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State of the U.S. Capital Markets - July 2005

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Dave Liu
Dave Liu

The document provides an overview of the U.S. capital markets environment in mid-2005. It notes declining equity mutual fund flows and drops in technology IPO issuances and prices. However, it also states that companies with strong businesses are still able to issue public equity. Private equity investment in Chinese technology companies remains strong. The IPO market has demonstrated a selective recovery for high-quality issuers. Issues facing new public companies include a lack of U.S. public company experience and Sarbanes-Oxley compliance costs.

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Jefferies & Company, Inc. State Of The U.S. Capital Markets July 11, 2005 CONFIDENTIAL DRAFT
Table of Contents U.S. Capital Markets Environment 1 M&A And Private Investment Environment 9 Issues Facing New Public Companies 15 Jefferies Broadview Overview 17 i
U.S. Capital Markets Environment 1
U.S. Technology Capital Markets Environment Uncertain economic conditions and outlook have impacted the equity markets Interest rate increases have caused equity mutual fund flows to decline to US$6.3B per month in 2005YTD vs. US$10.3B in 1H04 While the S&P and NASDAQ indices are down 11% and 4% since 1/1/05, they are still up 9% and 6% respectively, compared to 1 year ago High-profile IPOs have had difficulty generating investor interest Boise Cascade withdrawn Lazard trading below offer price The Technology IPO market is also trying to weather the storm. Companies with strong businesses are still able to issue public equity The number of quarterly Technology IPO issuances has dropped 50% from Q4 ¡¯04 to Q1 ¡¯05 and continues to decline in Q2 ¡®05 Despite extremely tough market conditions, China Techfaith Wireless was able to complete its offering, priced within range and has traded up slightly The IPO bar is high but the market rewards strong companies 2005YTD IPOs have a median EBIT margin of 17% and 8 quarters of profitability at pricing 2004-2005YTD Chinese IPOs are down a median 7% to date from their offer price 2
U.S. Market Overview (1) Source: Equidesk and Jefferies Equity Market Overview. Excludes REITs, close-end funds and private placements. (2) As of June 24, 2005. ($Billions) 3
U.S. IPO Market Overview Note: Technology defined per SDC Platinum high technology industry classification. (1) As of June 24 2005. There are currently over 55 Asian companies listed on U.S. exchanges. Approximately 20 of these companies went public in the last 18 months 4
The U.S. And Western Europe Technology IPO Markets Have Demonstrated A Selective Recovery For High Quality Issuers Recent tightening of the IPO and equity capital markets The IPO market remains stronger than it was for over the previous three years, particularly in technology (but the ¡°bar¡± is high) Comparable public companies are now benefiting from improved economic conditions and trading at healthier multiples, but IPO backlog remains high U.S. Western Europe Current IPO Environment Tech IPO Activity ¨C Number of Transactions 25 16 137 244 1997 171 204 1998 323 415 1999 398 289 2000 78 23 2001 20 2002 21 2003 2004 59 34 TTM IPO Issuances by Subsector 1 Q1 2003 ¨C Q2 2005 U.S. IT Sector IPOs 1 IPO Backlog (2) # IPOs Historic Tech IPO Activity As of June 17, 2005. Source: Capital IQ. 2005 YTD 1 19 13 1 2 7 11 9 12 20 18 11 8 0 20 40 60 80 100 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 5
Summary Of Median Performance For U.S. Technology IPOs Since Mid-2003 H2 2003 H1 2004 % Companies with Revenue < $25MM 11% 10% % Companies Unprofitable 16% 19% Median Quarters of Profitability 6 5 % Companies Trading Below IPO 37% 52% IPO Performance Statistics H2 2003 $85,000 $72,493 36.3% 6 4.5% 13.5% H1 2004 $86,000 $87,357 54.8% 5 7.6% (3.0%) Offering Amount TTM Revenue TTM Revenue Growth Quarters of Profitability EBIT Margin % Change From IPO (1) TTM H2 2004 $74,300 $47,447 60.3% 3 4.4% 5.3% H2 2004 34% 32% 3 34% YTD 2005 $141,813 $93,436 70.1% 8 17.0% 0.4% Period Median Profile (1) YTD 2005 (1) 5% 26% 8 47% As of June 17, 2005. Source: Jefferies Broadview¡¯s IPO Database / Hoover¡¯s IPO Central / Capital IQ. IPO Statistics (1) 6
Chinese Technology Capital Markets (NASDAQ) Activity In 2004 and 2005 YTD ($Millions) As of 5/30/05. Source: Broadview¡¯s IPO Database / Hoover¡¯s IPO Central / Capital IQ 7
Only 6 Non-Chinese Asian Technology Companies Have Gone Public In The U.S. Since January 1, 2004 8
M&A And Private Investment Environment 9
Private Equity / VC Investment Activity For Chinese Technology Companies Continues To Be Strong Representative Chinese Technology Investments Over The Past 12 Months ($Millions) While the majority of investment activity has been in the sub-$20 range, investors are increasingly gaining a higher level of comfort and looking to put more money into larger enterprises VC firms raised a total of U.S.$699 million in 2004 for investing in Mainland China, according to Zero2IPO 10 Japan-China Bridge $6.0 BeyondSoft Jun-05 Carlyle Group $20.0 Target Media Jun-05 Apax, Greylock $20.0 Fiberxon Jun-05 Legend, Doll Capital $6.0-7.0 Worksoft Jun-05 Doll Capital, Walden $10.0 ApexOne Microelectronics Jun-04 IDG, Qualcomm, Tom Online $3.5 Great Wall Software Aug-04 Granite, Intel, International Finance, JAFCO $20.0 HiSoft Oct-04 McGraw-Hill, Tiger NA PRCEdu Jan-05 Granite, Venrock, NEA, Redpoint, Acer, JAFCO, Intel UOB $50.0 BCD Semiconductor Jun-04 DFJ, Google, Integrity, Peninsula Capital, Bridger, China Equity, China Value, Venture TDF $100.0 Baidu Jun-04 Warburg Pincus $70.0 Datang Microelectronics Jul-04 WanJie Group $12.1 King-Hope Jul-04 Carlyle, Qualcomm $3.0 Enorbus Jul-04 2b Holdings, strategic investors $8.3 Smartpay Aug-04 Carlyle $15.0 Target Media Sep-04 IDG $5.0 Any8.com Oct-04 NA $16.9 Soutec Nov-04 Goldman Sachs, 3i $30.0 Focus Media Nov-04 Carlyle, Chengwei Ventures, Pacific Venture $13.0 Huaya Microelectronics Dec-04 3i $20.0 