CONFIDENTIAL | 25 JANUARY 2010

PRESENTATION TO INVESTORS | VALUATION ANALYSIS

Project Google

Sample Valuation
Confidential Project Google

Table of Contents

I. INDUSTRY OVERVIEW………………………………………………… 3

II. COMPANY OVERVIEW………………………………………………… 6

III. FINANCIAL OVERVIEW……………………………………………….. 10

IV. APPENDIX……………………………………………………………….. 18

Sample Valuation
 Project Google

INDUSTRY OVERVIEW | INTERNET SOFTWARE & SERVICES

Sample Valuation 3
Industry Overview Project Google

Global Search Market Posted 46% Growth in 2009

 The worldwide internet search reached over 131 billion queries in December 2009. This statistic
represents: (1)
 4 billion searches per day
 175 million searches per hour
 2.9 million searches per minute

 The U.S. had the largest share of the global individual search market with 22.7 billion searches
conducted by people age 15 or older. (2)
25,000 Top 10 Countries by Number of Searches Conducted
22%
Global Searches (MM)

20,000

15,000 13%
December-08
10,000 48%
December-09
35%
38% 61%
5,000 44% 53% 28% 92%

0
United China Japan United Germany France South Brazil Canada Russian
States Kingdom Korea Federation

Sample Valuation 1) Source: “comScore Reports Global Search Market Growth of 46 percent in 2009.” (January 22, 2010) 4
2) Source: “comScore Reports Global Search Market Growth of 46 percent in 2009.” (January 22, 2010)
Industry Overview Project Google

Google Sites Had a Dominate Share Of Search Query Volume in 2009

 The U.S. core search market grew 16% overall in 2009

 Google Sites search query volume grew 21 %
 Microsoft Sites had the greatest growth in search volume at 49%
 Ask Network increased its search query volume by 12%

Sample Valuation 5
 Project Google

COMPANY OVERVIEW | GOOGLE INC.

Sample Valuation 6
Company Overview Project Google

Selected Company Data

(1) (2)
Company Information Selected Market Data
Company Name Google Inc. Stock Valuation Date Jan/25/10
Ticker: GOOG Share Price as of (01/25/10) $529.0
Fiscal Year Ending Dec-31-08 F.D. Shares Outstanding 320.3
Fiscal Year Ending + 1 Dec-31-09
Equity Value $169,435.4
Fiscal Year Ending + 2 Dec-31-10
Marginal Tax Rate 35.0% Net Debt ($21,994.4)
Beta 1.08 Enterprise Value $147,441.0

700 %

600 %

500 %

400 %
Google
300 % Nasdaq

200 %

100 %

0%

Google NASDAQ

Sample Valuation 1)
2)
Based on company filings.
Based on closing prices as of January 25, 2010.
7
Company Overview Project Google

Google Stock Price Trading History (1)

$700 12,000
$650
$600 10,000

Volume in Thousands
$550
$500
$450 8,000
$400
$350 6,000
$300
$250 4,000
$200
$150
$100 2,000 Volume
$50 Share Price
$0 0

Price Volume

High (01/04/2010) $626.75 High (04/17/2009) 10,730

Low (03/09/2009) $290.89 Low (12/24/2009) 858.7
Average $456.18 Average 3,480
Volume Share Price

Sample Valuation 1) Source: Yahoo! Finance.

Note: Price and volume data are based on closing prices and volumes.
8
Company Overview Project Google

Google Stock Trading History (1)

26 Oct 09
16 Sep 09 On2 Technologies Announced Proposed
$700 Google Acquires Carnegie Settlement in Litigation. -Reuters
03 May 09 Mellon Spin-Off
$650 ReCapture Inc. - Reuters
12 Feb 09 Apple and
$600 Google Ties are
$550 Google Investigated. -
Exits Radio NYT
$500 Advertising 06 Dec 09
Business. - 13 Jan 2010
$450 Google Buys Online
Reuters 09 Nov 09 Rejecting
$400 Word Processing
Startup AppJet.- Censorship, Google
05 Aug 09 Google Signs Agreement Threatens To Quit
$350 To Acquire AdMob. - Reuters
China. -Reuters
$300 Google to acquire On2 Reuters
03 Apr 09 technologies.-Reuters
$250 26 Mar 09 23 Nov 09
Google Could Be in
$200 Talks To Buy Google To Buy Display
Google Cut 200
Twitter. - Reuters. Advertising Startup
$150 Jobs From
Sales Force. - Teracent. -DJ
$100 Reuters
$50
$0

Sample Valuation 1) Yahoo! Finance.

