1. ad:tech 2009
Feed Your Brain – An Update on the
Digital Economy
November 2009
Brian J. Pitz
Analyst
+1 212 713 9310
Brian.Pitz@ubs.com
This report has been prepared by UBS Securities LLC.
Brian P. Fitzgerald Analyst Certification and Required Disclosures Begin on Page 46
Analyst
+1 212 713 2851 UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be
Brian.Fitzgerald@ubs.com aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should
consider this report as only a single factor in making their investment decision.
Kaizad Gotla
Associate Analyst
+1 212 713 2603
Kaizad.Gotla@ubs.com

2. Table of Contents
1. General Global Internet User Snapshot Pg 2
2. Broadband / PC Penetration Driving Internet Growth Pg 6
3. Online Advertising Update Pg 15
4. Mobile Update Pg 23
5. A Quick Update on eCommerce & Online Advertising Pg 33
6. Appendix Pg 40
1

3. General Global Internet User Snapshot
2

4. Internet User Growth – Plenty of Global Runway Remaining…
♦ We expect Internet penetration (desktop and mobile) to
remain a growth driver for the industry
Worldwide Internet Adoption (% of Total Population)
70%
62%
60% 59%
54% 56%
50%
46%
42%
40%
36%
30% 31%
24% 22%
20% 17% 18% 17%
14% 15%
12% 12%
10% 11%
7% 8% 10%
7% 9%
3% 5% 3% 4% 5%
2% 2%
0% 0% 1% 1%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Developed World Developing World Total
Source: UBS, International Telecommunication Union 3

5. Internet User Growth – Plenty of Global Runway Remaining…
♦ Internet Population Penetration across the Globe…
Source: UBS, Wikipedia 4

6. Global Internet Users
Global Internet User Growth Forecasts: 2005-2010E
05-10E
2005 2006 2007 2008 2009 2010E CAGR
Total Internet Users (MM) 1,039 1,148 1,266 1,432 1,669 1,835 12%
North America 241 244 248 252 256 260 2%
Europe 271 304 334 367 402 439 10%
Asia/Pacific (including China, Japan 381 423 471 554 671 750 14%
Rest of World 97 110 126 144 164 188 14%
Latin America 50 67 86 115 176 198 32%
2005 2006E 2007E 2008E 2009E 2010E
Total Internet Users Growth (Y/Y) 15% 11% 10% 13% 17% 10%
North America 8% 2% 2% 2% 2% 2%
Europe 15% 12% 10% 10% 9% 9%
Asia/Pacific (including China, Japan 24% 11% 11% 17% 50% 12%
Rest of World 12% 14% 14% 14% 14% 14%
Latin America 6% 35% 28% 33% 54% 12%
2005 2006E 2007E 2008E 2009E 2010E
Population (MM) 7,569 7,655 7,746 7,837 7,929 8,022
North America 321 324 327 330 333 336
Europe 585 586 586 587 587 588
Asia/Pacific (including China, Japan 4,381 4,422 4,467 4,511 4,556 4,601
Rest of World 1,841 1,877 1,913 1,950 1,988 2,027
Latin America 440 447 453 459 465 472
2005 2006E 2007E 2008E 2009E 2010E
Internet User Penetration 14% 15% 16% 18% 21% 23%
North America 75% 76% 76% 77% 77% 78%
Europe 46% 52% 57% 63% 68% 75%
Asia/Pacific (including China, Japan 9% 10% 11% 12% 18% 16%
Rest of World 5% 6% 7% 7% 8% 9%
Latin America 11% 15% 19% 25% 38% 42%
2005 2006E 2007E 2008E 2009E 2010E
Share of Global Internet Users
North America 23% 21% 20% 18% 15% 14%
Europe 26% 26% 26% 26% 24% 24%
Asia/Pacific (including China, Japan 37% 37% 37% 39% 40% 41%
Rest of World 9% 10% 10% 10% 10% 10%
Latin America 5% 6% 7% 8% 11% 11%
Sources: UBS Investment Research; wikipedia; CNNIC; CIA Factbook; Computer Industry Almanac
5

7. Broadband / PC Penetration Driving Global Internet Growth
6

8. U2: 10 Million Streams across 188 Countries…
7

9. Search Becoming Even More Central to the User…
♦ Within the sea of information, users will need help
finding information that’s important to them
Source: Cisco
8

10. GDP Per Capita ⇡≈ Broadband / PC Adoption ⇡
Increasing GDP per capita leads to higher broadband penetration rates, which we view as a key indicator of
PC adoption (both drivers of Internet growth). We note significant correlation between GDP per capita
and Broadband Penetration rates in our sample, with an R2 of nearly 64%. While the R2 increases to 76%
when South Korea is excluded.
100.0%
90.0% South Korea
Hong Kong
80.0% 2
R = 0.6372
Broadband Penetration
Taiwan
70.0%
Singapore
Australia
Canada
60.0%
Japan
Western Europe
United States
50.0%
New Zealand
40.0%
30.0%
Chile
Argentina
20.0% China Malaysia
Mexico Venezuela
Peru Eastern Europe
10.0% Brazil
Thailand
India
Philipines
0.0%
$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000
GDP Per Capita
Source: UBS estimates, IMF, U.S. Census Bureau, IDC
9