GST Dec-04 Kongzhong $0.5 eFriendsNet / Yeeyoo Dec-04 Carlyle, China Merchants, Fortune, Sino-Korea Wireless $14.0 9you Dec-04 Tiger Tech $11.0 Dangdang Dec-04 Siemens Mobile Acceleration, Morningside Tech $3.0 LinkRich Jan-05 Rensheng Fund $3.0 V516.com Jan-05 Softbank, Shanda $0.6 Blogchina Jan-05 Carlyle Group NA Easyeb Feb-05 TVG Capital, Temasek, Warburg Pincus, DragonTech $37.0 Harbour Networks Mar-05 IDG, Newbridge $12.1 HiChina / MyMai Mar-05 Jafco, Intel NA Pollex Mobile Mar-05 IDG NA wap.3g.net.cn Mar-05 TPG, General Atlantic, Newbridge $350 Lenovo Mar-05 IDG, Legend Capital $6.0 Zhongsou Mar-05 Union Fortune Investment $7.6 Gasoft Mar-05 IDG $10 Emay Softcom Apr-05 Legend, Fidelity, IDG $16.0 Zhongsou Apr-05 Gobi Partners, NTT DoCoMo, Dentsu $6.0 Digital Media Group Apr-05 IDG $4.0 Netmovie May-05 IDG $0.2 163888.net May-05 IDG, Sumitomo NA Tengwu Digi-Tech May-05 Dragon Groove $5.0 9you May-05 Investor(s) Capital Raised Company Date
While Cross Border M&A Market In China Is Nascent, Deal Frequency Is On The Rise Representative Chinese Technology Cross Border M&A/Strategic Investments Over The Past 12 Months ($Millions) Date Announced Target Name Acquiror Name Transaction Value Transaction Type 4/21/05 PCHome CNET Networks Inc. 11.0 Acquisition 3/30/05 Three-Five System International DisplayWorks 10.4 Acquisition 2/3/05 ChinaHR Monster.com 50.0 Minority Investment 1/25/05 PRCInvestment.com Reed Elsevier NA Acquisition 1/25/05 PRCEDU Corporation McGraw-Hill Education NA Minority Investment 1/13/05 C-Valley THQ Wireless NA Minority Investment 12/27/04 Digital Media Group NTT DoCoMo 4.2 Minority Investment 12/17/04 Indiagames Tom Online 17.7 Acquisition 12/7/04 IBM PC Business Lenovo Group Ltd. 1,750.0 Acquisition 11/29/04 Actoz Shanda 91.7 Minority Investment 11/25/04 Konka Thomson 19.0 Minority Investment 10/14/04 Zhongguancun On Line Corp CNET Networks Inc. 15.0 Acquisition 10/14/04 Fengniao Photography On Line CNET Networks Inc. 1.0 Acquisition 8/19/04 Joyo.com Ltd Amazon.com Inc 75.0 Acquisition 7/26/04 eLong.com IAC/InterActiveCorp 60.0 Minority Investment 7/5/04 Davidhill Capital Inc Sina Corp 36.0 Acquisition 6/21/04 Ctrip.com Rakuten, Inc. 109.6 Minority Investment 6/15/04 Google Inc. 10.0 Minority Investment 5/11/05 Tsinghua-Shenxun (certain assets) Microsoft Corp. NA Acquisition 3/16/05 Skyinfo Index Corp. 80.0 Acquisition 11
Select Cross Border M&A Transactions Involving Asian Technology Companies Representative Asian (ex-China) Technology Cross Border M&A/Strategic Investments Since 1/1/2004 ($Millions) 12
Select Cross Border Indian Technology Deals In 2004 ($Millions) 13 Ygyan Consulting Ltd Moirai Media Solutions Inc Oramasters Inc Afrocom Technologies Pvt Ltd Daksh eServices Pvt Ltd Paral System Software Pvt Ltd e-Serve International Ltd Webneuron Services Ltd Ivega Corp Pvt Ltd Hughes Software Systems Ltd Netkraft Pvt Ltd Bennett Cole & Co Ltd-Assets EAP Global India Software Group Soft Systems Ltd Future Software Ltd Majoris Systems Pvt Ltd Smart Yantra Technologies Pvt iNuCom Inc EXIMSOFT Technologies Pvt Ltd In-Reality Software Pvt Ltd Mensamind GE Capital International Target Name 2.0 Cognizant Technology Solutions 2/20/04 NA DG2L Technologies Inc 3/17/04 NA Kenexa Corp 4/2/04 NA Financial Objects PLC 4/6/04 150.0-200.0 IBM Corp 4/7/04 3.1 Kewill Systems PLC 4/8/04 .03 Citibank Overseas Invest Corp 4/10/04 8.7 Monster.com 5/23/04 NA TCG Software Services Inc 6/2/04 226.5 Flextronics International Ltd 6/8/04 12.0-15.9 Adea Solutions Inc 6/10/04 NA BBC 6/25/04 NA Sight & Sound Education Ltd 7/6/04 NA Novasoft Information Tech 7/25/04 NA iSmart International Ltd 8/22/04 25.0 Flextronics International Ltd 8/26/04 5.8-10.2 Valtech SA 9/9/04 NA Genesis Microchip Inc 9/16/04 0.3 Ascential Software Corp 10/4/04 NA Trianz Inc 10/6/04 NA Symphony Services Corp 10/19/04 NA Alliance Consulting 10/27/04 NA Investor Group 11/8/04 Transaction Value Acquiror Name Date Announced
Private-Equity Investment Into India From Abroad 14
Issues Facing New Public Companies 15
Common Issues Facing Asian NASDAQ Companies Language barrier for key management team members Lack of CFOs with U.S. public company experience Credibility of financial forecasts Managing Wall Street¡¯s expectations Sarbanes-Oxley compliance Sarbanes-Oxley costs Issues Facing Non-Chinese Companies Listed on U.S. Exchanges Competition for investor mindshare versus their Chinese counterparts The focus on China has diverted investors¡¯ attention away from companies based in Japan, Hong Kong, Taiwan and Singapore. Companies are being classified as ¡°Non-China¡± Higher size threshold for going public in the U.S. Unlike Chinese technology companies which have successfully gone public at market capitalizations below US$500MM, there is a higher implicit size threshold for companies based in other Asian countries 16
Jefferies Broadview Overview 17
Jefferies Broadview Delivers The Full Spectrum To Clients Investment Banking Leading banking franchise focused on high growth companies Over 400 Investment Bankers (nearly 100 in technology) in over 25 offices worldwide Equity Offerings ¨C Completed over 245 public equity offerings since 1993 M&A - Ranks #1 in Technology M&A advisory assignments for 2004 (1) Private Equity - Regular dialogue and relationships with over 250 financial sponsors Restructuring - Restructured approximately $150 billion in securities and liabilities Equity Over 150 account execs cover over 2,000 institutional accounts; make markets in over 4,000 stocks #1 volume trader of NASDAQ stocks; handle over 10% of NYSE volume; top 5 trader in nearly 2,000 stocks Over 90 research analysts covering over 600 companies, over 70% of companies having a market cap less than $5.0 billion Debt Dedicated high yield team of over 40 experienced senior professionals Integrated sales, trading, research, capital markets and banking functions #1 underwriter of mid-cap high yield, led by team that joined Jefferies from Drexel Burnham Investment Banking Equity Asset Management Debt Technology Companies Cash Management Capital Partners High Yield Private Placements Structured Finance Trading Sales Research Capital Markets Industry Coverage Mergers and Acquisitions Financial Sponsors Restructuring Private Client Services Offers A Full Suite Of Investment Banking Products And Services To Serve High Growth Companies Throughout The Corporate Lifecycle Ranked by volume of reported deals. Source: Mergermarket. 18
