Team Members: Hanh Bui

Vamsi NamburiHang Nguyen

Tejaswi PonnadaJonathan Schick

• Recap of Sector Presentation

• Stock Recommendation:– Sell– Buy

• Q&A

Agenda

Recap Recommendation Sell Buy Q&A

Weight

Recap Recommendation Sell Buy Q&A

Recap

• As of 02/28/2010, IT is overweight by 90bp– S&P500: 18.77 %– SIM: 19.67 %

• Class voted: to increase 26bp

Recap Recommendation Sell Buy Q&A

Recommendation

• Sell 430bp of IBM

• Buy 350bp of RIMM

• Buy 50bp of HPQ

• Buy 56bp of INTC

Recap Recommendation Sell Buy Q&A

Current and Proposed Weights

Recap Recommendation Sell Buy Q&A

Research In Motion

Life On Blackberry

Recap Recommendation Sell Buy Q&A

• Canadian company founded in 1984• Leading designer, manufacturer and marketer of

innovative wireless solutions for the worldwide global communications market.

• Primary revenue driver: BlackBerry wireless solution • Traditional B2B focus: sales to carriers and services

revenues from infrastructure access fee paid by carrier/distributor.

Background

Recap Recommendation Sell Buy Q&A

Competitive Advantage• International expansion

• Increasing carrier customer base in NAM with 63% revenues generated in United States.

• Expect sales to increase in Europe and Asia (China).

• Device portfolio• Segmented by multiple

price points and feature sets versus Apple’s premium web/application experience offered at a high-end price point.

Recap Recommendation Sell Buy Q&A

Competitive Advantage

• Innovation– BlackBerry Bold (RIM’s first HSDPA smart phone)– BlackBerry Storm (RIM’s first touch-screen with smart phone with the award-

winning SurePress technology)– BlackBerry Pearl Flip (RIM’s first “clam-shell” smartphone)– BlackBerry Curve 8350i (iDen-based smart phone with Push-to-Talk)– BlackBerry Curve 8900 (based on a next generation platform)

2009 R&D expenditure of $684.7 million with 5000 employees and 2 new centers in U.S. and Germany

Recap Recommendation Sell Buy Q&A

Competitive Advantage

• Unique industry position– The only company to provide network

infrastructure as part of an optimized enterprise solution

– Vertically integrated and provides both hardware and software (UI, bundled applications) and related services.

– Yields strong gross and operating margins with recurring revenue.

Recap Recommendation Sell Buy Q&A

Risks

• Competition– Intense competition: Google’s Nexus One,

Motorola Droid and HTC Eris– Apple moving toward non-exclusive distribution

strategy– Well-positioned within existing enterprise

accounts but increased competition by Apple, Microsoft, Android and other platforms

• International exposure– U.S. sales account for 63% of total revenue, any

changes in competitive, economic or regulatory environment could affect sales.

Recap Recommendation Sell Buy Q&A

Risks• Increased B2C focus

– Consumers demand low security requirements and are unwilling to pay price premium for RIM features

– Consumer focus on Internet browsing and “apps” and currently RIM offers sub-par browsing and apps experience. Future success depends on strengthening these offerings

• Increased Capital expenditure– Capital spending increased from $350M in fiscal 2008

to $834M in 2009– Expect to increase- due to new products and

“outsourcing” of fundamental research via spending on IP rights

Recap Recommendation Sell Buy Q&A

Revenue Growth

Recap Recommendation Sell Buy Q&A

EPS

Recap Recommendation Sell Buy Q&A

3 month performance

Recap Recommendation Sell Buy Q&A

1 year performance

Recap Recommendation Sell Buy Q&A

5 year performance

Recap Recommendation Sell Buy Q&A

ValuationStock Valuation Relative to Industry

High Low Median Current

P/Trailing E 3.4 .65 1.4 .87 P/Forward E 2.2 .68 1.2 .84 P/B 4.8 .4 2 1.6 P/S 4.2 .8 2.0 .9 P/CF 4.4 .7 1.6 .9 Relative to S&P 500

