006 could drive higher online advertising exposure.
Adjusted EBITDA $9M - $11M $20M - $24M
$14.6M ($9.9M of
- Shift to higher margin products: out-of-home, online, database. Capex
which for Channel One)
- Will Channel One pay off?
Figure 156: Alloy Revenue and EBITDA Estimates, Fiscal 2005–09E ($ in millions, except per share data)
FY05A FY06A FY06A FY07E FY07E FY08E FY09E

1/31/2006 4/30/2006 7/31/2006 10/31/2006 1/31/2007 1/31/2007 4/30/2007 7/31/2007 10/31/2007 1/31/2008 1/31/2008 1/31/2009 1/31/2010
FY05A 1Q06A 2Q06A 3Q06A 4Q06A FY06A 1Q07A 2Q07A 3Q07A 4Q07E FY07E FY08E FY09E
Revenue 195.3 44.8 46.7 63.7 40.9 196.1 37.8 51.7 66.5 46.4 202.3 230.7 258.4
Y/Y Growth 6.0% 3.7% 1.4% 1.4% -5.4% 0.4% -15.7% 10.6% 4.5% 13.5% 3.2% 14.0% 12.0%
Q/Q Growth 3.8% 4.2% 36.3% -35.8% -7.5% 36.7% 28.7% -30.3%
Adjusted EBITDA 25.8 3.8 5.4 12.8 5.6 27.6 2.3 3.5 11.7 3.2 20.7 32.3 37.5
% Margin 13.2% 8.6% 11.6% 20.1% 13.6% 14.1% 6.1% 6.8% 17.5% 7.0% 10.2% 14.0% 14.5%
Corporate Adjusted EBITDA (8.5) (2.3) (2.0) (1.7) (2.5) (8.6) (2.4) (2.6) (2.3) (3.2) (10.6) (11.0) (12.0)
TOTAL Adjusted EBITDA 17.3 1.5 3.4 11.1 3.0 19.0 (0.1) 0.9 9.3 0.0 10.2 21.3 25.5
Y/Y Growth 258.6% 13.4% -12.0% 22.4% 0.4% 10.2% -107.2% -74.0% -15.7% -98.5% -46.6% 109.7% 19.6%
% Margin 8.8% 3.4% 7.3% 17.4% 7.4% 9.7% -0.3% 1.7% 14.0% 0.1% 5.0% 9.2% 9.9%
Enterprise Value Calculation FY06A FY07E FY08E FY09E

Price per share $12.00 $12.00 $12.00 $12.00
Shares outstanding 14.3 14.3 14.3 14.3
Market Capitalization $171.6 $171.6 $171.6 $171.6
+ Debt 12.7 1.4 1.4 1.4
- Cash 29.4 38.0 56.1 77.7
Enterprise Value $154.9 $135.0 $116.9 $95.3
Adjusted EBITDA 19.0 10.2 21.3 25.5

EV/EBITDA 8.2x 13.3x 5.5x 3.7x
April 07, 2008 133

Figure 157: TechTarget Snapshot

- Beneficiary of growth in online advertising market as well trends in - Limited operating metrics and lack of visibility given the short-term nature
corporate IT spending. B2B online advertising of $2.4 billion in the of advertising contracts. Campaigns typically run for less than 90 days and
U.S. in 2007E represents 24% growth year-over-year. are cancellable with less than 30 days notice. Visibility is dependent on the
company’s ability to forecast spending and not based on any backlog or
bookings metrics
- Over 4.9 million registered users consisting primarily of IT - Organic revenue growth: we estimate 2008 organic growth of 16%.
professionals and purchase decision makers with detailed user
information contributing to a valuable database of potential leads for
advertisers.
- Network of 40+ highly-specialized sector specific websites, featuring - Continued erosion of Print business will offset some total revenue growth
over 20,000 pieces of original content per year tailored for specific in the near-term.
audiences. Leader in distribution of White Papers via BitPipe
network. Online represented 67% of revenues in '07.
- Highly targeted database-driven campaigns are more effective at - Relatively high customer concentration creates risk (in 2006 top advertiser
providing measurable ROI and compare favorably to traditional CPM accounted for 11% of total revenue). Concentration could make company
based campaigns which dominate the Web. more susceptible to volatile quarter-to-quarter trends and product launches
of individual advertisers.
- Experienced management team with background in both business-to- - Client base is highly concentrated within the technology sector. As a
business and technology sectors as well as over 7 years of operating result, the macro environment around overall technology spending and
history at TechTarget and several years together prior to founding online advertising is critical.
TechTarget.

- International expansion opportunity -- less than 1% of TechTarget's 1Q08 2008
2006 revenue was International yet 30% of TechTarget's audience of Revenue $23M - $24M $118M - $122M
users is based overseas and 50% of global IT spending is based Adjusted EBITDA $3M - $3.8M $33M - $35M
overseas. Implied adj EBITDA Margin 13% - 15.8% 28% - 28.7%
- Scalable entry into new technology verticals such as vertical

software markets and Channel. Company can launch new sites in a
cost efficient and timely manner.
- Print revenue declines are expected, but deceleration could be

greater than anticipated
- TechTarget likely has room to exercise pricing power if it continues

to deliver attractive ROI.
- Tuck-in acquisitions in specific verticals: acquisition of

KnowledgeStorm contributed ~$1M in GAAP revenue to 4Q07 results,
but ~$1M in EBITDA loss as cost synergies not yet realized.
134 April 07, 2008

Figure 158: TechTarget Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue
Online 43,662 51,176 13,709 16,330 14,687 18,960 63,686 19,056 23,189 21,296 24,838 88,378 102,518
Events 14,595 19,708 2,939 6,350 6,912 8,053 24,254 3,350 7,112 7,603 8,617 26,682 28,817
Print 8,489 8,128 1,697 1,924 1,702 1,402 6,725 1,273 1,212 1,140 1,052 4,677 4,349
Total Revenue 66,746 79,012 18,345 24,604 23,301 28,415 94,665 23,679 31,513 30,040 34,506 119,737 135,685
Cost of Revenue
Cost of Revenue - Online 10,476 12,901 3,455 3,830 3,753 4,348 15,386 4,954 5,496 5,856 5,713 22,019 24,604
Cost of Revenue - Events 6,202 6,462 1,360 2,399 2,263 2,536 8,558 1,675 2,304 2,030 2,585 8,595 9,308
Cost of Revenue - Print 5,322 5,327 1,120 989 863 801 3,773 865 836 889 589 3,180 3,045
Total Cost of Revenue 22,000 24,690 5,934 7,218 6,879 7,685 27,716 7,495 8,636 8,776 8,887 33,794 36,957
Gross Profit 44,746 54,322 12,411 17,386 16,422 20,730 66,949 16,184 22,876 21,264 25,619 85,943 98,728
Operating Expenses
Selling and Marketing 18,174 19,699 5,616 5,800 6,341 7,292 25,049 7,364 7,658 7,510 7,936 30,468 34,600
Product Development 5,756 6,205 1,675 1,523 1,593 2,195 6,986 2,155 2,143 2,103 2,070 8,471 9,769
General and Administrative 7,539 8,332 2,240 2,497 2,760 2,852 10,349 3,055 3,183 3,244 3,451 12,932 14,111
Depreciation 1,792 1,144 330 364 401 515 1,610 720 580 500 400 2,200 2,200
Amortization 5,172 5,029 759 1,041 1,171 1,769 4,740 1,470 1,300 1,300 1,200 5,270 5,270
Stock-based Compensation 78 1,250 1,071 1,198 1,653 1,912 5,834 2,320 2,350 2,400 2,600 9,670 10,088
Total Operating Expenses 38,511 41,659 11,691 12,423 13,919 16,535 54,568 17,083 17,213 17,057 17,657 69,011 76,038
Operating Income 6,235 12,663 720 4,963 2,503 4,195 12,381 (900) 5,663 4,207 7,962 16,932 22,690
PF Operating Income (ex. stock-based comp) 6,313 13,913 1,791 6,161 4,156 6,107 18,215 1,420 8,013 6,607 10,562 26,602 32,778
Interest Income (Expense), net (30) 321 (67) 377 897 624 1,831 450 457 522 581 2,010 2,997
Pre-tax Income 6,205 12,984 653 5,340 3,400 4,819 14,212 (450) 6,120 4,729 8,543 18,942 25,687
Benefit from (Provision for) Income Taxes 2,681 (5,811) (336) (2,092) (1,568) (2,050) (6,046) 198 (2,693) (2,081) (3,759) (8,334) (11,302)
Reported Tax Rate NA 44.8% 51.5% 39.2% 46.1% 42.5% 42.5% 44.0% 44.0% 44.0% 44.0% 44.0% 44.0%
GAAP Net Income (loss) 8,886 7,173 317 3,248 1,832 2,769 8,166 (252) 3,427 2,648 4,784 10,607 14,385
Basic EPS $0.30 $0.22 $0.01 $0.09 $0.05 $0.07 $0.21 ($0.01) $0.08 $0.06 $0.11 $0.25 $0.33
GAAP Diluted EPS $0.30 $0.20 $0.01 $0.08 $0.04 $0.06 $0.20 ($0.01) $0.08 $0.06 $0.10 $0.23 $0.31
Basic Shares Outstanding 29,484 33,190 33,540 37,474 40,355 40,690 38,015 41,490 42,190 42,790 42,890 42,340 43,748
Diluted Shares Outstanding 29,484 35,933 36,290 39,993 43,336 43,833 40,863 44,783 45,333 45,783 45,883 45,446 46,801
Adjusted EPS Reconciliation

