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					                                                                                                                                Cross Asset Research
                                                                                                                                            16 May 2013




Global Technology Outlook
Entering a New Era of Cash Returns for Tech




Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result,
investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment decision.
This research report has been prepared in whole or in part by equity research analysts based outside the US who are not registered/
qualified as research analysts with FINRA.
FOR ANALYST CERTIFICATION(S), PLEASE SEE PAGE 102.
FOR IMPORTANT FIXED INCOME RESEARCH DISCLOSURES, PLEASE SEE PAGE 102.
FOR IMPORTANT EQUITY RESEARCH DISCLOSURES, PLEASE SEE PAGE 103.
Barclays | Global Technology Outlook




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Barclays | Global Technology Outlook


EXECUTIVE SUMMARY
Ben Reitzes                        • Entering a new era of cash return: We believe it is time for technology companies to
+1 212 526 9517                        get much more serious about returning cash to shareholders if they want to be
Benjamin.reitzes@barclays.com          investable in today’s market. We acknowledge that investors are afraid of major secular
BCI, New York                          shifts such as the rise of the public cloud, Software-as-a-Service (SaaS), and the sudden
                                       maturity of the smartphone market. Given these concerns, 2013 has been a challenging
                                       year for Technology as the S&P 500 IT Index increased 7.9% year-to-date vs. 14.5% for
                                       the S&P 500 (a rally since mid-April has closed some of the gap). Most large tech
                                       companies tell a tale of “cloud opportunities”, which if true, mean that many can keep
                                       revenues stable and deliver more cash to shareholders in this low interest rate
                                       environment.

                                   •    “Industrialization of Tech” in higher gear: Recent weakness in the Technology sector has
                                       come from multiple directions. Concerns range from the impact of sequestration on U.S.
                                       Federal spending (an outsized impact on networking, services, and hardware); the failure of
                                       Windows 8 (PC supply chain); and the slowdown of the iPhone (Apple, mobile supply chain,
                                       and semis). We believe that in order to convince investors to return to tech, companies
                                       must not only show that they can deliver stable revenues in the face of these challenges,
                                       but also accelerate the “Industrialization of Tech”, which we define as consistent free cash
                                       flows and return of cash to shareholders. So far, we have seen companies such as IBM and
                                       Cisco develop “Industrialized” strategies and Apple has joined recently.

                                   • Balance sheets warrant further debt issuance to achieve goals: We believe in general
                                       there has been a misuse of balance sheets. Tech companies carry much higher net cash
                                       balance to market cap ratio (about +10%) than companies in other S&P 500 sectors
                                       (-20% net cash or lower). Over the next six months, we would like to see the ratio of net
                                       cash to market cap start to trend closer to Industrials and the rest of the S&P 500. We
                                       believe that more tech companies could enter the debt markets and increase their
                                       leverage ratios in order to increase their cash returns to shareholders. Perhaps Apple’s
                                       recent foray into debt will serve as a potential catalyst. In this report, Barclays Fixed
                                       Income Research explores how tech companies can accomplish this feat even with large
                                       amounts of cash sitting overseas.

                                   • Shares have been rewarded for cash plans – we could see more: We have seen large
                                       tech companies like Apple, Cisco, and Oracle return cash to shareholders through
                                       expanded buyback programs and increased dividends. Apple has rebounded off its
                                       recent bottom and Cisco has outperformed peers in Networking. We believe others can
                                       follow suit. We are looking for European tech companies such as ARM Holdings and
                                       Capgemini to rise to the occasion. In addition, our team highlights Google, Samsung
                                       Electronics, Corning, Symantec, Delta Electronics, Visa, Canon, and many others as
                                       stocks that could rise due in part to greater future cash returns.

                                   • 2H13 more promising fundamentally despite secular threats: We believe that many
                                       companies in tech are set to grow slower in a “Cloud Era”, from storage to software.
                                       However, we believe a major part of the recent earnings warnings from Software,
                                       Networking, Hardware and some Semis companies had a significant macro component
                                       given issues such as U.S. Federal budget constraints, European weakness, and a
                                       slowdown in China. The 2H13 looks more promising given several new product cycles,
                                       prospects for q/q growth in Federal spending, and overall macro improvement. Our tech
                                       team highlights recommendations like Samsung SDI, Apple, Mediatek, AAC, Avago, NXP
                                       Semiconductor, Cisco, and many others that can benefit.

                                   As always, we appreciate your feedback and look forward to working with you in the future.

                                   Regards,

                                   Ben A. Reitzes, Global Sector Coordinator – Barclays Technology Equity Research

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Barclays | Global Technology Outlook


CONTENTS

                                   Summary of Investment Views and Key Recommendations ............................................................. 6
                                   Introduction .................................................................................................................................................. 10
                                   Sector Performance .................................................................................................................................... 36
                                   Credit: US High Grade Technology ......................................................................................................... 45
                                   Danish Agboatwala & Parth Shah: Leveraging Up

                                   EUROPE AND ISRAEL TECHNOLOGY
                                   European Technology Hardware and Software & IT Services ........................................................ 49
                                        Gerardus Vos & Andrew Gardiner: Looking past traditional ‘cash machines’
                                   Israel Technology ........................................................................................................................................ 52
                                        Joseph Wolf & David Kaplan: Focused on LCDs, handsets, cash returns

                                   U.S. TECHNOLOGY
                                   U.S. Software................................................................................................................................................. 55
                                        Raimo Lenschow: Performance gap between structural vendors and legacy software
                                        continues to expand
                                   U.S. Semiconductors................................................................................................................................... 57
                                        Blayne Curtis: Slower growth in Semis lies ahead
                                   U.S. Internet ................................................................................................................................................... 60
                                        Anthony DiClemente: Structural growth story remains intact
                                   U.S. Consulting & Computer Services .................................................................................................... 64
                                        Darrin Peller: Payment names continue to benefit from strong underlying drivers; mixed
                                        trends in IT Services
                                   U.S. IT Hardware & Data Networking..................................................................................................... 67
                                        Ben Reitzes: Hardware sectors ripe for cash return

                                   ASIA EX-JAPAN TECHNOLOGY
                                   Asia ex-Japan IT Hardware........................................................................................................................ 74
                                        Kirk Yang: PC outlook going from bad to worse; Apple supply chain also under pressure
                                   Asia ex-Japan Wireless Equipment ......................................................................................................... 76
                                        Dale Gai: Stronger China smartphone growth
                                   Asia ex-Japan Semiconductors ................................................................................................................ 78
                                        Andrew Lu & SC Bae: Investment themes beyond semi cycles
                                   Asia ex-Japan LCD Displays ...................................................................................................................... 81
                                        SC Bae, Jamie Yeh, Sunwoo Kim & Sebastian Hou: Recovery to accelerate into 2H13




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                                   JAPAN TECHNOLOGY
                                   Japan Precision Instruments ..................................................................................................................... 85
                                        Masahiro Nakanomyo: Focus on business structure reforms

                                   VALUATION & PERFORMANCE
                                   Equity Valuation Tables ............................................................................................................................. 87
                                   Equity Performance Tables ....................................................................................................................... 94

                                   CONTACTS
                                   Barclays Global Technology Team and Other Contributors .......................................................... 101




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SUMMARY OF TECHNOLOGY VIEWS AND RECOMMENDATIONS
Industry view/Analyst    Investment view                                             Company recommendations