11. Broadband – An Indicator of PC-based Internet Growth
We view broadband penetration as a more useful indicator of PC Shipments (and therefore broadband
/ PC-based Internet growth) in emerging markets, given penetration is still low and it’s all about
Internet access. Our sample of countries indicates a correlation between broadband penetration and PC
shipments per capita, with an R2 of nearly 60%, and rising to 72% when South Korea is excluded.
25.0%
R2 = 0.5974
United States
20.0% Singapore
Australia
PC Shipments Per Capita
Canada
New Zealand
15.0% Western Europe
Hong Kong
Taiwan
Japan
10.0%
Chile South Korea
Malaysia
Eastern Europe
Brazil
5.0% Argentina
Venezuela
Mexico
Thailand China
Philipines Peru
India
0.0%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%
Broadband Penetration
Source: UBS estimates, IMF, U.S. Census Bureau, IDC
10

12. Broadband Penetration Driving Secular Growth
500,000
450,000 56,772
400,000
39,264
47,862
95,399 Broadband reaching
350,000
300,000 30,703 78,781
87,432
70% of households
250,000 23,309 68,421
FTTH within more mature
58,371
200,000
150,000 10,117
15,755
46,310 323,513 Cable
markets (its been that
293,734
100,000 4,178 36,804
181,591
227,056
261,685
DSL
way in Korea for 5+
29,318 138,090
50,000
61,293
97,455 years…)
0
2003 2004 2005 2006 2007 2008 2009 2010
80.0%
69.9% 68.8%
…while emerging 70.0%
2007 2010
markets driving 60.0% 53.9% 56.1%
global growth of 50.0%
broadband and 40.0% 32.4%
26.9%
increased Internet 30.0% 24.6%
16.7%
usage 20.0% 15.1% 13.8%
10.0%
0.0%
Asia Pacific Europe N. America L. America EMEA
Source: UBS estimates and company documents 11

13. Consumers Continue Shifting Time to the Internet…
We all know by now that media consumption on the Internet is taking
share from offline, particularly newspapers and magazines…
…and we believe this trend will continue, if not accelerate, as waves
of younger tech-savvy generations displace older generations…
Average Time Spent with Media by US Consumers (hours per person per day)
2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E 07-'12 CAGR
Television 4.17 4.22 4.25 4.37 4.42 4.42 4.39 4.38 4.38 4.38 4.37 -0.2%
Broadcast & Satellite Radio 2.26 2.29 2.25 2.21 2.17 2.14 2.12 2.08 2.06 2.01 2.00 -1.4%
Consumer Internet 0.39 0.42 0.45 0.47 0.50 0.52 0.54 0.56 0.59 0.61 0.64 4.5%
Recorded Music 0.56 0.53 0.55 0.54 0.51 0.48 0.47 0.48 0.50 0.53 0.55 2.5%
Daily Newspapers 0.52 0.53 0.53 0.51 0.49 0.47 0.45 0.44 0.42 0.42 0.41 -2.6%
Out of Home 0.33 0.34 0.34 0.35 0.36 0.37 0.37 0.37 0.37 0.38 0.38 0.7%
Consumer Magazines 0.33 0.33 0.34 0.34 0.34 0.34 0.35 0.34 0.34 0.33 0.33 -0.6%
Consumer Books 0.29 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.29 -0.6%
Video Games 0.19 0.21 0.22 0.20 0.21 0.23 0.28 0.31 0.34 0.36 0.38 10.0%
Home Video 0.15 0.16 0.18 0.17 0.17 0.17 0.16 0.16 0.16 0.16 0.16 -0.7%
Mobile 0.01 0.01 0.02 0.02 0.03 0.04 0.05 0.07 0.08 0.09 0.10 19.1%
Yellow Pages 0.03 0.03 0.03 0.03 0.03 0.04 0.04 0.03 0.03 0.03 0.03 -4.2%
Box Office 0.04 0.04 0.04 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.0%
In-Flight Entertainment 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0%
Total 9.3 9.4 9.5 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.7 0.3%
Source: Veronis Suhler Stevenson, October 2008
12

14. Our Time Online:
Social Connects / Entertainment & Leisure Increasing…
Share of Online Time (Global) ~ 2009
All Other
36%
Communications
21%
Work, Business &
Education
6%
Social Connections
14%
Entertainment &
Leisure
17%
Shopping & Travel
6%
Definitions
Social Connections: Social Netw orking Sites, Blogs, Discussion/Chat, Community Sites
Shopping & Travel: Retail, Travel, Auctions, Automotive & Real Estate
Entertainm ent & Leisure: Entertainment, including Multimedia & Streaming, Online Games and Gaming, Sports, Hobbies & Lifestyle
Work, Business & Education: New s & Information, Business & Finance, Education, Career Services & Development, Government
comScore Oct '09
13

15. Some Facebook Stats from Oct 2009 – Web 2.0
1) Over 1 MILLION developers on the platform;
2) 250+ applications have over 1 MILLION users each;
3) 45MM status updates daily from 30MM users;
4) Users spend 8 Billion minutes daily on the site;
5) 2 Billion pieces of content shared on the service
(with 5 Billion API calls on a typical day);
6) 2 Billion photos uploaded a month (20 Billion in total);
7) During peaks – 1.2 MILLION photos a second are served;
8) 1.2 MILLION users for every engineer;
9) In a little over a year, growth from 100MM to 300MM daily
active users
10) The fastest growing group is over 35 years old in the U.S.
Source: Company reports
14

16. Online Advertising Update
15

17. 11% Growth in US Online Ad Spend as Advertisers Follow Traffic
• Disconnect between ad dollars spent online and time spent online
• Online ads are still just 9% of total advertising
• Advertising dollars should follow audience (20-25% of media time spent online)
• US Online ads should grow at an 11% compound rate from 2009 through 2011
• 1% ad budget shift online equals $2 billion more going to Internet
US Online Advertising
$30,000 12%
$25,000 10%
$20,000 8%
$15,000 6%
$10,000 4%
$5,000 2%
$0 0%
2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E
Ad Spend ($ MM) % of Total Adv ertising
Source: UBS, IAB/PwC
16