Net Income 8,886 7,173 317 3,248 1,832 2,769 8,166 (252) 3,427 2,648 4,784 10,607 14,385
One-time Items - - - - - - - - - - - - -
Adjusted Net Income 8,964 8,423 1,388 4,446 3,485 4,681 14,000 2,068 5,777 5,048 7,384 20,277 24,473
Adjusted Basic EPS $0.30 $0.25 $0.04 $0.12 $0.09 $0.12 $0.37 $0.05 $0.14 $0.12 $0.17 $0.48 $0.56
Adjusted Diluted EPS $0.30 $0.23 $0.04 $0.11 $0.08 $0.11 $0.34 $0.05 $0.13 $0.11 $0.16 $0.45 $0.52
Total Stock-based Compensation 78 1,250 1,071 1,198 1,653 1,912 5,834 2,320 2,350 2,400 2,600 9,670 10,088
Operating Income 6,235 12,662 720 4,963 2,503 4,195 12,381 (900) 5,663 4,207 7,962 16,932 22,690
Depreciation & Amortization 6,964 6,173 1,089 1,405 1,572 2,284 6,350 2,190 1,880 1,800 1,600 7,470 7,470
EBITDA 13,277 20,085 2,880 7,566 5,728 8,391 24,565 3,610 9,893 8,407 12,162 34,072 40,248
Y/Y GROWTH
Online Revenue 39.3% 17.2% 32.1% 27.5% 16.9% 22.9% 24.4% 39.0% 42.0% 45.0% 31.0% 38.8% 16.0%
Events Revenue 51.3% 35.0% 26.3% 10.6% 17.3% 40.1% 23.1% 14.0% 12.0% 10.0% 7.0% 10.0% 8.0%
Print Revenue 47.9% -4.3% -23.2% -11.0% -5.9% -28.0% -17.3% -25.0% -37.0% -33.0% -25.0% -30.5% -7.0%
Total Revenue 42.8% 18.4% 23.0% 18.8% 15.0% 22.9% 19.8% 29.1% 28.1% 28.9% 21.4% 26.5% 13.3%
Gross Profit 47.2% 21.4% 29.2% 19.3% 20.6% 25.5% 23.2% 30.4% 31.6% 29.5% 23.6% 28.4% 14.9%
Selling and Marketing 28.8% 8.4% 26.7% 12.2% 29.9% 39.9% 27.2% 31.1% 32.0% 18.4% 8.8% 21.6% 13.6%
Product Development 40.3% 7.8% 7.1% -2.0% -0.9% 48.2% 12.6% 28.6% 40.7% 32.0% -5.7% 21.2% 15.3%
General and Administrative 10.6% 10.5% 27.1% 20.0% 31.0% 19.8% 24.2% 36.4% 27.5% 17.5% 21.0% 25.0% 9.1%
Total Operating Expenses 14.0% 8.2% 28.6% 18.3% 35.0% 40.6% 31.0% 46.1% 38.6% 22.5% 6.8% 26.5% 10.2%
Operating Income -283.2% 103.1% 38.6% 21.9% -24.4% -11.9% -2.2% -225.0% 14.1% 68.1% 89.8% 36.8% 34.0%
Net Income 119.2% -19.3% -27.9% 36.8% 15.5% -0.1% 13.8% -179.4% 5.5% 44.5% 72.8% 29.9% 35.6%
Diluted EPS NA -33.8% -28.6% 22.9% -4.3% -18.1% 0.1% -164.4% -6.9% 36.8% 65.1% 16.8% 31.7%
Adjusted Diluted EPS NA -22.9% 193.6% 65.7% 72.2% -0.7% 46.2% 20.8% 14.6% 37.1% 50.7% 30.2% 17.2%
EBITDA 148.1% 51.3% 55.7% 31.1% 14.0% 12.7% 22.3% 25.4% 30.8% 46.8% 44.9% 38.7% 18.1%
% OF REVENUES
Cost of Online Rev as a % of Online Rev 24.0% 25.2% 25.2% 23.5% 25.6% 22.9% 24.2% 26.0% 23.7% 27.5% 23.0% 24.9% 24.0%
Cost of Events Rev as a % of Events Rev 42.5% 32.8% 46.3% 37.8% 32.7% 31.5% 35.3% 50.0% 32.4% 26.7% 30.0% 32.2% 32.3%
Cost of Print Rev as a % of Print Rev 62.7% 65.5% 66.0% 51.4% 50.7% 57.1% 56.1% 68.0% 69.0% 78.0% 56.0% 68.0% 70.0%
Total Cost of Revenue 33.0% 31.2% 32.3% 29.3% 29.5% 27.0% 29.3% 31.7% 27.4% 29.2% 25.8% 28.2% 27.2%
Selling and Marketing 27.2% 24.9% 30.6% 23.6% 27.2% 25.7% 26.5% 31.1% 24.3% 25.0% 23.0% 25.4% 25.5%
Product Development 8.6% 7.9% 9.1% 6.2% 6.8% 7.7% 7.4% 9.1% 6.8% 7.0% 6.0% 7.1% 7.2%
General and Administrative 11.3% 10.5% 12.2% 10.1% 11.8% 10.0% 10.9% 12.9% 10.1% 10.8% 10.0% 10.8% 10.4%
Total Operating Expenses 57.7% 52.7% 63.7% 50.5% 59.7% 58.2% 57.6% 72.1% 54.6% 56.8% 51.2% 57.6% 56.0%
MARGINS
Gross Margin - Online 76.0% 74.8% 74.8% 76.5% 74.4% 77.1% 75.8% 74.0% 76.3% 72.5% 77.0% 75.1% 76.0%
Gross Margin - Events 57.5% 67.2% 53.7% 62.2% 67.3% 68.5% 64.7% 50.0% 67.6% 73.3% 70.0% 67.8% 67.7%
Gross Margin - Print 37.3% 34.5% 34.0% 48.6% 49.3% 42.9% 43.9% 32.0% 31.0% 22.0% 44.0% 32.0% 30.0%
Gross Margin 67.0% 68.8% 67.7% 70.7% 70.5% 73.0% 70.7% 68.3% 72.6% 70.8% 74.2% 71.8% 72.8%
Operating Margin 9.3% 16.0% 3.9% 20.2% 10.7% 14.8% 13.1% -3.8% 18.0% 14.0% 23.1% 14.1% 16.7%
Net Margin 13.3% 9.1% 1.7% 13.2% 7.9% 9.7% 8.6% -1.1% 10.9% 8.8% 13.9% 8.9% 10.6%
EBITDA Margin 19.9% 25.4% 15.7% 30.8% 24.6% 29.5% 25.9% 15.2% 31.4% 28.0% 35.2% 28.5% 29.7%
Operating Leverage/EBITDA Flow-through 39.6% 55.5% 30.0% 46.2% 23.2% 17.9% 28.6% 13.7% 33.7% 39.8% 61.9% 37.9% 38.7%
April 07, 2008 135

Figure 159: TechTarget Segment Breakdown, 2005–09E ($ in thousands, except per share data)
Segment Detail
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
TOTAL ONLINE REVENUE 43,662 51,176 13,709 16,330 14,687 18,960 63,686 19,056 23,189 21,296 24,838 88,378 102,518
Y/Y Growth 39.3% 17.2% 32.1% 27.5% 16.9% 22.9% 24.4% 39.0% 42.0% 45.0% 31.0% 38.8% 16.0%
Q/Q Growth -11.1% 19.1% -10.1% 29.1% 0.5% 21.7% -8.2% 16.6%
TOTAL EVENTS REVENUE 14,595 19,708 2,939 6,350 6,912 8,053 24,254 3,350 7,112 7,603 8,617 26,682 28,817
Y/Y Growth 51.3% 35.0% 26.3% 10.6% 17.3% 40.1% 23.1% 14.0% 12.0% 10.0% 7.0% 10.0% 8.0%
Q/Q Growth -48.9% 116.1% 8.9% 16.5% -58.4% 112.3% 6.9% 13.3%
#REF!
TOTAL PRINT REVENUE 8,489 8,128 1,697 1,924 1,702 1,402 6,725 1,273 1,212 1,140 1,052 4,677 4,349
Y/Y Growth 47.9% -4.3% -23.2% -11.0% -5.9% -28.0% -17.3% -25.0% -37.0% -33.0% -25.0% -30.5% -7.0%
Q/Q Growth -12.8% 13.4% -11.5% -17.6% -9.2% -4.8% -5.9% -7.8%
TOTAL REVENUE 66,746 79,012 18,345 24,604 23,301 28,415 94,665 23,679 31,513 30,040 34,506 119,737 135,685
42.8% 18.4% 23.0% 18.8% 15.0% 22.9% 19.8% 29.1% 28.1% 28.9% 21.4% 26.5% 13.3%
-20.6% 34.1% -5.3% 21.9% -16.7% 33.1% -4.7% 14.9%
Metrics
Segment Breakdown 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Online Revenue 65% 65% 75% 66% 63% 67% 67% 80% 74% 71% 72% 74% 76%
Events Revenue 22% 25% 16% 26% 30% 28% 26% 14% 23% 25% 25% 22% 21%
Print Revenue 13% 10% 9% 8% 7% 5% 7% 5% 4% 4% 3% 4% 3%
Total Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Revenue Seasonality
Online Revenue 100% 100% 22% 26% 23% 30% 100% 22% 26% 24% 28% 100%
Events Revenue 100% 100% 12% 26% 28% 33% 100% 13% 27% 28% 32% 100%
Print Revenue 100% 100% 25% 29% 25% 21% 100% 27% 26% 24% 22% 100%
Total Revenue 100% 100% 19% 26% 25% 30% 100% 20% 26% 25% 29% 100%
Full-time employees 457 474 511
136 April 07, 2008

Figure 160: TechTarget Cash Flow Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07E 2007E 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Operating activities:
Net income (loss) 8,886 7,173 317 2,714 1,542 2,769 7,342 (252) 3,427 2,648 4,784 10,607 14,385
Adjustments:
Depreciation 1,792 1,144 330 364 401 515 1,610 720 580 500 400 2,200 2,200
Amortization of intangible assets 5,172 5,029 759 1,041 1,171 1,769 4,740 1,470 1,300 1,300 1,200 5,270 5,270
Provision for bad debt (124) 366 24 37 56 56 173 56 56 56 56 224 224
Stock-based compensation expense 78 1,250 1,071 1,198 1,653 1,912 5,834 2,320 2,350 2,400 2,600 9,670 10,088
Interest expense related to amortization of debt issuance costs 24 92 253 57 - - 310 - - - - - -
Deferred income taxes (2,995) 174 232 246 92 500 1,070 500 500 500 450 1,950 1,200
Realized gain/loss on foreign currency - - - - - - - - - - - - -
Excess tax benefit - stock options (2,295) (223) (2,518)
-
Changes in operating assets and liabilities:
Accounts receivable, net 1,161 (3,247) 1,099 (2,424) 884 (2,779) (3,220) (785) (1,349) 810 (2,284) (3,608) (2,904)
Other receivables - - - - - - - - - - - - -
Prepaid expenses and other assets (383) (813) (1,878) 1,713 984 1,497 2,316 825 (124) (121) 2 582 (384)
Accounts payable 1,204 (741) 448 93 (348) (121) 72 552 (401) 754 (455) 451 349
Income taxes payable 315 1,539 (1,757) (97) - 1,031 (823) - - - - - -
Accrued expenses and other current liabilities 30 399 (380) (200) 236 914 570 (105) 153 1,384 (1,421) 11 (42)
Accrued compensation expense (2,305) 446 (1,399) 387 469 821 278 - - - - - -
Deferred revenue (1,642) (418) 3,129 (57) (26) (1,829) 1,217 (446) 467 (177) (672) (828) 459
Deferred rent expense/Other liabilities 122 (54) (35) (39) (36) - - - - - - - -
Total changes in working capital (1,498) (2,889) (773) (624) 2,163 (466) 300 41 (1,254) 2,650 (4,829) (3,392) (2,522)
Net cash provided (used in) operating activities 11,335 12,339 2,213 2,738 6,855 7,055 18,861 4,855 6,959 10,054 4,661 26,530 30,845
Investing activities:
Acquisition of property and equipment (2,141) (1,263) (897) (792) (655) (650) (2,994) (725) (750) (750) (775) (3,000) (3,500)
Acquisition of businesses, net of cash acquired - (15,017) (1,013) (14,002) - (52,000) (67,015) - - - - - -
Proceeds from sale of assets 233 - - (1,013) - (1,013) - - - - - -
Purchases of short-term investments - - - (126,100) (158,147) (40,731) (324,978) - - - - - -
Proceeds from sale of short-term investments 33,000 - - 55,790 140,556 83,000 279,346 - - - - - -
Net cash provided by (used in) investing activities 31,092 (16,280) (1,910) (86,117) (18,246) (10,381) (116,654) (725) (750) (750) (775) (3,000) (3,500)
Financing activities:
IPO Proceeds - - - 83,161 - (6,000) 77,161 - - - - - -
Proceeds from issuance of Series B preferred stock - - - - - - - - - - - - -
Proceeds from issuance of Series C preferred stock - - - - - - - - - - - - -
Proceeds from bank term loan payable - 10,000 - - - - - - - - - - -
Payments of term loan payable (3,000) (23,000) (750) (750) (750) (750) (3,000) (750) (750) (750) (750) (3,000) (2,919)
Proceeds from credit facility - - - 12,000 - - 12,000 - - - - - -
Payments toward credit facility - - - (12,000) - - (12,000) - - - - - -
Proceeds from exercise of warrants/stock options 238 892 121 652 204 - 977 - - - - - -
Purchase of stock options through tender offer - - - - - - - - - - - - -
Purchase of common and preferred stock through tender offer - - - - - - - - - - - - -
Excess tax benefits - stock options 2,295 223
Net cash provided (used in) financing activities (2,762) (12,108) (629) 85,358 (323) (6,750) 75,138 (750) (750) (750) (750) (3,000) (2,919)
Total increase (decrease) in cash and cash equivalents 39,665 (16,049) (326) 1,979 (11,714) (10,076) (22,655) 3,380 5,459 8,554 3,136 20,530 24,426
Cash and cash equivalents, beginning of period 7,214 46,878 30,830 30,503 32,483 20,769 30,830 8,175 11,555 17,014 25,568 8,175 28,704
Cash and cash equivalents, end of period 46,878 30,830 30,503 32,483 20,769 10,693 8,175 11,555 17,014 25,568 28,704 28,704 53,130
Capex Analysis:
Capex 2,141 1,263 897 792 655 650 2,994 725 750 750 775 3,000 3,500
Capex as % of revenue 3.2% 1.6% 4.9% 3.2% 2.8% 2.3% 3.2% 3.1% 2.4% 2.5% 2.2% 2.5% 2.6%
Capex as % of EBITDA 16.1% 6.3% 31.1% 10.5% 11.4% 7.7% 12.2% 20.1% 7.6% 8.9% 6.4% 8.8% 8.7%
Free Cash Flow Reconciliation:

Cash flow from operations 11,335 12,339 2,213 2,738 6,855 7,055 18,861 4,855 6,959 10,054 4,661 26,530 30,845
Capex (2,141) (1,263) (897) (792) (655) (650) (2,994) (725) (750) (750) (775) (3,000) (3,500)
Free Cash Flow 9,194 11,076 1,316 1,946 6,200 6,405 15,867 4,130 6,209 9,304 3,886 23,530 27,345
% Y/Y Change 79.7% 20.5% 1485.4% 43.3% 213.9% 219.1% 50.1% -39.3% 48.3% 16.2%
Free cash flow per share
FCF as a % of CFO 81.1% 89.8% 59.5% 71.1% 90.4% 90.8% 84.1% 85.1% 89.2% 92.5% 83.4% 88.7% 88.7%
FCF as a % of EBITDA 69.2% 55.1% 45.7% 25.7% 108.2% 76.3% 64.6% 114.4% 62.8% 110.7% 31.9% 69.1% 67.9%
April 07, 2008 137

Figure 161: Dice Holdings Snapshot

-Beneficiary of growth in online employment advertising market as well as -Heavily concentrated within the U.S. In addition, heavily concentrated in the U.S.
positive growth trends within technology and financial sectors specifically. technology sector, with Dice.com, the company's flagship site which serves only the
U.S. online employment advertising totaled $2.2 billion in 2006 and is U.S. currently.
expected to grow to $4.5 billion in 2010, a 19.6% CAGR.
-Over 11,000 paying customers with no single customer accounting for more -Overall adjusted EBITDA margins of ~40% are significantly higher than largest
than 0.5% of revenue in 2006. competitor, Monster Worldwide, which has the resources to spend on sales and
marketing efforts more aggressively, putting pressure on Dice's business and
making margin expansion challenging.
-Solid revenue visibility, as the company books deferred revenue, reflecting -Client base is highly concentrated within the technology sector and to a lesser
recruitment package customers who have signed advertising contracts which extent, the financial sector. As a result, the macro environment around these two
extend beyond the current period. We est. ~75% of Dice customers are on broad industries will likely directly impact hiring trends and Dice's results.
annual contracts, ~10%-12% are on month-to-month contracts, and the
remaining % are on varied contract term lengths.
-Growing portfolio of specialized job sites, across various sectors: Dice.com -Sales and marketing expenses are significant, with approximately 38% of total
(technology/engineering), eFinancialCareers (financial services/banking), revenues devoted to acquiring employer/recruiter customers as well as job-seekers.
JobsInTheMoney (accounting), ClearanceJobs (gov't clearance), which Marketing and advertising costs to acquire job-seekers can potentially increase
provide both job-seekers and employers a targeted and efficient way to rapidly, as the type of targeted placement which Dice prefers is typically more
either search jobs or search for applicants. expensive than general run-of-network advertising online.
-Dice user base is typically more experienced, qualified and educated than -Increased competition could drive up online acquisition costs for Dice. Larger more
the typical user on a generalist job board. 75% have more than 5 years established competitors, such as Monster Worldwide, Careerbuilder, and Yahoo!'s
experience, almost half have 10+ yrs; Over 75% are currently employed HotJobs could potentially afford to spend more to acquire new customers online as
(often more desirable candidates); Avg Dice candidate earns $73,000; 70% they have greater resources.
have bachelor's degree or higher (based on company data)

-International expansion opportunity as ~21% of Dice's 2007 pro forma
revenue was International yet technology field is increasingly global with
cross-border hiring becoming more commonplace, and local foreign markets
growing faster than the U.S. in many cases. 1Q08 2008
Revenues $39M - $40M $161M - $173M
-Scalable entry into new verticals which are very skill-based and require
advanced sorting/search functionality, such as healthcare, or fields which are
large and growing significantly, such as sales and marketing.
Adjusted EBITDA $15.5M - $16.5M $68M - $76M
Adjusted EBITDA Margin 40% - 41% 42% - 44%
-Dice likely has room to exercise pricing power if it continues to deliver highly-
qualified applicants in an efficient way to employers and recruiters. Dice is
currently priced at or below competitors for typical monthly recruitment Sales & Marketing Expense $16M - $16.5M $63M - $65M
packages.
Capex $5M
-Potential further slow down in the macro-economy may negatively impact
employment trends and subsequently employment advertising budgets could
be reduced.
138 April 07, 2008

Figure 162: Dice Holdings Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Dice Online 48,986 77,285 23,351 25,233 26,557 27,074 102,215 27,224 28,716 28,729 29,991 114,659 130,214
eFinancialCareers (ex-U.S.) - 2,924 5,145 6,497 8,349 9,667 29,658 9,004 9,746 10,854 11,117 40,720 49,678
Other 1,892 3,192 1,894 2,628 3,183 2,773 10,478 3,106 3,416 3,820 3,189 13,531 18,267
Total Revenue 50,878 83,401 30,390 34,358 38,089 39,514 142,351 39,334 41,877 43,402 44,297 168,910 198,159
Operating Expenses
Cost of revenues 3,579 4,628 1,826 1,946 2,443 2,431 8,646 2,203 2,345 2,691 2,613 9,852 11,493
Product development 1,645 2,359 980 982 1,178 1,047 4,187 1,141 1,173 1,259 1,152 4,724 5,548
Sales and marketing 21,958 33,456 13,214 13,797 13,469 12,947 53,427 16,127 16,751 16,059 15,592 64,529 76,093
General and administrative 7,862 8,796 3,375 3,202 4,075 4,441 15,093 4,169 3,978 4,427 4,651 17,226 19,816
Share based compensation - 1,467 574 1,208 1,138 1,180 4,100 1,500 1,500 1,600 1,600 6,200 3,600
Depreciation 1,370 1,699 619 702 827 823 2,971 900 1,000 1,000 1,000 3,900 5,000
Amortization 5,416 13,092 5,228 4,773 4,661 4,389 19,051 4,700 4,500 4,500 4,600 18,300 15,400
Impairments and other charges 2,879
Total operating expenses 41,830 65,497 25,816 26,610 27,791 30,137 107,475 30,740 31,247 31,535 31,209 124,731 136,951
Operating Income (loss) 9,048 17,904 4,574 7,748 10,298 9,377 31,997 8,594 10,630 11,867 13,088 44,179 61,209
Interest income 518 234 74 82 371 520 1,047 698 874 977 1,034 3,583 5,881
Other income (expense) (160) - - - - - - - - - - -
Income (loss) from cont. ops b4 taxes 7,372 13,350 2,301 3,536 7,282 6,820 19,939 5,919 8,187 9,581 10,928 34,615 56,124
Income tax expense (benefit) 3,216 5,110 (907) 1,689 2,779 3,131 6,692 2,368 3,275 3,832 4,371 13,846 22,450
Income Tax Rate % 43.6% 38.3% - 47.8% 38.2% 45.9% 33.6% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%
Income (loss) from cont. ops b4 minority interes 4,156 8,240 3,208 1,847 4,503 3,689 13,247 3,551 4,912 5,749 6,557 20,769 33,675
Income (loss) from discontinued operations (525) (2,767) (949) 109 (460) (284) (1,584)
Income tax benefit (expense) from discontinued o 200 1,010 5,619 (463) 154 (1,329) 3,981
Minority interest in net loss of subsidiary 312 296 - 121 (255) (134)
Dividends - - - - -
Net Income (loss) to common shareholders 4,143 6,779 7,878 1,614 4,197 1,821 15,510 3,551 4,912 5,749 6,557 20,769 33,675
Basic Shares 10 55,300 55,300 55,200 62,000 62,500 58,750 63,500 64,000 64,500 65,500 64,375 65,663
Diluted Shares 11 62,300 62,300 58,450 64,400 65,769 62,730 66,769 67,269 67,769 68,769 67,644 68,997
GAAP Earnings Per Share

Basic EPS NA $0.12 $0.14 $0.03 $0.07 $0.03 $0.26 $0.06 $0.08 $0.09 $0.10 $0.32 $0.51
Diluted EPS NA $0.11 $0.13 $0.03 $0.07 $0.03 $0.25 $0.05 $0.07 $0.08 $0.10 $0.31 $0.49
PF Net Income Reconciliation:

GAAP Net Income 4,143 6,779 7,878 1,614 4,197 1,821 15,510 3,551 4,912 5,749 6,557 20,769 33,675
Share based compensation - 1,467 574 1,208 1,138 1,180 4,100 1,500 1,500 1,600 1,600 6,200 3,600
Amortization of intangibles 5,416 13,092 5,228 4,773 4,661 4,389 19,051 4,700 4,500 4,500 4,600 18,300 15,400
Tax effect (2,166) (5,824) (2,321) (2,392) (2,320) (2,228) (9,260) (2,480) (2,400) (2,440) (2,480) (9,800) (7,600)
Non-recurring items - - 0 - - - - - - - - -
Pro Forma Net income (loss) 7,393 15,514 11,359 5,203 7,676 5,162 29,401 7,271 8,512 9,409 10,277 35,469 45,075
Basic Shares 10 55,300 55,300 55,200 62,000 62,500 58,750 63,500 64,000 64,500 65,500 64,375 65,663
Diluted Shares 11 62,300 62,300 58,450 64,400 65,769 62,730 66,769 67,269 67,769 68,769 67,644 68,997
Pro Forma Earnings Per Share

Basic PF EPS NA $0.28 $0.21 $0.09 $0.12 $0.08 $0.50 $0.11 $0.13 $0.15 $0.16 $0.55 $0.69
Diluted PF EPS NA $0.25 $0.18 $0.09 $0.12 $0.08 $0.47 $0.11 $0.13 $0.14 $0.15 $0.52 $0.65
Adjusted EBITDA Reconciliation:

EBIT (reported) 9,048 17,904 4,574 7,748 10,298 9,377 31,997 8,594 10,630 11,867 13,088 44,179 61,209
Share based compensation 517 1,467 574 1,208 1,138 1,180 4,100 1,500 1,500 1,600 1,600 6,200 3,600
Depreciation 1,370 1,699 619 702 827 823 2,971 900 1,000 1,000 1,000 3,900 5,000
Amortization 5,416 13,092 5,228 4,773 4,661 4,389 19,051 4,700 4,500 4,500 4,600 18,300 15,400
Deferred revenue adjustments/Other - 2,967 758 518 248 2,879 4,403
Adjusted EBITDA 16,351 37,129 11,753 14,949 17,172 18,648 62,522 15,694 17,630 18,967 20,288 72,579 85,209
Yr/Yr Growth
Net revenues 57.8% 63.9% 89.3% 78.9% 76.5% 48.8% 70.7% 29.4% 21.9% 13.9% 12.1% 18.7% 17.3%
Cost of revenues 49.6% 29.3% 67.7% 91.5% 118.5% 73.0% 86.8% 20.6% 20.5% 10.1% 7.5% 14.0% 16.7%
Share based compensation NA NA 142.2% 399.2% 364.5% 58.8% 179.5% 161.3% 24.2% 40.6% 35.6% 51.2% -41.9%
Operating income 149.5% 97.9% 115.4% 80.9% 67.0% 75.8% 78.7% 87.9% 37.2% 15.2% 39.6% 38.1% 38.5%
Adjusted EBITDA 115.6% 127.1% 70.0% 78.3% 73.8% 56.0% 68.4% 33.5% 17.9% 10.5% 8.8% 16.1% 17.4%
GAAP Net Income NA NA NA NA NA NA 128.8% -54.9% 204.3% 37.0% 260.1% 33.9% 62.1%
Pro Forma Net Income NA NA NA NA NA NA 89.5% -36.0% 63.6% 22.6% 99.1% 20.6% 27.1%
Sequential Growth
Net revenues 14.4% 13.1% 10.9% 3.7% -0.5% 6.5% 3.6% 2.1%
% of Revenues
Cost of revenues 7.0% 5.5% 6.0% 5.7% 6.4% 6.2% 6.1% 5.6% 5.6% 6.2% 5.9% 5.8% 5.8%
Margins
Net income margin 8.1% 8.1% 25.9% 4.7% 11.0% 4.6% 10.9% 9.0% 11.7% 13.2% 14.8% 12.3% 17.0%
EBITDA margin 32.1% 44.5% 38.7% 43.5% 45.1% 47.2% 43.9% 39.9% 42.1% 43.7% 45.8% 43.0% 43.0%
Operating Leverage/Incremental Margin 47.0% 63.9% 33.8% 43.3% 44.2% 51.7% 43.1% 44.1% 35.7% 33.8% 34.3% 37.9% 43.2%
April 07, 2008 139