European Software & IT   In European Software, we find more longevity in slower-     Capgemini offers significant late-cyclical exposure
Services                 growth stories due to stable maintenance bases, and         which we deem a positive as we expect growth to
Neutral                  see the IT Services companies as well-positioned to         pick up in the 2H. Moreover, the company has
                         drive improvement via cost saves and balance sheet          significant capacity for improvement as a result of its
Gerardus Vos
                         restructuring.                                              inefficient balance sheet; something we expect will be
                                                                                     addressed over coming quarters.
European Technology      European Technology has several structurally mature         ARM Holdings may not be the most obvious choice
Hardware                 names and many/most have turned to cash returns to          when it comes to looking for shareholder returns, but
Neutral                  bolster their valuations. Many names tick the boxes of      we think it is one worth considering. It is a growth
Andrew Gardiner          low-growth and high-cash conversion and are therefore       story, but with over 90% gross and 50% operating
                         prime candidates to return cash to shareholders.            margins and a high degree of cash conversion, it also
                         However, because of a lack of M&A in the space, we          generates consistent cash flow that should result in
                         think some atypical names could provide the next wave       higher shareholder returns over time.
                         of equity returns.
Israel Technology        Most of our companies are sensitive to the macro            Our top picks are GLW, CEVA, and DOX. As the LCD
Positive                 trends. The DPI market is facing an end market where        business begins to stabilize, we favour GLW, which
                         CFOs are pressured to realize cost savings. Ceragon and     should benefit from a growth recovery in larger sized
Joseph Wolf & David
                         Radwear are dealing with longer sales cycles. EZchip        TVs as well as smartphones and tablets. We expect
Kaplan
                         faces carriers’ capex cuts. Mellanox’ sales could be        CEVA’s revenues and earnings to rebound in the next
                         impacted given HP weakness; potential sale of IBM’s         few months as low-end smartphones proliferate in
                         server business; and launch of Intel’s new server           emerging markets. Amdocs’ recent results further
                         platform. We favour solid companies that operate in         boost our confidence in management’s ability to
                         more favourable segments.                                   maintain growth.
U.S. Software            Software continues to perform relatively well given its     We like VMware as we expect the software defined
Positive                 significant exposure to key secular themes. Within our      datacenter and hybrid cloud growth story to come
Raimo Lenschow           space, SaaS companies have stood out for delivering         through. We believe VMW’s refocused strategy
                         healthy results, while enterprise names have struggled.     around its three key growth initiatives will drive
                         The secular themes of Big Data and cloud/SaaS, which        revenue acceleration in the 2H13. We highlight PTC
                         ranked as the top two priorities in our recent CIO survey   inexpensive and for its an attractive internally driven
                         should remain relevant for the next few years.              margin and earnings growth story.
U.S. Semiconductors      We believe the growth in semis is much slower than          Our top picks are Avago and NXP. Avago is well
Neutral                  many anticipate. We expect revenue growth in the low-       positioned to capitalize on secular drivers in both its
Blayne Curtis            single     digits  as    computing      and    wireless     wireless (FBAR leadership driving 3G/4G & iPhone
                         communications accounted for the vast majority of           ramps) and wired (custom ASICs & parallel optics)
                         growth due to the rising penetration of PCs/laptops         businesses. For NXPI, we see upside to GMs; beatable
                         and mobile phones. We see slower growth as PCs are          2H estimates; de-leveraging/refinancing should
                         likely in permanent secular decline; smartphone growth      lower interest expense; and the potential to initiate
                         is slowing; and most of the smartphone content              and support a 3%+ dividend before debt pay down.
                         tailwinds are transitioning to lower-cost Asian
                         manufacturers.
U.S. Internet            We believe continued growth of connected devices and        Our top picks are Google and Yahoo!. We see
Positive                 internet penetration will drive structural growth of        significant growth ahead for Google’s core advertising
                         subsectors such as online advertising, online travel, and   business and believe the implementation of Enhanced
Anthony DiClemente
                         eCommerce, all of which will outweigh cyclical              Campaigns by early 3Q13 can accelerate the pace of
                         headwinds and lead to our Positive industry view.           mobile monetization. Yahoo!’s stakes in Alibaba and
                                                                                     Yahoo Japan continue to appreciate and we believe
                                                                                     monetization of these assets will lead to significant
                                                                                     capital returns.
U.S. Consulting & IT     We continue to view Payments stocks as well                 We favor companies with strong organic growth driven
Services                 positioned to benefit from strong secular growth            by sustainable secular trends and a resilient business
Neutral                  trends. Our outlook continues to be conservative for IT     model. We see solid trends at Visa despite a tepid
Darrin Peller            Services names, which have exhibited mixed                  macroeconomic environment and see upside to our
                         fundamental trends across the space and demand              FY13-14 estimates. At Total Systems, we expect core
                         pressures in the first quarter of 2013.                     issuer processing revenue growth to accelerate in
                                                                                     2H13/ 2014 due to the anniversary of headwinds and
                                                                                     a number of key portfolio conversions. We believe that
                                                                                     Lender Processing Services should benefit from the
                                                                                     better-than-expected refi activity.




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Industry view/Analyst       Investment View                                             Company Recommendations

U.S. IT Hardware            The U.S. IT Hardware sector could use higher cash           We believe the near term for Apple is quite positive;
Neutral                     returns. Companies in the space are starting to make        and are more positive on gross margins in the 2H13
                            full use of their balance sheets and have seen recent       than we were earlier in the year. We believe that our
Ben Reitzes
                            share price appreciation. We expect some areas to           margin estimates for the June and December quarters
                            rebound in 2H13 with new products and typical               are conservative given potential trends in warranty
                            seasonality.                                                accruals, mix, and Apple’s pricing plans.
U.S. Data Networking        Like the IT Hardware sector, Data Networking could          We believe that Cisco is emerging as the next way to
Neutral                     benefit if companies return more cash to shareholders,      play a theme we call the “Industrialization of Tech”,
Ben Reitzes                 but other than Cisco, companies are not quite ready to      as it returns more cash to shareholders. Cisco’s
                            do so. We expect a rebound in networking in the back        Insieme may be developing a fabric controller for
                            half of the year as new product cycles should help drive    high performance networks that help expand its
                            revenues.                                                   position in the marketplace.
Asia ex-Japan IT            We still prefer branded PC companies over original          Our top picks are Lenovo and Asustek. We expect
Hardware                    design manufacturers (ODMs), as they are taking             both companies to gain market share from their US
Neutral                     market share from their US peers. We maintain our           competitors. Both companies are also making
Kirk Yang                   cautious view on ODMs as we think no further market         progress in non-PC products, such as smartphones
                            share gains are possible and that the entire industry is    and tablets with improving margin profiles driven by
                            declining in tandem with global PC weakness.                increasing procurement scale and market share
                                                                                        gains. We also like both companies for their solid
                                                                                        balance sheets, net cash positions, and strong cash-
                                                                                        generating capabilities.
Asia ex-Japan Wireless      This year the penetration of phablets is rising in China    Our top picks are AAC Technologies and Catcher.
Equipment                   and other Asian markets. We expect demand for the           AAC has promoted its speaker box solution with LDS
Positive                    product to accelerate component upgrades in cameras         antenna to China smartphone clients. We expect
Dale Gai                    and acoustics parts in 2013 and likely metal casings in     Xiaomi to become one of AAC’s top five clients in
                            2014, along with migration of CPUs/displays.                2013 and also expect wins from Samsung. Also,
                                                                                        Catcher is likely to be one of the major beneficiaries
                                                                                        of the growing penetration of metal casings in
                                                                                        smartphones.
Asia ex-Japan               We are positive on the foundry/OSAT recovery that           We like MediaTek for its quad/octa core 3G/4G
Semiconductors              started in March 2013. We also expect three key drivers:    smartphone SoC turnkey solution; and Kinsus for its
Positive                    Apple’s expected shift to ARM processors; AMD’s new         strong FC CSP (flip chip chip scale packaging)
Andrew Lu & SC Bae          game console orders; and the commoditization of             exposure to MediaTek and to Apple in 2013-15, as
                            smartphones.                                                well as multiple drivers that should boost its
                                                                                        operating margins.
Asia ex-Japan LCD           We maintain our positive view on the global LCD panel       LG Display and Samsung SDI are our top picks in the
Displays                    industry. We expect the supply-demand dynamics of           Korean display space and Elan Microelectronics, TPK,
Positive                    the global LCD panel industry to tighten from end-2Q13      and Novatek are our preferred names in Taiwan. For
SC Bae, Jamie Yeh,          following a downturn in 1H13 on a seasonal pickup in        LG Display, we think the market is underestimating
Sunwoo Kim &                demand and continued migration to large-size TVs.           the demand for larger-size TVs. We expect Elan to
Sebastian Hou               Longer term, we believe the migration in demand to          benefit from the proliferation of touch panels. We
                            4Kx2K panels will have a significant positive impact on     expect solid earnings growth for TPK given the
                            both supply and demand as this will likely drive ultra-     tabletisation process across major operating systems.
                            large-size panel demand. 4Kx2K panels also require          We expect Novatek to benefit from the resolution
                            more capacity than full high-definition (FHD) panels.       upgrade theme and remain bullish on Samsung SDI
                                                                                        given momentum in the battery business and
                                                                                        contribution from displays.
Japan Precision             We expect a weak yen to boost the sector in 2H and see      Our top picks are Canon on low investor expectations
Instruments                 potential upside even for laggards. Many precision          despite a strong balance sheet and substantial forex
Neutral                     companies faced tough conditions that offset                sensitivity, and Topcon on potential for market
Masahiro Nakanomyo          anticipated weak yen benefits in Jan-Mar 2013. We           growth in major products and business structure
                            think precision companies need to capitalize on the         reforms.
                            better macro environment in 2013 and establish
                            foundations for future growth by revisiting their
                            businesses, reinforcing their earnings base, and revising
                            capital policy.
Source: Barclays Research




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                                   Barclays Technology team – Top picks for 2013
                                   FIGURE 1


                                       Industry                                 Company
                                         Analyst
                                       European Software & IT Services          Capgemini
                                         Gerardus Vos
                                       European Technology Hardware             ARM
                                         Andrew Gardiner
                                       Israel Technology                        Corning, CEVA, Amdocs
                                         Joseph Wolf & David Kaplan
                                       U.S. Software                            Vmware, PTC
                                         Raimo Lenschow
                                       U.S. Semiconductors                      Avago, NXP Semiconductor
                                         Blayne Curtis
                                       U.S. Internet                            Google, Yahoo!
                                         Anthony DiClemente
                                       U.S. IT Consulting & Computer Services   Visa, Total Systems, Lendor Processing
                                         Darrin Peller                          Services
                                       U.S. IT Hardware                         Apple
                                         Ben Reitzes
                                       U.S. Data Networking                     Cisco
                                         Ben Reitzes
                                       Asia ex-Japan IT Hardware                Lenovo, Asustek
                                         Kirk Yang
                                       Asia ex-Japan Wireless                   AAC Technologies, Catcher
                                         Dale Gai
                                       Asia ex-Japan Semiconductors             MediaTek, Kinsus
                                         Andrew Lu & SC Bae
                                       Asia ex-Japan LCD Displays               LG Display, Elan Microelectronics, TPK,
                                         SC Bae, Jamie Yeh & Sunwoo Kim         Novatek, Samsung SDI
                                       Japan Precision Instruments              Canon, Topcon
                                         Masahiro Nakanomyo

                                   Source: Barclays Research




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Barclays | Global Technology Outlook


                                   Underweights highlight structural concerns
                                   In addition to the tech sector’s top picks, below we list a number of Underweight-rated
                                   names.