18. Global Internet Advertising +13% ’09-11 CAGR vs. 5% for Industry
Global Advertising Expenditure
100% Internet
Outdoor
80%
Cinema
Newspapers
60%
Magazine
Radio
40%
Television
20%
0%
1997 1999 2001 2003 2005 2007 2009E 2011E
Source: UBS Investment Research
17

19. UBS Global Advertising Model
Global Advertising Expenditure (USD Millions) CAGR (%)
2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E '01-'11E 09-'11E
Global Market
Share of Advertisement Expenditure
Television 37.9% 39.0% 39.3% 40.3% 39.5% 39.4% 39.0% 39.1% 39.3% 39.6% 39.5%
Radio 8.6% 8.9% 8.7% 8.4% 8.2% 7.9% 7.6% 7.4% 7.2% 7.1% 6.9%
Magazine 12.7% 12.2% 11.9% 11.4% 11.4% 11.0% 10.8% 10.6% 10.1% 9.9% 9.6%
Newspapers 32.2% 31.5% 31.0% 29.8% 28.7% 27.6% 26.2% 24.7% 23.5% 22.7% 22.0%
Cinema 0.4% 0.4% 0.4% 0.4% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Outdoor 5.5% 5.5% 5.4% 5.4% 5.8% 5.9% 6.1% 6.2% 6.2% 6.2% 6.2%
Internet 2.7% 2.5% 3.3% 4.2% 5.9% 7.8% 9.8% 11.5% 13.2% 14.0% 15.2%
Total market 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Advertising Expenditure
Television 134,273 137,877 143,637 159,252 166,498 177,234 184,216 183,046 166,163 173,916 185,439 3.3% 5.6%
Radio 30,530 31,452 31,896 33,179 34,453 35,475 35,948 34,727 30,339 31,107 32,418 0.6% 3.4%
Magazine 44,853 43,056 43,517 45,161 47,951 49,622 51,080 49,376 42,831 43,446 45,155 0.1% 2.7%
Newspapers 114,029 111,148 113,178 117,886 121,170 124,083 123,704 115,664 99,302 99,632 103,378 -1.0% 2.0%
Cinema 1,447 1,447 1,542 1,760 1,929 2,026 2,247 2,339 2,217 2,334 2,507 5.7% 6.3%
Outdoor 19,493 19,379 19,880 21,173 24,634 26,466 28,615 28,859 26,362 27,157 29,187 4.1% 5.2%
Internet 9,444 8,948 11,964 16,586 25,027 34,999 46,362 53,980 55,693 61,624 71,328 22.4% 13.2%
Total market 354,068 353,306 365,615 394,996 421,662 449,904 472,172 467,991 422,907 439,215 469,411 2.9% 5.4%
Advertising Growth
Television -5.1% 2.7% 4.2% 10.9% 4.5% 6.4% 3.9% -0.6% -9.2% 4.7% 6.6%
Radio -5.8% 3.0% 1.4% 4.0% 3.8% 3.0% 1.3% -3.4% -12.6% 2.5% 4.2%
Magazine -6.4% -4.0% 1.1% 3.8% 6.2% 3.5% 2.9% -3.3% -13.3% 1.4% 3.9%
Newspapers -6.1% -2.5% 1.8% 4.2% 2.8% 2.4% -0.3% -6.5% -14.1% 0.3% 3.8%
Cinema 2.5% 0.0% 6.6% 14.1% 9.6% 5.0% 11.0% 4.1% -5.2% 5.3% 7.4%
Outdoor 0.3% -0.6% 2.6% 6.5% 16.3% 7.4% 8.1% 0.9% -8.7% 3.0% 7.5%
Internet -8.2% -5.3% 33.7% 38.6% 50.9% 39.8% 32.5% 16.4% 3.2% 10.6% 15.7%
All Media -5.5% -0.2% 3.5% 8.0% 6.8% 6.7% 4.9% -0.9% -9.6% 3.9% 6.9%
18

20. Online Advertising by Vertical…
Pharma & Other, 7%
Healthcare, 4% Retail, 22%
Entertainment, 4%
CPG, 6%
Media, 5%
Leisure Travel, 6%
Financial Services,
13%
Telecom, 9%
Computing, 12%
Automotive, 12%
Source: UBS Investment Research
19