Note: Price and volume data are based on closing prices and volumes.
9
 Project Google

FINANCIAL OVERVIEW | GOOGLE INC.

Sample Valuation 10
Financial Overview Project Google

Valuation Summary PREMIUM IMPLIED 2009E MULTIPLES

GOOGLE VALUATION – TO 01/25/2010
IMPLIED PRICE PER SHARE PRICE: $533.50 EBITDA P/E

COMPARABLE
PUBLIC $170.89 $1081.61 212.2% - (50.0%) 7.2x – 34.7x 9.5x – 60.1x
COMPANIES (1)

PRECEDENT $193.75 $1617. 37 175.4% - (67.0%) 7.9x – 50.8x 10.8x – 90.0x

TRANSACTIONS
(2)

DISCOUNTED $ 553.59 $781.66 Median: $659.9 (3.6%) - (31.7%) 18.8x – 25.6x 30.8x – 43.5x
CASH FLOW
(3)

PREMIUMS PAID $540.46 $1348. 58 (1.3%) - (60.0%) 18.4x – 42.7x 30.1x – 75.0x
ANALYSIS
(4)

52-WEEK RANGE $290.89 $626.76 (83.4%) - (14.9%) 10.8x – 21.0x 16.2x – 34.9x
(5)

ANALYST PRICE
TARGETS $600.00 $635.00 (11.1%) - (16.0%) 20.2x – 21.2x 33.4x – 35.3x
(5)
$200.00 $700.00 $1,200.00 $1,700.00

1) Based on selected comparable companies for the “Internet Software & Services” sector.
2) Selected transactions are based on data provided by techcrunch.com and company press-releases.
3) Reflects WACC of 12.1% and exit multiple of 14.5x.
4) Source: Techcrunch.com. Includes transactions greater than $1 billion from 2007 to date.
5) Based on closing prices as of January 25, 2010.
Sample Valuation 6) Based on selected Wall Street analysts„ equity reports on October 16, 2009. 11
 Financial Overview Project Google
($ in millions, except per share data )

Comparable Public Companies (1)

Multiples Analysis
Share
Price % of 52- Market Enterprise EV/Revenue EV/EBITDA
Company Name Ticker 1/11/2010 Week High Capitalization Value Cash Debt LTM FYE +1 FYE +2 LTM FYE +1 FYE +2
Amazon.com, Inc. AMZN $120.4 17.5% $52,915.0 $49,030.0 $4,001.0 $116.0 2.3x 2.1x 1.6x 30.9x 27.5x 19.2x
eBay Inc. EBAY $23.7 8.2% $30,630.3 $27,671.0 $3,159.3 $200.0 3.3x 3.2x 3.0x 9.2x 9.0x 8.0x
Yahoo Inc. YHOO $15.9 12.0% $22,220.8 $17,801.3 $4,503.1 $83.6 3.7x 3.8x 3.6x 10.3x 10.5x 10.0x
Microsoft Corp. MSFT $29.3 7.0% $260,494.6 $260,494.6 $36,728.0 $5,996.0 4.1x 3.8x 3.5x 9.8x 9.5x 8.6x
Maximum $120.4 17.5% $260,494.6 $260,494.6 $36,728.0 $5,996.0 4.1x 3.8x 3.6x 30.9x 27.5x 19.2x
75th Percentile $52.1 13.4% $104,809.9 $101,896.1 $12,559.3 $1,649.0 3.8x 3.8x 3.5x 15.5x 14.7x 12.3x
Median $26.5 10.1% $41,772.6 $38,350.5 $4,252.0 $158.0 3.5x 3.5x 3.3x 10.1x 10.0x 9.3x
Mean $47.3 11.2% $91,565.1 $88,749.2 $12,097.8 $1,598.9 3.3x 3.2x 2.9x 15.0x 14.1x 11.5x
25th Percentile $21.7 7.9% $28,527.9 $25,203.5 $3,790.6 $107.9 3.0x 2.9x 2.7x 9.6x 9.4x 8.5x
Minimum $15.9 7.0% $22,220.8 $17,801.3 $3,159.3 $83.6 2.3x 2.1x 1.6x 9.2x 9.0x 8.0x