                                   FIGURE 2
                                   Barclays Underweight Rated Names
                                       Industry                                      Company
                                         Analyst
                                       U.S. IT Hardware                              Seagate, Lexmark
                                         Ben Reitzes
                                       U.S. Semiconductors                           Broadcom
                                         Blayne Curtis
                                       U.S. Consulting & Computer Services           Western Union
                                         Darrin Peller
                                       European Technology Hardware                  Logitech, Nokia, TomTom
                                         Andrew Gardiner
                                       European Software & IT Services               Dassault Systèmes, Sage Group
                                         Gerardus Vos
                                       Japan Precision Instruments                   GS Yuasa
                                         Masahiro Nakanomyo
                                       Asia ex-Japan IT Hardware                     Compal Electronics, Foxconn Tech,
                                         Kirk Yang & SC Bae
                                       Asia ex-Japan LCD Displays                    Coretronic, Wintek
                                         Jamie Yeh & SC Bae
                                       Asia ex-Japan Semiconductors                  Nan Ya Printed Circuit Board, Vanguard
                                         Andrew Lu & SC Bae
                                       Asia ex-Japan Wireless Equipment & Products   Career Technologies, Compal
                                         Dale Gai                                    Communications, Flexium, HTC, Tripod
                                   Source: Barclays Research




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GLOBAL TECHNOLOGY OUTLOOK

                                   Entering a new era of cash return for Tech
                                   Welcome to the Barclays Global Technology Outlook, where we outline our top picks and
                                   key themes for the second half of 2013.

We believe it is time for tech     We believe it is time for technology companies to get much more serious about
companies to accelerate            returning cash to shareholders if they want to be investable in today’s market. We
efforts to return more cash to     acknowledge that investors are afraid of major secular shifts such as the rise of the public
shareholders.                      cloud, SaaS, and the sudden maturity of the smartphone market. Given these concerns,
                                   2013 has been a challenging year for Technology as the S&P 500 IT Index increased 7.9%
                                   year-to-date vs. 14.5% for the S&P 500 (a rally since mid-April has closed some of the gap).
                                   Most large tech companies tell a tale of “cloud opportunities”, which if true, mean that
                                   many can keep revenues stable and deliver more cash to shareholders in this low interest
                                   rate environment.

                                   To be clear, recent weakness in the Technology sector has come from multiple
                                   directions. Concerns range from the impact of sequestration on U.S. Federal tech spending
                                   (an outsized impact on networking, services, and other hardware); the failure of Windows 8
                                   (PC supply chain); and the slowdown of the iPhone (Apple, mobile supply chain, and semis).
                                   We believe that in order to convince investors to return to tech, companies must not only
                                   show that they can deliver stable revenues in the face of these challenges, but also
                                   accelerate the “Industrialization of Tech”, which we define as consistent free cash flows and
                                   return of cash to shareholders. So far, we have seen companies like IBM and Cisco develop
                                   “Industrialized” strategies and Apple has started joined in recently. We are looking for other
                                   mature tech companies such as Google, ARM Holdings, and Capgemini to rise to the
                                   occasion as well.

                                   Tech has underperformed other key sectors
Tech has underperformed            We believe Tech deserves to trade at a discount to many other sectors since many companies
other sectors that traditionally   exclude stock options from EPS results; and assume investors do not realize that having to buy
return more cash to                back those shares in the open market (to keep share count flattish) is a cash expense.
shareholders.                      However, the discount today seems overdone. For example, year-to-date Consumer Staples
                                   and Industrials have outperformed Technology by nine points and five points, respectively, as
                                   Apple and other tech bellwethers have weighed on the S&P 500. These groups also boast P/Es
                                   of 17.0x and 14.4x NTM EPS vs. 13.1x for Tech and only 10.5x for Tech Hardware.
                                   Year-to-date, the S&P Consumer Staples sector is up 18% and the Industrials sector is up 14%
                                   compared to Information Technology which is only up 8%. The non-tech companies in the
                                   S&P 500 Index help weather periods of weaker growth with high payouts and cost
                                   management. We believe all tech companies with ample cash should take notice.




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                                   FIGURE 3
                                   YTD Performance by S&P Sector

                                       25%
                                              19%             18%
                                       20%                                   18%                17%
                                                                                                             15%          15%
                                       15%                                                                                                    13%
                                                                                                                                                            12%
                                       10%                                                                                                                             8%          8%

                                       5%

                                       0%




                                                                             Consumer Staples
                                                             Discretionary
                                               Health Care




                                                                                                                                              Industrials



                                                                                                                                                            Energy
                                                                                                Financials




                                                                                                                         Telecommunications




                                                                                                                                                                     Information



                                                                                                                                                                                   Materials
                                                                                                             Utilities




                                                                                                                                                                     Technology
                                                              Consumer




                                                                                                                               Services
                                   Source: FactSet, Barclays Research. Prices as of May 10, 2013.


                                   Given the reasons above, Tech has caused the NASDAQ to modestly underperform the Dow
                                   Jones Industrial Average (DJIA) this year, despite Healthcare’s sizeable representation in
                                   NASDAQ. Moreover, tech holdings in the DJIA include tech companies with the best cash
                                   return ratios in the sector (Intel, IBM, Cisco, HP, and Microsoft), further helping the Dow’s
                                   performance.

                                   The DJIA is weighted more toward Industrials and Technology companies that return
                                   more cash than others …




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Barclays | Global Technology Outlook


                                   FIGURE 4
                                   Market index YTD performance


                                       116
                                       114
                                       112
                                       110
                                       108
                                       106
                                       104
                                       102
                                       100
                                         Dec-12                    Jan-13         Feb-13              Mar-13       Apr-13

                                                                      S&P 500      DJIA        Nasdaq Composite

                                   Source: FactSet. Prices as of May 10, 2013.


                                   The Tech components of the DJIA are all in the black this year…



                                   FIGURE 5
                                   YTD Performance of Tech Companies in DJIA


                                       165

                                       155

                                       145

                                       135

                                       125

                                       115

                                       105

                                        95
                                         Dec-12                    Jan-13         Feb-13              Mar-13       Apr-13

                                                       Microsoft            IBM     Hewlett-Packard        Cisco   Intel

                                   Source: FactSet. Prices as of May 10, 2013.


                                   We looked at the stock performance of each of the 24 S&P 500 GICS Industries and we note
                                   the variability of both the top three performing and worst three performing sectors. Over
                                   the past year and a half, Tech sectors have sat at the bottom of the performance charts
                                   while Consumer, Media, and Industrials-related sectors have consistently been at the top.




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Barclays | Global Technology Outlook


FIGURE 6
S&P GICS industry yearly performance ranking
Rank         2005               2006             2007                         2008                       2009                         2010                              2011                       2012           2013 (YTD)
             Energy           Real Estate       Energy               Food & Staples                       Autos                       Autos          Cons. Services                              Diversified                   Media
1                                                                       Retailing                                                                                                                Financials
          Health Care        Telco Services    Materials           Pharma, Biotech Tech Hardware                                   Transportation                       Utilities                  Media          Pharma, Biotech &
2       Equip. & Services                                             & Life Sci                                                                                                                                       Life Sci
             Utilities          Media         Software &               Household &                 Software &                     Cons. Durables Food Beverage                                    Retailing                   Insurance
                                               Services                 Personal                    Services                        & Apparel      & Tobacco
3                                                                       Products


…                                                                                                                                                                                                                               …
          Telco Services Cons. Durables &      Diversified                   Insurance         Food & Staples    Health Care                                            Banks                   Cons. Services                 Energy
22                           Apparel           Financials                                         Retailing   Equip. & Services
             Media            Health Care    Cons. Durables              Diversified           Telco Services                         Utilities                         Autos                      Utilities                  Materials
23                          Equip & Services   & Apparel                 Financials
              Autos              Semis           Banks                        Autos                       Banks                   Pharma, Biotech             Diversified                           Semis             Tech Hardware
24                                                                                                                                   & Life Sci               Financials
Source: FactSet



                                              FIGURE 7
                                              S&P 500 performance by sector QTD

                                                 8%            7%
                                                 7%
                                                 6%                              6%               6%
                                                                                                                    5%
                                                 5%                                                                                      4%
                                                 4%                                                                                                  3%                         3%                  3%
                                                 3%
                                                                                                                                                                                                                  2%               1%
                                                 2%
                                                 1%
                                                 0%
                                                                                                                                                     Consumer Staples




                                                                                                                                                                                                    Industrials
                                                                                  Financials




                                                                                                                                                                                                                                   Energy
                                                                                                                                                                                                                  Utilities
                                                             Discretionary




                                                                                                                                       Information
                                                                                                                    Health Care




                                                                                                                                                                                    Materials
                                                                                               Telecommunications




                                                                                                                                       Technology
                                                              Consumer




                                                                                                     Services




                                              Source: FactSet. Prices as of May 10, 2013.


                                              Tech has underperformed on a year-to-date basis but could continue its rebound as of
                                              late April if more cash is returned to shareholders…




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FIGURE 8                                                                    FIGURE 9
S&P 500 vs. S&P 500 Information Technology, 1H13                            S&P 500 vs. S&P 500 Information Technology, QTD

  115                                                                           105


  110                                                                         102.5



  105                                                                           100



  100                                                                           97.5



    95                                                                            95
     Dec-12           Jan-13        Feb-13       Mar-13       Apr-13              28-Mar-13            11-Apr-13          25-Apr-13     9-May-13

                            S&P 500           S&P 500: IT                                               S&P 500           S&P 500: IT


Source: FactSet. Prices as of May 10, 2013.                                 Source: FactSet. Prices as of May 10, 2013.


                                              Sustainable and strong free cash flow is obviously essential in order for companies to deliver
                                              steady returns. We acknowledge that many tech companies can’t generate the consistent
                                              cash flow necessary to deliver to shareholders and still be focused on acquisitions and
                                              growth, nor should they. However, for many of the larger companies with over $10 billion in
                                              market cap, the percentage of cash to total market cap is significant. Moreover, we believe
                                              the need to maintain a sizeable cash balance for making acquisitions doesn’t hold, especially
                                              with the ability to borrow against cash overseas.