High Low Median Current

P/Trailing E 4.8 .84 1.8 1 P/Forward E 2.9 .81 1.6 .96 P/B 7.4 .7 2.7 2.1 P/S 9.8 2.2 4.8 2.3 P/CF 7.7 1.0 2.6 1.4

Recap Recommendation Sell Buy Q&A

Price Target

• Current price: $73.39• Multiples Average: $92.84• DCF Target Price: $110.10• 50% Multiples + 50% DCF = $101.47 or 38.2% upside

Absolute Valuation

High Low Median Current #Your Target Multiple

*Your Target E, S, B,

etc/Share

Your Target Price (F x G)

A. B. C. D. E. F. G. H.P/Forward E 45.7 10.8 25.6 14 25.6 3.3 84.48P/S 13.7 2.4 6.3 2.7 3.5 26.99 94.465P/B 22.7 2 6.3 4.7 6.3 14.79 93.177P/EBITDA 90.01 7.21 23.88 11.99 17 5.79 98.43P/CF 85.9 10 27.2 14.1 19 4.93 93.67

Recap Recommendation Sell Buy Q&A

DCFTerminal Discount Rate:= 12.0%

Terminal FCF Growth= 4.5%

Year 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

Revenue 15,161 18,478 21,118 24,075 27,445 31,287 35,042 38,546 42,015 45,376 47,645 % Grow th 21.9% 14.3% 14.00% 14.00% 14.00% 12.00% 10.00% 9.00% 8.00% 5.00%

Operating Income 3,601 4,188 4,808 4,808 6,312 7,196 8,060 8,866 9,663 10,437 10,958 Operating Margin 24% 23% 22.77% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00%

Interest and Other 29 45 90 72.22 82.33 93.86 105.13 115.64 126.05 136.13 142.94 as % of Sales 0.19% 0.24% 0.43% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30%

Taxes 893 1,036 1,180 1,184 1,558 1,776 1,989 2,187 2,384 2,575 2,704 Tax Rate 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%

Net Income 2,737 3,197 3,719 3,696 4,837 5,514 6,176 6,794 7,405 7,998 8,397

% Grow th 16.8% 16.3% -0.6% 30.9% 14.0% 12.0% 10.0% 9.0% 8.0% 5.0%

Add Depreciation/Amort 546 684 781 915 1,098 1,251 1,402 1,542 1,681 1,815 1,906 % of Sales 3.60% 3.70% 3.70% 3.80% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%

Plus/(minus) Changes WC (200) (200) (200) (200) (200) (200) (200) (200) (200) (200) (200) % of Sales -1.32% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Subtract Cap Ex 561 739 845 1,083 1,235 1,408 1,577 1,735 1,891 2,042 2,144

Capex % of sales 3.70% 4.00% 4.00% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50%

Free Cash Flow 2,522 2,942 3,455 3,328 4,500 5,158 5,801 6,401 6,995 7,571 7,959

% Grow th 16.6% 17.4% -3.7% 35.2% 14.6% 12.5% 10.3% 9.3% 8.2% 5.1%

NPV of Cash Flows 27,488.53$ 43%NPV of terminal value 35,706.30$ 57% Terminal Value 110,898.34$

Projected Equity Value 63,194.83$ 100%Free Cash Flow Yield Free Cash Yield 7.18%

Current P/E 14.80 12.67 10.89 Terminal P/E 13.21

Projected P/E 23.09 19.77 16.99

Current EV/EBITDA 9.56 8.14 7.10 Terminal EV/EBITDA 8.56

Projected EV/EBITDA 15.04 12.80 11.16

Shares Outstanding 574

Current Price 70.55$

Implied equity value/share 110.10$ Upside/(Downside) to DCF 56%

HP – Buy 50 basis points

• Best performing IT company this month in SIM at 7.9%• Continues to grow through acquisitions

– EDS 2008– 3com 2009

• Becoming the first full service provider• Revised guidance upward for 2010

– Revenues of $121.5-$122.5B vs $118-$119B– EPS of $4.37-$4.44 vs $4.25-$4.35

Recap Recommendation Sell Buy Q&A

DCFAnalyst: Jonathan Schick 11.0%

Date: 1/26/10 Terminal FCF Growth = 4.0%

Year 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E

Revenue 114,552 123678 132756 138066 143589 149332 155306 161518 167979 174698 181686