21. US Online Ad Model: The Details
(US$ in Millions) Q108A Q208A Q308A Q408A Q109A Q209A Q309E Q409E 2007 2008 2009E 2010E 2011E 09-11 CAGR
Search 2,537 2,528 2,627 2,806 2,570 2,553 2,787 3,084 8,695 10,498 10,994 12,337 14,104
growth Y/Y 23.2% 24.1% 25.1% 12.4% 1.3% 1.0% 6.1% 9.9% 28.8% 20.7% 4.7% 12.2% 14.3% 13.3%
% of Total Spend 44.0% 44.0% 45.0% 46.0% 47.0% 47.0% 47.5% 48.0% 41.0% 44.8% 47.4% 49.0% 49.8%
Classified (& auctions) 807 804 817 793 601 598 616 643 3,393 3,222 2,458 2,392 2,407
growth Y/Y -3.1% -7.1% -5.1% -4.7% -25.5% -25.7% -24.6% -19.0% 11.3% -5.0% -23.7% -2.7% 0.6% -1.0%
% of Total Spend 14.0% 14.0% 14.0% 13.0% 11.0% 11.0% 10.5% 10.0% 16.0% 13.7% 10.6% 9.5% 8.5%
Sponsorship 115 115 117 61 109 109 117 129 636 408 464 504 595
growth Y/Y -21.5% -24.8% -26.1% -65.8% -5.2% -5.4% 0.5% 110.7% 22.6% -35.9% 13.7% 8.6% 18.1% 13.2%
% of Total Spend 2.0% 2.0% 2.0% 1.0% 2.0% 2.0% 2.0% 2.0% 3.0% 1.7% 2.0% 2.0% 2.1%
Banner 1,211 1,206 1,197 1,251 1,105 1,168 1,232 1,336 4,714 4,864 4,841 5,262 5,947
growth Y/Y 23.8% 7.7% 8.2% -17.1% -8.8% -3.2% 3.0% 6.9% 26.9% 3.2% -0.5% 8.7% 13.0% 10.8%
% of Total Spend 21.0% 21.0% 20.5% 20.5% 20.2% 21.5% 21.0% 20.8% 22.2% 20.7% 20.9% 20.9% 21.0%
Rich Media 404 402 409 427 383 380 411 450 1,696 1,641 1,624 1,813 2,096
growth Y/Y 17.8% 12.8% -11.4% -20.2% -5.2% -5.4% 0.5% 5.3% 43.5% -3.2% -1.1% 11.7% 15.6% 13.6%
% of Total Spend 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 8.0% 7.0% 7.0% 7.2% 7.4%
Video 173 172 175 171 219 217 235 257 424 691 928 1,133 1,359
growth Y/Y 253.5% 238.3% -14.7% 43.6% 26.5% 26.1% 34.0% 50.5% 63.0% 34.2% 22.1% 20.0% 21.1%
% of Total Spend 3.0% 3.0% 3.0% 2.8% 4.0% 4.0% 4.0% 4.0% 2.0% 2.9% 4.0% 4.5% 4.8%
Email 115 115 117 122 82 76 106 116 424 469 379 403 453
growth Y/Y 17.7% 12.8% 10.9% 2.6% -28.9% -33.8% -9.5% -5.2% 25.6% 10.6% -19.1% 6.2% 12.5% 9.3%
% of Total Spend 2.0% 2.0% 2.0% 2.0% 1.5% 1.4% 1.8% 1.8% 2.0% 2.0% 1.6% 1.6% 1.6%
Referrals/Lead Generation 404 402 409 427 399 331 364 411 1,484 1,641 1,506 1,334 1,359
growth Y/Y 3.2% -1.3% 51.5% 2.6% -1.1% -17.6% -11.0% -3.7% 11.9% 10.6% -8.3% -11.4% 1.9% -5.0%
% of Total Spend 7.0% 7.0% 7.0% 7.0% 7.3% 6.1% 6.2% 6.4% 7.0% 7.0% 6.5% 5.3% 4.8%
Total Online Spend ($MM) 5,765 5,745 5,838 6,100 5,468 5,432 5,868 6,425 21,206 23,448 23,193 25,177 28,321
growth Y/Y 17.7% 12.8% 10.8% 2.6% -5.2% -5.4% 0.5% 5.3% 25.6% 10.6% -1.1% 8.6% 12.5% 10.5%
Source: UBS Investment Research
20

22. Search, Rich Media, Video ⇡ / Classifieds, Sponsorships ⇣
U.S. Online Advertising Composition
$B Email
100% Sponsorship
Referrals/Lead Generation
Video
Rich Media
80%
Classified (& auctions)
Banner
60%
40%
Search
20%
0%
2007 2008 2009E 2010E 2011E
Source: UBS Investment Research; IAB
21

23. Premium CPMs Going to Vertical Inventory…
Source: Adify Q2 / 2009; Over 200 premium vertical ad networks are growing on the Adify Network Builder Platform. Since Adify serves advertising directly to the
12,000 sites in those networks, Adify can track and analyze CPM trends across verticals. The data in this report reflects all campaigns that have been served by Adify’s
IAB ad measurement audited and certified technology since October 1, 2008. The data is analyzed quarterly as part of the Adify Vertical Gauge (AVG) report.
22

24. Mobile Internet Update
23

25. The End of the “Walled Garden”…
— Over 2B downloads from the 85,000 apps in Apple’s store to
50MM+ iPhone/iPod Touch customers; 125K developers in the iPhone
program
— Carriers/device makers developing their own platforms
— Subscribers purchase service based on available apps (voice just one
on the list), carriers risk disintermediation
Downloads from the Apple App Store
2B on 9/28/09!!!
2000
1750
1500
Dow nloads (M)
1250
1000
750
500
250
0
10/11/08
11/11/08
12/11/08
7/11/08
8/11/08
9/11/08
1/11/09
2/11/09
3/11/09
4/11/09
5/11/09
6/11/09
7/11/09
8/11/09
9/11/09
Source: UBS estimates and company documents 24

26. Phones vs. PCs…
♦ Among various demographics, mobile phone penetration is equal to or
greater than Internet penetration
♦ Certainly, in emerging markets, the first experience with the Internet will
be over the mobile phone…
87%
18-24 year olds
83% ("Gen Y")
Internet
Penetration 65%
65% 25-44 year olds
("Gen X")
45-54 year olds
("Young Boomers")
85%
Mobile
84% 55-64 year olds
Phone
84% ("Old Boomers")
Penetration
79%
Source: InsightExpress Digital Consumer Portrait, Jun 2009
25

27. Text Nation…
83%
Texting 65%
52%
33%
19%
23%
Internet 12%
4%
20% Weekly Usage of Mobile
21%
Video 8% 18-24 year olds
3%
14%
25-44 year olds
14%
Applications 5% 45-54 year olds
4%
55-64 year olds
7%
10%
Games 1%
1%
Source: InsightExpress Digital Consumer Portrait, Jun 2009
26