                                              Cloud and smartphone market maturity have pressured Tech
The maturity of the                           From 2007-12, we saw an acceleration of a trend we called “disruptive mobility”, a move
smartphone market has                         toward ultra-mobility and apps so powerful that it redefined the technology sector.
contributed to the stagnation                 However, in less than a year of changing the landscape of profit pools and shifting the
in tech.                                      market cap profiles of many companies, we believe we are entering an age where mobility
                                              devices are becoming increasingly commoditized and the hardware builds that drove sector
                                              growth from device manufacturers to component suppliers are now not as important as
                                              they once were.

                                              The law of large numbers is catching up with smartphones as developed markets have
                                              become saturated…




16 May 2013                                                                                                                                  14
Barclays | Global Technology Outlook


                                   FIGURE 10
                                   Tablet and smartphone y/y growth rates

                                                                        Growth above 100%
                                       100%


                                       75%


                                       50%


                                       25%


                                        0%
                                          2010                     2011                     2012                 2013E            2014E

                                                                                Tablets            Smartphones

                                   Source: IDC, Gartner and Barclays Research


                                   The mobility trend is still relatively new and we believe that there is still significant growth
                                   for some companies with exposure to mobile semiconductors, smartphones, and tablets.
                                   However, the pace of growth appears to be slowing faster than previously anticipated. Over
                                   the past year, we have seen significant commoditization of both smartphones and
                                   components, leading to declining ASPs and fierce competition, often exemplified by the
                                   rivalry between Samsung and Apple. Nevertheless, the smartphone trend does not appear
                                   to be going away and it looks like there will be some sustained demand for such devices for
                                   the foreseeable future. As a result, we believe that the smartphone market can continue to
                                   grow long term.

                                   Mobile tech has weighed on the sector as of late …


                                   FIGURE 11
                                   IT Hardware, mobile indices vs. S&P 500 last six months

                                       125
                                       120
                                       115
                                       110
                                       105
                                       100
                                        95
                                        90
                                        85
                                        80
                                        75
                                         Nov-12          Dec-12            Jan-13           Feb-13        Mar-13         Apr-13    May-13

                                                                                Mobile Index           S&P 500

                                   Source: FactSet
                                   Note: Our mobile index includes: BBRY, NOK, AAPL, HTC, ZTE & Samsung



                                   Cloud driving disruption in Tech
The move to the cloud could        We believe many established tech players may see some pressure as more applications and
mean slower growth rates for       workloads move into the cloud. We see SaaS and Infrastructure-as-a-service (IaaS)
traditional IT vendors.            becoming increasingly popular, with services being run in proprietary remote data centers


16 May 2013                                                                                                                               15
Barclays | Global Technology Outlook


                                               that increasingly run on “self-made” hardware and software using open platforms. In fact,
                                               proprietary hardware and software face an uphill battle in the face of these threats given the
                                               rise. The rise of Amazon Web Services – a $3 billion run rate IaaS division of Amazon – has
                                               investors particularly worried given packed user conferences and rapid growth. Also, SaaS
                                               companies such as Salesforce.com and ServiceNow seem like one of the only subsectors to
                                               widely beat and raise forecasts in the recent quarter, as many companies across tech have
                                               hit road bumps. Proponents believe that the open-source cloud environments can be
                                               deployed on commodity hardware including rack servers and internal DAS drives for
                                               storage. This environment creates risks for hardware and networking incumbents in
                                               particular.

Within Tech, Software, Consulting, and Internet have outperformed Hardware YTD given threats from the cloud…


FIGURE 12
Barclays Technology performance YTD by sector

       120


       115


       110


       105


       100


        95


        90


        85




                  AEJ IT Hardware             Euro Software       US Consulting       US Internet        US IT Hardware        US Software

Source: FactSet. Prices as of May 10, 2013.


                                               We believe that many companies in tech are set to grow slower in a cloud era from storage to
                                               software. However, we believe a large component of the recent earnings warnings from
                                               software, networking, hardware and some semis companies had a significant macro
                                               component given issues such as U.S. Federal budget constraints, weakness in Europe, and a
                                               slowdown in China. Also, many established companies have SaaS and IaaS services of their
                                               own, which may stem some threats. So, while we believe the cloud movement is a threat, the
                                               shift in market cap in tech may be getting ahead of reality a bit. Some “old guard” tech
                                               companies may emerge with slower growth but still have steady revenue and cash flow
                                               streams. IBM, Cisco and Oracle come to mind among Overweight-rated names. As shown in
                                               the charts below, widely-respected data and forecasts indicate that the IT market still
                                               approximates $1.1 trillion in spending for 2013, with SaaS and IaaS representing less than a
                                               percent of total spending over the next few years. As a result, one could argue that the
                                               pendulum can shift the other way, perhaps through a catalyst such as greater cash returns,
                                               with “old tech” potentially set for a rally in the near future if the macro environment stabilizes.




16 May 2013                                                                                                                                    16
Barclays | Global Technology Outlook


                                   For reference, IDC forecasts overall IT spending will amount to $2.5 trillion in 2016 with
                                   $1.2 trillion coming from in IT Hardware. In comparison, IDC forecasts 2016 revenues for
                                   IaaS, SaaS, and Platform-as-a-Service (PaaS) to be only $30.9 billion, $57.7 billion, and $9.8
                                   billion, respectively. These forecasts mean that “old tech” could still have a large market to
                                   serve, which could generate the cash needed to get investors interested in the space again.

                                   While the cloud is a threat, it may be overdone since so much of IT spending will still be
                                   done in private…


                                   FIGURE 13
                                   Projected public and private cloud infrastructure spending as % of worldwide IT
                                   Hardware spending

                                       1.0%

                                       0.9%

                                       0.8%

                                       0.7%

                                       0.6%

                                       0.5%

                                       0.4%
                                           2010        2011         2012            2013        2014        2015         2016

                                                                     Public Cloud          Private Cloud

                                   Source: IDC



                                   Balance sheets support an era of cash return
We believe we are entering a       As tech companies aim to regain respect with investors who clearly appreciate cash return
new era of increased cash          in the current era, we believe that we will see greater cash returns in tech. We believe many
return in tech given high          companies in tech do not effectively utilize their balance sheets and have plenty of room to
percentages of market cap are      leverage free cash flow into constant and growing dividends.
tied up in cash.
                                   We believe dividend yields are growing in importance and tech companies without
                                   dividends and any hint of secular threats have been left behind. Industrials and Consumer
                                   stocks still have better average yields than Tech, even with higher stock prices. For example,
                                   the S&P 500’s Industrials Index has had an above-market average dividend yield over the
                                   past two years. In contrast, technology companies have lagged behind both the S&P 500 in
                                   general and in Industrials. It was not until early 2012 when the technology sector started to
                                   show an improving dividend yield. That being said, we have seen some sizeable increases in
                                   payouts in, well beyond the group averages from companies such as Cisco, Apple,
                                   Microsoft, and Oracle.

                                   Tech dividend yields have a long way to go…




16 May 2013                                                                                                                     17
Barclays | Global Technology Outlook


                                               FIGURE 14
                                               Comparison of dividend yields by sector

                                                 3.5%

                                                 3.0%

                                                 2.5%

                                                 2.0%

                                                 1.5%

                                                 1.0%

                                                 0.5%
                                                    May-11         Aug-11     Nov-11     Feb-12     May-12    Aug-12     Nov-12    Feb-13      May-13

                                                                   S&P 500         Technology           Industrials        Consumer Staples

                                               Source: FactSet


                                               Over the last twelve months, Tech valuations have become significantly depressed
                                               compared to those in Industrials and the S&P 500 in general. We believe that a lack of cash
                                               utilization and balance sheet optimization has partially soured tech for investors. Over the
                                               last year, the S&P 500 and the S&P 500 Industrials Index have traded at about 14.4x NTM
                                               P/E, over a full turn ahead of the S&P 500 Information Technology Index.

                                               Industrials have achieved much better multiples compared to tech bellwethers…

FIGURE 15
Key non-tech company valuations vs...
                                                                         Forward
                                                  Market          EPS      P/E                                           Dividend EBITDA EBIT
 Ticker       Company Name             Price       Cap           (NTM)    (NTM)    ROE      ROIC       ROA      FCF/NI     Yield  Margin Margin

  MMM                 3M              $110.48 $76,253            $6.86    16.1x    26.9%    20.9%     13.6%       0.9x    2.3%    25.9%       21.5%
    BA              Boeing            $94.24     $71,498         $6.47    14.6x    83.0%    27.5%      4.6%       1.3x    2.1%     9.6%       7.3%
   CAT            Caterpillar         $88.62     $58,266         $7.35    12.1x    37.4%    13.7%      6.7%       0.2x    2.3%    18.1%       13.5%
   KO             Coca-Cola           $42.15 $187,726            $2.19    19.2x    28.0%    19.4%     10.9%       0.9x    2.7%    27.2%       23.0%
  DHR              Danaher            $61.90     $42,879         $3.50    17.7x    12.8%    9.9%       7.3%       1.2x    0.2%    22.0%       17.3%
  DOV               Dover             $74.00     $12,662         $5.43    13.6x    16.9%    11.7%      8.3%       1.1x    1.9%    20.5%       15.9%
  EMR         Emerson Electric        $57.96     $41,665         $3.69    15.7x    19.0%    13.7%      8.3%       1.3x    2.8%    20.3%       17.0%
    GE         General Electric       $22.90 $236,789            $1.65    13.9x    12.3%    3.5%       2.0%       1.1x    3.3%    18.9%       13.4%
  HON             Honeywell           $77.74     $61,165         $5.04    15.4x    24.6%    15.8%      7.2%       0.9x    2.1%    15.1%       12.6%
    JNJ      Johnson & Johnson        $85.76 $240,890            $5.46    15.7x    17.8%    14.8%      9.2%       1.1x    3.1%    31.3%       25.6%
  MCD            McDonald's           $100.20 $100,480           $5.80    17.3x    36.8%    19.7%     16.0%       0.7x    3.1%    35.7%       30.2%
   PEP             PepsiCo            $83.00 $128,353            $4.44    18.7x    28.8%    14.2%      8.4%       1.2x    2.7%    18.6%       14.5%
   PG         Procter & Gamble        $78.76 $215,863            $4.19    18.8x    14.0%    10.5%      6.8%       0.9x    3.1%    24.0%       20.4%
   ROK             Rockwell           $87.92     $12,279         $5.76    15.3x    40.9%    27.2%     13.5%       1.2x    2.4%    18.1%       15.8%
   TYC               Tyco             $33.87     $15,716         $1.95    17.4x    -3.5%    -2.7%     -1.7%      -2.1x    1.9%     1.2%       1.9%
   UTX      United Technologies       $95.25     $87,563         $6.21    15.3x    20.3%    12.3%      6.4%       1.1x    2.2%    17.4%       14.7%
  WMT             Wal-Mart            $78.89 $259,741            $5.34    14.8x    23.0%    14.4%      8.6%       0.7x    2.4%     7.7%       5.9%
   DIS         Walt Disney Co.        $67.20 $121,023            $3.70    18.2x    14.7%    11.4%      7.7%       0.8x    1.1%    26.0%       21.2%
Average                                                                   16.1x    25.2%    14.3%      8.0%       0.8x    2.3%    19.9%       16.2%
Source: FactSet. Prices as of May 10, 2013.