% Growth 7.97% 7.34% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%

Operating Income 9415 13419 16727 14911 15508 16128 16773 17444 18142 18867 19622

Operating Margin 8.2% 10.9% 12.6% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8%

Interest and Other -721 0 0 0 0 0 0 0 0 0 0

Interest % of Sales -1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Taxes -1,755 -2684 -3345 -2982 -3102 -3226 -3355 -3489 -3628 -3773 -3924

Tax Rate 19% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20%

Net Income 7660 10735 13382 11929 12406 12902 13418 13955 14513 15094 15698

% Growth 40% 25% -11% 4% 4% 4% 4% 4% 4% 4%

Add Depreciation/Amort 4,773 4,576 4,646 4,832 4,882 4,928 4,970 5,007 5,039 5,066 5,087

% of Sales 4.2% 3.7% 3.5% 3.5% 3.4% 3.3% 3.2% 3.1% 3.0% 2.9% 2.8%

Plus/(minus) Changes WC (2,034) 1,420 681 0 0 0 0 0 0 0 0

% of Sales -1.8% 1.1% 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Subtract Cap Ex 3695.00 3710.35 3650.79 4832.31 4882.02 4927.97 4969.78 5007.05 5039.36 5066.23 5087.20

Capex % of sales 3.2% 3.0% 2.8% 3.5% 3.4% 3.3% 3.2% 3.1% 3.0% 2.9% 2.8%

Free Cash Flow 6704 13021 15058 11929 12406 12902 13418 13955 14513 15094 15698

% Growth 94% 16% -21% 4% 4% 4% 4% 4% 4% 4%

NPV of Cash Flows 80,126 49%

NPV of terminal value 82,137 51% Terminal Value 233,222

Projected Equity Value 162,263 100%

Free Cash Flow Yield 5.49% Free Cash Yield 6.73%

Current P/E 16.0 11.4 9.1 Terminal P/E 14.9

Projected P/E 21.2 15.1 12.1

Current EV/EBITDA 8.6 6.8 5.7 9.4

Projected EV/EBITDA 11.5 9.0 7.6

Shares Outstanding 2,437

Current Price 50.15

Implied equity value/share 66.58$

Upside/(Downside) to DCF 32.8%

Terminal Discount Rate =

Terminal EV/EBITDA

Sensitivity Analysis

66.58$ 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%

9.0% 87.11 92.50 99.09 107.33 117.92 132.05

9.5% 79.95 84.26 89.43 95.76 103.66 113.83

10.0% 73.88 77.39 81.53 86.49 92.56 100.15

10.5% 68.69 71.57 74.93 78.91 83.67 89.50

11.0% 64.19 66.58 69.35 72.58 76.39 80.9711.5% 60.24 62.26 64.56 67.22 70.32 73.9812.0% 56.77 58.47 60.41 62.62 65.17 68.15

Terminal FCF Growth

Ter

min

al D

isco

un

t R

ate

Recap Recommendation Sell Buy Q&A

Valuation - multiples

Relative to Industry High Low Median Current

P/Trailing E 1.1 .54 .79 .74

P/Forward E 1.2 .57 .75 .81

P/B .7 .3 .6 .6

P/S 1.0 .5 .7 .6

P/CF 1.2 .5 .8 .7

Relative to S&P 500 High Low Median Current

P/Trailing E 1.5 .63 1.0 .67

P/Forward E 1.6 .64 .88 .77

P/B 1.4 .5 .9 1.3

P/S 1.4 .4 .7 .9

P/CF 1.8 .6 1.0 .8

Recap Recommendation Sell Buy Q&A

Valuation - multiples

Price for multiples - $60.53DCF Target Price - $66.58 50% multiples, 50% DCF - $63.55 or 22.21%

Absolute Valuation

High Low Median Current #Your Target Multiple

*Your Target E, S, B, etc/Share

Your Target Price (F x G)

