IP Protection - CVCA April 2004

Broadview InternationalA division of Jefferies & Company, Inc.

Intellectual Property Protectionand Venture Capital Development

The Wall Street Perspective

2005 年 4 月 8 日

保密草稿

Jefferies Broadview

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Jefferies Broadview 为客户提供全面性的服务

股券业务

150多位机构销售员针对2000多家机构投资基金；操盘 4000多种股票

纳斯达克股票交易量排名第一的经纪人；纽约股票交易所内运作交易量超过10%；是近 2000多种股票的前五名的经纪人

90多位研究分析师追踪500余家企业， 70%的企业市价总值于 50亿美

元以下债券业务

40多位经验丰富的资深专家组成专门的团队，专

事高获利项目

销售、交易、研究分析、资本市场以及银行职能，综合一体，一条龙服务

排名第一的中盘股、高获利债券包销商，由 Drexel Burnham加入 Jefferies 的成员领导

投资银行股

券

资产

管理债务

现金管理

资本合作伙伴

高获利债券

私募

结构性融资

交易

销售

研究分析

资本市场专业知识合并与收

购资金

支持单位

结构重组

私人客户服务

为高增长企业的成长周期配备全套的投资银行产品和服务

(1) 资料来源 : Mergermarket.

投资银行

排名首位的专注于在高增长企业的投资银行

400多名投资银行家，其中 100多名专长于高科技企业，遍布全球 20多个分处

股权发售：近十年内完成了240多起公开股权发行

并购： 2004年高科技企业并购业务排名第一 (1) （<10亿美元成交额）

1999年至今完成了 321项高科技并购交易，价值超越 5430亿美元

私人资本：与 250多家直接投资基金具有常规性沟通机长久性的良好关系

结构重组：近 1500亿美元的证券和债务结构重组

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高科技特许能力的全球性投资银行

排名首位的机构交易经纪及投资银行公司：由业内最具影响力的资本市场交易平台所引领

是控股公司 Jefferies集团公司 (NYSE: JEF) 的首要运作子公司； Jefferies 集团在股权市场总市值逾 20亿美元、员工超过 1700人、分布全世界 24 个城市

荣登 Standard & Poor’s和Moody’s “ ”的投资等级

是近 10年股票表现最好的投资银行、员工持股率超过 50%

(1) 华尔街日报 2004 年 3 月 .* 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.

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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

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erie

s 股

价 (

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AustinDallas

New Orleans

ChicagoNashville

Richmond

Stamford

Jersey City

伦敦*

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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

Austin

旧金山

洛杉矶Dallas

休斯敦New Orleans

芝加哥Nashville

亚特兰大 Richmond

波士顿Stamford纽约

Jersey City华盛顿 *

*巴黎 *苏黎世 *

东京 *

悉尼**墨尔本**

硅谷

香港 *

$165,100,000

has divested its Handset Division to

June 2004$165,100,000

has divested its Handset Division to

June 2004

Initial Public OfferingCo-Manager

$106,000,000December 2004

Ninetowns Digital

World Trade

Initial Public OfferingCo-Manager

$106,000,000December 2004

Ninetowns Digital

World Trade

Initial Public Offering

Co-Lead Manager

$100,000,000

Pending

Watchdata Technologies Ltd.

Recent China Transactions

$66,000,000August 2004

has been acquired by

$66,000,000August 2004


$66,000,000August 2004


$66,000,000August 2004


$80,600,000October 2004


China Finance Online Co. Limited

$80,600,000October 2004


China Finance Online Co. Limited

ManagerManager

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第一流的股权分发平台扩大了我们客户与投资基金的接触

广范的交易关系和场后交易支持优化了新股的价值– 非凡能力为新股创造从大小机构投资商来自的需求

担任主承销商后，通常是股票的最大的交易商 – 自 2003 年以来，担任副承销商后， 80% 的时候是股票的前 3 名交易商

2004 年 1 月 1 日 – 2004 年 12 月 31 日

投资银行成交额的评比排名 (1) 银行

1 Jefferies Broadview

2 Bear Stearns and Company

3 UBS

4 Citigroup

5 Goldman Sachs

6 Morgan Stanley

7 Merrill Lynch

8 Credit Suisse First Boston

9 SG Cowen Securities Corp.

10 Prudential Securities

Jefferies Broadview 在纳斯达克全国市场(NNM) 、纳斯达克小型资本市场 (SCM) 、以及场外交易公告板(OTCBB) 公布的股票成交中，是排名第二的投资银行

(1) Ranking among investment banks, based on Nasdaq NNM, SCM, and advertised OTCBB combined share volume (AutEx® BLOCKDATA January 1, 2004 to December 31, 2004).