Global Investment Bank With Top Technology Franchise A leading institutional brokerage and investment banking firm ¨C led by one of the most powerful capital markets trading platforms in the industry Principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF), a holding company with an equity market capitalization of over $2 billion and over 1,800 employees in over 25 offices worldwide ¡° Investment grade¡± ratings by Standard & Poor¡¯s and Moody¡¯s #1 performing investment bank by stock price over the last 10 years (1) with over 50% employee ownership (1) Wall Street Journal, March 2004. * Offices of Jefferies Group, Inc. subsidiaries Jefferies International Limited or Quarterdeck Investment Partners, LLC, or affiliate Broadview International LLC. ** Sydney and Melbourne Offices of Australian affiliate, Burdett Buckeridge Young Limited, Israel office affiliate, Axcess International, Inc. Austin San Francisco Los Angeles Dallas Houston New Orleans Chicago Nashville Atlanta Richmond Boston Stamford New York Jersey City Washington* London * Paris* Zurich* Tokyo* Sydney ** Melbourne ** Silicon Valley Hong Kong* $0 $4 $8 $12 $16 $20 $24 $28 $32 $36 $40 $44 12/31/92 11/5/93 9/9/94 7/14/95 5/17/96 3/21/97 1/23/98 11/27/98 10/1/99 8/4/00 6/8/01 4/12/02 2/14/03 12/19/03 10/22/04 Jefferies Share Price ($ U.S.D) $0 $4 $8 $12 $16 $20 $24 $28 $32 $36 $40 $44 12/31/92 11/5/93 9/9/94 7/14/95 5/17/96 3/21/97 1/23/98 11/27/98 10/1/99 8/4/00 6/8/01 4/12/02 2/14/03 12/19/03 10/22/04 Jefferies Share Price ($ U.S.D) Austin Recent Asia Transactions $80,600,000 Initial Public Offering Co - Manager China Finance Online Co. Limited $80,600,000 October 2004 Initial Public Offering Co-Manager China Finance Online Co. Limited $66,000,000 August 2004 has been acquired by $66,000,000 August 2004 has been acquired by $66,000,000 August 2004 has been acquired by $66,000,000 August 2004 has been acquired by $165,100,000 has divested its Handset Division to June 2004 $165,100,000 has divested its Handset Division to Initial Public Offering Co - Manager $106,000,000 December 2004 Ninetowns Digital World Trade Initial Public Offering $106,000,000 December 2004 Ninetowns Digital World Trade Co-Manager Financial Advisor to the Seller June 2004 Financial Advisor to the Seller 19 $0 $4 $8 $12 $16 $20 $24 $28 $32 $36 $40 $44 12/31/92 11/5/93 9/9/94 7/14/95 5/17/96 3/21/97 1/23/98 11/27/98 10/1/99 8/4/00 6/8/01 4/12/02 2/14/03 12/19/03 10/22/04 Jefferies Share Price ($ U.S.D) San Francisco Los Angeles Dallas Houston New Orleans Chicago Nashville Atlanta Richmond Boston Stamford New York Jersey City Washington* London * Paris* Zurich* Tokyo* Sydney ** Melbourne ** Silicon Valley Hong Kong*
Jefferies Broadview Is A Leader In Technology M&A 2004 ÄêýÌå¼°µçѶ¹«Ë¾²¢¹º½± 2004 ×î´óµÄ°²È«¼¼ÊõÏîÄ¿ 2004 Èí¼þÏîÄ¿ 2003 Technology M&A League Table 2 1 CSFB 20 2 Jefferies Broadview 19 3 Citigroup Inc 16 3 UBS 16 5 Houlihan Lokey 14 Citigroup JP Morgan Credit Suisse First Boston Goldman Sachs Morgan Stanley Jefferies & Company 6 29 5 33 4 33 3 38 2 40 1 44 Rank Financial Advisor 2004 Technology M&A League Table 1 # of Deals Rank Financial Advisor # of Deals Ranked by volume of reported deals. Source: SDC Ranked by volume of reported deals. Source: MergerMarket 20
Substantial Public Equity Issuance Track Record Focused On High Growth Companies Since 1993, Jefferies has raised over $29 billion through over 240 IPOs and follow-on offerings April 2005 $40,842,000 Follow - On Offering Co - Manager April 2005 $40,842,000 Follow - On Offering Co - Manager $99,000,000 May 2005 Initial Public Offering Co-Manager May 2005 $554,200,000 Initial Public Equity Offering Co-Manger 21 November 2004 $257,933,296 Initial Public Offering Co - Lead Manager November 2004 $257,933,296 Initial Public Offering Co - Lead Manager $78,000,000 March 2005 Initial Public Offering Co-Manager
Superior Aftermarket Distribution Support for our Clients Jefferies Broadview is committed to becoming the top trader of our clients¡¯ stock 1 Source: Autex, as of June 1, 2005; data from the later of offering or January 1, 2004. Lead Manager Co-Manager Co-Manager Co-Manager Lead Manager Co-Manager Sole Book Manager Book Running Lead Manager Book Running Lead Manager Co-Lead Manager Lead Manager Co-Lead Manager 22
A Trading Powerhouse Of NASDAQ and OTC Stocks Extensive trading relationships and aftermarket support help maximize valuation of new issues Typically top trader in lead-managed underwritings #1 or #2 trader in 80% of co-managed underwritings since 2003 Continued expansion of our Research Sales group to enhance new issue capabilities Our seasoned research sales professionals have previously worked at firms such as Bear Stearns, Lehman Brothers, JP Morgan, Morgan Stanley, Merrill Lynch and Citigroup Top Volume Trader of NASDAQ Stocks Top 5 Trader of NASDAQ Stocks Jefferies¡¯ superior equity sales and trading platform is leveraged by the reach of our Investment Banking clients Source: Autex, January 1, 2004 ¨C December 31, 2004. Market share weighted by total volume traded in Bulletin Board Market, Nasdaq National Market, and Nasdaq Small Cap Market segments as a percentage of total trading; rank does not include trading firms. % of Total Volume Traded 0.0% 5.0% 10.0% 15.0% Jefferies Bear Stearns UBS Citigroup Goldman Sachs FGP Morgan Stanley Merrill Lynch CSFB SG Cowen 23 Bear Stearns Citigroup UBS CSFB Merrill Lynch Jefferies Morgan Stanley RJ JP Morgan Goldman Sachs Number of Stocks 405 1,208 1,248 1,569 1,868 2,188 2,376 2,403 2,566 4,831 0 500 1,000 1,500 2,000 2,500 3,000