A. B. C. D. E. F. G. H. P/Forward E 37.9 7.8 15.2 10.8 15.54 4.27 66.36 P/S 3.0 .5 1.0 1.0 1.0 49.19 49.19 P/B 6.9 1.3 2.5 2.7 2.5 17.96 44.91 P/EBITDA 49.79 5.07 11.93 6.86 10.0 7.07 70.70 P/CF 29.1 5.5 11.5 8.0 11.5 6.06 69.72

Recap Recommendation Sell Buy Q&A

Intel- Buy 56bp

• Market Cap: $113.4bn

• World largest semiconductor chip maker, market share of over 70%

• 80% international sales

• 2009 Q4 revenue jumped 28% year-over-year

• Benefit from IT spending rebound

Recap Recommendation Sell Buy Q&A

DCFHanh Bui Terminal Discount Rate:= 12.0%3/8/2010 Terminal FCF Growth= 4.5%

Year 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E

Revenue 39,331 42,617 46,787 50,998 55,332 59,759 64,540 69,703 74,582 80,176 % Grow th 8.4% 9.8% 9.00% 8.50% 8.00% 8.00% 8.00% 7.00% 7.50%

Operating Income 11,602 13,012 14,532 14,789 16,046 17,330 18,717 20,214 21,629 23,251 Operating Margin 29% 31% 31% 29% 29% 29% 29% 29% 29% 29%

G/L on equity investment, net; Interest and Other 319 (116) (33) (51.00) (55.33) (59.76) (64.54) (69.70) (74.58) (80.18) as % of Sales 0.81% -0.27% -0.07% -0.10% -0.10% -0.10% -0.10% -0.10% -0.10% -0.10%

Taxes 3,576 3,482 3,915 4,155 4,508 4,869 5,259 5,679 6,077 6,533 Tax Rate 30% 27% 27% 28% 28% 28% 28% 28% 28% 28%

Net Income 8,345 9,414 10,584 10,583 11,483 12,401 13,393 14,465 15,477 16,638 % Grow th 12.8% 12.4% 0.0% 8.5% 8.0% 8.0% 8.0% 7.0% 7.5%

Add Depreciation/Amort 4500 4600 4700 5,202 5,644 6,095 6,583 7,110 7,607 8,178 % of Sales 11.44% 10.79% 10.05% 10.20% 10.20% 10.20% 10.20% 10.20% 10.20% 10.20%Plus/(minus) Changes WC (241) 285 163 - - - - - - -

% of Sales -0.61% 0.67% 0.35% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Subtract Cap Ex 4,800 4,900 5,000 5,100 5,533 5,976 6,454 6,970 7,458 8,018

Capex % of sales 12.20% 11.50% 10.69% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Free Cash Flow 7,804 9,399 10,447 10,685 11,593 12,521 13,522 14,604 15,626 16,798

% Grow th 20.4% 11.1% 2.3% 8.5% 8.0% 8.0% 8.0% 7.0% 7.5%

NPV of Cash Flows 70,438.28$ 47%NPV of terminal value 81,012.42$ 53% Terminal ValueProjected Equity Value 151,450.70$ 100%Free Cash Flow Yield Free Cash Yield

Current P/E 13.86 12.29 10.93 Terminal P/E Projected P/E 18.15 16.09 14.31 Current EV/EBITDA 6.53 5.97 5.47 Terminal EV/EBITDA Projected EV/EBITDA 8.75 8.00 7.33

Shares Outstanding 5,578

Current Price 20.74$

Implied equity value/share 27.15$ Upside/(Downside) to DCF 31%

Sensitivity Analysis

Recap Recommendation Sell Buy Q&A

29.66$ 9.0% 9.5% 10.0% 10.5% 11.0% 11.5% 12.0% 12.5% 13.0%3.0% 38.67$ 35.49$ 32.76$ 30.41$ 28.35$ 26.54$ 24.94$ 23.50$ 22.22$ 3.5% 40.97$ 37.36$ 34.30$ 31.69$ 29.42$ 27.45$ 25.71$ 24.17$ 22.80$ 4.0% 43.73$ 39.56$ 36.09$ 33.16$ 30.65$ 28.48$ 26.59$ 24.92$ 23.44$ 4.5% 47.11$ 42.21$ 38.21$ 34.88$ 32.07$ 29.66$ 27.58$ 25.76$ 24.16$ 5.0% 51.32$ 45.45$ 40.75$ 36.92$ 33.72$ 31.02$ 28.71$ 26.71$ 24.96$ 5.5% 56.75$ 49.49$ 43.86$ 39.36$ 35.67$ 32.61$ 30.02$ 27.80$ 25.88$ 6.0% 63.97$ 54.70$ 47.74$ 42.34$ 38.02$ 34.48$ 31.54$ 29.05$ 26.92$