Google Inc. GOOG $533.5 14.9% $170,879.4 $148,885.0 $21,994.4 $0.0 8.9x 8.3x 7.2x 14.2x 14.0x 11.8x

Margins Analysis

Revenue Growth (CAGR) EBITDA Growth (CAGR) EBIT Growth (CAGR) LTM CapEx EBIT Margin EBITDA Margin
Company Name FYE '06-08 FYE '08-10 FYE '06-08 FYE '08-10 FYE '06-08 FYE '08-10 % Revenue LTM FYE +1 FYE +2 LTM FYE +1 FYE +2
Amazon.com, Inc. 33.8% 26.7% 42.1% 34.7% 51.0% 25.7% 2.0% 5.7% 4.6% 5.7% 7.3% 7.5% 8.3%
eBay Inc. 19.6% 3.2% 18.3% 3.8% 19.3% 8.2% 6.6% 26.3% 29.6% 31.9% 35.9% 35.4% 37.9%
Yahoo Inc. 8.8% (4.9%) (2.5%) (0.9%) (13.5%) (20.8%) 9.5% 20.1% 8.8% 13.2% 35.9% 36.6% 36.5%
Microsoft Corp. 6.9% 6.3% 7.9% 3.3% 5.9% 3.0% 4.9% 37.1% 35.4% 36.0% 41.8% 39.8% 40.4%
Maximum 33.8% 26.7% 42.1% 34.7% 51.0% 25.7% 9.5% 37.1% 35.4% 36.0% 41.8% 39.8% 40.4%
75th Percentile 23.2% 11.4% 24.3% 11.5% 27.2% 12.6% 7.3% 29.0% 31.0% 32.9% 37.4% 37.4% 38.5%
Median 14.2% 4.7% 13.1% 3.5% 12.6% 5.6% 5.8% 23.2% 19.2% 22.5% 35.9% 36.0% 37.2%
Mean 17.3% 7.8% 16.5% 10.2% 15.7% 4.0% 5.8% 22.3% 19.6% 21.7% 30.2% 29.8% 30.7%
25th Percentile 8.3% 1.2% 5.3% 2.3% 1.0% (2.9%) 4.2% 16.5% 7.7% 11.3% 28.7% 28.4% 29.4%
Minimum 6.9% (4.9%) (2.5%) (0.9%) (13.5%) (20.8%) 2.0% 5.7% 4.6% 5.7% 7.3% 7.5% 8.3%

Google Inc. 47.4% 13.9% 49.0% 16.1% 46.9% 12.3% 5.7% 53.5% 46.1% 48.1% 62.7% 59.4% 61.3%

Sample Valuation 1) Based on selected comparable companies for the “Internet Software & Services” sector. 12
 Financial Overview Project Google
($ in millions)

Precedent Transactions
Announce Target LTM Transaction EV/Revenue EV/EBITDA
Date Acquiror Target Target description Revenue EBITDA Value LTM FYE+1 LTM FYE+1
04/29/07 (1) Yahoo Inc. Right Media Right Media, Inc. is an online advertising company that $70.0 $18.0 $850.0 12.1x N/A 47.2x N/A
operates the Right Media Exchange (RMX), a marketplace
that enables advertisers, publishers, and ad networks to
trade digital media.
05/18/07 (2) Microsoft Corp. aQuantive Inc., aQuantive is a digital marketing company with three $492.6 $129.5 $6,376.9 12.3x 9.9x 46.7x 39.3x
distinct business segments: digital marketing services;
digital marketing technologies; and digital performance
media.
04/13/07 (3) Google Inc. DoubleClick DoubleClick is a provider of digital marketing technology $232.0 $72.0 $3,100.0 13.4x 10.4x 46.7x 31.6x
and services with a focus on ad serving, media, video,
search and affiliate marketing.