Top Tier Equity Research Platform Focused on High Growth Companies 19 research professionals dedicated to technology 620 companies under coverage with emphasis on growth and middle market companies Have initiated coverage on over 149 technology companies since January 2004 0 2002 2003 2004 Market Cap. Of Companies Under Coverage: Software Services & Media Applications Software Rob Schwartz Infrastructure Software Katherine Egbert IT Services & Federal IT Joe Vafi Internet & New Media Youssef Squali Business & IT Services Craig Peckham Knowledge Services Richard Close Communication & Media Romeo Reyes Media Robert Routh European Software Simon Andrews Software, Services & Media Derrick Wenger IT Services Matthew McKay Communications & Computing Infrastructure Network Infrastructure George Notter U.S. and European Telecom Ian Macleod Semiconductors John Lau Semiconductors Adam Benjamin European Hardware Tech Titus Menzies Healthcare Biotechnology Adam Walsh¡¯ Healthcare Delivery & Technology Glen Santangelo Medical Devices & Diagnostics Ryan Rauch 24 Other Companies Under Coverage Technology Companies Under Coverage 100 200 300 400 500 600 700
Jefferies¡¯ Equity Research Ranks 2nd in The Wall Street Journal's ¡°Best on the Street 2005 Analysts Survey¡± Source: The Wall Street Journal 13 th annual ¡°Best on the Street¡±, May 16 th , 2005 25 0.833 6 5 Avondale Partners 15 0.133 45 6 UBS 0.133 45 6 Banc of America Securities 13 0.171 35 6 Deutsche Bank 12 0.250 24 6 Legg Mason 11 0.261 23 6 Robert W. Baird 10 0.175 40 7 Standard & Poor¡¯s 9 0.184 38 7 A.G. Edwards 8 0.212 33 7 Raymond James 7 0.219 32 7 Wachovia Securities 6 0.259 27 7 Friedman, Billings, Ramsey 5 0.318 22 7 Piper Jaffray 4 0.157 51 8 J.P. Morgan Chase 3 0.421 19 8 Jefferies 2 0.169 59 10 Merrill Lynch 1 Batting Average No. of Qualifying Analysts Total Awards Firm Rank
Jefferies Covers A Wide Range Of Companies Across The Various Technology Verticals Computer Services/Financial Tech. Craig Peckham Automatic Data Processing BISYS Group, Inc. Ceridien Certegy Checkfree Corp. eFunds Equifax First Data Corp. Fiserv, Inc. Global Payments Hewitt Associates InterCept Intuit Inc. Life Sciences ¨C Pharma. Services David Windley, Glen Santagelo aaiPharma, Inc. Albany Molecular Research, Inc. Alkermes, Inc Charles River Laboratories International Connectics Corporation Covance, Inc. Endo Pharmaceuticals Holdings Forest Laboratories, Inc ICON Plc IMS Health, Inc. ISTA Pharmaceuticals Kendle International, Inc. Noven Pharmaceuticals, Inc PAREXEL International, Inc. PRA International, Inc Professional Detailing Pharmaceutical Prod. Dev. SFBC International,Inc Ventiv Health AmerisourceBergen Corp Cardinal Health Caremark Rx Express Scripts Henry Schein McKesson Corp Medco Health Solutions Owens & Minor The Patterson Companies Life Sciences ¨C Biotechnology Adam Walsh, Robin Campbell Abgenix, Inc Advanced Magnetics, Inc Amgen, Inc. Biogen, Inc. Cypress Bioscience Genentech, Inc. Genzyme Corp Hollis-Eden Pharmaceutical Keryx Biopharmaceuticals MannKind Corporation Internet & New Media Youssef Squali aQuantive, Inc Ask Jeeves, Inc China Finance Online Co Earthlink, Inc. eBay, Inc. FindWhat.com Google, Inc iVillage, Inc J2 Global Communications Netflix, Inc United Online, Inc ValueClick, Inc Yahoo!, Inc IT Services Joseph Vafi Affiliated Computer Services Anteon Corporation BearingPoint CACI International CCC Information Services Group Cognizant Technology Solutions Computer Services Corporation Dynamics Research, Corp. Electronic Data Systems Telecom Services & Equipment Richard Klugman, Ian Macleod Alaska Communications AT&T Corp. BellSouth Corp. CenturyTel, Inc. Cincinnati Bell Citizens Communication Commonwealth Telephone CT Communications Earthlink, Inc General Communication IDT Corp InterNap Application Software Robert Schwartz, Simon Andrews Aspen Technology, Inc Cognos Hyperion Solutions Kronos, Inc Manhattan Associates MicroStrategy Open Text RightNow Technologies Salesforce.com Siebel Systems Sybase, Inc Media & Entertainment David Brenner, Meredith Fischer, Robert Routh Mediacom Communications Carmike Cinemas, Inc Central European Media Enterprises 4Kids Entertainment, Inc Cedar Fair, LP Crown Media Holdings,Inc Insight Communications Lions Gate Entertainment Marvel Enterprises Outdoor Channel Holdings Pixar Animation Studios Playboy Enterprises The Topps Company ValueVision Media World Wrestling Entertainment Semiconductor Cap Equipment Adam Benjamin Applied Materials, Inc Cymer,Inc. KLA-Tencor Corporation LTX Corporation Mattson Technology,Inc Nova Measuring Instruments Novellus Systems, Inc Photronics, Inc Rudoplh Technologies, Inc Semiconductor Manufacturing Intl. Communications Equipment George Notter ADC Telecommunications ADTRAN Corp Advanced Fibre Communications Carrier Access Corp CIENA Corp. Lucent Technologies Nortel Networks Redback Networks, Inc Sonus Networks Tekelec Tellabs, Inc Terayon Communications Systems Infrastructure Software Katherine Egbert Akamai Technologies, Inc. Altiris, Inc BEA Systems Inc CheckPoint Software Technologies Citrix Systems, Inc Internet Security Systems McAfee, Inc Mercury Interactive Corp Novell Inc Opsware, Inc Red Hat Inc RSA Security Inc. Secure Computing Corp TIBCO Software Inc. Websense, Inc. Labor Ready Manpower MoneyGram International Online Resources Corp. Paychex Robert Half International SS&C Technologies, Inc. Total System Services Watson Wyatt Infosys Technologies Ltd ManTech International Corp. MTC Technologies Ninetowns Digital PEC Solutions Perot Systems SRA International Syntel Unisys Taiwan Semiconductor Manu Therma-Wave Inc Ultratech, Inc. Cirrus Logic Sigmatel Silicon Image SiRF Technology Holdings Omnivision SigmaTel Silicon Image NPS Pharmaceuticals, Inc. SciClone Pharmaceuticals XOMA, Ltd. Acambis Cambridge Antibody Technology deCODE Genetics SkyePharma Net2Phone Primus Telecom Qwest Communications International Inc. SBC Communications Inc. Sprint FON Group SureWest Communications United Online, Inc Verizon Communications Inc. Ericcson ADR France Telecom SA Hellenic Telecommunications Koninklijke(Royal) Nokia ADR 26