Figure 163: Dice Holdings Segment Breakdown, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Avg. Dice Recruitment Pkg Customers 5,214 7,101 8,050 8,650 8,900 8,850 8,613 8,983 9,207 9,299 9,299 9,299 9,997
Y/Y Growth 36.2% 27.7% 22.7% 19.5% 16.4% 21.3% 11.6% 6.4% 4.5% 5.1% 8.0% 7.5%
Q/Q Growth 5.9% 7.5% 2.9% -0.6% 1.5% 2.5% 1.0% 0.0%
Avg Monthly Revenue Per Customer $703 $783 $826 $830 $839 $852 $837 $859 $863 $864 $882 $867 $897
Y/Y Growth 11.0% 9.7% 7.5% 5.5% 4.8% 6.8% 4.0% 4.0% 3.0% 3.5% 3.6% 3.5%
Q/Q Growth 1.6% 0.5% 1.1% 1.5% 0.8% 0.5% 0.1% 2.0%
Total Dice Revenue 48,986 77,285 23,351 25,233 26,557 27,074 102,215 27,224 28,716 28,729 29,991 114,659 130,214
Y/Y Growth 52.0% 57.8% 51.2% 36.3% 27.6% 20.3% 32.3% 16.6% 13.8% 8.2% 10.8% 12.2% 13.6%
Q/Q Growth 3.7% 8.1% 5.2% 1.9% 0.6% 5.5% 0.0% 4.4%
eFC Revenue - 2,924 5,145 6,497 8,349 9,667 29,658 9,004 9,746 10,854 11,117 40,720 49,678
Y/Y Growth 62.1% 78.1% 230.6% 914.3% 75.0% 50.0% 30.0% 15.0% 37.3% 22.0%
Q/Q Growth 76.0% 26.3% 28.5% 15.8% -6.9% 8.2% 11.4% 2.4%
Other Revenue 1,892 3,192 1,894 2,628 3,183 2,773 10,478 3,106 3,416 3,820 3,189 13,531 18,267
Y/Y Growth 69% 207.5% 279.8% 319.4% 146.5% 228.3% 64.0% 30.0% 20.0% 15.0% 29.1% 35.0%
Q/Q Growth 68.4% 38.8% 21.1% -12.9% 12.0% 10.0% 11.8% -16.5%
Total Revenue 50,878 83,401 30,390 34,358 38,089 39,514 142,351 39,334 41,877 43,402 44,297 168,910 198,159
Y/Y Growth 57.8% 63.9% 89.3% 78.9% 76.5% 48.8% 70.7% 29.4% 21.9% 13.9% 12.1% 18.7% 17.3%
Q/Q Growth 14.4% 13.1% 10.9% 3.7% -0.5% 6.5% 3.6% 2.1%
Revenue Breakdown 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Dice 96% 93% 77% 73% 70% 69% 72% 69% 69% 66% 68% 68% 66%
eFC 0% 4% 17% 19% 22% 24% 21% 23% 23% 25% 25% 24% 25%
Other 4% 4% 6% 8% 8% 7% 7% 8% 8% 9% 7% 8% 9%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Revenue Seasonality
Dice 100% 23% 25% 26% 26% 100% 24% 25% 25% 26% 100%
eFC 100% 17% 22% 28% 33% 100% 22% 24% 27% 27% 100%
Other 100% 18% 25% 30% 26% 100% 23% 25% 28% 24% 100%
Total 100% 21% 24% 27% 28% 100% 23% 25% 26% 26% 100%
140 April 07, 2008

Figure 164: Dice Holdings Pro Forma Analysis, 2005–08E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
REPORTED GAAP REVENUE

Dice 48,986 77,285 23,351 25,233 26,557 27,074 102,215 27,224 28,716 28,729 29,991 114,659
eFinancialCareers (non-U.S.) - 2,924 5,145 6,497 8,349 9,667 29,658 9,004 9,746 10,854 11,117 40,720
Other 1,892 3,192 1,894 2,628 3,183 2,773 10,478 3,106 3,416 3,820 3,189 13,531
Total GAAP Revenue 50,878 83,401 30,390 34,358 38,089 39,514 142,351 39,334 41,877 43,402 44,297 168,910
REPORTED EBITDA
Reported Adjusted EBITDA 16,350 34,152 10,995 14,431 16,924 18,648 60,998 15,694 17,630 18,967 20,288 72,579
PRO FORMA REVENUE ADJUSTMENTS

Dice 3,644 2,049 - - - - - - - - - -
eFinancialCareers (non-U.S.) 9,207 13,997 379 301 147 - 827 - - - - -
Other 3,256 4,937 379 217 101 - 697 - - - - -
Pro Forma Revenue Adjustments 16,107 20,983 758 518 248 - 1,524 - - - - -
PRO FORMA EBITDA ADJUSTMENTS
Pro Forma EBITDA Adjustments 5,537 6,575 758 518 248 - 1,524 - - - - -
PRO FORMA REVENUE

Dice 52,630 79,334 23,351 25,233 26,557 27,074 102,215 27,224 28,716 28,729 29,991 114,659
Y/Y Growth 50.7% 40.3% 31.7% 26.4% 20.2% 28.8% 16.6% 13.8% 8.2% 10.8% 12.2%
eFinancialCareers (non-U.S.) 9,207 16,921 5,524 6,798 8,496 9,667 30,485 9,004 9,746 10,854 11,117 40,720
Y/Y Growth 83.8% 67.0% 69.6% 81.3% 96.5% 80.2% 63.0% 43.4% 27.8% 15.0% 33.6%
Other 5,148 8,129 2,273 2,845 3,284 2,773 11,175 3,106 3,416 3,820 3,189 13,531
Y/Y Growth 57.9% 22.9% 38.8% 55.9% 30.6% 37.5% 36.7% 20.1% 16.3% 15.0% 21.1%
Pro Forma Revenue 66,985 104,384 31,148 34,876 38,337 39,514 143,875 39,334 41,877 43,402 44,297 168,910
Y/Y Growth 73.1% 55.8% 42.9% 38.3% 37.9% 33.7% 37.8% 26.3% 20.1% 13.2% 12.1% 17.4%
PRO FORMA EBITDA
Pro Forma EBITDA 21,887 40,727 11,752 14,950 17,171 18,648 62,521 15,694 17,630 18,967 20,288 72,579
Y/Y Growth 188.9% 86.1% 51.5% 70.2% 64.1% 73.6% 53.5% 33.5% 17.9% 10.5% 8.8% 16.1%
Pro Forma EBITDA Margin 32.7% 39.0% 37.7% 42.9% 44.8% 47.2% 43.5% 39.9% 42.1% 43.7% 45.8% 43.0%
Operating Flow-Through/Incremental Margin 50.6% 50.4% 42.7% 63.8% 63.7% 79.4% 55.2% 48.2% 38.3% 35.5% 34.3% 40.2%
Reported Sales and Marketing Expense 21,958 33,456 13,214 13,797 13,469 12,947 53,427 16,127 16,751 16,059 15,592 64,529
eFinancialCareers PF Adjustment 8,119 - - - - - - - - - -
Total PF Sales and Marketing Expense 21,958 41,575 13,214 13,797 13,469 12,947 53,427 16,127 16,751 16,059 15,592 64,529
Y/Y Growth 46% 89% 47% 34% 22% 15% 29% 22% 21% 19% 20% 21%
Sales and Marketing as % of PF Revenue 32.8% 39.8% 42.4% 39.6% 35.1% 32.8% 37.1% 41.0% 40.0% 37.0% 35.2% 38.2%
Revenue Breakdown -- Pro Forma 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
Dice 79% 76% 75% 72% 69% 69% 71% 69% 69% 66% 68% 68%
eFC 14% 16% 18% 19% 22% 24% 21% 23% 23% 25% 25% 24%
Other 8% 8% 7% 8% 9% 7% 8% 8% 8% 9% 7% 8%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
April 07, 2008 141

Figure 165: AOL Quarterly Advertising Forecast, 2005–08E ($ in millions)

AOL Advertising
$ millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
AUDIENCE AND AD METRICS
Average Monthly Domestic Unique Visitors --- 110.8 111.0 114.0 113.0 109.0 111.8 109.9 114.0 114.1 110.1 112.0
% Growth Y/Y --- --- 3.7% 0.9% 0.9% -1.8% 0.9% -1.0% 0.0% 1.0% 1.0% 0.2%
% Growth Q/Q --- --- 0.5% 2.7% -0.9% -3.5% --- 0.5% 3.7% 0.1% -3.5% ---
Total Page Views (MM) --- 197,374 43,959 52,080 47,602 49,161 192,802 44,398.6 51,038.4 47,126.0 48,669.4 191,232
% Growth Y/Y --- --- -16.5% 0.8% -2.2% 10.8% -2.3% 1.0% -2.0% -1.0% -1.0% -0.8%
% Growth Q/Q --- --- -1.0% 18.5% -8.6% 3.3% --- -9.7% 15.0% -7.7% 3.3% ---
Avg. Monthly Page Views Per Unique User --- 148.4 132.0 152.3 140.4 150.3 143.8 134.7 149.2 137.6 147.4 142.3
% Growth Y/Y --- --- -19.5% -0.1% -3.1% 13.5% -3.1% 2.0% -2.0% -2.0% -2.0% -1.1%
% Growth Q/Q --- --- -0.4% 15.4% -7.8% 7.1% --- -10.4% 10.8% -7.8% 7.1% ---
Domestic Advertising Revenue (Gross---as reported) --- $1,525.0 $443.0 $419.0 $433.0 $500.0 $1,795.0 $434.1 $454.4 $476.7 $546.7 $1,911.9
% Growth Y/Y --- --- 39.3% 16.7% 10.5% 9.6% 17.7% -2.0% 8.4% 10.1% 9.3% 6.5%
% Growth Q/Q --- --- -2.9% -5.4% 3.3% 15.5% --- -13.2% 4.7% 4.9% 14.7% ---
% of Total AOL Gross Ad Revs --- 80.9% 80.7% 80.3% 80.2% 80.6% 80.4% 79.7% 79.5% 79.2% 79.0% 79.4%
Domestic Advertising Revenue Less TAC (Net) --- $1,235.0 $345.0 $329.0 $330.0 $375.0 $1,379.0 $321.7 $344.0 $352.2 $396.0 $1,413.9
% Growth Y/Y --- --- 25.5% 11.5% 8.6% 3.9% 11.7% -6.8% 4.6% 6.7% 5.6% 2.5%
% Growth Q/Q --- --- -4.4% -4.6% 0.3% 13.6% --- -14.2% 6.9% 2.4% 12.4% ---
% of Total AOL Net Ad Revs --- 77.4% 76.5% 76.2% 75.5% 75.8% 76.0% 74.4% 74.6% 73.8% 73.2% 73.9%
Domestic Adv Revenue Less TAC Per Unique Visitor --- $11.13 $3.11 $2.89 $2.92 $3.44 $12.35 $2.93 $3.02 $3.09 $3.60 $12.63
% Growth Y/Y --- --- 20.9% 10.5% 7.6% 5.8% 11.0% -5.8% 4.6% 5.7% 4.6% 2.2%
% Growth Q/Q --- --- -4.4% -7.1% 1.2% 17.8% --- -14.9% 3.1% 2.3% 16.5% ---
Domestic Adv Revenue Less TAC Per 1,000 Page Views $6.26 $7.85 $6.32 $6.93 $7.63 $7.15 $7.24 $6.74 $7.47 $8.14 $7.39
% Growth Y/Y --- --- 50.2% 10.6% 11.0% -6.2% 14.3% -7.7% 6.7% 7.8% 6.7% 3.4%
% Growth Q/Q --- --- -3.5% -19.5% 9.7% 10.0% --- -5.0% -7.0% 10.9% 8.9% ---
International Advertising Revenue --- $361.0 $106.0 $103.0 $107.0 $120.0 $436.0 $110.6 $117.2 $125.2 $145.3 $498.2
% Growth Y/Y --- --- 43.2% 14.4% 23.0% 9.1% 20.8% 4.3% 13.8% 17.0% 21.1% 14.3%
% Growth Q/Q --- --- -3.6% -2.8% 3.9% 12.1% --- -7.9% 6.0% 6.9% 16.1% ---
% of Total AOL Gross Ad Revs --- 19.1% 19.3% 19.7% 19.8% 19.4% 19.5% 20.3% 20.5% 20.8% 21.0% 20.7%
% of Total AOL Net Ad Revs --- 22.5% 23.5% 23.8% 24.5% 24.2% 24.0% 25.6% 25.4% 26.2% 26.8% 26.1%
Total Advertising Revenue Less TAC (Net) --- $1,596.0 $451.0 $432.0 $437.0 $495.0 $1,815.0 $432.2 $461.2 $477.4 $541.3 $1,912.1
% Growth Y/Y --- --- 29.2% 12.2% 11.8% 5.1% 13.7% -4.2% 6.8% 9.3% 9.4% 5.4%
% Growth Q/Q --- --- -4.2% -4.2% 1.2% 13.3% --- -12.7% 6.7% 3.5% 13.4% ---
DISPLAY ADVERTISING 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
TOTAL DISPLAY ADVERTISING REVENUE $627.0 $819.0 $232.0 $220.9 $213.9 $252.2 $919.0 $194.9 $232.0 $228.9 $274.9 $930.6
% Growth Y/Y 9.6% 30.6% 31.8% 15.1% 5.9% 1.3% 12.2% -16.0% 5.0% 7.0% 9.0% 1.3%
TOTAL DISPLAY ADVERTISING EBITDA $261.1 $327.6 $104.4 $99.4 $96.3 $113.5 $413.6 $87.7 $104.4 $103.0 $123.7 $418.8
% Growth Y/Y -19.8% 25.5% 48.3% 29.5% 19.1% 13.9% 26.2% -16.0% 5.0% 7.0% 9.0% 1.3%
% Margin 41.6% 40.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0%
PAID SEARCH
Queries (MM) 7,236 7,569 1,820 1,690 1,712 1,805 7,027 1,683 1,606 1,678 1,823 6,790
% Growth Y/Y 6% 4.6% -10.1% -10.1% 3.0% -9.9% -7.2% -7.5% -5.0% -2.0% 1.0% -3.4%
% Growth Q/Q --- -9.2% -7.1% 1.3% 5.4% -6.7% -4.6% 4.5% 8.6%
Paid Click-Through Rate 19.5% 20.3% 13.4% 13.8% 14.0% 15.6% 14.2% 14.8% 15.0% 15.0% 15.4% 15.1%
Paid Introductions (MM) 1,409 1,537 244 233 240 282 998 249 241 252 281 1,022
% Growth Y/Y -4.8% 9.0% -44.1% -40.3% -23.9% -28.6% -35.0% 2.2% 3.3% 5.0% -0.3% 2.4%
Price Per Click (PPC) $0.37 $0.42 $0.74 $0.73 $0.74 $0.66 $0.72 $0.77 $0.76 $0.78 $0.72 $0.76
% Growth Y/Y 38.9% 14.2% 112.5% 77.9% 51.0% 41.5% 68.9% 3.0% 5.0% 6.0% 9.0% 5.8%
% Growth Q/Q --- --- 59.7% 1.0% 1.7% -10.8% --- 16.3% 1.0% 2.6% -8.3% ---
Gross Revenue AOL Generates for Google $522.4 $650.7 $181.5 $169.6 $177.3 $185.7 $714.1 $191.0 $183.9 $197.3 $201.8 $774.0
TAC Rate Google Pays to AOL 86.5% 90.8% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0%
--- ---
TOTAL AOL PAID SEARCH REVENUE $452.0 $591.0 $167.0 $156.1 $163.1 $170.8 $657.0 $175.7 $169.2 $181.5 $185.6 $712.1
% Growth Y/Y 34.5% 30.8% 25.6% 6.2% 14.9% 1.1% 11.2% 5.2% 8.4% 11.3% 8.7% 8.4%
% Growth Q/Q --- --- -1.2% -6.5% 4.5% 4.7% --- 2.9% -3.7% 7.3% 2.3% ---
TOTAL PAID SEARCH EBITDA $406.8 $541.1 $153.6 $143.6 $150.4 $157.5 $605.1 $161.7 $155.7 $167.4 $171.1 $655.9
% Growth Y/Y 34.5% 33.0% 28.4% 6.2% 15.1% 1.3% 11.8% 5.2% 8.4% 11.3% 8.7% 8.4%
% Margin 90.0% 91.5% 92.0% 92.0% 92.2% 92.2% 92.1% 92.0% 92.0% 92.2% 92.2% 92.1%
Revenue Per Search (RPS) $0.06 $0.08 $0.09 $0.09 $0.10 $0.09 $0.09 $0.10 $0.11 $0.11 $0.10 $0.10
% Growth Y/Y 26.9% 25.0% 39.6% 18.1% 11.5% 12.2% 19.7% 13.8% 14.1% 13.6% 7.6% 12.2%
% Growth Q/Q --- --- 8.8% 0.6% 3.1% -0.6% --- 10.3% 0.9% 2.6% -5.9% ---
PARTNER SITES (ADVERTISING.COM)

