Tuesday, January 19, 2010

UBS RESEARCH US Internet and Interactive Entertainment GOOG, VMW

US Morning Meeting Highlights

Google reviewing its businesses in China
After thwarting concerted phishing/malware attacks (targeting human rights activist/political dissidents), Google is placing their operations in China ‘under review’. Google's China search revenue in 2009 was roughly $400-500MM (1-2%
of total; $0.25-0.30 in EPS). Baidu and Google collectively account for 95% of the
Chinese search market (63% and 31%, respectively). Our checks suggest
Google.cn has already removed censoring filters for several keywords, increasing
the possibility that Google.cn could be shut down (at least for a period of time);
negotiations with China's government continue.

VMware acquires Zimbra
VMware, a provider of virtualization software, has agreed to acquire web mail
client, Zimbra from Yahoo. According to the terms of the deal, VMware will
purchase all Zimbra technology and intellectual property, while Yahoo will retain
the right to use Zimbra technology in its communication services. Financials of the
deal have not been disclosed. Yahoo! had acquired Zimbra for $350MM in 2007.

Google Docs gets increases file storage
Google announced that users will soon be allowed to upload any type of file to its
Docs service. This will include photos, music, movies, and Zip archives. In
addition, Google also increased the size of individual downloads. The company
will apply the same permissions-based sharing system it has for documents that it

Modern Warfare2 crosses $1B in retail sales
Activison’s Call of Duty: Modern Warfare2 has crossed $1B in retail sales
worldwide since its launch in November. The company previously announced the
game had recorded $550MM worldwide in sales within 5 days of its release.

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