Contact Information CONFIDENTIAL DRAFT DAVID A. LIU Managing Director Technology Investment Banking Jefferies & Company, Inc. Broadview, a division of Jefferies 950 Tower Lane, 18 th Floor Foster City, CA 94404 T: (650) 573-4803 F: (650) 573-4801 Email: [email_address] ; [email_address]

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State of the U.S. Capital Markets - July 2005

  • 1. Jefferies & Company, Inc. State Of The U.S. Capital Markets July 11, 2005 CONFIDENTIAL DRAFT
  • 2. Table of Contents U.S. Capital Markets Environment 1 M&A And Private Investment Environment 9 Issues Facing New Public Companies 15 Jefferies Broadview Overview 17 i
  • 3. U.S. Capital Markets Environment 1
  • 4. U.S. Technology Capital Markets Environment Uncertain economic conditions and outlook have impacted the equity markets Interest rate increases have caused equity mutual fund flows to decline to US$6.3B per month in 2005YTD vs. US$10.3B in 1H04 While the S&P and NASDAQ indices are down 11% and 4% since 1/1/05, they are still up 9% and 6% respectively, compared to 1 year ago High-profile IPOs have had difficulty generating investor interest Boise Cascade withdrawn Lazard trading below offer price The Technology IPO market is also trying to weather the storm. Companies with strong businesses are still able to issue public equity The number of quarterly Technology IPO issuances has dropped 50% from Q4 ¡¯04 to Q1 ¡¯05 and continues to decline in Q2 ¡®05 Despite extremely tough market conditions, China Techfaith Wireless was able to complete its offering, priced within range and has traded up slightly The IPO bar is high but the market rewards strong companies 2005YTD IPOs have a median EBIT margin of 17% and 8 quarters of profitability at pricing 2004-2005YTD Chinese IPOs are down a median 7% to date from their offer price 2
  • 5. U.S. Market Overview (1) Source: Equidesk and Jefferies Equity Market Overview. Excludes REITs, close-end funds and private placements. (2) As of June 24, 2005. ($Billions) 3
  • 6. U.S. IPO Market Overview Note: Technology defined per SDC Platinum high technology industry classification. (1) As of June 24 2005. There are currently over 55 Asian companies listed on U.S. exchanges. Approximately 20 of these companies went public in the last 18 months 4
  • 7. The U.S. And Western Europe Technology IPO Markets Have Demonstrated A Selective Recovery For High Quality Issuers Recent tightening of the IPO and equity capital markets The IPO market remains stronger than it was for over the previous three years, particularly in technology (but the ¡°bar¡± is high) Comparable public companies are now benefiting from improved economic conditions and trading at healthier multiples, but IPO backlog remains high U.S. Western Europe Current IPO Environment Tech IPO Activity ¨C Number of Transactions 25 16 137 244 1997 171 204 1998 323 415 1999 398 289 2000 78 23 2001 20 2002 21 2003 2004 59 34 TTM IPO Issuances by Subsector 1 Q1 2003 ¨C Q2 2005 U.S. IT Sector IPOs 1 IPO Backlog (2) # IPOs Historic Tech IPO Activity As of June 17, 2005. Source: Capital IQ. 2005 YTD 1 19 13 1 2 7 11 9 12 20 18 11 8 0 20 40 60 80 100 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 5
  • 8. Summary Of Median Performance For U.S. Technology IPOs Since Mid-2003 H2 2003 H1 2004 % Companies with Revenue < $25MM 11% 10% % Companies Unprofitable 16% 19% Median Quarters of Profitability 6 5 % Companies Trading Below IPO 37% 52% IPO Performance Statistics H2 2003 $85,000 $72,493 36.3% 6 4.5% 13.5% H1 2004 $86,000 $87,357 54.8% 5 7.6% (3.0%) Offering Amount TTM Revenue TTM Revenue Growth Quarters of Profitability EBIT Margin % Change From IPO (1) TTM H2 2004 $74,300 $47,447 60.3% 3 4.4% 5.3% H2 2004 34% 32% 3 34% YTD 2005 $141,813 $93,436 70.1% 8 17.0% 0.4% Period Median Profile (1) YTD 2005 (1) 5% 26% 8 47% As of June 17, 2005. Source: Jefferies Broadview¡¯s IPO Database / Hoover¡¯s IPO Central / Capital IQ. IPO Statistics (1) 6
  • 9. Chinese Technology Capital Markets (NASDAQ) Activity In 2004 and 2005 YTD ($Millions) As of 5/30/05. Source: Broadview¡¯s IPO Database / Hoover¡¯s IPO Central / Capital IQ 7
  • 10. Only 6 Non-Chinese Asian Technology Companies Have Gone Public In The U.S. Since January 1, 2004 8
  • 11. M&A And Private Investment Environment 9
  • 12. Private Equity / VC Investment Activity For Chinese Technology Companies Continues To Be Strong Representative Chinese Technology Investments Over The Past 12 Months ($Millions) While the majority of investment activity has been in the sub-$20 range, investors are increasingly gaining a higher level of comfort and looking to put more money into larger enterprises VC firms raised a total of U.S.$699 million in 2004 for investing in Mainland China, according to Zero2IPO 10 Japan-China Bridge $6.0 BeyondSoft Jun-05 Carlyle Group $20.0 Target Media Jun-05 Apax, Greylock $20.0 Fiberxon Jun-05 Legend, Doll Capital $6.0-7.0 Worksoft Jun-05 Doll Capital, Walden $10.0 ApexOne Microelectronics Jun-04 IDG, Qualcomm, Tom Online $3.5 Great Wall Software Aug-04 Granite, Intel, International Finance, JAFCO $20.0 HiSoft Oct-04 McGraw-Hill, Tiger NA PRCEdu Jan-05 Granite, Venrock, NEA, Redpoint, Acer, JAFCO, Intel UOB $50.0 BCD Semiconductor Jun-04 DFJ, Google, Integrity, Peninsula Capital, Bridger, China Equity, China Value, Venture TDF $100.0 Baidu Jun-04 Warburg Pincus $70.0 Datang Microelectronics Jul-04 WanJie Group $12.1 King-Hope Jul-04 Carlyle, Qualcomm $3.0 Enorbus Jul-04 2b Holdings, strategic investors $8.3 Smartpay Aug-04 Carlyle $15.0 Target Media Sep-04 IDG $5.0 Any8.com Oct-04 NA $16.9 Soutec Nov-04 Goldman Sachs, 3i $30.0 Focus Media Nov-04 Carlyle, Chengwei Ventures, Pacific Venture $13.0 Huaya Microelectronics Dec-04 3i $20.0 GST Dec-04 Kongzhong $0.5 eFriendsNet / Yeeyoo Dec-04 Carlyle, China Merchants, Fortune, Sino-Korea Wireless $14.0 9you Dec-04 Tiger Tech $11.0 Dangdang Dec-04 Siemens Mobile Acceleration, Morningside Tech $3.0 LinkRich Jan-05 Rensheng Fund $3.0 V516.com Jan-05 Softbank, Shanda $0.6 Blogchina Jan-05 Carlyle Group NA Easyeb Feb-05 TVG Capital, Temasek, Warburg Pincus, DragonTech $37.0 Harbour Networks Mar-05 IDG, Newbridge $12.1 HiChina / MyMai Mar-05 Jafco, Intel NA Pollex Mobile Mar-05 IDG NA wap.3g.net.cn Mar-05 TPG, General Atlantic, Newbridge $350 Lenovo Mar-05 IDG, Legend Capital $6.0 Zhongsou Mar-05 Union Fortune Investment $7.6 Gasoft Mar-05 IDG $10 Emay Softcom Apr-05 Legend, Fidelity, IDG $16.0 Zhongsou Apr-05 Gobi Partners, NTT DoCoMo, Dentsu $6.0 Digital Media Group Apr-05 IDG $4.0 Netmovie May-05 IDG $0.2 163888.net May-05 IDG, Sumitomo NA Tengwu Digi-Tech May-05 Dragon Groove $5.0 9you May-05 Investor(s) Capital Raised Company Date