05/17/07 (4) WPP Group 24/7 Real Media 24/7 Real Media provides multi-platform internet marketing $215.0 $20.8 $668.6 2.8x 2.2x 29.0x 22.3x
strategies including behavioral targeting, ad serving and
Web advertising.

03/15/07 (5) CISCO Systems WebEX Com. Inc. WebEx Communications Inc. provides on-demand $380.0 $124.1 $3,090.5 7.2x 6.0x 22.1x 18.6x
collaboration, online meeting, web conferencing and video
conferencing applications.

05/15/08 (6) CBS Corp. CNET Networks CNET is an interactive media company providing tech $408.2 $73.3 $1,794.3 4.3x 4.0x 23.8x 20.1x
product reviews, news and price comparisons, free
software downloads, daily videos, and podcasts.

10/23/09 (7) Adobe Systems Omniture, Inc. Omniture is a provider of online business optimization $335.5 $68.8 $1,771.0 4.9x 3.6x 24.1x 11.2x
products and services including integrated set of
optimization applications for online analytics, channel
analytics, visitor acquisition and conversion.
Maximum $492.6 $129.5 $6,376.9 13.4x 10.4x 47.2x 39.3x
75% Percentile $394.1 $98.7 $3,095.3 12.2x 8.9x 46.7x 29.3x
Median $335.5 $72.0 $1,794.3 7.2x 5.0x 29.0x 21.2x
Mean $304.8 $72.4 $2,521.6 8.1x 6.0x 34.2x 23.9x
25th Percentile $223.5 $44.8 $1,310.5 4.6x 3.7x 23.9x 19.0x
Minimum $70.0 $18.0 $668.6 2.8x 2.2x 22.1x 11.2x

1) Source: “Yahoo to buy rest of Right Media for $680mln.” (Reuters, 04/30/2007)
Note: Includes 20% stake (~$200MM) Yahoo! acquired in October, 2006.
2) Source: “Microsoft to Acquire aQuantive, Inc.” (Microsoft, 05/18/2007)
3) Source : “Google to Acquire DoubleClick.” (Google, 04/13/2007)
4) Source :”WPP has agreed to acquire 24/7 Real Media for $11.75 per share.” (WPP, 05/17/2007)
5) Source: “CISCO Announces Agreement to Acquire WebEx.”(CISCO, 03/15/2007)
6) Source: “CBS to buy CNET Networks.” (05/15/2008)
Sample Valuation 7) Source : “Adobe to Acquire Omniture.” (Adobe, 10/23/2009) 13
 Financial Overview Project Google
($ in millions, except per share data)

Discounted Cash Flow Analysis

Fiscal Year Ending 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 DCF Assumptions
Discount Rate 12.1%
Revenue (excl. TAC) $17,879.5 $20,561.4 $23,350.2 $26,275.8 $29,326.9 Tax Rate 35.0%

EBIT $8,246.3 $9,888.8 $11,470.0 $13,300.2 $14,998.1 Mid-Year Conversion (Y/N)? Y

Less: Taxes $3,074.4 $3,694.7 $4,304.0 $5,010.6 $5,680.3 Terminal Multiple 14.5x
Debt-Free Earnings $5,171.9 $6,194.1 $7,166.1 $8,289.6 $9,317.8 Gordon Growth Approach (Y/N)? N
Less: Capital Expenditures ($1,984.6) ($1,871.1) ($1,657.9) ($1,865.6) ($2,082.2) Gordon Growth Rate 8.0%
Less: Working Capital Requirements ($328.6) ($515.8) ($525.0) ($577.4) ($581.3)
Add: Depreciation and Amortization $1,302.2 $1,557.4 $1,775.0 $1,973.7 $2,216.0 Terminal Multiple Increment 1.0x
Add: Stock-Based Compensation $1,073.5 $1,155.1 $1,184.4 $1,267.9 $1,326.0 Discount Rate Increment 1.0%
Total Net Investment $62.4 $325.6 $776.6 $798.6 $878.6
Terminal Value Assumptions
Net Debt-Free Cash Flows: $5,234.3 $6,519.7 $7,942.6 $9,088.2 $10,196.4 Terminal EBITDA $18,540.1
Projection Year 1.0 2.0 3.0 4.0 5.0 Terminal Multiple 14.50
Discount period 0.5 1.5 2.5 3.5 4.5 Terminal Value $268,831.6
Discount Factor @ 12.1% 0.94 0.84 0.75 0.67 0.60 Discount Period 4.50
PV of Net Debt-Free Cash Flows: $4,944.8 $5,496.5 $5,975.8 $6,102.1 $6,109.7 Discount Factor @ 0.60
PV of Terminal Value $161,084.2
Free Cash Flow Growth Rate: % of Enterprise Value

