December, 2001

The Life After …

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•International Terror•Intifada•NASDAQ

How Bad Is it ?!

Next Year We’ll make the big step

ahead…

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Bill

ion

sSupply / Demand Repealed

Shares of top five tech firms:Cisco Systems, Intel, Microsoft, Oracle, Sun Microsystems

The world has reached an absurd disparity between the number of outstanding shares of technology stocks and the number of people out there to chase them:

World population

Equity Capital Markets Update

The IPO Market will probably not gain much momentum in the last five weeks of 2001. According to Dealogic, there are only 51 IPOs in the pipeline. This is a considerable decline when compared to the same time last year when 187 companies were scheduled to go public.

The Pipeline

IPO Dollars in Backlog (millions of Dollars)

Technology represents

42% of the dollars in the IPO

pipelines Energy$600M

Financial$3,600M

Healthcare$1,100M

Other $1,700M

Consumer$800M

Tech$5,700M

Mutual Funds Flows

Money Markets: (as of November 20, 2001)

• Assets at an all-time record high of $2.29 trillion

• While money market yields have reached historical lows, they still offer institutional investors a higher return than treasury bills and commercial paper.

Mutual Funds Flows

Equity Funds: (as of November 20, 2001)

• Three consecutive weeks of hefty inflows-assets of $2.73 trillion

• Half of the week’s (November 13-20) inflows of $2.1 billion went into large cap growth funds and half went into small and aggressive growth funds

New Offerings are Trickling Back:

Follow-On Pricings

• Due to Deteriorated market conditions, supply of follow-ons is lighter and the appetite for properly positioned follow-ons is growing

• Although continuing to exhibit concerns about valuations and fundamentals, investors continue to seek growth opportunities

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“Cash Is King…”

• Much less money- 20-25 %

• Very little new investments (in new companies)

• New emphasis on profit, cash flow

• Different schedules- raising money takes a lot of time

• Different legal environment

Venture Capital

New reality in the next few years:

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Get down... New Economy

Old Economy

• Back to reality- sales and profit are “In” again!

• We are five years back…

• Planning of financing and fund raising, sales and profits

• It’s a new world- and we need to get used to it…

In The long run- “The New Economy”?!

What is the market looking for in a tech company?

• A strong management team

• Consistent growth

• A low cash burn rate

• A clear sign to profitability

• Avoid unnecessary hype

• Under promise and over deliver!

Key Take Aways

The New Tech World…