  • 13. While Cross Border M&A Market In China Is Nascent, Deal Frequency Is On The Rise Representative Chinese Technology Cross Border M&A/Strategic Investments Over The Past 12 Months ($Millions) Date Announced Target Name Acquiror Name Transaction Value Transaction Type 4/21/05 PCHome CNET Networks Inc. 11.0 Acquisition 3/30/05 Three-Five System International DisplayWorks 10.4 Acquisition 2/3/05 ChinaHR Monster.com 50.0 Minority Investment 1/25/05 PRCInvestment.com Reed Elsevier NA Acquisition 1/25/05 PRCEDU Corporation McGraw-Hill Education NA Minority Investment 1/13/05 C-Valley THQ Wireless NA Minority Investment 12/27/04 Digital Media Group NTT DoCoMo 4.2 Minority Investment 12/17/04 Indiagames Tom Online 17.7 Acquisition 12/7/04 IBM PC Business Lenovo Group Ltd. 1,750.0 Acquisition 11/29/04 Actoz Shanda 91.7 Minority Investment 11/25/04 Konka Thomson 19.0 Minority Investment 10/14/04 Zhongguancun On Line Corp CNET Networks Inc. 15.0 Acquisition 10/14/04 Fengniao Photography On Line CNET Networks Inc. 1.0 Acquisition 8/19/04 Joyo.com Ltd Amazon.com Inc 75.0 Acquisition 7/26/04 eLong.com IAC/InterActiveCorp 60.0 Minority Investment 7/5/04 Davidhill Capital Inc Sina Corp 36.0 Acquisition 6/21/04 Ctrip.com Rakuten, Inc. 109.6 Minority Investment 6/15/04 Google Inc. 10.0 Minority Investment 5/11/05 Tsinghua-Shenxun (certain assets) Microsoft Corp. NA Acquisition 3/16/05 Skyinfo Index Corp. 80.0 Acquisition 11
  • 14. Select Cross Border M&A Transactions Involving Asian Technology Companies Representative Asian (ex-China) Technology Cross Border M&A/Strategic Investments Since 1/1/2004 ($Millions) 12
  • 15. Select Cross Border Indian Technology Deals In 2004 ($Millions) 13 Ygyan Consulting Ltd Moirai Media Solutions Inc Oramasters Inc Afrocom Technologies Pvt Ltd Daksh eServices Pvt Ltd Paral System Software Pvt Ltd e-Serve International Ltd Webneuron Services Ltd Ivega Corp Pvt Ltd Hughes Software Systems Ltd Netkraft Pvt Ltd Bennett Cole & Co Ltd-Assets EAP Global India Software Group Soft Systems Ltd Future Software Ltd Majoris Systems Pvt Ltd Smart Yantra Technologies Pvt iNuCom Inc EXIMSOFT Technologies Pvt Ltd In-Reality Software Pvt Ltd Mensamind GE Capital International Target Name 2.0 Cognizant Technology Solutions 2/20/04 NA DG2L Technologies Inc 3/17/04 NA Kenexa Corp 4/2/04 NA Financial Objects PLC 4/6/04 150.0-200.0 IBM Corp 4/7/04 3.1 Kewill Systems PLC 4/8/04 .03 Citibank Overseas Invest Corp 4/10/04 8.7 Monster.com 5/23/04 NA TCG Software Services Inc 6/2/04 226.5 Flextronics International Ltd 6/8/04 12.0-15.9 Adea Solutions Inc 6/10/04 NA BBC 6/25/04 NA Sight & Sound Education Ltd 7/6/04 NA Novasoft Information Tech 7/25/04 NA iSmart International Ltd 8/22/04 25.0 Flextronics International Ltd 8/26/04 5.8-10.2 Valtech SA 9/9/04 NA Genesis Microchip Inc 9/16/04 0.3 Ascential Software Corp 10/4/04 NA Trianz Inc 10/6/04 NA Symphony Services Corp 10/19/04 NA Alliance Consulting 10/27/04 NA Investor Group 11/8/04 Transaction Value Acquiror Name Date Announced
  • 16. Private-Equity Investment Into India From Abroad 14
  • 17. Issues Facing New Public Companies 15
  • 18. Common Issues Facing Asian NASDAQ Companies Language barrier for key management team members Lack of CFOs with U.S. public company experience Credibility of financial forecasts Managing Wall Street¡¯s expectations Sarbanes-Oxley compliance Sarbanes-Oxley costs Issues Facing Non-Chinese Companies Listed on U.S. Exchanges Competition for investor mindshare versus their Chinese counterparts The focus on China has diverted investors¡¯ attention away from companies based in Japan, Hong Kong, Taiwan and Singapore. Companies are being classified as ¡°Non-China¡± Higher size threshold for going public in the U.S. Unlike Chinese technology companies which have successfully gone public at market capitalizations below US$500MM, there is a higher implicit size threshold for companies based in other Asian countries 16
  • 20. Jefferies Broadview Delivers The Full Spectrum To Clients Investment Banking Leading banking franchise focused on high growth companies Over 400 Investment Bankers (nearly 100 in technology) in over 25 offices worldwide Equity Offerings ¨C Completed over 245 public equity offerings since 1993 M&A - Ranks #1 in Technology M&A advisory assignments for 2004 (1) Private Equity - Regular dialogue and relationships with over 250 financial sponsors Restructuring - Restructured approximately $150 billion in securities and liabilities Equity Over 150 account execs cover over 2,000 institutional accounts; make markets in over 4,000 stocks #1 volume trader of NASDAQ stocks; handle over 10% of NYSE volume; top 5 trader in nearly 2,000 stocks Over 90 research analysts covering over 600 companies, over 70% of companies having a market cap less than $5.0 billion Debt Dedicated high yield team of over 40 experienced senior professionals Integrated sales, trading, research, capital markets and banking functions #1 underwriter of mid-cap high yield, led by team that joined Jefferies from Drexel Burnham Investment Banking Equity Asset Management Debt Technology Companies Cash Management Capital Partners High Yield Private Placements Structured Finance Trading Sales Research Capital Markets Industry Coverage Mergers and Acquisitions Financial Sponsors Restructuring Private Client Services Offers A Full Suite Of Investment Banking Products And Services To Serve High Growth Companies Throughout The Corporate Lifecycle Ranked by volume of reported deals. Source: Mergermarket. 18