Valuation

• Current price: $20.79• Multiples Average: $26.91• DCF Target Price: $27.58• 50% Multiples + 50% DCF = $27or 31% upside

Absolute Valuation High Low Median Current #Your Target Multiple

*Your Target E, S, B, etc/Share

Your Target Price (F x G)

A. B. C. D. E. F. G. H.P/Forward E 67.5 11.9 21.3 12.7 21.3 1.50 31.87P/S 16.9 1.8 4.3 3.3 3.3 7.05 23.27P/B 15.3 1.8 3.7 2.7 3.7 7.40 27.38P/EBITDA 33.5 5.72 10.44 8.51 10.44 2.43 25.37P/CF 43.8 6.6 12.4 10 12.4 2.15 26.66

Recap Recommendation Sell Buy Q&A

Sell IBM

• International Business Machines – core focus on providing IT strategy and consulting services to business domains

• Competition in all business lines from offshore companies

• Increasing dollar value a concern for their revenue from offshore consulting

• No sign of potential breakthrough technologies (growing through acquisitions)

Recap Recommendation Sell Buy Q&A

Financial Valuations

Price Target from Valuation: $135.28

Recap Recommendation Sell Buy Q&A

DCFIBM

Analyst: Vamsi Namburi Terminal Discount Rate = 11.0%Date: 03/07/2010 Terminal FCF Growth = 4.0%

Year 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E

Revenue 95,727 98,781 102,238 106,328 107,391 109,002 111,182 113,739 116,583 119,031 120,817 % Grow th 3.2% 3.5% 4.0% 1.0% 1.5% 2.0% 2.3% 2.5% 2.1% 1.5%

Operating Income 17,248 18,838 20,519 22,329 22,552 23,435 24,460 25,023 25,648 26,187 24,163 Operating Margin 18.0% 19.1% 20.1% 21.0% 21.0% 21.5% 22.0% 22.0% 22.0% 22.0% 20.0%

Interest and Other 531 711 757 744 752 763 778 796 816 833 846 Interest % of Sales 0.6% 0.7% 0.7% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70%

Taxes 4,708 4,713 5,237 6,152 6,213 6,462 6,749 6,905 7,077 7,226 6,646 Tax Rate 26.0% 26.0% 26.5% 28.5% 28.5% 28.5% 28.5% 28.5% 28.5% 28.5% 28.5%

Net Income 13,400 13,413 14,526 15,433 15,587 16,211 16,932 17,322 17,755 18,128 16,672 % Grow th 0.1% 8.3% 6.2% 1.0% 4.0% 4.5% 2.3% 2.5% 2.1% -8.0%

Add Depreciation/Amort 4,940 5,137 5,316 5,316 5,370 5,450 5,559 5,687 5,829 5,952 3,624 % of Sales 5.2% 5.2% 5.2% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 3.0%

Plus/(minus) Changes WC 800 400 52 (532) (107) 218 556 455 933 595 121 % of Sales 0.8% 0.4% 0.1% -0.5% -0.1% 0.2% 0.5% 0.4% 0.8% 0.5% 0.1%

Subtract Cap Ex 3,509 3,621 3,747 3,934 4,296 4,033 4,225 4,550 4,314 4,166 4,349 Capex % of sales 3.7% 3.7% 3.7% 3.7% 4.0% 3.7% 3.8% 4.0% 3.7% 3.5% 3.6%

Free Cash Flow 15,631 15,329 16,147 16,284 16,554 17,846 18,823 18,914 20,203 20,508 16,068 % Grow th -1.9% 5.3% 0.8% 1.7% 7.8% 5.5% 0.5% 6.8% 1.5% -21.7%