16 May 2013                                                                                                                                      18
Barclays | Global Technology Outlook


FIGURE 16
Key tech bellwether valuations
                                                                                        Forward
                                                Market             EPS                    P/E                                                                                                                    Dividend EBITDA                                        EBIT
Ticker     Company Name               Price      Cap              (NTM)                  (NTM)                         ROE                ROIC                      ROA                   FCF/NI                   Yield  Margin                                       Margin

CSCO       Cisco                     $21.10    $112,505            $2.02                    10.4x                  16.3%                 12.3%                      9.0%                       1.2x                  3.2%                    28.2%                     22.7%
IBM        IBM                      $204.47    $226,715           $17.00                    12.0x                  85.2%                 38.6%                      14.1%                      0.9x                  1.9%                    24.7%                     20.2%
AAPL       Apple                    $452.97    $425,180           $39.98                    11.3x                  42.8%                 42.8%                      28.5%                      1.1x                  2.7%                    33.9%                     30.9%
MSFT       Microsoft                 $32.69    $272,997            $3.02                    10.8x                  27.5%                 23.2%                      14.8%                      1.7x                  2.8%                    40.1%                     35.5%
HPQ        Hewlett-Packard           $21.54    $41,874             $3.47                      6.2x                -41.4% -24.0%                                 -10.6%                         -0.7x                 2.5%                    11.5%                     7.4%
INTC       Intel                     $24.50    $121,790            $1.92                    12.8x                  22.7%                 18.8%                      14.2%                      1.0x                  3.7%                    40.1%                     25.3%
Tech Bellwethers Average                                                                     10.6x                 25.5%                 18.6%                      11.7%                      0.9x                  2.8%                    29.8%                     23.7%
Source: FactSet. Prices as of May 10, 2013.


                                              We believe in general there has been a misuse of balance sheets in tech. For example, tech
                                              companies carry much higher net cash balance to market cap ratio (about +10%) than
                                              companies in other S&P 500 sectors (-20% net cash or lower). Over the next six months, we
                                              would like to see the ratio of net cash to market cap start to trend closer to Industrials and
                                              the S&P 500. We believe that more tech companies could enter the debt markets and
                                              increase their leverage ratios in order to increase their cash returns to shareholders. For
                                              more information see the section by credit analyst Danish Agboatwala titled, “Leveraging
                                              Up” on page 45.

                                              The Technology sector has consistently had a higher ratio of net cash to market cap
                                              than Industrials, Consumer Staples, and the market in general…


                                              FIGURE 17
                                              S&P 500 net cash to market cap by sector

                                                 20%
                                                 10%
                                                   0%
                                                -10%
                                                -20%
                                                -30%
                                                -40%
                                                -50%
                                                -60%
                                                                                                                                                           Apr-12




                                                                                                                                                                                                                                                                       Apr-13
                                                                          Jul-11




                                                                                                                                                                                      Jul-12
                                                                                            Sep-11




                                                                                                                                                                                                        Sep-12
                                                                                   Aug-11


                                                                                                     Oct-11




                                                                                                                                                                                               Aug-12


                                                                                                                                                                                                                 Oct-12
                                                                 Jun-11




                                                                                                                       Dec-11


                                                                                                                                         Feb-12




                                                                                                                                                                             Jun-12




                                                                                                                                                                                                                                   Dec-12


                                                                                                                                                                                                                                                     Feb-13
                                                                                                                                Jan-12


                                                                                                                                                  Mar-12




                                                                                                                                                                                                                                            Jan-13


                                                                                                                                                                                                                                                              Mar-13
                                                        May-11




                                                                                                                                                                    May-12




                                                                                                                                                                                                                                                                                May-13
                                                                                                              Nov-11




                                                                                                                                                                                                                          Nov-12




                                                                          S&P 500                                      Technology                                        Industrials                                      Consumer Staples

                                              Source: FactSet. Prices as of May 10, 2013.




16 May 2013                                                                                                                                                                                                                                                                        19
Barclays | Global Technology Outlook


                                   FIGURE 18
                                   S&P 500 EV/EBITDA multiples by sector

                                       11.0x

                                       10.0x

                                        9.0x

                                        8.0x

                                        7.0x

                                        6.0x

                                        5.0x




                                                                                                                                                  Apr-12




                                                                                                                                                                                                                                                              Apr-13
                                                                 Jul-11




                                                                                                                                                                             Jul-12
                                                                                   Sep-11




                                                                                                                                                                                               Sep-12
                                                                          Aug-11


                                                                                            Oct-11




                                                                                                                                                                                      Aug-12


                                                                                                                                                                                                        Oct-12
                                                        Jun-11




                                                                                                              Dec-11


                                                                                                                                Feb-12




                                                                                                                                                                    Jun-12




                                                                                                                                                                                                                          Dec-12


                                                                                                                                                                                                                                            Feb-13
                                                                                                                       Jan-12


                                                                                                                                         Mar-12




                                                                                                                                                                                                                                   Jan-13


                                                                                                                                                                                                                                                     Mar-13
                                               May-11




                                                                                                                                                           May-12
                                                                                                     Nov-11




                                                                                                                                                                                                                 Nov-12
                                                                 S&P 500                                  Consumer Staples                                                   Industrials                                  Technology

                                   Source: FactSet. Prices as of May 10, 2013.



                                   Apple joins the cash party – and sees immediate boost to shares
Apple may have started a           We believe that IBM and Cisco are examples of mature technology companies that have
trend by borrowing and             embraced the “industrialization” concept by transitioning to recurring revenue streams and
returning a lot of cash.           returning more cash to shareholders. IBM is very far along and visible in this journey, as
                                   evidenced by Warren Buffett’s large investment in the company, while Cisco is still in the
                                   earlier stages. Over the past five years, IBM has gone well beyond attracting investors with a
                                   tech sector focus and has executed on and highlighted attributes that appeal to PMs and
                                   generalist investors. IBM has taken on more characteristics of successful industrials stocks
                                   and over the past several years, its multiple has diverged significantly from its closest IT
                                   hardware competitors such as HP. However, the argument that IBM should no longer be
                                   viewed as a hardware company, but rather as an enterprise software company (similar to
                                   Oracle) or a global services firm (similar to Accenture) has already been made.

                                   We believe that Cisco is another example of a mature tech company transitioning to
                                   industrialization. Cisco is returning more cash to shareholders and adjusting its business
                                   model around the cloud. A key part of the industrialization trend is transitioning to business
                                   models that deliver more recurring revenue streams. While we expect Cisco to deliver
                                   revenue growth only in the mid-single digit long term, we believe the company is adding
                                   more software value to its products to sustain margins. Unlike many industrials companies
                                   and even IBM, we believe Cisco has the opportunity to further optimize its balance sheet,
                                   leading to much greater cash returns.

We believe companies like          We believe that Cisco can raise its debt load systematically by at least $5bn per year on
Cisco can follow Apple’s lead      average, if desired. We also believe Cisco will continue to increase its dividend over time. In
and tap into debt markets          addition, we believe that Cisco’s balance sheet could easily be optimized to raise its debt/
further to finance a cash return   capital ratio to well over 30% (includes financing) vs. ~21% currently, which gives the
strategy.                          company the ability to access well over $5bn more in domestic cash. We expect overseas
                                   cash to be used as collateral for this debt and for funding of foreign operations, overseas
                                   capex, and continuing its strategy of making tuck-in international acquisitions. To that end,
                                   our analysis points toward Cisco having the ability to raise its dividend yield at a
                                   compounded rate of 15-20% over the next three years, while also reducing share count and
                                   making tuck-in acquisitions.

                                   We view Apple’s recent capital return program as an example of the emerging cash return
                                   theme. On April 23, 2013 Apple doubled the amount of its 3-year capital return program,

16 May 2013                                                                                                                                                                                                                                                        20
Barclays | Global Technology Outlook


                                   including a major boost to the buyback of $60 billion from $10 billion and a 15% increase to
                                   its quarterly dividend. Apple’s new annualized dividend is $12.20 up from the previous
                                   annual dividend of $10.60, which at the time brought its yield from 2.6% to 3.0%. Apple
                                   expects to repurchase shares over the next three years which under the new authorization
                                   would imply about $20 billion of repurchases per year, not including $1 billion per year to
                                   settle vesting restricted stock units. Overall, the increase in Apple’s capital return program is
                                   expected to use $100 billion, an increase of $55 billion from the previously existing
                                   program. Investors have responded very favorably to the increased capital return program
                                   as shares have increased 12% since April 23, compared to 3.5% for the S&P 500.