  • 21. Global Investment Bank With Top Technology Franchise A leading institutional brokerage and investment banking firm ¨C led by one of the most powerful capital markets trading platforms in the industry Principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF), a holding company with an equity market capitalization of over $2 billion and over 1,800 employees in over 25 offices worldwide ¡° Investment grade¡± ratings by Standard & Poor¡¯s and Moody¡¯s #1 performing investment bank by stock price over the last 10 years (1) with over 50% employee ownership (1) Wall Street Journal, March 2004. * Offices of Jefferies Group, Inc. subsidiaries Jefferies International Limited or Quarterdeck Investment Partners, LLC, or affiliate Broadview International LLC. ** Sydney and Melbourne Offices of Australian affiliate, Burdett Buckeridge Young Limited, Israel office affiliate, Axcess International, Inc. Austin San Francisco Los Angeles Dallas Houston New Orleans Chicago Nashville Atlanta Richmond Boston Stamford New York Jersey City Washington* London * Paris* Zurich* Tokyo* Sydney ** Melbourne ** Silicon Valley Hong Kong* $0 $4 $8 $12 $16 $20 $24 $28 $32 $36 $40 $44 12/31/92 11/5/93 9/9/94 7/14/95 5/17/96 3/21/97 1/23/98 11/27/98 10/1/99 8/4/00 6/8/01 4/12/02 2/14/03 12/19/03 10/22/04 Jefferies Share Price ($ U.S.D) $0 $4 $8 $12 $16 $20 $24 $28 $32 $36 $40 $44 12/31/92 11/5/93 9/9/94 7/14/95 5/17/96 3/21/97 1/23/98 11/27/98 10/1/99 8/4/00 6/8/01 4/12/02 2/14/03 12/19/03 10/22/04 Jefferies Share Price ($ U.S.D) Austin Recent Asia Transactions $80,600,000 Initial Public Offering Co - Manager China Finance Online Co. Limited $80,600,000 October 2004 Initial Public Offering Co-Manager China Finance Online Co. Limited $66,000,000 August 2004 has been acquired by $66,000,000 August 2004 has been acquired by $66,000,000 August 2004 has been acquired by $66,000,000 August 2004 has been acquired by $165,100,000 has divested its Handset Division to June 2004 $165,100,000 has divested its Handset Division to Initial Public Offering Co - Manager $106,000,000 December 2004 Ninetowns Digital World Trade Initial Public Offering $106,000,000 December 2004 Ninetowns Digital World Trade Co-Manager Financial Advisor to the Seller June 2004 Financial Advisor to the Seller 19 $0 $4 $8 $12 $16 $20 $24 $28 $32 $36 $40 $44 12/31/92 11/5/93 9/9/94 7/14/95 5/17/96 3/21/97 1/23/98 11/27/98 10/1/99 8/4/00 6/8/01 4/12/02 2/14/03 12/19/03 10/22/04 Jefferies Share Price ($ U.S.D) San Francisco Los Angeles Dallas Houston New Orleans Chicago Nashville Atlanta Richmond Boston Stamford New York Jersey City Washington* London * Paris* Zurich* Tokyo* Sydney ** Melbourne ** Silicon Valley Hong Kong*
  • 22. Jefferies Broadview Is A Leader In Technology M&A 2004 ÄêýÌå¼°µçѶ¹«Ë¾²¢¹º½± 2004 ×î´óµÄ°²È«¼¼ÊõÏîÄ¿ 2004 Èí¼þÏîÄ¿ 2003 Technology M&A League Table 2 1 CSFB 20 2 Jefferies Broadview 19 3 Citigroup Inc 16 3 UBS 16 5 Houlihan Lokey 14 Citigroup JP Morgan Credit Suisse First Boston Goldman Sachs Morgan Stanley Jefferies & Company 6 29 5 33 4 33 3 38 2 40 1 44 Rank Financial Advisor 2004 Technology M&A League Table 1 # of Deals Rank Financial Advisor # of Deals Ranked by volume of reported deals. Source: SDC Ranked by volume of reported deals. Source: MergerMarket 20
  • 23. Substantial Public Equity Issuance Track Record Focused On High Growth Companies Since 1993, Jefferies has raised over $29 billion through over 240 IPOs and follow-on offerings April 2005 $40,842,000 Follow - On Offering Co - Manager April 2005 $40,842,000 Follow - On Offering Co - Manager $99,000,000 May 2005 Initial Public Offering Co-Manager May 2005 $554,200,000 Initial Public Equity Offering Co-Manger 21 November 2004 $257,933,296 Initial Public Offering Co - Lead Manager November 2004 $257,933,296 Initial Public Offering Co - Lead Manager $78,000,000 March 2005 Initial Public Offering Co-Manager
  • 24. Superior Aftermarket Distribution Support for our Clients Jefferies Broadview is committed to becoming the top trader of our clients¡¯ stock 1 Source: Autex, as of June 1, 2005; data from the later of offering or January 1, 2004. Lead Manager Co-Manager Co-Manager Co-Manager Lead Manager Co-Manager Sole Book Manager Book Running Lead Manager Book Running Lead Manager Co-Lead Manager Lead Manager Co-Lead Manager 22
  • 25. A Trading Powerhouse Of NASDAQ and OTC Stocks Extensive trading relationships and aftermarket support help maximize valuation of new issues Typically top trader in lead-managed underwritings #1 or #2 trader in 80% of co-managed underwritings since 2003 Continued expansion of our Research Sales group to enhance new issue capabilities Our seasoned research sales professionals have previously worked at firms such as Bear Stearns, Lehman Brothers, JP Morgan, Morgan Stanley, Merrill Lynch and Citigroup Top Volume Trader of NASDAQ Stocks Top 5 Trader of NASDAQ Stocks Jefferies¡¯ superior equity sales and trading platform is leveraged by the reach of our Investment Banking clients Source: Autex, January 1, 2004 ¨C December 31, 2004. Market share weighted by total volume traded in Bulletin Board Market, Nasdaq National Market, and Nasdaq Small Cap Market segments as a percentage of total trading; rank does not include trading firms. % of Total Volume Traded 0.0% 5.0% 10.0% 15.0% Jefferies Bear Stearns UBS Citigroup Goldman Sachs FGP Morgan Stanley Merrill Lynch CSFB SG Cowen 23 Bear Stearns Citigroup UBS CSFB Merrill Lynch Jefferies Morgan Stanley RJ JP Morgan Goldman Sachs Number of Stocks 405 1,208 1,248 1,569 1,868 2,188 2,376 2,403 2,566 4,831 0 500 1,000 1,500 2,000 2,500 3,000