NPV of Cash Flows 101,933 55%NPV of terminal value 84,075 45% Terminal Value 238,725 Projected Equity Value 186,008 100%Free Cash Flow Yield 9.45% Free Cash Yield 6.73%

Current P/E 12.3 12.3 11.4 Terminal P/E 14.3 Projected P/E 13.9 13.9 12.8 Current EV/EBITDA 11.2 10.4 9.7 Terminal EV/EBITDA 11.6 Projected EV/EBITDA 12.2 11.3 10.5

Shares Outstanding 1,300

Current Price 127.25$ Implied equity value/share 143.08$ Upside/(Downside) to DCF 12.4%

Debt 98,000 Cash 14,000 Cash/share 10.77

Sensitivity Analysis

Price Target from DCF: $143.08

Overall Price (50% from both DCF and Valuation) : 0.5*143.08+0.5*135.08 = $139.08

143 3.5% 4.0% 4.5% 5.0% 5.5%9% 184.01$ 194.36$ 207.01$ 222.81$ 243.14$

9.5% 169.86$ 178.14$ 188.07$ 200.20$ 215.37$ 10% 157.84$ 164.56$ 172.50$ 182.03$ 193.68$

10.5% 147.49$ 153.02$ 159.47$ 167.10$ 176.25$ 11% 138.48$ 143.08$ 148.39$ 154.59$ 161.91$

11.5% 130.56$ 134.43$ 138.85$ 143.95$ 149.90$ 12% 123.55$ 126.82$ 130.54$ 134.78$ 139.68$

Terminal FCF GrowthDi

scou

nt R

ate

Recap Recommendation Sell Buy Q&A

Stocks Analyzed

• Researched stocks in Telecom Sector with focus on low-medium market caps and growth potential

Recommendation

• Sell 430bp of IBM

• Buy 350bp of RIMM

• Buy 50bp of HPQ

• Buy 56bp of INTC

Recap Recommendation Sell Buy Q&A

Q&A

NCR

•Discount Rate: 13.2%•Terminal FCF Growth: 5%

•Current : $13.06

•DCF Target: $18.14•Upside: 39%

CAPMBeta 1.5

Analyst: Hang Nguyen Terminal Discount Rate = 13.20% Rf 4.50%Date: Jan 18, 2010 Terminal FCF Growth = 5.00% MRP 5.8%

Year 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

Revenue (Millions $USD) 4,833.59 5,124.78 5,508.49 5,938.16 6,377.58 6,824.01 7,274.40 7,725.41 8,173.48 8,614.85 9,045.59 % Growth 6.02% 7.49% 7.80% 7.40% 7.00% 6.60% 6.20% 5.80% 5.40% 5.00%

Operating Income 228.79 264.09 311.85 356.29 369.90 382.14 392.82 401.72 408.67 413.51 434.19 Operating Margin 4.73% 5.15% 5.66% 6.00% 5.80% 5.60% 5.40% 5.20% 5.00% 4.80% 4.80%

Interest and Other 142.11 99.93 52.88 59.38 63.78 68.24 72.74 77.25 81.73 86.15 90.46% of Sales 2.94% 1.95% 0.96% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

Taxes 23.40 62.38 77.69 83.13 85.71 87.89 89.62 90.85 91.54 91.66 96.25 Tax Rate 27.00% 35.00% 30.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00%

Net Income 63.28 101.77 181.28 213.77 220.41 226.01 230.45 233.62 235.40 235.70 247.49 % Growth 60.84% 78.12% 17.92% 3.10% 2.54% 1.97% 1.37% 0.76% 0.13% 5.00%

Add Depreciation/Amort 140.00 245.99 220.34 207.84 191.33 136.48 145.49 154.51 163.47 172.30 180.91 % of Sales 2.90% 4.80% 4.00% 3.50% 3.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%Plus/(minus) Changes WC (86.73) (61.85) (49.31) (59.38) (63.78) (68.24) (72.74) (77.25) (81.73) (86.15) (90.46) % of Sales -1.79% -1.21% -0.90% -1.00% -1.00% -1.00% -1.00% -1.00% -1.00% -1.00% -1.00%Subtract Cap Ex 220.00 250.00 220.34 207.84 127.55 136.48 145.49 154.51 163.47 172.30 180.91 Capex % of sales 4.55% 4.88% 4.00% 3.50% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