We believe Apple’s chief rival,    In addition, we believe Apple’s chief rival, Samsung, is poised to return more cash to
Samsung, is also ready to          shareholders given its rapidly increasing cash balance. We think Samsung’s free cash flow
return cash to shareholders.       has significantly improved for the last 3-4 years as most of its profit generation has been
                                   done at its less capital intensive business such as Telecom. This should result in a significant
                                   increase of net cash balance over the next couples of years. We estimate Samsung’s net
                                   cash balance at cKRW45tn at the end of 2013, cKRW65tn at 2014 and cKRW89tn at 2015
                                   vs. a historical average of around cKRW10tn. We estimate Samsung will increase its
                                   dividend pay out to KRW1.9tn, KRW3.8tn, KRW5.7tn during 2013-15 vs. KRW1.3tn in 2012
                                   and cKRW250tn of total market cap.

                                   We also acknowledge other companies that have engaged in significant cash return
                                   programs such as Intel, Microsoft, and Oracle. While Oracle has already returned cash to
                                   shareholders, we believe that Oracle has the capacity to return more cash to shareholders.
                                   Although the company announced a $10bn share repurchase program with its 4QFY12
                                   results and has repurchased $8.2bn worth of stock in the first three fiscal quarters of FY13,
                                   the dividend yield is only ~1%. Over the past eight years, average dividend and stock
                                   repurchases have been 43% of FCF, whereas cash spent on acquisitions has averaged 93%
                                   of FCF over the same period (Microsoft’s eight year average for acquisition spending has
                                   been 62%). In our view, Oracle could comfortably commit to a dividend yield comparable to
                                   Microsoft and Symantec, as well as a long-term FCF return of 50-60% without significantly
                                   impacting its acquisition ability. Intel also has a longstanding commitment to cash return
                                   (INTC has paid a cash dividend for 81 consecutive quarters) and paid out $4.4bn in
                                   dividends and repurchased $4.8bn of common stock in 2012. As of 1Q13, the company
                                   pays a dividend of $0.225 per common share and has roughly $4.8bn remaining on its
                                   $45bn repurchase authorization from October 2005.

                                   Increased cash returns particularly applicable for European Tech too
Many European tech                 By missing most of the internet wave, European technology companies are relatively mature.
companies also need to get         Therefore, an increase in shareholder returns is particularly applicable in Europe in order to
onboard in terms of cash           raise interest in the sector, beyond the high quality vendors like ASML, ARM, and SAP.
return.
                                   To measure this trend for European tech, we have defined “mature growth” as <1x than
                                   nominal global GDP growth (c. 5%), “growth” as 1-2x, and “emerging growth” as >2x. As
                                   can be in Figure 19, over 40% of our Euro tech coverage list is mature (growing slower than
                                   global GDP). To drive a respectable return, companies ought to focus on i) acquisitions; ii)
                                   optimizing operational return by operating expense efficiencies/restructuring; and iii)
                                   financial leverage and balance sheet optimization. As inorganic activities are hit-or-miss and
                                   empirical evidence is pointing to value migration from acquirer shareholders to target
                                   shareholders, we tend to prefer the latter of the two.




16 May 2013                                                                                                                      21
Barclays | Global Technology Outlook


FIGURE 19
European technology grouped by revenue CAGR
 3 year revenue CAGR                                                                                         >2x GDP growth
   40%
   35%
                                                                       >1 and <2x GDP growth
   30%
   25%
   20%                          Below-GDP growth
   15%
   10%
    5%
    0%
   -5%
  -10%




Source: Barclays estimates between 2013-15


                                             So far, we have seen some increased returns to shareholders such as Micro Focus, CSR, and
                                             Sage. However, as can be seen from the figure above we believe that it should be broader.
                                             The two Euro technology stocks which will likely benefit most from a shareholder return
                                             strategy are Capgemini and ARM, closely followed by Amadeus.

                                             Who’s next to join the party?
                                             Our global tech teams believe that several companies with underutilized but strong balance
                                             sheets fit the bill as the next beneficiaries of the “new era of cash return” for the technology
                                             sector. The following Overweight-rated companies in our opinion are poised for greater
                                             payout ratios:




16 May 2013                                                                                                                               22
Barclays | Global Technology Outlook


                                   FIGURE 20
                                   Barclays’ potential winners from the “new era of cash return”
                                       Industry                               Company
                                         Analyst
                                       U.S. IT Hardware                       Apple
                                         Ben Reitzes
                                       U.S. Data Networking                   Cisco
                                         Ben Reitzes
                                       U.S. Internet                          Yahoo!, AOL, Google
                                         Anthony DiClemente
                                       U.S. Consulting and Computer           Visa, Lender Processing
                                         Darrin Peller                        Services, CoreLogic
                                       Japan Precision Instruments            Canon
                                         Masahiro Nakanomyo
                                       European Software & IT Services        Capgemini, Micro Focus
                                         Gerardus Vos
                                       European Technology Hardware           ARM, ASML
                                         Andrew Gardiner
                                       Israel Technology                      Corning, Amdocs
                                         Joseph Wolf & David Kaplan
                                       U.S. Semiconductors                    NXP Semiconductors
                                         Blayne Curtis
                                       U.S. Software                          Oracle, Symantec
                                         Raimo Lenschow
                                       Asia ex-Japan IT Hardware              Delta Electronics, Lite-On Tech
                                         Kirk Yang
                                       Asia ex-Japan Semiconductors           Samsung
                                         SC Bae
                                   Source: Barclays Research




16 May 2013                                                                                                     23
Barclays | Global Technology Outlook


                                                Smartphone sales driven by emerging markets
                                                Barclays still forecasts growth for tablets and smartphones fueled by innovation and lower
                                                prices although smartphones are clearly maturing in developed markets. We expect growth
                                                to be fastest in emerging markets, where lower-end models should be more popular
                                                running on Android. We estimate the smartphone market to slow to 32% and 23% y/y
                                                growth respectively, in 2013 and 2014 after 44% y/y unit growth in 2012. For tablets, we
                                                estimate the market to grow 93% and 29% y/y, respectively in 2013 and 2014 after 79%
                                                y/y unit growth.

FIGURE 21
Barclays Smartphone Model
Units in (000)
Calendar Year          2010      2011      2012      1Q13E     2Q13E     3Q13E     4Q13E     2013E     1Q14E      2Q14E     3Q14E     4Q14E       2014E       2015E       2016E
Worldwide            298,847   472,891   680,108    200,988   204,772   225,037   264,115   894,912   253,007    254,131   273,949   315,736   1,096,823   1,256,627   1,371,419
          Y/Y           73%       58%       44%        37%       33%       31%       27%       32%      25.9%      24.1%     21.7%      20%         23%         15%          9%
          Q/Q                                          -3%        2%       10%       17%                  -4%         0%        8%      15%

North America         71,986   107,267   126,847     33,321    30,488    35,976    48,568   148,353    37,883     34,852    41,126    55,520    169,380     186,980     193,235
          Y/Y          58%       49%       18%         21%      20%       15%       14%       17%        14%       14%       14%       14%         14%         10%          3%
          Q/Q                                         -22%      -9%       18%       35%                 -22%       -8%       18%       35%
        % of Total     24%       23%       19%         17%      15%       16%       18%       17%        15%       14%       15%       18%         15%         15%         14%

Europe                99,292   116,995   147,784     39,678    40,868    42,094    50,934   173,574    45,331     45,784    47,158    56,590    194,863     214,975     226,620
          Y/Y          89%       18%       26%         19%      18%       17%       16%       17%        14%       12%       12%       11%         12%         10%          5%
          Q/Q                                         -10%       3%        3%       21%                 -11%        1%        3%       20%
        % of Total     33%       25%       22%         20%      20%       19%       19%       19%        18%       18%       17%       18%         18%         17%         17%

Japan                 17,927    25,004    32,180     10,393     7,587     9,408    10,161    37,549    11,888      8,440    10,466    11,303     42,098      46,848      49,781
          Y/Y            3%      39%       29%        19%        15%      15%       16%       17%       14%         11%      11%       11%         12%         11%          6%
          Q/Q                                         19%       -27%      24%        8%                 17%        -29%      24%        8%
        % of Total       6%        5%          5%      5%         4%       4%        4%         4%       5%          3%       4%        4%          4%          4%          4%

Asia Pacific          73,449   159,934   278,982     88,556    94,755   104,620   118,221   406,152   120,586    126,615   135,608   149,169    531,977     627,262     707,009
          Y/Y          95%      118%       74%        53%       47%       45%       40%       46%       36%        34%       30%       26%         31%         18%         13%
          Q/Q                                          5%        7%       10%       13%                  2%         5%        7%       10%
        % of Total     25%       34%       41%        44%       46%       46%       45%       45%       48%        50%       50%       47%         49%         50%         52%

Rest of World         36,193    63,691    94,316     29,041    31,074    32,938    36,232   129,285    37,319     38,439    39,592    43,155    158,504     180,562     194,774
          Y/Y          88%       76%       48%        49%       36%       36%       30%       37%       29%        24%       20%       19%         23%         14%          8%
          Q/Q                                          4%        7%        6%       10%                  3%         3%        3%        9%
        % of Total     12%       13%       14%        14%       15%       15%       14%       14%       15%        15%       14%       14%         14%         14%         14%
Source: Gartner, Barclays Research Estimates