28. Mobile Internet Growth (with 4.1B TXT messages / day)
Source: CTIA’s Semi-Annual Wireless Industry Survey 2009
27

29. Consumerization of Digital Media Content
♦ We believe the next major milestone in the evolution of the mobile communications industry will
be based on the extension of mobility to consumers’ digital media.
♦ This has been occurring, which has allowed more mobile device manufacturers the opportunity to
drive higher levels of differentiation in their devices.
♦ Differentiation has largely been in terms of form factor, aesthetics, applications, and man-machine
interfaces, which both impact the device’s ease of use and perceived utility.
♦ RIM & Apple have raised the bar in the industry and driven differentiation, but competition is
increasing
♦ Operators are also getting into the content game and may compete against handset vendors
Source: UBS estimates
28

30. Global Handset Market – Phases of Differentiation
♦ Given the maturity of the mobile
device market, the current debate
is whether the market has
commoditized.
♦ Devices predominantly addressing
industry secular growth (now
primarily emerging markets) have
become increasingly
commoditized, with price now the
key differentiator.
♦ We believe the replacement
segment of the market
experiences periods of different
levels of differentiation, and, in
turn, varying degrees of 1990 1995 2000 2007 2010
commoditization.
♦ Differentiation comes in three
areas:
1) Industrial design
2) Technology
3) User experience (ease of use)
♦ New applications such as music,
imaging, and navigation have
helped to increase some
differentiation in the market.
29

31. Two Areas of Handset Growth
Despite decelerating handset unit growth and weakness in 2009,
two segments are still expected to see growth:
400.0
3G handsets
350.0
CAGR of 62%
♦ 3G: expected CAGR of 62% driven 300.0
by upgrade sales in developed 250.0
200.0
markets. Qualcomm will benefit 150.0
from WCDMA chipset sales and 100.0
royalty income. 50.0
0.0
2005 2006 2007 2008 2009E
200.0
180.0 Converged devices
♦ Converged Devices: expected 160.0 CAGR of 36%
CAGR of 36% driven by mobile 140.0
120.0
applications. This is a great 100.0
opportunity for RIMM given the 80.0
60.0
company’s unique operating model 40.0
and strong brand in the converged 20.0
0.0
devices market. 2005 2006 2007 2008E 2009E
Sources: Company data, UBS estimates
30

32. Will Action / Acquisition (CPA) become the New Metrics
vs. Reach, Impressions or Clicks (CPM/CPC)???
Time Horizon for Shifting from Impression-Based to Impact-Based
Adverting
1 Year, 5% 93% say the
Never, 7% shift will
happen in
the next 3 to
Shift Already
Started, 13% 5 years
3 Years, 48%
5 Years, 33%
Source: Velti / IBM advertising industry executive interviews and panel discussions
31

33. Mobile Banner Advertising – Mobile vs. Non-Mobile Categories
Source: comScore Ad Metrix Mobile; Data: 3 month average ending June 2009 (US)
32

34. A Quick Update on eCommerce…
33

35. eCommerce still an under-penetrated retail channel
♦ We expect eCommerce penetration of total retail to continue,
reaching 4-5% by 2011-2013. We conservatively expect this number
to reach at least 15%+ over time
♦ As a comparison, catalog retail is currently roughly 4% of US retail,
though the online channel has lower barriers to entry and offers a
virtually unlimited selection and on-demand access
F2008 F2009
Q1 08A Q2 08A Q3 08A Q4 08A Q1 09A Q2 09A Q3 09E Q4 09E F2007A F2008A F2009E F2010E
Total US Retail Sales $1,012,727 $1,015,423 $998,689 $925,889 $909,867 $906,016 $985,706 $960,147 $3,997,706 $3,952,728 $3,761,736 $3,863,303
% Y/Y Growth 2.5% 2.3% 0.1% -9.1% -10.2% -10.8% -1.3% 3.7% 3.1% -1.1% -4.8% 2.7%
Total US Retail eCommerce Sales $33,543 $33,889 $33,494 $31,482 $31,708 $32,404 $34,931 $34,471 $126,224 $132,408 $133,515 $145,212
% Y/Y Growth 12.9% 8.7% 4.7% -5.6% -5.5% -4.4% 4.3% 9.5% 18.4% 4.9% 0.8% 8.8%
eCommerce Penetration - % of Retail 3.3% 3.3% 3.4% 3.4% 3.5% 3.6% 3.5% 3.6% 3.2% 3.3% 3.5% 3.8%
Y/Y Penetration Increases 0.31% 0.20% 0.15% 0.13% 0.17% 0.24% 0.19% 0.19% 0.41% 0.19% 0.20% 0.21%
Source: UBS; US Department of Commerce; Does not include auctions, travel, financial services, or event ticket sales --
http://www.census.gov/mrts/www/ecomm.html; eCommerce sales are goods and services where an order is placed by the buyer or price and terms of sale
are negotiated over an Internet, extranet, EDI network, e-mail, or other online system. Payment may or may not be made online
34

36. eCommerce still an under-penetrated retail channel
♦ Several categories are still in their nascent stages online
30.9
30.1
$30.0
$25.0 2008 - $141 Billion (ex Travel)
22.5
2009E - $156 Billion (ex Travel)
$20.0
2010E $177 Billion (ex Travel)
14.6
$15.0
10.3
$10.0
7.5 7.6
6.9 7.1
5.6 5.9 6
$5.0 4 4.2
3.2
2.3 2.7
2.1 2.2
1.2
$0.0
ts
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ts
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ames
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prove
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Auto
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& Vid
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Source: UBS, Shop.org – State of Retail Online 2009 35