TOTAL GROSS PARTNER SITES REVENUE $259.0 $476.0 $150.0 $145.0 $163.0 $197.0 $655.0 $174.0 $170.4 $191.5 $231.5 $767.4
% Growth Y/Y 167.0% 83.8% 80.7% 31.8% 20.7% 30.0% 37.6% 16.0% 17.5% 17.5% 17.5% 17.2%
% Growth Q/Q 1.4% -3.3% 12.4% 20.9% -11.7% -2.1% 12.4% 20.9%
Total Partner Sites TAC $153.5 $290.0 $98.0 $90.0 $103.0 $125.0 $416.0 $112.4 $110.4 $124.5 $150.7 $498.0
% TAC Growth Y/Y 146% 89% 128% 41% 17% 32% 43% 14.7% 22.7% 20.9% 20.6% 19.7%
TAC% of Total Gross 59.3% 60.9% 65.3% 62.1% 63.2% 63.5% 63.5% 64.6% 64.8% 65.0% 65.1% 64.9%
Total Net Partner Sites Revenue $105.5 $186.0 $52.0 $55.0 $60.0 $72.0 $239.0 $61.6 $60.0 $67.0 $80.8 $269.4
% Growth Y/Y 0% 76% 30% 20% 28% 36% 28% 18.5% 9.0% 11.7% 12.2% 12.7%
% Net Revenue Margin (Gross Margin) 40.7% 39.1% 34.7% 37.9% 36.8% 36.5% 36.5% 35.4% 35.2% 35.0% 34.9% 35.1%
TOTAL PARTNER SITES EBITDA $57.3 $104.4 $30.0 $29.0 $32.6 $39.4 $131.0 $34.8 $34.1 $38.3 $46.3 $153.5
% Growth Y/Y 0% 82% 37% 18% 16% 33% 26% 16% 18% 18% 18% 17.2%
% Margin 22.1% 21.9% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%
TOTAL ADVERTISING SUMMARY 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
ADVERTISING REVENUE
Display Advertising $627.0 $819.0 $232.0 $220.9 $213.9 $252.2 $919.0 $194.9 $232.0 $228.9 $274.9 $930.6
% Growth Y/Y 9.6% 30.6% 31.8% 15.1% 5.9% 1.3% 12.2% -16.0% 5.0% 7.0% 9.0% 1.3%
Paid Search $452.0 $591.0 $167.0 $156.1 $163.1 $170.8 $657.0 $175.7 $169.2 $181.5 $185.6 $712.1
% Growth Y/Y 34.5% 30.8% 25.6% 6.2% 14.9% 1.1% 11.2% 5.2% 8.4% 11.3% 8.7% 8.4%
Partner Sites $259.0 $476.0 $150.0 $145.0 $163.0 $197.0 $655.0 $174.0 $170.4 $191.5 $231.5 $767.4
% Growth Y/Y 167.0% 83.8% 80.7% 31.8% 20.7% 30.0% 37.6% 16.0% 17.5% 17.5% 17.5% 17.2%
TOTAL ADVERTISING REVENUE $1,338.0 $1,886.0 $549.0 $522.0 $540.0 $620.0 $2,231.0 $544.6 $571.6 $601.9 $692.0 $2,410.1
% Growth Y/Y 33.1% 41.0% 40.1% 16.3% 12.7% 9.5% 18.3% -0.8% 9.5% 11.5% 11.6% 8.0%
% Growth Q/Q --- --- -3.0% -4.9% 3.4% 14.8% --- -12.2% 4.9% 5.3% 15.0% ---
ADVERTISING EBITDA
% Growth Y/Y -19.8% 25.5% 48.3% 29.5% 19.1% 13.9% 26.2% -16.0% 5.0% 7.0% 9.0% 1.3%
% Margin 41.6% 40.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0%
Paid Search $406.8 $541.1 $153.6 $143.6 $150.4 $157.5 $605.1 $161.7 $155.7 $167.4 $171.1 $655.9
% Growth Y/Y 34.5% 33.0% 28.4% 6.2% 15.1% 1.3% 11.8% 5.2% 8.4% 11.3% 8.7% 8.4%
% Margin 90.0% 91.5% 92.0% 92.0% 92.2% 92.2% 92.1% 92.0% 92.0% 92.2% 92.2% 92.1%
Partner Sites $57.3 $104.4 $30.0 $29.0 $32.6 $39.4 $131.0 $34.8 $34.1 $38.3 $46.3 $153.5
% Growth Y/Y --- 82.1% 36.9% 17.7% 15.5% 33.1% 25.5% 16.0% 17.5% 17.5% 17.5% 17.2%
% Margin 22.1% 21.9% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%
TOTAL ADVERTISING EBITDA $725.2 $973.0 $288.0 $272.0 $279.2 $310.4 $1,149.6 $284.2 $294.1 $308.7 $341.1 $1,228.1
% Growth Y/Y 12.5% 34.2% 35.9% 14.9% 16.5% 9.0% 18.2% -1.3% 8.1% 10.5% 9.9% 6.8%
% Margin 54.2% 51.6% 52.5% 52.1% 51.7% 50.1% 51.5% 52.2% 51.5% 51.3% 49.3% 51.0%
142 April 07, 2008

Figure 166: AOL Annual Advertising Forecast, 2005–11E ($ in millions)

AOL Advertising
$ millions
2005A 2006A 2007A 2008E 2009E 2010E 2011E

AUDIENCE AND AD METRICS
Average Monthly Domestic Unique Visitors --- 111 112 112 113 115 116
% Growth Y/Y --- --- 1% 0% 1.3% 1.2% 1.2%
% Growth Q/Q --- --- --- --- --- --- ---
Total Page Views (MM) --- 197,374 192,802 191,232 192,189 194,110 196,052
% Growth Y/Y --- --- -2% -1% 0.5% 1.0% 1.0%
% Growth Q/Q --- --- --- --- --- --- ---
Avg. Monthly Page Views Per Unique User --- 148 144 142 141 141 141
% Growth Y/Y --- --- -3% -1% -0.8% -0.2% -0.2%
% Growth Q/Q --- --- --- --- --- --- ---
Domestic Advertising Revenue (Gross---as reported) --- $1,525.0 $1,795.0 $1,911.9 $2,156.1 $2,358.9 $2,555.6
% Growth Y/Y --- --- 18% 7% 12.8% 9.4% 8.3%
% Growth Q/Q --- --- --- --- --- --- ---
% of Total AOL Gross Ad Revs --- 81% 80% 79% 79% 78% 77%
Domestic Advertising Revenue Less TAC (Net) --- $1,235.0 $1,379.0 $1,413.9 $1,570 $1,674 $1,770
% Growth Y/Y --- --- 12% 3% 11.0% 6.7% 5.7%
% Growth Q/Q --- --- --- --- --- --- ---
% of Total AOL Net Ad Revs --- --- 76.0% 73.9% 73.4% 71.6% 69.9%
Domestic Adv Revenue Less TAC Per Unique Visitor --- $11.1 $12.4 $12.6 $13.83 $14.58 $15.23
% Growth Y/Y --- --- 11.0% 2.2% 9.5% 5.4% 4.5%
% Growth Q/Q --- --- --- --- --- --- ---
Domestic Adv Revenue Less TAC Per 1,000 Page Views --- $6.3 $7.2 $7.4 $8.17 $8.62 $9.03
% Growth Y/Y --- --- 14.3% 3.4% 10.5% 5.6% 4.7%
% Growth Q/Q --- --- --- --- --- --- ---
International Advertising Revenue --- $361.0 $436.0 $498.2 $569.7 $665.3 $763.4
% Growth Y/Y --- --- 20.8% 14.3% 14.3% 16.8% 14.7%
% Growth Q/Q --- --- --- --- --- --- ---
% of Total AOL Gross Ad Revs --- 19.1% 19.5% 20.7% 20.9% 22.0% 23.0%
% of Total AOL Net Ad Revs --- 22.5% 24.0% 26.1% 26.6% 28.4% 30.1%
Total Advertising Revenue Less TAC (Net) --- $1,596.0 $1,815.0 $1,912.1 $2,139.2 $2,339.4 $2,533.6
% Growth Y/Y --- 0.0% 13.7% 5.4% 11.9% 9.4% 8.3%
% Growth Q/Q --- --- --- --- --- --- ---
DISPLAY ADVERTISING 2005A 2006A 2007A 2008E 2009E 2010E 2011E