FIGURE 22
Global smartphone market share, 1Q10–4Q12
 Worldwide Smartphone Unit Share Trends
 Vendor            2010Q1 2010Q2 2010Q3 2010Q4                          2011Q1      2011Q2      2011Q3          2011Q4      2012Q1       2012Q2        2012Q3          2012Q4
 Samsung              4.8%     4.3%    9.9% 11.9%                        12.4%       15.8%       20.9%           23.2%       27.6%        29.7%         32.1%           31.1%
 Apple               15.3% 14.1% 16.6% 15.8%                             16.9%       18.2%       15.0%           23.6%       22.5%        18.8%         14.3%           20.9%
 Huawei Tech          0.1%     0.0%    0.1%  0.2%                         2.5%        2.5%        3.9%            4.0%        3.6%         3.5%          4.5%            4.2%
 ZTE                  0.0%     0.0%    0.1%  0.2%                         0.9%        1.9%        2.5%            3.2%        3.1%         4.1%          4.5%            4.0%
 LG Electronics       0.6%     1.2%    1.2%  3.5%                         4.1%        4.6%        4.0%            3.6%        3.4%         3.8%          4.1%            3.9%
 Lenovo               0.1%     0.1%    0.1%  0.2%                         0.2%        0.1%        0.3%            0.7%        1.7%         2.8%          4.1%            3.8%
 RIM                 19.7% 18.7% 15.4% 14.6%                             13.0%       11.7%       11.0%            8.8%        6.8%         5.2%          5.2%            3.5%
 Nokia               39.0% 37.1% 33.4% 30.4%                             25.7%       20.9%       16.0%           12.1%        9.1%         7.6%          4.2%            3.4%
 Sony                 0.0%     0.0%    0.0%  0.0%                         0.0%        0.0%        0.0%            0.0%        3.7%         3.5%          3.9%            3.4%
 HTC                  6.2%     9.5%    8.0%  8.8%                         9.3%       10.2%       10.3%            7.2%        5.2%         6.0%          4.9%            3.2%
Source: Gartner




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FIGURE 23
Barclays tablet model

Units in (000)              2010         2011     1Q12     2Q12     3Q12     4Q12       2012      1Q13     2Q13E     3Q13E     4Q13E     2013E     2014E     2015E     2016E
Apple iPad Forecast         14,789       40,497   11,798   17,042   14,036   22,860     65,736    19,477    18,000    21,060    30,537    89,074    98,213   110,550   122,110
 q/q change                                         -24%      44%     -18%      63%                 -15%       -8%       17%       45%
 y/y change                    -          174%     151%       84%      26%      48%        62%       65%        6%       50%       34%       36%       10%       13%       10%
 % Unit Share                  82%          58%      58%      68%      50%      44%        52%       40%       35%       37%       36%       37%       31%       30%       31%
Other Tablets                3,211       29,562    8,502    7,952   13,764   29,640     59,858    29,723    32,993    36,292    54,438   153,445   213,774   252,132   277,715
 q/q change                                         -41%      -6%      73%    115%                    0%      11%       10%       50%
 y/y change                    -          821%     386%       37%      82%    105%       102%       250%     315%      164%        84%     156%        39%       18%       10%
Total Tablet Forecast       18,000       70,059   20,300   24,994   27,800   52,500    125,594    49,200    50,993    57,352    84,975   242,519   311,987   362,681   399,825
 q/q change                                         -32%      23%      11%      89%                  -6%        4%       12%       48%
 y/y change                    -          289%     215%       66%      49%      76%       79%       142%     104%      106%        62%      93%       29%       16%       10%

ASP ($)                     2010         2011    1Q12  2Q12   3Q12   4Q12   2012    1Q13E   2Q13E   3Q13E   4Q13E    2013E     2014E     2015E    2016E
Apple iPad Forecast     $     620    $     582  $ 531 $ 515 $ 508 $ 467 $      500 $   430 $   440 $   430 $   415 $     427 $     412 $    400 $    392
 q/q change                                        -7%    -3%    -1%    -8%            -8%      2%     -2%     -3%
 y/y change                   -             -6%    -5%   -15%   -14%   -18%   -14%    -19%    -15%    -15%    -11%      -15%       -3%      -3%      -2%
Other Tablets           $     410    $      429 $ 380 $ 370 $ 350 $ 330 $      347 $   320 $   315 $   310 $   290 $     306 $     275 $    255 $    239
 q/q change                                        -3%    -3%    -5%    -6%            -3%     -2%     -2%     -6%
 y/y change                   -              5%   -24%   -30%   -16%   -15%   -19%    -16%    -15%    -11%    -12%      -12%      -10%      -7%      -6%
Total Tablet Forecast   $     582    $      518 $ 468 $ 469 $ 430 $ 390 $      427 $   364 $   359 $   354 $   335 $     350 $     318 $    299 $    286
 q/q change                                        -3%     0%    -8%    -9%            -7%     -1%     -1%     -5%
 y/y change                    -           -11%   -14%   -18%   -17%   -19%   -18%    -22%    -23%    -18%    -14%      -18%       -9%      -6%      -5%

Value (in $ millions)    2010         2011    1Q12E    2Q12     3Q12     4Q12     2012     1Q13E    2Q13E    3Q13E    4Q13E    2013E    2014E    2015E     2016E
Apple iPad Forecast     $ 9,165      $ 23,567 $ 6,264 $ 8,779 $ 7,133 $ 10,674 $ 32,850 $ 8,375 $ 7,920 $ 9,056 $ 12,673 $ 38,024 $ 40,479 $ 44,220 $ 47,822
 q/q change                                      -29%      40%     -19%      50%              -22%      -5%      14%      40%
 y/y change                 -           157%    138%       57%       9%      22%      39%      34%     -10%      27%      19%      16%       6%        9%        8%
Other Tablets           $ 1,315      $ 12,693 $ 3,231 $ 2,942 $ 4,817 $ 9,781 $ 20,772 $ 9,511 $ 10,393 $ 11,250 $ 15,787 $ 46,941 $ 58,800 $ 64,360 $ 66,358
 q/q change                                      -43%      -9%      64%    103%                -3%       9%       8%      40%
 y/y change                  -          865%    269%       -3%      54%      73%      64%    194%     253%     134%       61%    126%       25%        9%        3%
Total Tablet Forecast   $ 10,481     $ 36,260 $ 9,495 $ 11,721 $ 11,950 $ 20,455 $ 53,622 $ 17,886 $ 18,313 $ 20,306 $ 28,460 $ 84,965 $ 99,280 $ 108,580 $ 114,180
 q/q change                                      -34%      23%       2%      71%              -13%       2%      11%      40%
 y/y change                    -        246%    171%       36%      23%      42%      48%      88%      56%      70%      39%      58%      17%        9%        5%
Source: IDC, Gartner, Barclays Research Estimates


FIGURE 24
Worldwide mobile device sales by vendor, 1Q10–4Q12
Worldwide Handset Unit Share Trends
Vendor                                              2010Q1    2010Q2     2010Q3       2010Q4     2011Q1    2011Q2    2011Q3    2011Q4    2012Q1    2012Q2    2012Q3    2012Q4
Samsung                                              18.0%     17.8%      17.2%        17.5%      16.1%     16.3%     18.7%     19.6%     21.1%     21.5%     22.7%     22.7%
Nokia                                                30.6%     30.3%      28.2%        27.1%      25.1%     22.8%     23.9%     23.4%     19.7%     19.9%     19.1%     18.0%
Apple                                                 2.3%      2.4%       3.2%         3.5%       3.9%      4.6%      3.9%      7.4%      7.8%      6.9%      5.7%      9.2%
ZTE                                                   1.7%      1.8%       1.9%         2.0%       2.5%      3.0%      3.2%      4.0%      4.1%      4.1%      3.9%      3.4%
LG Electronics                                        7.6%      8.0%       6.6%         6.7%       5.6%      5.7%      4.8%      3.5%      3.5%      3.4%      3.2%      3.2%
Huawei Technologies                                   1.5%      1.4%       1.3%         1.7%       1.6%      2.1%      2.4%      2.9%      2.6%      2.6%      2.8%      2.9%
Lenovo                                                0.6%      0.7%       0.8%         0.8%       0.9%      0.8%      0.8%      1.1%      1.4%      1.6%      1.7%      1.8%
Sony Mobile Communications                            0.0%      0.0%       0.0%         0.0%       0.0%      0.0%      0.0%      0.0%      1.9%      1.7%      1.9%      1.7%
Motorola                                              2.7%      2.5%       2.1%         2.4%       2.1%      2.4%      2.5%      2.1%      2.0%      2.2%      2.0%      1.7%
Research In Motion                                    3.0%      3.2%       3.0%         3.3%       3.0%      3.0%      2.9%      2.8%      2.3%      1.9%      2.1%      1.6%
Others                                               32.0%     32.0%      35.7%        35.0%      39.1%     39.3%     36.9%     33.2%     33.7%     34.2%     35.0%     34.0%
Source: Gartner


                                                       Growth in mobile devices remains a strong secular theme – with negative
                                                       consequences for PCs and printing
We anticipate PCs to continue                         As we have noted, the rise of mobile devices is changing the way profit pools are split among
their downward trend as                               large-cap tech companies. We believe that we can see the large scale impact of mobility by
buyers focus more on tablets.                         examining the changes in unit shipments across various sectors over time. We cite the
                                                      correlation between the rise of smartphones and tablets with the relatively large scale declines
                                                      as of late in PCs and printers. Due to weak macro conditions, confusion around Windows 8,
                                                      ongoing cannibalization from tablets, and an elongation in replacement cycles, we forecast
                                                      weakness in PC-related sectors for years to come. For 2Q13, we estimate the PC market will
                                                      decline 11% y/y on a unit basis and fall 9% y/y in 2013. We anticipate new Samsung and
                                                      Apple products to continue to take share of the wallet.