37. 50% of Retailers Have Started ’09 Holiday Online Marketing
Question: When Do You Plan to Start Your ONLINE Holiday Marketing &
Promotion Campaigns?
Week of Nov 23 or
Later Oct 5 or Earlier
Week of Nov 16 3% 10%
10%
Week of Nov 9 Week of Oct 12
8% 15%
Week of Oct 19
Week of Nov 2 16%
28%
Week of Oct 26
10%
Source: UBS, Shop.org – Pre-Holiday Consumer & Retailer Results – eHoliday 2009
36

38. 50%+ of Retailers Will Spend 11-30% of 2009 Budget on Holidays
Question: What % of Your Total 2009 ONLINE Marketing Budget is
Dedicated Specifically to the Holidays?
50%+ of Total 2009 1-5% of Total 2009
Online Marketing Online Marketing
41-50% of Total 2009 Budget, 5% Budget, 5%
Online Marketing 6-10% of Total 2009
Budget, 11% Online Marketing
Budget, 12%
31-40% of Total 2009
Online Marketing
Budget, 11%
11-20% of Total
2009 Online
21-30% of Total Marketing Budget,
2009 Online 30%
Marketing Budget,
26%
Source: UBS, Shop.org – Pre-Holiday Consumer & Retailer Results – eHoliday 2009
37

39. Merchants Focusing on Leading Social Channels
Question: Since last Holiday season, have you added or improved any of the following marketing
and / or promotions that you feel will drive improved holiday sales this year?.
Site Ev ent / Action-triggered
Email
Dy namic Customized /
Personalized Email
Tw itter
Facebook Page
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Added New in 2009 Improved / Enhanced in 2009
Offered, but No Substantial Change in 2009 Do Not Offer / Use
Source: UBS, Shop.org – Pre-Holiday Consumer & Retailer Results – eHoliday 2009
38

40. Social, SEO and Email are Areas of Marketing Focus
for the 2009 Holiday Season
Question: For the 2009 Holiday season, please indicate for each of the following ONLINE
marketing options whether you plan to increase, decrease or keep at the same level that you have
used to date (Jan to Oct) in 2009.
Social Shopping websites
Blogs / RSS Feeds
Word of Mouth / Viral
Affiliate & Loyalty
SEM (paid)
Email
SEO (organic)
Twitter
Facebook, MySpace
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Increase Keep the Same Decrease Won't Use
Source: UBS, Shop.org – Pre-Holiday Consumer & Retailer Results – eHoliday 2009
39

41. Appendix
40

42. Mobile Handset Industry Summary
♦ Digital media content is becoming more pervasive in society
— Significant growth expected in new forms of digital media content
— Music, digital TV (Personal Video Recorders and Video on Demand),
radio, pictures, games
♦ Mobile communications will evolve to support access to consumer digital
content
— After 20 years of supporting voice, mobile networks now evolving to
support broadband applications, WCDMA the first step in the process
with HSDPA seen as the key enabler . . .
— Vendor consolidation occurring through “natural selection”, not M&A
— Continued growth in emerging markets as teledensity improves
♦ Mobile device market in a transition phase, waiting for new applications
to take hold
— New entrants raising the bar in the industry (RIM, Apple, etc.)
— Higher differentiation is returning to the replacement market with
the balance of power shifting to handset vendors. However, this cycle
will likely fade in the coming year or two
41

43. Key Mobile Handset Industry Trends
♦ Focus on Data to Drive ARPU. With decreasing price per minute,
roaming fees, etc, operators focus on data to help offset declines in voice
ARPU.
♦ Higher Subsidies for Handsets that Drive ARPU. Apple changed the
game for smartphone pricing. RIM is already competitively priced. Other
vendors must prove they can drive ARPU to get similar subsidies to be
competitive or risk either market share losses or margin contraction.
♦ At the Expense of Older Handsets. We believe operators are less
aggressively pushing older handsets to focus on newer, differentiated
products.
42

44. Handsets a More Intimate / Compelling Forum?
Mobile Scores for Branding Metrics
Limited Advertising Real Estate / Lack of Clutter is a Benefit
20
16.5
16
Mobile Norms Online Norms
10.7 10.5
12
9.1
8.6
8
4.9
4 2.7 2.2 2.7
2
0
Unaided Aided Awareness Ad Awareness Brand Favorability Purchase Intent
Awareness
Source: Source: InsightExpress: InsightNorms; Respondent: Mobile N = 47,658; Online N = 51,3973
43

45. Contact Information – “Pitz & Fitz”
Brian J. Pitz
Analyst: Internet & Interactive Entertainment
+1-212-713 9310 (w) +1-917-696 9977 (m)
brian.pitz@ubs.com
Brian J. Pitz is an Executive Director and a senior analyst in the Communications Group of UBS Investment
Research, where he covers the Internet and Interactive Entertainment.
Previously, he was a Principal and senior research analyst covering the Internet at Banc of America Securities
LLC. Prior to that, Brian was a Vice President at Morgan Stanley co-covering the Internet & PC Applications
Software, while lead covering Interactive Entertainment. Early in his career at Morgan Stanley, Brian was part
of the number one ranked Broadcasting research team in Institutional Investor’s All-America rankings in
1998, 1999, 2000 and 2001. Later, he was a co-leader of the top ranked Internet research team in
Institutional Investor and Greenwich in 2004 and 2005. Brian commenced his professional career in the
Business Consulting practice of Arthur Andersen LLP in New York. Brian received a Bachelor of Science
degree in Accountancy from Villanova University.
Brian P. Fitzgerald
Analyst: Internet & Interactive Entertainment
+1-212-713 2851 (w) +1-917-749 1103 (m)
brian.fitzgerald@ubs.com
Brian P. Fitzgerald is a Director and an analyst in the Communications Group at UBS Investment Research,
where he covers the Internet and Interactive Entertainment.
Previously, he was a Vice President and research analyst covering the Internet at Banc of America Securities
LLC. Prior to that, Brian was a Vice President at Morgan Stanley co-covering the Internet & PC Applications
Software and Interactive Entertainment sectors since 2000. There, he was a member of the top ranked
Internet research team in the annual Institutional Investor poll and Greenwich Survey. Before his move into
equity research, Brian was a manager in the Client Technology group of Morgan Stanley's Information
Technology division. Before starting his corporate career, he was a helicopter pilot and officer in the US
Army. Fitzgerald received a Bachelor of Science degree in Mathematical Economics and Computer Science
from the United States Military Academy at West Point and an MBA with a concentration in Finance from
New York University's Stern School of Business.
UBS Securities LLC
1285 Avenue of the Americas
New York, NY 10019
Tel: +1-212-713-2000
www.ubs.com
44
UBS Securities LLC is a subsidiary of UBS AG.