Enterprise Value $189,713.0

Sensitivity Analysis Implied Equity Value and Share Price

Exit Multiple Enterprise Value $189,713.0
Enterprise Value 12.5x 13.5x 14.5x 15.5x 16.5x Less: Net Debt ($21,994.4)
Discount Rate

10.1% $180,286.2 $192,310.8 $204,335.4 $216,359.9 $228,384.5

11.1% $173,589.4 $185,134.6 $196,679.7 $208,224.9 $219,770.0 Implied Equity Value $211,707.4
12.1% $167,209.2 $178,298.1 $189,386.9 $200,475.8 $211,564.7 F.D. Shares Outstanding 320.3
13.1% $161,127.8 $171,782.2 $182,436.7 $193,091.1 $203,745.6 Implied Share Price $660.9
14.1% $155,328.7 $165,569.3 $175,809.9 $186,050.6 $196,291.2
Distribution of Value
Period Cash Flow 15.1%
Exit Multiple Terminal Cash Flow 84.9%
Implied Share price 12.5x 13.5x 14.5x 15.5x 16.5x Total 100.0%
Discount Rate

10.1% $631.5 $669.0 $706.6 $744.1 $781.7

11.1% $610.6 $646.6 $682.7 $718.7 $754.8 Implied Analyses
12.1% $590.7 $625.3 $659.9 $694.5 $729.2 LTM EBITDA Multiple 18.1x
13.1% $571.7 $605.0 $638.2 $671.5 $704.7 NFY EBITDA Multiple 17.9x
14.1% $553.6 $585.6 $617.5 $649.5 $681.5 Implied Gordon Growth Rate 13.4%

Sample Valuation 14
 Financial Overview Project Google
($ in millions)

WACC Analysis

Market Debt to Preferred to Equity to

Preferred Value of Total Debt to Total Total Total
Ticker Debt Stock Equity Capitalization Equity Capitalization Capitalization Capitalization
Amazon.com, Inc. AMZN $116.0 $0.0 $52,915.0 $53,031.0 0.2% 0.2% 0.0% 99.8%
eBay Inc. EBAY $200.0 $0.0 $30,630.3 $30,830.3 0.7% 0.6% 0.0% 99.4%
Yahoo Inc. YHOO $83.6 $0.0 $22,220.8 $22,304.4 0.4% 0.4% 0.0% 99.6%
Microsoft Corp. MSFT $5,996.0 $0.0 $260,494.6 $266,490.6 2.3% 2.2% 0.0% 97.8%
Median $158.0 $0.0 $41,772.6 $41,930.6 0.5% 0.5% 0.0% 99.5%
Mean $1,598.9 $0.0 $91,565.1 $93,164.1 0.9% 0.9% 0.0% 99.1%

Google Inc. GOOG $0.0 $0.0 $170,879.4 $170,879.4 0.0% 0.0% 0.0% 100.0%

Equity
Levered Unlevered Risk Cost of Cost of Cost of
Ticker Beta Beta Premium Equity Debt Preferred WACC
Amazon.com, Inc. AMZN 1.25 1.25 7.0% 13.1% 0.0% 0.0% 13.1%
eBay Inc. EBAY 1.92 1.91 7.0% 17.8% 0.5% 0.0% 17.7%
Yahoo Inc. YHOO 0.76 0.76 7.0% 9.7% 0.0% 0.0% 9.7%
Microsoft Corp. MSFT 0.96 0.95 7.0% 11.1% 2.4% 0.0% 10.9%
Median 1.11 1.10 7.0% 12.1% 0.2% 0.0% 12.0%
Mean 1.22 1.22 7.0% 12.9% 0.7% 0.0% 12.8%

Google Inc. GOOG 1.10 1.10 7.0% 12.1% 0.0% 0.0% 12.1%

Source: Company filings, Yahoo! Finance and equity research.

