Goldman Stanley, Inc.

Project Aardvark
Presentation to the Board of Directors
January 29, 2010

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Confidential Draft

Table Of Contents
Executive Summary

Aardvark Valuation

Potential Acquisitions

11

Process Recommendations

16

Appendix

19

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Executive Summary

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Executive Summary

As of January 29, 2010, Aardvarks share price and valuation are at all-time highs,
having more than doubled since early 2009

As Aardvarks stock price has soared in value, it has also generated over $35B in
cash & cash-equivalents

As Aardvarks cash balance grows, it is likely to face shareholder pressure to reinvest the cash in its business and to make significant acquisitions

Given Aardvarks strong currency and cash balance, it could easily make several
tuck-in acquisitions or larger-scale acquisitions to acquire customers

Such a strategy would allow Aardvark to capture more of the smartphone, laptop, and
desktop markets, and significantly improve its software offerings

Given Aardvarks cash position, such acquisitions could be made with 100% cash
or in the case of a larger deal, stock could also be used

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Aardvark Valuation

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Valuation Summary

Aardvarks current share price of $192.61 far exceeds the value implied by
comparable public companies

Recent comparable transactions show higher implied valuation ranges due to flurry of
consolidation and hardware M&A activity over 2009

Discounted Cash Flow Analysis under base-case assumptions shows implied

valuation on-par with Aardvarks current share price, implying that share price is
justified

All valuation analysis is based on base-case financial projections in line with Wall
Street analyst expectations

Given Aardvarks cash balance and high valuation multiples vs. similar public
companies, few competitors are well-positioned to make substantial acquisitions

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Aardvark Valuation Summary

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Aardvark Comparable Public Companies

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Aardvark Precedent Transactions

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Aardvark Discounted Cash Flow Analysis

DCF Assumptions:
Discount Rate:
Terminal EBITDA Multiple:

12.5%
7.0 x

Model Uses Base Case Financial

Projections
Mid-Year Convention Used For PV
Of Cash Flows

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Potential Acquisitions

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Potential Acquisitions

Given Aardvarks large cash balance, it could make a wide variety of acquisitions
ranging from small tuck-in deals to acquire technology and IP to larger deals driven
by customer or market share acquisition

Tier 1 Potential Acquisitions

Tier 1 acquisition candidates are worth over $1 billion and would significantly
boost Aardvarks market share or result in substantial revenue or cost synergies
Leading candidates include ARM, for its chipset technology and integration with
Aardvarks existing products, and Research in Motion to capture additional
share in the corporate smartphone market

Tier 2 Potential Acquisitions

Tier 2 acquisition candidates are worth less than $1 billion and would enhance
Aardvarks core technology and fill in gaps in existing products
Potential acquisitions include specialized chipset and semiconductor companies
as well as Web 2.0, social media, and mobile software companies

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Potential Acquisition Candidates

Tier 1 Acquisition Candidates

Tier 2 Acquisition Candidates

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Company Profile: ARM

Management Team:

ARM Holdings
Headquarters:
Employees:
Founded:

Cambridge, UK
1700
ARM
1990

Warren East
Tudor Brown
Graham Budd
Mike Muller
Tim Score
John Cornish
Ian Drew
Antonio Viana

Holdings is a supplier of semiconductor

intellectual property and components of digital
electronic products. It designs and licenses
Key Partners:
Financial Information:
intellectual property rather than manufacturing and
selling semiconductor chips, and it licenses its IP to
Market Cap:
$2.5B
Electronic Arts, LSI Logic,
a wide network of hardware, mobile, and
Cash:
$204M
Microsoft, National Semiconductor,
networking companies. It also provides tools to
2009 Revenue:
$490M
Nokia, NVIDIA, Rambus, Real
2009 EPS:
$7.85
optimize system-on-chip designs.
Networks,
Samsung, and Toshiba.
2010E Revenue:
$531M
Products:
2010E EPS:

$10.97

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Processors ARM provides 32-bit embedded

microprocessors based on a common architecture
that delivers high-performance, power efficiency,
and reduced system cost.
System IP Serves as the connection between
processors, memory, and peripherals to ensure
optimum performance.
Multimedia ARM provides graphics processors
that enable embedded graphics, audio, and video
applications.
Physical IP Provides SoC integrated circuits
and logic, embedded memory, and interface IP.
Tools ARM subsidiaries provide compilers,
debuggers, simulators, and other optimization tools

CEO
President
COO
CTO
CFO
EVP, Systems
EVP, Marketing
EVP, Sales

Company Profile: Research In Motion

Management Team:

Research In Motion
Headquarters:
Employees:
Founded:

Waterloo, ON
12,000
1984

Financial Information:
Market Cap:
Cash:
2009 Revenue:
2009 EPS:
2010E Revenue:
2010E EPS:

Research In Motion designs the BlackBerry

smartphone and creates solutions for the
worldwide mobile communications market,
including a variety of software for the BlackBerry
device. In addition to its line of BlackBerry devices,
the company also provides enterprise server
software to support businesses using the device.

Jim Balsillie
Mike Lazaridis
Don Morrison
Robin Bienfait
Brian Bidulka
David Yach

Products:

$36B
$2.5B
BlackBerry Pearl 3G Provides Trackpad and
$13B
dedicated media keys as well as SureType
$3.70
technology and 3G network support.
$17B
BlackBerry Bold Provides extended battery life
$5.03

as well as GPS, Wi-Fi, and 3G network support.

BlackBerry Curve 8500 Includes Trackpad and
dedicated media keys, easy media sharing, and
2.0 MP camera.
BlackBerry Tour 9630 Provides GPS,
worldwide compatibility, and 3.2 MP camera.
BlackBerry Storm Features Wi-Fi, SurePress
technology, and 3G network support.
BlackBerry Curve 8900 Features thin,
lightweight design as well as GPS and Wi-Fi
support and 3.2 MP camera.

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Key Partners:
AT&T, Brightstar, Digital China,
GPXS, Hewlett-Packard, IBM,
Skype, Sprint, Tata Indicom, TMobile, Verizon, Virgin, and
Vodafone,

Co-CEO
Co-CEO
COO
CIO
CFO
CTO

Process Recommendations

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Key Recommendations

We recommend engaging in targeted discussions with the Tier 1 acquisition

candidates and assessing their receptiveness to M&A discussions

At the same time, Goldman Stanley will reach out to Tier 2 candidates and introduce
Aardvark as a potential acquirer

M&A process with Tier 1 candidates will take significantly longer due to the scale of
the companies, so we recommend conducting both processes simultaneously

Depending on responses from Tier 1 and Tier 2 candidates, Goldman Stanley and
Aardvark may do additional research to determine other potential acquisitions and
then approach them

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Process Recommendation

Broad
Marketing

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Appendix

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Aardvark Projected Income Statement

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Aardvark Comparable Public Companies

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Aardvark DCF Analysis WACC Calculation

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