46. Coverage
♦ Internet
— AMZN – Buy Rating, $140 12-Month Price Target
— GSIC – Buy Rating, $26 12-Month Price Target
— GOOG – Buy Rating, $635 12-Month Price Target
— EBAY – Buy Rating, $30 12-Month Price Target
— IACI – Buy Rating, $24 12-Month Price Target
— YHOO – Neutral Rating, $18 12-Month Price Target
— NFLX – Neutral Rating, $50 12-Month Price Target
— VCLK – Neutral Rating, $11 12-Month Price Target
♦ Interactive Entertainment
— ATVI – Buy Rating, $15 12-Month Price Target
— ERTS – Buy Rating, $28 12-Month Price Target
45

47. Internet / Interactive Entertainment – Estimates
($MMs, except EPS) 1 2
Revenue EBITDA EPS FCF 09E Margin
Ticker Rating Market Cap UBS Estimate Consensus UBS Estimate Consensus UBS Estimate Consensus
Gross Operating
Company 2009E 2010E 2009E 2010E 2009E 2010E 2009E 2010E 2009E 2010E 2009E 2010E 2009E 2010E
Interactive Entertainment
Activision ATVI Buy $13,767 $4,576 $5,478 $4,560 $5,123 $1,132 $1,427 $1,382 $1,578 $0.64 $0.84 $0.64 $0.77 $1,584 $1,355 53.1% 23.2%
Electronic Arts ERTS Buy 5,727 4,322 4,768 4,276 4,446 410 706 590 725 1.06 1.33 0.90 1.20 (871) 339 51.6 6.7
GameStop GME NR 3,949 - - 9,042 9,536 - - 866 960 - - 2.52 2.87 374 479 - -
TakeTwo TTWO NR 875 - - 993 1,246 - - (38) 79 - - (0.84) 0.66 (50) 84 - -
THQ Interactive THQI NR 337 - - 855 902 - - 30 47 - - 0.15 0.34 (11) 20 - -
Advertising & Related Services
Google GOOG Buy 172,441 17,466 20,541 17,376 20,293 10,974 13,232 10,884 12,626 22.74 27.08 22.77 26.31 7,565 8,768 85.1 54.0
Yahoo! YHOO Neutral 22,562 4,685 4,903 4,654 4,841 1,709 1,886 1,145 1,338 0.61 0.65 0.42 0.46 1,047 1,140 76.9 20.7
IAC / InterActiveCorp IACI Buy 2,680 1,362 1,437 1,348 1,419 168 215 158 191 0.31 0.79 0.50 0.72 304 143 66.4 7.6
WebMD WBMD NR 1,571 - - 429 485 - - 88 111 - - 0.61 0.81 40 48 - -
ValueClick VCLK Neutral 1,633 541 569 529 534 138 155 126 126 0.63 0.56 0.74 0.64 154 94 66.7 23.9
comScore SCOR NR 450 - - 128 145 - - -- -- - - 0.12 0.27 -- -- - -
Marchex MCHX NR 161 - - 89 89 - - 11 11 - - 0.09 0.10 -- -- - -
eCommerce
Amazon.com AMZN Buy 52,232 24,110 30,640 23,760 29,581 1,868 2,549 1,484 1,841 1.91 2.82 1.87 2.50 2,225 3,265 22.4 4.8
eBay EBAY Buy 30,646 8,650 9,141 8,644 9,044 3,069 3,361 3,015 3,244 1.53 1.73 1.54 1.62 2,452 2,847 72.6 29.7
Digital River DRIV NR 861 - - 395 357 - - 108 93 - - 1.81 1.49 54 54 - -
Mercado Libre MELI NR 1,677 - - 171 234 - - 53 77 - - 0.66 0.91 25 38 - -
GSI Commerce GSIC Buy 935 974 1,296 980 1,262 102 133 79 119 ($0.13) 0.17 (0.14) 0.21 54 85 60.0 2.8
Drugstore.com DSCM NR 268 - - 404 450 - - 5 15 - - (0.02) 0.01 -- -- - -
Online Entertainment
Netflix NFLX Neutral 3,221 1,673 2,090 1,672 2,048 237 283 224 262 1.90 2.12 1.89 2.23 158 233 34.4 7.2
Blockbuster BBI NR 159 - - 4,354 4,205 - - 274 276 - - (0.03) 0.10 113 135 - -
(1) All figures represent "Operating EPS", defined to excludes SBC and 1x items as per Mgmt, except the following companies which are GAAP: VCLK, AMZN, GSIC, NFLX, YHOO
(2) FCF for non-covered companies are FirstCall means
(3) ERTS 2009E = Fiscal year ending 05/2010; 2010E = Fiscal Year ending 05/2011
Source: UBS, FirstCall, and FactSet
46