Weighted Average Cost of Capital (WACC) = (Cost of Debt*(1- Tax Rate) * Debt to Enterprise Value) +
(Cost of Equity * Equity to Enterprise Value) + (Cost of Preferred *Preferred to Enterprise Value )
Cost of Equity = Risk Free + (Levered Beta * Equity Risk Premium)
Risk Free Rate is based on the 30-year treasury rate of 4.375%.
Sample Valuation Equity Risk Premium (average) is sourced from equity research and press-releases. 15
 Financial Overview Project Google
($ in millions)

Premiums Analysis – Technology M&A Deals Over $1 Billion with Public,

U.S.-Based Sellers Since 01/01/2007
Date Equity Offer Share Price History Premium/(Discounts)
Acquirer Target Announced Value Price 1-Day 20-Day 1-Day 20-Day
Microsoft Corp. (1) aQuantive Inc., 05/18/07 $6,376.93 $66.50 $35.87 $31.90 85.4% 108.5%
CISCO Systems, Inc. (2) WebEX Com. Inc. 03/15/07 $3,090.52 $57.00 $25.98 $26.18 119.4% 117.7%
CBS Corp. (3) CNET Networks 05/15/08 $1,794.35 $11.50 $7.95 $7.95 44.7% 44.7%
Adobe Systems, Inc. (4) Omniture, Inc. 10/23/09 $1,771.04 $21.50 $21.48 $21.51 0.1% (0.05%)
Hewlett-Packard (5) EDS 05/13/08 $13,900.00 $25.00 $24.13 $17.17 3.6% 45.6%
Oracle Corp. (6) Sun Microsystems 04/20/09 $7,400.00 $9.50 $6.69 $7.94 42.0% 19.6%
Dell Inc. (7) Perot Systems 09/21/09 $3,900.00 $30.00 $17.91 $17.00 67.5% 76.5%
CISCO Systems, Inc. (8) Starent Systems 10/13/09 $2,900.00 $35.00 $34.97 $34.39 0.1% 1.8%
Hewlett-Packard (9) 3Com 11/11/09 $2,700.00 $7.90 $5.41 $5.84 46.0% 35.3%
IBM (10) SPSS 07/28/09 $1,200.00 $50.00 $35.09 $33.37 42.5% 49.8%
Max $66.50 $35.87 $34.39 119.4% 117.7%
75th Percentile $46.25 $32.72 $30.47 62.1% 69.8%
Median $27.50 $22.81 $19.34 43.6% 45.1%
Mean $31.39 $21.55 $20.33 45.1% 49.9%
25th Percentile $14.00 $10.44 $10.21 13.2% 23.6%
Min $7.90 $5.41 $5.84 0.1% (0.0%)

1) Source: “Microsoft to Acquire aQuantive, Inc.” (Microsoft, 05/18/2007)

2) Source: “CISCO Announces Agreement to Acquire WebEx.”(CISCO, 03/15/2007)
3) Source: “CBS to buy CNET Networks.” (05/15/2008)
4) Source : “Adobe to Acquire Omniture.” (Adobe, 10/23/2009)
5) Source: “HP to Acquire EDS for $13.9 Billion.” (HP, 05/13/2008)
6) Source: “Sun and Oracle.” (Sun, 04/20/2009)
7) Source: “Dell to Acquire Perot Systems for $3.9Billion.” (Dell, 09/21/09)
8) Source: “CISCO Announces Agreement to Acquire Starent Networks.” (CISCO,10/13/2009)
Source: “HP to Acquire 3Com for $2.7 Billion.” (HP, 11/11/2009)
Sample Valuation 9)
10) Source: “IBM to Acquire SPSS Inc. to Provide Clients Predictive Analytics Capabilities.” (IBM, 07/28/2009)
16
 Financial Overview Project Google