TOTAL DISPLAY ADVERTISING REVENUE $627.0 $819.0 $919.0 $930.6 $1,047.0 $1,141.2 $1,232.5
% Growth Y/Y 9.6% 30.6% 12.2% 1.3% 12.5% 9.0% 8.0%
TOTAL DISPLAY ADVERTISING EBITDA $261.1 $327.6 $413.6 $418.8 $471.1 $513.5 $554.6
% Growth Y/Y -19.8% 25.5% 26.2% 1.3% 12.5% 9.0% 8.0%
% Margin 41.6% 40.0% 45.0% 45.0% 45.0% 45.0% 45.0%
PAID SEARCH 2005A 2006A 2007A 2008E 2009E 2010E 2011E

Queries (MM) 7,236 7,569 7,027 6,790 6,892 6,995 7,135
% Growth Y/Y 6.0% 4.6% -7.2% -3.4% 1.5% 1.5% 2.0%
% Growth Q/Q --- --- --- --- --- --- ---
Paid Click-Through Rate 19.5% 20.3% 14.2% 15.1% 15.5% 16.0% 16.3%
Paid Introductions (MM) 1,409 1,537 998 1,022 1,068 1,119 1,163
% Growth Y/Y -4.8% 9.0% -35.0% 2.4% 4.5% 4.8% 3.9%
Price Per Click (PPC) $0.37 $0.42 $0.72 $0.76 $0.80 $0.83 $0.86
% Growth Y/Y 38.9% 14.2% 68.9% 5.8% 6.0% 4.0% 3.0%
% Growth Q/Q --- --- --- --- --- --- ---
Gross Revenue AOL Generates for Google $522.4 $650.7 $714.1 $774.0 $857.2 $934.1 $999.8
TAC Rate Google Pays to AOL 86.5% 90.8% 92.0% 92.0% 92.0% 92.0% 93.0%
TOTAL AOL PAID SEARCH REVENUE $452.0 $591.0 $657.0 $712.1 $788.7 $859.4 $929.8
% Growth Y/Y 34.5% 30.8% 11.2% 8.4% 10.7% 9.0% 8.2%
% Growth Q/Q --- --- --- --- --- --- ---
TOTAL PAID SEARCH EBITDA $406.8 $541.1 $605.1 $655.9 $730.3 $798.3 $866.5
% Growth Y/Y 34.5% 33.0% 11.8% 8.4% 11.3% 9.3% 8.5%
% Margin 90.0% 91.5% 92.1% 92.1% 92.6% 92.9% 93.2%
Revenue Per Search (RPS) $0.06 $0.08 $0.09 $0.10 $0.11 $0.12 $0.13
% Growth Y/Y 26.9% 25.0% 19.7% 12.2% 9.1% 7.4% 6.1%
% Growth Q/Q --- --- --- --- --- --- ---
PARTNER SITES (ADVERTISING.COM) 2005A 2006A 2007A 2008E 2009E 2010E 2011E
TOTAL GROSS PARTNER SITES REVENUE $259.0 $476.0 $655.0 $767.4 $890.2 $1,023.7 $1,156.8
% Growth Y/Y 167.0% 83.8% 37.6% 17.2% 16.0% 15.0% 13.0%
% Growth Q/Q --- --- --- --- --- --- ---
Total Partner Sites TAC $153.5 $290.0 $416.0 $498.0 $586.6 $684.8 $785.4
% TAC Growth Y/Y 146% 89% 43% 20% 18% 17% 15%
TAC as % of Gross Revenue 59.3% 60.9% 63.5% 64.9% 65.9% 66.9% 67.9%
Total Net Partner Sites Revenue $105.5 $186.0 $239.0 $269.4 $303.6 $338.9 $371.4
% Growth Y/Y 0% 76% 28% 13% 13% 12% 10%
% Net Revenue Margin (Gross Margin) 40.7% 39.1% 36.5% 35.1% 34.1% 33.1% 32.1%
TOTAL PARTNER SITES EBITDA $57.3 $104.4 $131.0 $153.5 $177.1 $202.7 $227.9
% Growth Y/Y 0% 82% 26% 17% 15% 14% 12%
% Margin 22.1% 21.9% 20.0% 20.0% 19.9% 19.8% 19.7%
TOTAL ADVERTISING SUMMARY 2005A 2006A 2007E 2008E 2009E 2010E 2011E
ADVERTISING REVENUE
Display Advertising $627.0 $819.0 $919.0 $930.6 $1,047.0 $1,141.2 $1,232.5
% Growth Y/Y 9.6% 30.6% 12.2% 1.3% 12.5% 9.0% 8.0%
Paid Search $452.0 $591.0 $657.0 $712.1 $788.7 $859.4 $929.8

% Growth Y/Y 34.5% 30.8% 11.2% 8.4% 10.7% 9.0% 8.2%
Partner Sites $259.0 $476.0 $655.0 $767.4 $890.2 $1,023.7 $1,156.8

% Growth Y/Y 167.0% 83.8% 37.6% 17.2% 16.0% 15.0% 13.0%
TOTAL ADVERTISING REVENUE $1,338.0 $1,886.0 $2,231.0 $2,410.1 $2,725.8 $3,024.2 $3,319.0
% Growth Y/Y 33.1% 41.0% 18.3% 8.0% 13.1% 10.9% 9.7%
% Growth Q/Q --- --- --- --- --- --- ---
ADVERTISING EBITDA
Display Advertising $261.1 $327.6 $413.6 $418.8 $471.1 $513.5 $554.6
% Growth Y/Y -19.8% 25.5% 26.2% 1.3% 12.5% 9.0% 8.0%
% Margin 41.6% 40.0% 45.0% 45.0% 45.0% 45.0% 45.0%
Paid Search $406.8 $541.1 $605.1 $655.9 $730.3 $798.3 $866.5

% Growth Y/Y 34.5% 33.0% 11.8% 8.4% 11.3% 9.3% 8.5%
% Margin 90.0% 91.5% 92.1% 92.1% 92.6% 92.9% 93.2%
Partner Sites $57.3 $104.4 $131.0 $153.5 $177.1 $202.7 $227.9

% Growth Y/Y 0.0% 82.1% 25.5% 17.2% 15.4% 14.4% 12.4%
% Margin 22.1% 21.9% 20.0% 20.0% 19.9% 19.8% 19.7%
TOTAL ADVERTISING EBITDA $725.2 $973.0 $1,149.6 $1,228.1 $1,378.6 $1,514.6 $1,649.0
% Growth Y/Y 12.5% 34.2% 18.2% 6.8% 12.2% 9.9% 8.9%
% Margin 54.2% 51.6% 51.5% 51.0% 50.6% 50.1% 49.7%
April 07, 2008 143

Figure 167: AOL Quarterly Income Statement, 2005–08E ($ in millions)

Time Warner -- AOL
2005 2006 1Q 2Q 3Q 4Q 2007 1Q 2Q 3Q 4Q 2008
A A A A A A A A A A E E
12/31/2005 12/31/2006 3/31/2007 6/30/2007 9/30/2007 12/31/2007 12/31/2007 3/31/2008 6/30/2008 9/30/2008 12/31/2008 12/31/2008
AOL Income Statement

AOL Income Statement ($ Millions)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
SUBSCRIPTION
SUBSCRIPTION REVENUE
U.S. $5,080.0 $4,152.0 $783.7 $691.2 $635.0 $589.0 $2,699.0 $554.3 $511.9 $476.6 $444.8 $1,987.6
AOL Europe 1,675.0 1,632.0 89.3 --- --- --- 89.3 --- --- --- --- ---
TOTAL SUBSCRIPTION REVENUE $6,755.0 $5,784.0 $873.0 $691.2 $635.0 $589.0 $2,788.3 $554.3 $511.9 $476.6 $444.8 $1,987.6
% Growth Y/Y -12.4% -14.4% -43.2% -55.3% -56.4% -52.7% -51.8% -36.5% -25.9% -24.9% -24.5% -28.7%
SUBSCRIPTION EBITDA
U.S. $819.5 $624.1 $245.0 $209.4 $140.8 $160.9 $756.1 $183.8 $152.4 $124.7 $122.2 $583.2
AOL Europe $245.5 $371.7 25.5 --- --- --- $25.5 --- --- --- --- ---
TOTAL SUBSCRIPTION EBITDA $1,065.0 $995.8 $270.5 $209.4 $140.8 $160.9 $781.5 $183.8 $152.4 $124.7 $122.2 $583.2
% Growth Y/Y 4.0% -6.5% 28.4% -21.3% -58.0% -12.5% -21.5% -32.1% -27.2% -11.4% -24.0% -25.4%
% Margin 15.8% 17.2% 31.0% 30.3% 22.2% 27.3% 28.0% 33.2% 29.8% 26.2% 27.5% 29.3%
ADVERTISING 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
ADVERTISING REVENUE
Paid Search $452.0 591.0 167.0 156.1 163.1 170.8 $657.0 175.7 169.2 181.5 185.6 $712.1
Partner Sites $259.0 476.0 150.0 145.0 163.0 197.0 $655.0 174.0 170.4 191.5 231.5 $767.4
TOTAL ADVERTISING REVENUE $1,338.0 $1,886.0 $549.0 $522.0 $540.0 $620.0 $2,231.0 $544.6 $571.6 $601.9 $692.0 $2,410.1
% Growth Y/Y 33.1% 41.0% 40.1% 16.3% 12.7% 9.5% 18.3% -0.8% 9.5% 11.5% 11.6% 8.0%
ADVERTISING EBITDA
Paid Search 406.8 541.1 153.6 143.6 150.4 157.5 605.1 161.7 155.7 167.4 171.1 655.9
Partner Sites 57.3 104.4 30.0 29.0 32.6 39.4 131.0 34.8 34.1 38.3 46.3 153.5
TOTAL ADVERTISING EBITDA $725.2 $973.0 $288.0 $272.0 $279.2 $310.4 $1,149.6 $284.2 $294.1 $308.7 $341.1 $1,228.1
% Growth Y/Y 12.5% 34.2% 35.9% 14.9% 16.5% 9.0% 18.2% -1.3% 8.1% 10.5% 9.9% 6.8%
% Margin 54.2% 51.6% 52.5% 52.1% 51.7% 50.1% 51.5% 52.2% 51.5% 51.3% 49.3% 51.0%
OTHER 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
TOTAL OTHER REVENUE $109.0 $116.0 $36.0 $40.0 $44.0 $42.0 $162.0 $39.6 $43.2 $46.6 $43.7 $173.1
% Growth Y/Y -48.1% 6.4% 33.3% 25.0% 25.0% 55.6% 39.7% 10.0% 8.0% 6.0% 4.0% 6.9%
TOTAL OTHER EBITDA $24.8 $23.2 $6.5 $7.2 $7.9 $7.6 $29.2 $7.1 $7.8 $8.4 $7.9 $31.2
% Growth Y/Y -51.8% -6.3% 20.0% 12.5% 32.0% 40.0% 25.7% 10.0% 8.0% 6.0% 4.0% 6.9%
% Margin 22.7% 20.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
AOL INCOME STATEMENT SUMMARY 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
REVENUE
Subscriptions $6,755.0 $5,784.0 $873.0 $691.2 $635.0 $589.0 $2,788.3 $554.3 $511.9 $476.6 $444.8 $1,987.6
Advertising 1,338.0 1,886.0 549.0 522.0 540.0 620.0 2,231.0 544.6 571.6 601.9 692.0 2,410.1
Other 109.0 116.0 36.0 40.0 44.0 42.0 162.0 39.6 43.2 46.6 43.7 173.1
TOTAL REVENUE $8,202.0 $7,786.0 $1,458.0 $1,253.2 $1,219.0 $1,251.0 $5,181.3 $1,138.5 $1,126.7 $1,125.2 $1,180.4 $4,570.8
% Growth Y/Y -5.6% -5.1% -25.5% -38.2% -37.9% -31.9% -33.5% -21.9% -10.1% -7.7% -5.6% -11.8%
EBITDA
Subscriptions $1,065.0 $995.8 $270.5 $209.4 $140.8 $160.9 $781.5 $183.8 $152.4 $124.7 $122.2 $583.2
Advertising 725.2 973.0 288.0 272.0 279.2 310.4 1,149.6 284.2 294.1 308.7 341.1 1,228.1
Other 24.8 23.2 6.5 7.2 7.9 7.6 29.2 7.1 7.8 8.4 7.9 31.2
OPERATING EBITDA $1,815.0 $1,992.1 $565.0 $488.6 $427.9 $478.8 $1,960.4 $475.1 $454.3 $441.8 $471.2 $1,842.4
% Growth 7.6% 9.8% 32.0% -4.0% -26.3% 1.0% -1.6% -15.9% -7.0% 3.2% -1.6% -6.0%
% Margin 22.1% 25.6% 38.8% 39.0% 35.1% 38.3% 37.8% 41.7% 40.3% 39.3% 39.9% 40.3%
Merger & Restructuring Costs (10.0) (222.0) (23.0) (4.0) --- (98.0) (125.0) --- (40.0) --- (40.0) (80.0)
ADJUSTED EBITDA $1,805.0 $1,770.1 $542.0 $484.6 $427.9 $380.8 $1,835.4 $475.1 $414.3 $441.8 $431.2 $1,762.4
% Growth Y/Y 7.6% -1.9% 26.9% -1.9% -22.8% 29.1% 3.7% -12.3% -14.5% 3.2% 13.2% -4.0%
% Margin 22.0% 22.7% 37.2% 38.7% 35.1% 30.4% 35.4% 41.7% 36.8% 39.3% 36.5% 38.6%
Gain on Disposition of Assets $10.0 $771.0 $670.0 $(1.0) $(2.0) $16.0 $683.0 --- --- --- --- ---
Impairment of Goodwill and PPE (24.0) (13.0) (1.0) --- (1.0) --- (2.0) --- --- --- --- ---
UNADJUSTED EBITDA $1,791.0 $2,528.1 $1,211.0 $483.6 $424.9 $396.8 $2,516.4 $475.1 $414.3 $441.8 $431.2 $1,762.4
% Growth Y/Y 8.7% 41.2% 182.2% -2.1% -23.3% -62.2% -0.5% -60.8% -14.3% 4.0% 8.7% -30.0%
Depreciation (548.0) (501.0) (105.0) (104.0) (103.0) (96.0) (475.4) (95.0) (90.0) (90.0) (85.0) (475.4)
Amortization (167.0) (133.0) (22.0) (20.0) (27.0) (27.0) (97.5) (25.0) (25.0) (20.0) (20.0) (97.5)
OPERATING INCOME $1,076.0 $1,894.1 $1,084.0 $359.6 $294.9 $273.8 $2,012.4 $355.1 $299.3 $331.8 $326.2 $1,312.4
% Growth Y/Y 31.4% 76.0% 309.0% 9.3% -24.4% -69.9% 6.2% -67.2% -16.8% 12.5% 19.1% -34.8%
% Margin 13.1% 24.3% 74.3% 28.7% 24.2% 21.9% 38.8% 31.2% 26.6% 29.5% 27.6% 28.7%
144 April 07, 2008