  • 26. Top Tier Equity Research Platform Focused on High Growth Companies 19 research professionals dedicated to technology 620 companies under coverage with emphasis on growth and middle market companies Have initiated coverage on over 149 technology companies since January 2004 0 2002 2003 2004 Market Cap. Of Companies Under Coverage: Software Services & Media Applications Software Rob Schwartz Infrastructure Software Katherine Egbert IT Services & Federal IT Joe Vafi Internet & New Media Youssef Squali Business & IT Services Craig Peckham Knowledge Services Richard Close Communication & Media Romeo Reyes Media Robert Routh European Software Simon Andrews Software, Services & Media Derrick Wenger IT Services Matthew McKay Communications & Computing Infrastructure Network Infrastructure George Notter U.S. and European Telecom Ian Macleod Semiconductors John Lau Semiconductors Adam Benjamin European Hardware Tech Titus Menzies Healthcare Biotechnology Adam Walsh¡¯ Healthcare Delivery & Technology Glen Santangelo Medical Devices & Diagnostics Ryan Rauch 24 Other Companies Under Coverage Technology Companies Under Coverage 100 200 300 400 500 600 700
  • 27. Jefferies¡¯ Equity Research Ranks 2nd in The Wall Street Journal's ¡°Best on the Street 2005 Analysts Survey¡± Source: The Wall Street Journal 13 th annual ¡°Best on the Street¡±, May 16 th , 2005 25 0.833 6 5 Avondale Partners 15 0.133 45 6 UBS 0.133 45 6 Banc of America Securities 13 0.171 35 6 Deutsche Bank 12 0.250 24 6 Legg Mason 11 0.261 23 6 Robert W. Baird 10 0.175 40 7 Standard & Poor¡¯s 9 0.184 38 7 A.G. Edwards 8 0.212 33 7 Raymond James 7 0.219 32 7 Wachovia Securities 6 0.259 27 7 Friedman, Billings, Ramsey 5 0.318 22 7 Piper Jaffray 4 0.157 51 8 J.P. Morgan Chase 3 0.421 19 8 Jefferies 2 0.169 59 10 Merrill Lynch 1 Batting Average No. of Qualifying Analysts Total Awards Firm Rank
  • 28. Jefferies Covers A Wide Range Of Companies Across The Various Technology Verticals Computer Services/Financial Tech. Craig Peckham Automatic Data Processing BISYS Group, Inc. Ceridien Certegy Checkfree Corp. eFunds Equifax First Data Corp. Fiserv, Inc. Global Payments Hewitt Associates InterCept Intuit Inc. Life Sciences ¨C Pharma. Services David Windley, Glen Santagelo aaiPharma, Inc. Albany Molecular Research, Inc. Alkermes, Inc Charles River Laboratories International Connectics Corporation Covance, Inc. Endo Pharmaceuticals Holdings Forest Laboratories, Inc ICON Plc IMS Health, Inc. ISTA Pharmaceuticals Kendle International, Inc. Noven Pharmaceuticals, Inc PAREXEL International, Inc. PRA International, Inc Professional Detailing Pharmaceutical Prod. Dev. SFBC International,Inc Ventiv Health AmerisourceBergen Corp Cardinal Health Caremark Rx Express Scripts Henry Schein McKesson Corp Medco Health Solutions Owens & Minor The Patterson Companies Life Sciences ¨C Biotechnology Adam Walsh, Robin Campbell Abgenix, Inc Advanced Magnetics, Inc Amgen, Inc. Biogen, Inc. Cypress Bioscience Genentech, Inc. Genzyme Corp Hollis-Eden Pharmaceutical Keryx Biopharmaceuticals MannKind Corporation Internet & New Media Youssef Squali aQuantive, Inc Ask Jeeves, Inc China Finance Online Co Earthlink, Inc. eBay, Inc. FindWhat.com Google, Inc iVillage, Inc J2 Global Communications Netflix, Inc United Online, Inc ValueClick, Inc Yahoo!, Inc IT Services Joseph Vafi Affiliated Computer Services Anteon Corporation BearingPoint CACI International CCC Information Services Group Cognizant Technology Solutions Computer Services Corporation Dynamics Research, Corp. Electronic Data Systems Telecom Services & Equipment Richard Klugman, Ian Macleod Alaska Communications AT&T Corp. BellSouth Corp. CenturyTel, Inc. Cincinnati Bell Citizens Communication Commonwealth Telephone CT Communications Earthlink, Inc General Communication IDT Corp InterNap Application Software Robert Schwartz, Simon Andrews Aspen Technology, Inc Cognos Hyperion Solutions Kronos, Inc Manhattan Associates MicroStrategy Open Text RightNow Technologies Salesforce.com Siebel Systems Sybase, Inc Media & Entertainment David Brenner, Meredith Fischer, Robert Routh Mediacom Communications Carmike Cinemas, Inc Central European Media Enterprises 4Kids Entertainment, Inc Cedar Fair, LP Crown Media Holdings,Inc Insight Communications Lions Gate Entertainment Marvel Enterprises Outdoor Channel Holdings Pixar Animation Studios Playboy Enterprises The Topps Company ValueVision Media World Wrestling Entertainment Semiconductor Cap Equipment Adam Benjamin Applied Materials, Inc Cymer,Inc. KLA-Tencor Corporation LTX Corporation Mattson Technology,Inc Nova Measuring Instruments Novellus Systems, Inc Photronics, Inc Rudoplh Technologies, Inc Semiconductor Manufacturing Intl. Communications Equipment George Notter ADC Telecommunications ADTRAN Corp Advanced Fibre Communications Carrier Access Corp CIENA Corp. Lucent Technologies Nortel Networks Redback Networks, Inc Sonus Networks Tekelec Tellabs, Inc Terayon Communications Systems Infrastructure Software Katherine Egbert Akamai Technologies, Inc. Altiris, Inc BEA Systems Inc CheckPoint Software Technologies Citrix Systems, Inc Internet Security Systems McAfee, Inc Mercury Interactive Corp Novell Inc Opsware, Inc Red Hat Inc RSA Security Inc. Secure Computing Corp TIBCO Software Inc. Websense, Inc. Labor Ready Manpower MoneyGram International Online Resources Corp. Paychex Robert Half International SS&C Technologies, Inc. Total System Services Watson Wyatt Infosys Technologies Ltd ManTech International Corp. MTC Technologies Ninetowns Digital PEC Solutions Perot Systems SRA International Syntel Unisys Taiwan Semiconductor Manu Therma-Wave Inc Ultratech, Inc. Cirrus Logic Sigmatel Silicon Image SiRF Technology Holdings Omnivision SigmaTel Silicon Image NPS Pharmaceuticals, Inc. SciClone Pharmaceuticals XOMA, Ltd. Acambis Cambridge Antibody Technology deCODE Genetics SkyePharma Net2Phone Primus Telecom Qwest Communications International Inc. SBC Communications Inc. Sprint FON Group SureWest Communications United Online, Inc Verizon Communications Inc. Ericcson ADR France Telecom SA Hellenic Telecommunications Koninklijke(Royal) Nokia ADR 26
  • 29. Contact Information CONFIDENTIAL DRAFT DAVID A. LIU Managing Director Technology Investment Banking Jefferies & Company, Inc. Broadview, a division of Jefferies 950 Tower Lane, 18 th Floor Foster City, CA 94404 T: (650) 573-4803 F: (650) 573-4801 Email: [email_address] ; [email_address]