2027

749

410

298

1026

GoldmanSachs

Jefferies

RaymondJames

Merrill Lynch

CS FirstBoston

4

最佳高科技企业并购顾问

$807,500,000

has completed a recapitalization and

restructuring

2003 年美国中型市场企业并购将

$7,600,000,000August 2000


历史上最大的半导体企业并购交易

排名金融机构交易数

1 Jefferies Broadview 32

2 Morgan Stanley 31

3 CSFB 21

3 Deutsche Bank AG 21

5 Goldman Sachs 20

5 Citigroup Inc 20

7 UBS 18

8 JP Morgan 17

9 Needham & Company Inc 13

10 Lehman Brothers 12

10 PriceWaterhouseCoopers 12

10 Houlihan Lokey 12

10 Ernst & Young 12

2004 年成交额 < 10 亿美元的高科技交易

(1) Source: Mergermarket 1/1/2004-12/31/2004. All announced deals with transaction value of less than $1 billion for 1/1/2004-12/31/2004. Includes domestic, cross border, trans-Atlantic, private, public, acquisitions, divestment, merger, demerger deals, full credit to each advisor. Includes computer software, computer hardware, semiconductors, industrial electronics, internet / eCommerce, and telecommunications hardware.

€475,000,000April 2004


2004 年媒体及电讯企业并购将

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Intellectual Property and Impact on Exit Strategies for Chinese Companies

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Is Intellectual Property Protection Important?

Key to creating sustainable long-term valueWall Street considers IP sustainability key to corporate value protection and preservation are key

Most valuable and fastest growing U.S. companies include many IP and Human Capital based businesses

Most Valuable U.S. Companies

Company Business

GE Conglomerate

Exxon Energy

Microsoft Software

Citigroup Banking

BP Energy

Wal Mart Retail

J&J Drugs

Pfizer Drugs

BofA Banking

HSBC Banking

Best Performing U.S. Stocks (10 years)1

Company Business

Biogen Drugs

NVR Banking

Apollo Education

ImClone Drugs

Chico’s FAS Clothing

Dell PC

Penn National Gaming

W Holding Banking

Jabil EMS

Jefferies (16) Banking

IP is Core Contributor to Corporate Value

(1) As of 2/05. Source: Wall Street Journal

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U.S. Investor Perspective

Key Facts Reported by WSJ 2005

– 75% of fake product confiscated by U.S. Customs originates each year from China and Hong Kong

– 90%+ of software and films sold in China are pirated

– Chinese-made pharmaceutical copies sold in 50+ countries

Traditional methods of “withholding IP” no longer practical

– Market is too dynamic and fast moving to have this barrier

Companies must develop own strategies to protect IP

– Limited assistance expected from the regulatory bodies

– Some believe government incentives exist

Chinese companies are held to higher standard

– Natural U.S. suspicion of foreign companies exists

– Contributes to “China” valuation discount despite phenomenal growth vis-à-vis U.S. counterparts

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Recent Chinese Technology U.S. Capital Markets Activity

($Millions)

Of the last 13 Chinese IPOs in U.S. markets, 8 are now trading below IPO price

Recent mixed performance of Chinese IPOs creates higher threshold for excellence and need for good corporate policies

(1) As of 3/18/04. Source: Broadview’s IPO Database / Hoover’s IPO Central / Capital IQ

TickerIssue Date Name

Offering Type

Offering Amount

TTM Revenue

TTM Revenue Growth

Quarters of Profitability

TTM EBITDA Margin

% Change From

Offering1

HRAY 2/3/05 Hurray! IPO $70.5 $53.4 131% 6 36% (18%)