Figure 168: AOL Annual Income Statement, 2005–11E ($ in millions)
Time Warner -- AOL

2005 2006 2007 2008 2009 2010 2011
A A E E E E E
12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11
AOL Income Statement

AOL Income Statement ($ Millions)
2005A 2006A 2007A 2008E 2009E 2010E 2011E
SUBSCRIPTION
SUBSCRIPTION REVENUE
U.S. $5,080.0 $4,152.0 $2,699.0 $1,987.6 $1,519.8 $1,268.9 $1,095.6
AOL Europe 1,675.0 1,632.0 89.3 --- --- --- ---
TOTAL SUBSCRIPTION REVENUE $6,755.0 $5,784.0 $2,788.3 $1,987.6 $1,519.8 $1,268.9 $1,095.6
% Growth Y/Y -12.4% -14.4% -51.8% -28.7% -23.5% -16.5% -13.7%
SUBSCRIPTION EBITDA
U.S. $819.5 $624.1 $756.1 $583.2 $432.1 $327.5 $228.8
AOL Europe 245.5 371.7 25.5 --- --- --- ---
TOTAL SUBSCRIPTION EBITDA $1,065.0 $995.8 $781.5 $583.2 $432.1 $327.5 $228.8
% Growth Y/Y 4.0% -6.5% -21.5% -25.4% -25.9% -24.2% -30.1%
% Margin 15.8% 17.2% 28.0% 29.3% 28.4% 25.8% 20.9%
ADVERTISING 2005A 2006A 2007E 2008E 2009E 2010E 2011E

ADVERTISING REVENUE
Display Advertising $627.0 $819.0 $919.0 $930.6 $1,047.0 $1,141.2 $1,232.5
Paid Search 452.0 591.0 657.0 712.1 788.7 859.4 929.8
Partner Sites 259.0 476.0 655.0 767.4 890.2 1,023.7 1,156.8
TOTAL ADVERTISING REVENUE $1,338.0 $1,886.0 $2,231.0 $2,410.1 $2,725.8 $3,024.2 $3,319.0
% Growth Y/Y 33.1% 41.0% 18.3% 8.0% 13.1% 10.9% 9.7%
ADVERTISING EBITDA
Display Advertising $261.1 $327.6 $413.6 $418.8 $471.1 $513.5 $554.6
Paid Search 406.8 541.1 605.1 655.9 730.3 798.3 866.5
Partner Sites 57.3 104.4 131.0 153.5 177.1 202.7 227.9
TOTAL ADVERTISING EBITDA $725.2 $973.0 $1,149.6 $1,228.1 $1,378.6 $1,514.6 $1,649.0
% Growth Y/Y 12.5% 34.2% 18.2% 6.8% 12.2% 9.9% 8.9%
% Margin 54.2% 51.6% 51.5% 51.0% 50.6% 50.1% 49.7%
OTHER 2005A 2006A 2007E 2008E 2009E 2010E 2011E

TOTAL OTHER REVENUE $109.0 $116.0 $162.0 $173.1 $181.8 $189.0 $194.7
% Growth Y/Y -48.1% 6.4% 39.7% 6.9% 5.0% 4.0% 3.0%
TOTAL OTHER EBITDA $24.8 $23.2 $29.2 $31.2 $32.7 $34.0 $35.0
% Growth Y/Y -51.8% -6.3% 25.7% 6.9% 5.0% 4.0% 3.0%
% Margin 22.7% 20.0% 18.0% 18.0% 18.0% 18.0% 18.0%
AOL INCOME STATEMENT SUMMARY 2005A 2006A 2007E 2008E 2009E 2010E 2011E
REVENUE
Subscriptions $6,755.0 $5,784.0 $2,788.3 $1,987.6 $1,519.8 $1,268.9 $1,095.6
Advertising 1,338.0 1,886.0 2,231.0 2,410.1 2,725.8 3,024.2 3,319.0
Other 109.0 116.0 162.0 173.1 181.8 189.0 194.7
TOTAL REVENUE $8,202.0 $7,786.0 $5,181.3 $4,570.8 $4,427.3 $4,482.2 $4,609.3
% Growth Y/Y -5.6% -5.1% -33.5% -11.8% -3.1% 1.2% 2.8%
EBITDA
Subscriptions $1,065.0 $995.8 $781.5 $583.2 $432.1 $327.5 $228.8
Advertising 725.2 973.0 1,149.6 1,228.1 1,378.6 1,514.6 1,649.0
Other 24.8 23.2 29.2 31.2 32.7 34.0 35.0
OPERATING EBITDA $1,815.0 $1,992.1 $1,960.4 $1,842.4 $1,843.4 $1,876.0 $1,912.9
% Growth 7.6% 9.8% -1.6% -6.0% 0.1% 1.8% 2.0%
% Margin 22.1% 25.6% 37.8% 40.3% 41.6% 41.9% 41.5%
Merger & Restructuring Costs (10.0) (222.0) (125.0) (80.0) (60.0) (40.0) (20.0)
ADJUSTED EBITDA $1,805.0 $1,770.1 $1,835.4 $1,762.4 $1,783.4 $1,836.0 $1,892.9
% Growth Y/Y 10.3% -1.9% 3.7% -4.0% 1.2% 3.0% 3.1%
% Margin 22.0% 22.7% 35.4% 38.6% 40.3% 41.0% 41.1%
Gain on Disposition of Assets $10.0 $771.0 $683.0 --- --- --- ---
Impairment of Goodwill and PPE (24.0) (13.0) (2.0) --- --- --- ---
UNADJUSTED EBITDA $1,791.0 $2,528.1 $2,516.4 $1,762.4 $1,783.4 $1,836.0 $1,892.9
% Growth Y/Y 8.7% 41.2% -0.5% -30.0% 1.2% 3.0% 3.1%
Depreciation (548.0) (501.0) (475.4) (475.4) (451.7) (429.1) (407.6)
Amortization (167.0) (133.0) (97.5) (97.5) (82.9) (70.5) (59.9)
OPERATING INCOME $1,076.0 $1,894.1 $1,943.4 $1,189.5 $1,248.8 $1,336.5 $1,425.4
% Growth Y/Y 31.4% 76.0% 2.6% -38.8% 5.0% 7.0% 6.7%
% Margin 13.1% 24.3% 37.5% 26.0% 28.2% 29.8% 30.9%
April 07, 2008 145

Important Disclosures:
Other Material Conflicts

Clear Channel Outdoor Holdings (CCO): Lehman Brothers Inc. is associated with specialist firm Van der Moolen who makes a market in Clear Channel Outdoor Holdings stock. At any given time, the
associated specialist may have "long" or "short" inventory position in the stock; and the associated specialist may be on the opposite side of orders executed on the Floor of the Exchange in the stock.
Walt Disney Co (DIS): Lehman Brothers Inc. is associated with specialist firm Van der Moolen who makes a market in Walt Disney Co. stock. At any given time, the associated specialist may have
"long" or "short" inventory position in the stock; and the associated specialist may be on the opposite side of orders executed on the Floor of the Exchange in the stock.
Yahoo! Inc (YHOO): Lehman Brothers is acting as financial advisor to Yahoo! Inc. in connection with its evaluation of alternatives.
Sector Coverage Universe
Below is the list of companies that constitute the sector coverage universe:
Alloy, Inc (ALOY) Amazon.com, Inc (AMZN)
Blue Nile (NILE) Dice Holdings Inc. (DHX)
eBay, Inc (EBAY) Expedia, Inc. (EXPE)
Google Inc. (GOOG) Greenfield Online (SRVY)
Harris Interactive (HPOL) IAC/InterActiveCorp (IACI)
Netflix Inc. (NFLX) Orbitz Worldwide Inc. (OWW)
TechTarget Inc. (TTGT) Yahoo! Inc (YHOO)
Mentioned Company Ticker Price (04-Apr-2008) Stock / Sector Rating

Alloy, Inc ALOY US$ 7.06 2-Equal weight / 2-Neutral
Amazon.com, Inc AMZN US$ 76.87 2-Equal weight / 2-Neutral
Blue Nile NILE US$ 49.41 2-Equal weight / 2-Neutral
CBS Corp. CBS US$ 22.29 2-Equal weight / 2-Neutral
Clear Channel Communications CCU US$ 28.90 2-Equal weight / 3-Negative
Clear Channel Outdoor Holdings CCO US$ 19.63 2-Equal weight / 3-Negative
Comcast Corp CMCSK US$ 19.98 2-Equal weight / 2-Neutral
Costco Wholesale Corp. COST US$ 66.45 2-Equal weight / 2-Neutral
Dice Holdings Inc. DHX US$ 9.04 2-Equal weight / 2-Neutral
eBay, Inc EBAY US$ 32.94 2-Equal weight / 2-Neutral
Expedia, Inc. EXPE US$ 24.81 2-Equal weight / 2-Neutral
Gannett Inc. GCI US$ 29.48 3-Underweight / 3-Negative
Google Inc. GOOG US$ 471.09 1-Overweight / 2-Neutral
Greenfield Online SRVY US$ 11.34 1-Overweight / 2-Neutral
Harris Interactive HPOL US$ 2.69 1-Overweight / 2-Neutral
IAC/InterActiveCorp IACI US$ 21.41 1-Overweight / 2-Neutral
Lamar Advertising Co. LAMR US$ 35.77 2-Equal weight / 3-Negative
Liberty Global, Inc. LBTYA US$ 35.14 1-Overweight / 2-Neutral
Netflix Inc. NFLX US$ 36.21 2-Equal weight / 2-Neutral
New York Times NYT US$ 19.29 3-Underweight / 3-Negative
News Corporation NWS US$ 19.78 1-Overweight / 2-Neutral
Orbitz Worldwide Inc. OWW US$ 8.05 1-Overweight / 2-Neutral
Target Corp TGT US$ 52.67 1-Overweight / 2-Neutral
TechTarget Inc. TTGT US$ 14.61 2-Equal weight / 2-Neutral
Time Warner TWX US$ 14.60 1-Overweight / 2-Neutral
Viacom Inc VIA US$ 40.45 2-Equal weight / 2-Neutral
Wal-Mart Stores WMT US$ 54.40 1-Overweight / 2-Neutral
Walt Disney Co DIS US$ 31.24 2-Equal weight / 2-Neutral
Yahoo! Inc YHOO US$ 28.36 RS-Rating Suspended / 2-Neutral
146 April 07, 2008