Wall Street Analysts’ Price Targets

Analyst Price Earnings Per Share
Firm Date Name Rating Target
Susquehanna Financial Group 10/16/2009 Marianne Wolk Positive $625.00 $22.72 - $25.69

Morgan Stanley 10/16/2009 Mary Meeker Overweight $625.00 $20.17 - $22.87

Jefferies & Co. 10/16/2009 Youssef H. Squali Buy $600.00 $23.02 - $26.54

Credit Suisse 10/16/2009 Spencer Wang Outperform $600.00 $22.51 - $26.18

Collins Stewart 10/16/2009 Sundeep Aggarwal Buy $635.00 $22.68 - $25.89

Median $625.00 $22.68 - $25.89
Mean $617.00 $22.22 - $25.43

Sample Valuation Source: Thomson Reuters One Banker and analysts‟ equity research reports on October 16, 2009. 17
 Project Google

APPENDIX

Sample Valuation 18
 Appendix Project Google
($ in millions, except per share data)

Projected Income Statement

Income Statement (Exc. TAC) - Google Inc.:
Historical Statement Projected Statements
FY2006A FY2007A FY2008A FY2009P FY2010P FY2011P FY2012P FY2013P

Net revenue (Exc.TAC): $7,296.1 $11,660.1 $15,856.6 $17,879.5 $20,561.4 $23,350.2 $26,275.8 $29,326.9
Other cost of revenue: $916.2 $1,715.2 $2,682.5 $2,826.3 $2,976.0 $3,124.3 $3,258.5 $3,380.1
Research & development: $1,601.3 $2,120.0 $2,793.2 $3,071.7 $3,521.8 $3,920.0 $4,441.2 $4,942.4
Sales & marketing: $849.5 $1,461.3 $1,946.2 $2,071.5 $2,324.2 $2,692.3 $2,949.7 $3,358.1
General & sales: $751.8 $1,279.3 $1,802.6 $1,663.7 $1,850.5 $2,143.6 $2,326.2 $2,648.2
Total operating Expenses: $4,118.8 $6,575.7 $9,224.6 $9,633.2 $10,672.6 $11,880.2 $12,975.6 $14,328.9
Operating Income: $3,177.3 $5,084.4 $6,632.0 $8,246.3 $9,888.8 $11,470.0 $13,300.2 $14,998.1
4% 11% 11% 9% 10%
EBITDA: $4,207.3 $6,920.7 $9,251.7 $10,622.0 $12,601.3 $14,429.4 $16,541.8 $18,540.1
EBITDA margin: 57.7% 59.4% 58.3% 59.4% 61.3% 61.8% 63.0% 63.2%
EBITDA growth: N/A 64.5% 33.7% 14.8% 18.6% 14.5% 14.6% 12.1%

Interest & other, net: $461.0 $589.6 $316.4 $537.7 $667.4 $827.0 $1,015.9 $1,231.3
Impairment of equity investments: (1) $0.0 $0.0 ($1,094.8) $0.0 $0.0 $0.0 $0.0 $0.0
Pre-tax income: $3,638.3 $5,674.0 $5,853.6 $8,784.0 $10,556.1 $12,297.1 $14,316.0 $16,229.3
Income tax provision $933.6 $1,470.3 $1,626.7 $3,074.4 $3,694.7 $4,304.0 $5,010.6 $5,680.3
Effective Income tax: 25.7% 25.9% 27.8% 35.0% 35.0% 35.0% 35.0% 35.0%
Net Income: $2,704.8 $4,203.7 $4,226.9 $5,709.6 $6,861.5 $7,993.1 $9,305.4 $10,549.1
Net income margin: 37.1% 36.1% 26.7% 31.9% 33.4% 34.2% 35.4% 36.0%
Net income growth: N/A 55.4% 0.6% 35.1% 20.2% 16.5% 16.4% 13.4%