48. Internet / Interactive Entertainment – Valuation
Firm Firm Value / 09-12E 09-12E 2010E 09-12E 2010E
Price Upside to 1
Price YTD Value EBITDA EBITDA Price / Earnings EPS P/E to Price / FCF / share FCF FCF
Target Target
Company Ticker Rating 11/04/09 Performance ($MMs) 2009E 2010E CAGR 2009E 2010E CAGR Growth 2009E 2010E CAGR Yield (%)
Interactive Entertainment
Activision ATVI Buy $10.68 $15 45% 23% $10,921 10x 8x 17% 17x 13x 19.5% 0.6 9x 10x (7%) 9.7%
Electronic Arts ERTS Buy $17.73 28 56 11% 3,928 10 6 33 17 13 15 0.9 -- 17 (163) 5.8%
GameStop GME NR $23.74 - - 11% 4,247 5 4 - 9 8 -- -- 10 8 -- 12.3%
TakeTwo TTWO NR $11.09 - - 45% 839 -- 11 - -- 17 -- -- -- 11 -- 9.5%
THQ Interactive THQI NR $5.02 - - 19% 179 6 4 - 34 15 -- -- -- 17 -- 5.8%
weighted average 19% 8 7 15 12 13 0.5 7 11 -36 9.5%
mean 22% 8 6 19 13 17 0.8 10 13 -85 8.6%
Advertising & Related Services
Google GOOG Buy $540.33 635 17 75% 150,336 14 11 20 24 20 20 1.0 23 20 18 5.1%
Yahoo! YHOO Neutral $15.69 18 12 29% 10,194 6 5 9 26 24 15 1.6 21 20 5 5.1%
IAC / InterActiveCorp IACI Buy $18.98 24 29 21% 768 5 4 19 60 24 47 0.5 9 18 (10) 5.6%
WebMD WBMD NR $35.60 - - 45% 1,654 19 15 - 58 44 -- -- 41 34 -- 2.9%
ValueClick VCLK Neutral $9.84 13 28 42% 1,474 11 9 6 16 17 12 1.4 6 9 (14) 10.7%
comScore SCOR NR $15.39 - - 19% 367 -- -- - 124 57 -- -- -- -- -- --
Marchex MCHX NR $4.52 - - -24% 132 12 12 - 53 43 -- -- -- -- -- --
weighted average 79% 15 12 27 22 18 0.9 26 21 15 4.8%
mean 48% 15 12 47 31 24 1.1 26 23 0 5.4%
eCommerce
Amazon.com AMZN Buy $117.10 140 20 131% 48,347 26 19 29 61 41 38 1.1 23 16 30 6.3%
eBay EBAY Buy $22.55 30 31 61% 24,372 8 7 9 15 13 11 1.2 12 10 9 9.5%
Digital River DRIV NR $24.75 - - -10% 458 4 5 - 14 17 -- -- 18 18 -- 5.7%
Mercado Libre MELI NR $38.36 - - 132% 1,645 31 21 - 59 42 -- -- 69 44 -- 2.3%
GSI Commerce GSIC Buy $18.37 26 39 78% 975 10 7 17 -- 105 -- -- -- 19 21 5.3%
Drugstore.com DSCM NR $2.70 - - 116% 234 45 16 - -- 540 -- -- -- -- -- --
weighted average 107% 20 15 45 35 27 1.1 20 15 22 7.1%
mean 85% 23 15 44 105 25 1.1 30 21 20 5.8%
Online Entertainment
Netflix NFLX Neutral $54.16 50 -8 80% 3,103 13 11 21 28 26 17 1.5 20 14 14 7.0%
Blockbuster BBI NR $0.88 - - -35% 994 4 4 - -- 9 -- --
weighted average 52% 11 9 22 21 13 1.2 15 11 10 5.3%
mean 22% 8 7 28 17 17 1.5 20 14 14 7.0%
(1) Firm Value equal to Equity Value plus straight and convertible debt, straight and convertible preferred stock, and minority interest less cash and cash equivalents, marketable securities, and equity in unconsolidated affiliates. Yahoo! Firm Value adju
Valuation metrics of non-covered companies are based on FirstCall mean estimates
(3) ERTS 2009E = Fiscal year ending 05/2010; 2010E = Fiscal Year ending 05/2011
Source: UBS, FirstCall and FactSet
47

49. Required Disclosures
This report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to
herein as UBS.
For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance
information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures
contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made
available upon request.
UBS Investment Research: Global Equity Rating Allocations
1 2
UBS 12-Month Rating Rating Category Coverage IB Services
Buy Buy 44% 38%
Neutral Hold/Neutral 39% 36%
Sell Sell 17% 25%
3 4
UBS Short-Term Rating Rating Category Coverage IB Services
Buy Buy less than 1% 33%
Sell Sell less than 1% 33%
1:Percentage of companies under coverage globally within the 12-month rating category.
2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within
the past 12 months.
3:Percentage of companies under coverage globally within the Short-Term rating category.
4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided
within the past 12 months.
Source: UBS. Rating allocations are as of 30 June 2009.
UBS Investment Research: Global Equity Rating Definitions
UBS 12-Month Rating Definition
Buy FSR is > 6% above the MRA.
Neutral FSR is between -6% and 6% of the MRA.
Sell FSR is > 6% below the MRA.
UBS Short-Term Rating Definition
Buy: Stock price expected to rise within three months from the time the rating was assigned
Buy
because of a specific catalyst or event.
Sell: Stock price expected to fall within three months from the time the rating was assigned
Sell
because of a specific catalyst or event.
48