GLOBAL EQUITY RESEARCH
Lehman Brothers Inc. and its Foreign
FOR CURRENT IMPORTANT DISCLOSURES REGARDING COMPANIES THAT ARE
Affiliates involved in the Production of
THE SUBJECT OF THIS RESEARCH REPORT, PLEASE SEND A WRITTEN REQUEST TO: Equity Research
LEHMAN BROTHERS CONTROL ROOM
1271 AVENUE OF THE AMERICAS, 42ND FLOOR, NEW YORK, NY 10020 New York
OR Lehman Brothers Inc.
LBI, New York
REFER TO THE FIRM'S DISCLOSURE WEBSITE AT www.lehman.com/disclosures
745 Seventh Avenue
New York, NY 10019
Important Disclosures Continued: Member, FINRA
The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, a
portion of which is generated by investment banking activities. London
Lehman Brothers International (Europe)
LBIE, London
With the exception of analysts who publish for either LBI or a branch of LBI, research analysts may not be associated persons of the member and 25 Bank Street
therefore may not be subject to Rule 2711 restrictions on communications with a subject company, public appearances and trading securities held
London, E14 5LE, England
by a research analyst account.
Regulated by FSA
Tokyo
Guide to the Lehman Brothers Equity Research Rating System: Lehman Brothers Japan Inc
Our coverage analysts use a relative rating system in which they rate stocks as 1-Overweight, 2-Equal weight or 3-Underweight (see definitions LBJ, Tokyo
below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry sector (“the sector Roppongi Hills Mori Tower, 31st Floor
coverage universe”). To see a list of companies that comprise a particular sector coverage universe, please go to www.lehman.com/disclosures. 6-10-1 Roppongi
In addition to the stock rating, we provide sector views which rate the outlook for the sector coverage universe as 1-Positive, 2-Neutral or 3- Minato-ku, Tokyo 106-6131, Japan
Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors Regulated by FSA
should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone.
Hong Kong
Stock Ratings: Lehman Brothers Asia Limited, Hong
1-Overweight - The stock is expected to outperform the unweighted expected total return of the sector coverage universe over a 12-month Kong
investment horizon. LBAL, Hong Kong
2-Equal weight - The stock is expected to perform in line with the unweighted expected total return of the sector coverage universe over a 12- Two International Finance Centre
month investment horizon. 8 Finance Street, 26th Floor
3-Underweight - The stock is expected to underperform the unweighted expected total return of the sector coverage universe over a 12-month Central, Hong Kong
investment horizon. Regulated by SFC
RS-Rating Suspended - The rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in Seoul
certain circumstances including when Lehman Brothers is acting in an advisory capacity in a merger or strategic transaction involving the company. Lehman Brothers International (Europe)
Sector View: LBIE, Seoul
Hanwha Building, 12th Floor
1-Positive - sector coverage universe fundamentals/valuations are improving.
110, Sokong-dong Chung-Ku
2-Neutral - sector coverage universe fundamentals/valuations are steady, neither improving nor deteriorating. Seoul 100-755, Korea
3-Negative - sector coverage universe fundamentals/valuations are deteriorating. Regulated by FSC
Taipei
Lehman Brothers Securities Taiwan
Limited
LBSTL, Taiwan
This material has been prepared and/or issued by Lehman Brothers Inc., member SIPC, and/or one of its affiliates (“Lehman Brothers”) and has been approved by Cathay Financial Center 12F
Lehman Brothers International (Europe), authorized and regulated by the Financial Services Authority, in connection with its distribution in the European Economic 7 Sungren Road - Shin-Yi District
Area. This material is distributed in Japan by Lehman Brothers Japan Inc., and in Hong Kong by Lehman Brothers Asia Limited. This material is distributed in Taipei, Taiwan
Australia by Lehman Brothers Australia Securities Pty Limited, and in Singapore by Lehman Brothers Singapore Pte Ltd. Where this material is distributed by Lehman
Regulated by FSC
Brothers Singapore Pte Ltd, please note that it is intended for general circulation only and the recommendations contained herein does not take into account the
specific investment objectives, financial situation or particular needs of any particular person. An investor should consult his Lehman Brothers’ representative Mumbai
regarding the suitability of the product and take into account his specific investment objectives, financial situation or particular needs before he makes a Lehman Brothers Inc., India Branch
commitment to purchase the investment product. This material is distributed in Korea by Lehman Brothers International (Europe) Seoul Branch, and in Taiwan by LBI, India
Lehman Brothers Securities Taiwan Limited. Where this material is distributed by Lehman Brothers Securities Taiwan Limited, please note that recommendations
Winchester, Off High Street, 9th floor
expressed herein are for reference only. Investors should carefully evaluate the investment risks and are reminded that they are solely responsible for their
investment decisions. This document is for information purposes only and it should not be regarded as an offer to sell or as a solicitation of an offer to buy the
Hiranandani Business Park
securities or other instruments mentioned in it. No part of this document may be reproduced in any manner without the written permission of Lehman Brothers. With Powai, Mumbai 400 076, India
the exception of disclosures relating to Lehman Brothers, this research report is based on current public information that Lehman Brothers considers reliable, but we Mumbai
make no representation that it is accurate or complete, and it should not be relied on as such. In the case of any disclosure to the effect that Lehman Brothers Inc. or
Lehman Brothers Securities Private Limited
its affiliates beneficially own 1% or more of any class of common equity securities of the subject company, the computation of beneficial ownership of securities is
LBSPL, India
based upon the methodology used to compute ownership under Section 13(d) of the United States' Securities Exchange Act of 1934. In the case of any disclosure to
the effect that Lehman Brothers Inc. and/or its affiliates hold a short position of at least 1% of the outstanding share capital of a particular company, such disclosure Ceejay House, 11th Level, Plot F,
relates solely to the ordinary share capital of the company. Accordingly, while such calculation represents Lehman Brothers’ holdings net of any long position in the Shivsagar Estate, Dr. Annie Besant Road
ordinary share capital of the company, such calculation excludes any rights or obligations that Lehman Brothers may otherwise have, or which may accrue in the Worli, Mumbai 400018, India
future, with respect to such ordinary share capital. Similarly such calculation does not include any shares held or owned by Lehman Brothers where such shares are Regulated by SEBI
held under a wider agreement or arrangement (be it with a client or a counterparty) concerning the shares of such company (e.g. prime broking and/or stock
lending activity). Any such disclosure represents the position of Lehman Brothers as of the last business day of the calendar month preceding the date of this report. Sydney
This material is provided with the understanding that Lehman Brothers is not acting in a fiduciary capacity. Opinions expressed herein reflect the opinion of Lehman Lehman Brothers Australia Securities Pty
Brothers and are subject to change without notice. The products mentioned in this document may not be eligible for sale in some states or countries, and they may Limited
not be suitable for all types of investors. If an investor has any doubts about product suitability, he should consult his Lehman Brothers representative. The value of LBAUL, Sydney
and the income produced by products may fluctuate, so that an investor may get back less than he invested. Value and income may be adversely affected by Level 33, 264 George Street,
exchange rates, interest rates, or other factors. Past performance is not necessarily indicative of future results. If a product is income producing, part of the capital Sydney NSW 2000, Australia
invested may be used to pay that income. © 2008 Lehman Brothers. All rights reserved. Additional information is available on request. Please contact a Lehman Regulated by ASIC
Brothers entity in your home jurisdiction.
Lehman Brothers policy for managing conflicts of interest in connection with investment research is available at www.lehman.com/researchconflictspolicy. Complete
disclosure information regarding companies covered by Lehman Brothers Equity Research, including ratings, earnings per share forecasts and price targets contained
in reports covering U.S. companies is available at www.lehman.com/disclosures.
EUS08-0139

Internet Data Book, April 2008

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Internet Data Book, April 2008

Uploaded by

Copyright:

Available Formats

INTERNET & MEDIA GLOBAL EQUITY RESEARCH

Internet NORTH AMERICA

We highlight the following charts on pages:

13 Cross-Media and Cross-Retail Valuation Comps

Introduction to the Lehman Brothers Internet Data Book .............................................. 7

Figure 1: Coverage Universe Comparative Valuation – Large Cap......................... 10

2 April 07, 2008

Figure 31: International Broadband Penetration – Top 20 Countries ....................... 32

April 07, 2008 3

Figure 73: U.S. Department of Commerce E-Commerce Data, by Quarter, '00–'07 .. 61

4 April 07, 2008

Figure 115: Amazon Snapshot......................................................................... 94

April 07, 2008 5

Figure 157: TechTarget Snapshot ................................................................... 134

6 April 07, 2008

Introduction to the Lehman Brothers Internet Data Book

1. Introduction includes Internet and cross-industry comparative valuation charts in addition

13 Cross-Media and Cross-Retail Valuation Comps

April 07, 2008 7

The ratings within our Internet coverage universe are:

1-Overweight: Google, IAC, Greenfield Online, Orbitz, Harris Interactive

Rating Suspended: Yahoo! *

8 April 07, 2008

April 07, 2008 9

Figure 1: Coverage Universe Comparative Valuation – Large Cap

Price as of 4/7/2008 $465.70 $27.82 $31.76 $77.37 $21.39 $25.13

Market Capitalization $147,259 $38,799 $43,450 $33,037 $262,545 $6,413 $8,053

EARNINGS PER SHARE (EPS) 1,2

P/E 2007 29.9x 36.6x 20.8x 58.6x 36.4x 14.7x 20.6x

FREE CASH FLOW (FCF)

FCF/Share 2007 $10.67 $0.96 $1.60 $2.77 $1.43 $1.95

Price/FCF 2007 43.7x 29.0x 19.9x 27.9x 30.1x 15.0x 12.9x

EV/EBITDA 2007 19.1x 14.0x 13.0x 28.5x 18.6x 5.8x 11.3x

10 April 07, 2008

Figure 2: Coverage Universe Comparative Valuation – Small Cap

EARNINGS PER SHARE (EPS) 1,2, 3, 4

P/E 2007 11.7x 35.8x 40.2x 18.9x 44.1x 23.6x 17.7x NA

FREE CASH FLOW (FCF)

FCF/Share 2007 $0.58 $0.69 $2.17 $0.85 $0.39 $0.45 $0.40 NA

Price/FCF 2007 13.2x 52.9x 23.3x 10.4x 38.9x 25.2x 7.0x NA

1) EPS for NFLX is fully-taxed

Source: Company reports, Lehman Brothers estimates

April 07, 2008 11

Figure 3: Overall Internet Industry Comparative Valuation

Source: FactSet, company reports, Lehman Brothers estimates

12 April 07, 2008

Figure 4: Cross-Media Comparative Valuation

*Covered by Lehman Brothers Entertainment Analyst Anthony DiClemente.

Figure 5: Retail and Internet Retail Comparative Valuation

April 07, 2008 13

Revenue EPS EBITDA

Source: Reuters, company reports, Lehman Brothers estimates

14 April 07, 2008

Figure 7: Internet Coverage Universe, Year-to-Date Stock Performance, 2008

IAC/InterActiveCorp $21.39 $6,413 3% -21%

Total Universe Average 3% -11%

NASDAQ 2,361.40 4% -11%

Figure 8: Historical Annual Stock Performance

April 07, 2008 15

Figure 9: Stock Performance Seasonality – Large Cap

S&P 500 Average

16 April 07, 2008