Free Cash Flow 70.00 159.61 230.59 273.16 347.96 294.25 303.20 310.87 317.13 321.85 337.94 % Growth 128.00% 44.47% 18.46% 27.39% -15.44% 3.04% 2.53% 2.01% 1.49% 5.00%

NPV of Cash Flows 1,474.95 52.21% Terminal Value 4,665.27NPV of terminal value 1,350.24 47.79%Projected Equity Value 2,825.19 100.00% Free Cash Yield 7.24%Free Cash Flow Yield 3.44%

Terminal P/E 18.85Current P/E 32.11 19.97 11.21 Projected P/E 44.65 27.76 15.58 Terminal EV/EBITDA 6.84Current EV/EBITDA 4.27 3.09 2.96 Projected EV/EBITDA 6.42 4.64 4.45

Shares Outstanding 155.72

Current Price 13.05 EPS consensus 0.48 Implied equity value/share 18.14 EPS guidance .41 - .51Upside/(Downside) to DCF 39.02%

Debt 25.00 Revenue consensus N/ACash 483.36 Revenue guidance N/A Cash/share 3.10

NCR18.14 13.00% 13.10% 13.20% 13.30% 13.40% 13.50% 13.60% 13.70% 13.80% 13.90% 14.00%4.50% 18.05 17.85 17.64 17.45 17.25 17.06 16.88 16.69 16.52 16.34 16.17 4.60% 18.16 17.95 17.74 17.54 17.34 17.15 16.96 16.78 16.60 16.42 16.25 4.70% 18.26 18.05 17.84 17.63 17.43 17.24 17.05 16.86 16.68 16.50 16.32 4.80% 18.37 18.15 17.94 17.73 17.53 17.33 17.13 16.94 16.76 16.58 16.40 4.90% 18.47 18.25 18.04 17.83 17.62 17.42 17.22 17.03 16.84 16.66 16.48 5.00% 18.59 18.36 18.14 17.93 17.72 17.52 17.32 17.12 16.93 16.74 16.56 5.10% 18.70 18.47 18.25 18.03 17.82 17.61 17.41 17.21 17.02 16.83 16.64 5.20% 18.82 18.59 18.36 18.14 17.92 17.71 17.51 17.31 17.11 16.92 16.73 5.30% 18.94 18.70 18.47 18.25 18.03 17.81 17.61 17.40 17.20 17.01 16.82 5.40% 19.06 18.82 18.59 18.36 18.14 17.92 17.71 17.50 17.30 17.10 16.91 5.50% 19.19 18.94 18.71 18.47 18.25 18.03 17.81 17.60 17.39 17.19 17.00

Absolute Valuation

High Low Median Current #Your Target

Multiple

*Your Target

E, S, B, etc/Share

Your Target

Price (F x G)

A. B. C. D. E. F. G. H. P/Forward E 26.8 5.3 9.9 26.8 9.9 .406 4.023 P/S 1.0 .10 .40 .40 .40 31.04 12.42 P/B 5.1 .50 1.4 4.5 1.4 2.9 4.06 P/EBITDA 13.1 1.61 4.85 4.94 4.85 2.64 12.8 P/CF 13.6 1.5 5.5 9.3 5.5 1.4 7.7

Oracle

Discount Rate 12%

Terminal Growth 4%

Current $24.76

Price Target $32.84

Upside 33.1%

Oracle

Absolute Valuation

High Low Median Current #Your Target Multiple

*Your Target E, S, B, etc/Share

Your Target Price (F x G)

A. B. C. D. E. F. G. H.

P/Forward E 117.9 10.6 25.0 13.5 21 1.55 32.55

P/S 27.5 2.7 6.2 5.0 5.3 6.1 32.33

P/B 61.9 3.4 9.9 3.8 5.2 6.26 32.57

P/EBITDA 97.13 8.06 16.27 8.81 12 2.7 32.42

P/CF 151.5 11.1 27.3 15.5 21 1.53 32.25