Weighted average diluted shares outstanding: 309.5 316.2 317.5 317.5 317.5 317.5 317.5 317.5
Diluted EPS (GAAP): $8.74 $13.29 $13.31 $17.98 $21.61 $25.17 $29.31 $33.22

Depreciation: $494.4 $807.7 $1,212.2 $1,050.4 $1,336.5 $1,605.8 $1,844.0 $2,112.0

Amortization: $77.5 $159.9 $287.7 $251.8 $220.9 $169.2 $129.7 $104.0
Stock-based compensation: (2) $458.1 $868.6 $1,119.8 $1,073.5 $1,155.1 $1,184.4 $1,267.9 $1,326.0

Sample Valuation 1)
2)
Impairment of equity investments in AOL and Clearwire.
Per 2008 10K - SBC was estimated to be ~ $1.0 billion in 2009 and ~$1.4 billion thereafter.
19
 Appendix Project Google

Revenue And Operating Expenses Projections

Total Net Revenue (Exc. TAC) - Google Inc.:
Historical Statements Projected Statements
FY2006A FY2007A FY2008A FY2009P FY2010P FY2011P FY2012P FY2013P

Search/Paid click revenue: $7,173.9 $11,396.8 $14,919.6 $16,553.3 $18,829.8 $21,275.0 $23,814.5 $26,422.4
% of advertising revenue: 99.9% 99.3% 98.2% 97.3% 96.2% 95.4% 94.5% 93.6%

Display/YouTube revenue: $10.0 $82.0 $270.0 $459.0 $734.4 $1,028.2 $1,388.0 $1,804.4
% of advertising revenue: 0.1% 0.7% 1.8% 2.7% 3.8% 4.6% 5.5% 6.4%

Total advertising revenue: $7,183.9 $11,478.8 $15,189.6 $17,012.3 $19,564.2 $22,303.1 $25,202.5 $28,226.9
% of net revenue: 98.5% 98.4% 95.8% 95.2% 95.2% 95.5% 95.9% 96.2%

Licensing & other revenue: $112.3 $181.3 $667.0 $867.1 $997.2 $1,047.1 $1,073.3 $1,100.1
% of net revenue: 1.5% 1.6% 4.2% 4.8% 4.8% 4.5% 4.1% 3.8%

Net Revenue: $7,296.1 $11,660.1 $15,856.6 $17,879.5 $20,561.4 $23,350.2 $26,275.8 $29,326.9
Growth: n/a 59.8% 36.0% 12.8% 15.0% 13.6% 12.5% 11.6%

Operating Expenses- Google Inc.:

Historical Statements Projected Statements
FY2006A FY2007A FY2008A FY2009P FY2010P FY2011P FY2012P FY2013P

Cost of revenue: $916.2 $1,715.2 $2,682.5 $2,826.3 $2,976.0 $3,124.3 $3,258.5 $3,380.1
% of total revenue 12.6% 14.7% 16.9% 15.8% 14.5% 13.4% 12.4% 11.5%

Research and development: $1,228.6 $2,120.0 $2,793.2 $3,071.7 $3,521.8 $3,920.0 $4,441.2 $4,942.4
% of total revenue 16.8% 18.2% 17.6% 17.2% 17.1% 16.8% 16.9% 16.9%

Sales and marketing: $849.5 $1,461.3 $1,946.2 $2,071.5 $2,324.2 $2,692.3 $2,949.7 $3,358.1
% of total revenue 11.6% 12.5% 12.3% 11.6% 11.3% 11.5% 11.2% 11.5%

General and administrative: $751.8 $1,279.3 $1,802.6 $1,663.7 $1,850.5 $2,143.6 $2,326.2 $2,648.2
% of total revenue 10.3% 11.0% 11.4% 9.3% 9.0% 9.2% 8.9% 9.0%

Total operating expenses: $3,746.1 $6,575.7 $9,224.6 $9,633.2 $10,672.6 $11,880.2 $12,975.6 $14,328.9
% net revenue: 51.3% 56.4% 58.2% 53.9% 51.9% 50.9% 49.4% 48.9%

Sample Valuation 20