CTRP 12/16/04 Ctrip.com Follow-On 109.6 302.7 221% 10 44% 128%

NCTY 12/14/04 The9 IPO 103.3 3.4 183% 7 11% 2%

NINE 12/2/04 Ninetowns IPO 105.6 21.1 43% 15 66% (17%)

CN 11/10/04 China Netcom IPO 1,141.1 7,663.4 10% 14 52% 17%

LONG 10/27/04 eLong IPO 62.1 13.3 94% 0 4% (34%)

SNDA 10/22/04 ShandaConvertible Debt

275.0 849.8 260% 10 43% NA

JRJC 10/15/04 China Finance IPO 80.6 3.5 122% 8 66% (53%)

HTX 10/7/04 Hutchison Telecom. IPO 808.7 1,597.8 32% 2 27% 31%

JOBS 9/28/04 51job IPO 73.5 45.9 77% 10 25% 20%

KONG 7/8/04 Kongzhong IPO 100.0 14.3 3,798% 5 41% (20%)

SNDA 5/13/04 Shanda IPO 152.4 72.6 84% 8 43% 179%

NYSE:SMI 3/12/04 SMI IPO 1,712.9 365.8 627% 1 48% (45%)

TOMO 3/5/04 TOM Online IPO 175.0 77.1 157% 4 30% (20%)

LTON 3/4/04 Linktone IPO 86.0 15.5 285% 4 31% (50%)

High 1,712.9 7,663.4 3,798% 15 66% 179%Median 105.6 53.4 131% 7 41% (17%)Low 62.1 3.4 10% 0 4% (53%)

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Recent Chinese Technology Cross Border M&A/Minority Investment Activity

M&A Is Still A Very Nascent Market But Strategic Investments Are Quite Common($Millions)

Date Announced Target Name Acquiror Name

Transaction Value M&A Type

2/3/05 ChinaHR Monster.com $50.0 Minority Investment

1/25/05 PRCEDU Corporation McGraw-Hill Education 18.0 Minority Investment

12/7/04 IBM PC Business Lenovo Group Ltd. 1,750.0 Acquisition

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 Baidu.com Google Inc. 100.0 Minority Investment

2/27/04 Crillion Corp Sina Corp 125.0 Acquisition

2/13/04 Shenzhen Powercom Co Ltd Investor Group 26.0 Minority Investment

IP and control issues are key factors in promoting M&A activity

Strategic investments are the “safer” means of accessing the China market for U.S. / European companies

In North America and Europe Technology, there were 2,000+ M&A deals but only 60+ IPOs in 2004

M&A is preferred “exit” for North American and European Technology Companies

As of November 24, 2004. Source: SDC.

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IP Protection Methods

Protection Through Delivery Mechanisms

– Software delivered as a Web-based Service (“SaaS”)

– Technology delivered through hardware

– Data encrypted or requires user ID authorization

Protection Through Organizational Mechanisms

– Use of networked thin clients (no hard drives)

– Modular development (development by cells)

– Development by geography (high level in U.S., low level in China)

– Core IP architecture limited to C-level execs

Protection Through Financial Mechanisms

– J.V. or minority investment to leverage China market

– Business development / license agreements

Protection Through Legal Mechanisms

– Employment agreements

– Threat of litigation

Wall Street investors need comfort that Company’s core assets (IP) have strong protection for the foreseeable future

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Conclusion

Most Valuable, Fastest Growing U.S. Companies Have Intellectual Property (and Protection) as their Core Value

Intellectual Property is Top of Mind For U.S. Investors

– IP protection is asked at every IPO or M&A meeting

– Particularly relevant for Chinese companies

U.S. Investors Link Intellectual Property to Long-Term Corporate Value

– Will Tolerate: Value decline due to IP obsolescence

– Will NOT Tolerate: Value decline due to IP theft

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Contact

DAVID A. LIUManaging DirectorTechnology Investment Banking

Jefferies & Company, Inc.Broadview, a division of Jefferies 950 Tower Lane, 18th FloorFoster City, CA 94404T: (650) 573-4803F: (650) 573-4801Email: [email protected]

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