                                                       We maintain a relatively conservative view of the PC replacement cycle, with analysis now
                                                       pointing toward a 1-2 year extension in the replacement rate from 2010-15 due to income
                                                       diverted by disruptive mobile products such as tablets and smartphones across the globe. Our
                                                       analysis equates to a cumulative lost in PC shipments of 75 million over the next three to five
                                                       years, shaving 4% to 7% off of the annual growth rate. We also believe that potential growth
16 May 2013                                                                                                                                                                 25
Barclays | Global Technology Outlook


                                                 in emerging markets is relatively limited. For years, bulls and PC companies alike have cited the
                                                 low PC penetration in emerging markets and how emerging markets would enable the PC
                                                 market to grow. We believe that emerging markets are likely to never see the PC penetration
                                                 rates of developed markets since the population will simply see the benefits of tablets and
                                                 smartphones, and devote more income to these categories (just like we do now in developed
                                                 markets). In our view, there is simply no reason for emerging markets to go backwards and
                                                 invest in as many expensive PCs as we did in the U.S. in prior decades.

                                                 We forecast a steady decline for PCs and printers as tablets disrupt the market…

FIGURE 25
Barclays Research PC unit model
Units in (000)
Calendar Year         2010      2011     1Q12        2Q12     3Q12     4Q12       2012    1Q13E    2Q13E     3Q13E     4Q13E      2013E     2014E     2015E     2016E
Worldwide           357,896   363,886   88,640      85,495   88,497   88,388    351,019   76,515   75,976    81,520    83,829    317,839   299,237   281,197   266,415
         Y/Y           14%      1.7%       4%         -2%      -8%      -8%        -4%     -14%     -11%       -8%       -5%        -9%       -6%       -6%       -5%
         Q/Q                              -8%         -4%       4%       0%                -13%      -1%        7%        3%

U.S.                 75,266    71,550   16,255      15,971   16,551   17,403     66,181   14,347   14,375    14,974    15,732     59,428    55,244    49,816    46,086
         Y/Y            5%       -5%      -1%        -10%     -12%      -6%        -8%     -12%     -10%      -10%      -10%       -10%       -7%      -10%       -7%
         Q/Q                             -12%         -2%       4%       5%                -18%       0%        4%        5%
       % of Total     21%       20%       18%         19%      19%      20%       19%       19%      19%       18%       19%       19%        18%       18%       17%

Western Europe       71,199    60,860   14,964      13,169   13,263   15,514     56,910   11,603   10,518    11,768    13,894     47,783    43,138    39,947    37,346
         Y/Y            4%      -15%      -1%          4%     -14%     -12%        -6%     -22%     -20%      -11%      -10%       -16%      -10%       -7%       -7%
         Q/Q                             -16%        -12%       1%      17%                -25%      -9%       12%       18%
       % of Total     20%       17%       17%         15%      15%      18%       16%       15%      14%       14%       17%       15%        14%       14%       14%

Japan                16,297    15,661    4,318       3,851    3,719    3,681     15,568    4,126    3,714     3,714     3,765     15,318    14,503    13,682    12,809
         Y/Y          17%        -4%      10%         -1%      -6%      -6%        -1%      -4%      -4%        0%        2%        -2%       -5%       -6%       -6%
         Q/Q                              11%        -11%      -3%      -1%                 12%     -10%        0%        1%
       % of Total       5%        4%       5%          5%       4%       4%         4%       5%       5%        5%        4%         5%        5%        5%        5%

Asia Pacific        111,098   122,785   30,280      30,152   31,519   28,766    120,717   26,804   27,245    28,664    26,852    109,565   102,509    95,725    90,452
         Y/Y          19%       11%        6%        -3%      -5%       -4%        -2%     -11%     -10%       -9%       -7%        -9%       -6%       -7%       -6%
         Q/Q                               1%         0%       5%       -9%                 -7%       2%        5%       -6%
       % of Total     31%       34%       34%        35%      36%       33%       34%       35%      36%       35%       32%       34%        34%       34%       34%

Rest of World        84,035    93,031   22,823      22,352   23,444   23,023     91,643   19,635   20,124    22,401    23,586     85,746    83,843    82,028    79,721
         Y/Y          23%       11%        9%         5%      -6%      -10%        -1%     -14%     -10%       -4%        2%        -6%       -2%       -2%       -3%
         Q/Q                             -11%        -2%       5%       -2%                -15%       2%       11%        5%
       % of Total     23%       26%       26%        26%      26%       26%       26%       26%      26%       27%       28%       27%        28%       29%       30%
Source: IDC, Gartner and Barclays Research Estimates


FIGURE 26
Worldwide printer unit model (in ‘000)
Calendar Year       2010      2011       1Q12        2Q12     3Q12      4Q12    2012      1Q13    2Q13E      3Q13E     4Q13E     2013E     2014E     2015E     2016E
Worldwide           38,340    40,940     9,866       9,457    9,599   10,109    39,031      9,644 9,227       9,403     9,753    38,027    36,690    35,211    34,320
          Y/Y           23%        7%     -4%          1%      -8%        -7%       -5%      -2%     -2%         -2%       -4%       -3%       -4%       -4%       -3%
          Q/Q                             -9%         -4%       2%         5%                -5%     -4%          2%        4%
U.S.                  5,555     5,635    1,315       1,303    1,350     1,277     5,245    1,305     1,272     1,298     1,324     5,199     4,972     4,804     4,691
         Y/Y            8%        1%      -7%          3%      -9%      -13%       -7%      -1%      -2%        -4%        4%       -1%       -4%       -3%       -2%
         Q/Q                              -7%         -1%       4%       -5%                -1%      -3%         2%        2%
       % of Total      14%       14%      13%         14%      14%       13%       13%      14%      14%        14%       14%       14%       14%       14%       14%

Western Europe        7,835     8,035    1,952       1,566    1,621     1,980     7,119    1,923     1,538     1,600     1,824     6,886     6,701     6,622     6,506
         Y/Y            9%        3%     -11%         -9%     -16%       -9%      -11%      -1%       -2%       -1%       -8%       -3%       -3%       -1%       -2%
         Q/Q                             -10%        -20%       4%       22%                -3%      -20%        4%       14%
       % of Total      20%       20%      20%         17%      17%       20%       18%      20%       17%       17%       19%       18%       18%       19%       19%

Japan                 1,600     1,600      491         358      398      367      1,613      473      355        383       360     1,571     1,555     1,497     1,449
         Y/Y           11%        0%       6%          4%      -1%       -6%        1%      -4%       -1%       -4%       -2%       -3%       -1%       -4%       -3%
         Q/Q                              26%        -27%      11%       -8%                29%      -25%        8%       -6%
       % of Total       4%        4%       5%          4%       4%        4%        4%       5%        4%        4%        4%        4%        4%        4%        4%

AP & ROW             23,350    25,670    6,109       6,229    6,230     6,486    25,055    5,943     6,061     6,122     6,245    24,371    23,463    22,288    21,674
         Y/Y           34%       10%      -2%          3%      -6%       -4%       -2%      -3%      -3%        -2%       -4%       -3%       -4%       -5%       -3%
         Q/Q                             -10%          2%       0%        4%                -8%       2%         1%        2%
       % of Total      61%       63%      62%         66%      65%       64%       64%      62%      66%        65%       64%       64%       64%       63%       63%
Source: IDC, Gartner, Barclays Research Estimates




16 May 2013                                                                                                                                                        26
Barclays | Global Technology Outlook


                                              Barclays’ outlook for HDDs reflects a more challenging PC environment as well as macro
HDDs could see downside from
                                              weakness. We do not believe that the shift of exabytes from local sources (PCs) to the cloud
PC weakness.
                                              (the data center) will be smooth or uniformly positive, as the HDD vendors seem to believe.
                                              We estimate that 2013 HDD unit shipments will total 545 million units, down 6% y/y and
                                              estimate a further 4% decline in 2014 to 525 million units.


FIGURE 27
Barclays HDD Unit Model
                                                                                                          Estimates
Calendar Year                     2009        2010      2011      2012      1Q13      2Q13E     3Q13E     4Q13E       2013E     2014E     2015E     2016E
Disk Drive Units (in thousands)
Mobile Units                      233,611     277,529   277,886   272,741    62,136    60,893    65,156    63,201     251,386   241,430   231,040   223,422
Desktop Units                     231,467     255,353   208,113   179,647    43,456    41,718    42,552    42,127     169,852   161,758   154,864   148,686
Enterprise Units                   25,597      30,338    54,762    61,491    15,890    16,367    15,876    16,511      64,643    68,834    72,243    75,804
Consumer Electronics Units         66,406      88,156    81,396    64,668    14,415    15,424    15,733    13,687      59,259    52,505    49,858    47,179
Total Units                       557,081     651,377   622,157   578,547   135,897   134,402   139,316   135,526     545,141   524,528   508,006   495,091
Year/Year change
  Mobile                            24.4%      18.8%       0.1%    -1.9%    -10.6%    -15.7%     -5.2%      1.5%        -7.8%     -4.0%     -4.3%     -3.3%
  Desktop                           -3.7%      10.3%         NM   -13.7%     -6.6%    -11.0%      2.6%     -5.8%        -5.5%     -4.8%     -4.3%     -4.0%
  Enterprise                       -19.7%      18.5%         NM    12.3%      0.4%     -7.6%     21.5%     10.9%         5.1%      6.5%      5.0%      4.9%
  Consumer Electronics             -15.5%      32.8%      -7.7%   -20.6%     -1.1%    -23.8%     -1.0%     -2.0%        -8.4%    -11.4%     -5.0%     -5.4%
Total                                3.4%      16.9%      -4.5%    -7.0%     -7.2%    -14.4%      0.1%     -0.2%        -5.8%     -3.8%     -3.1%     -2.5%

Disk Drive ASPs ($ per unit)
Mobile ASPs                        $48.00      $46.14    $48.13    $53.62    $48.55    $47.58    $47.58    $47.10      $47.70    $45.94    $44.46    $43.47
Desktop ASPs                       $48.89      $47.66    $47.40    $60.96    $53.52    $51.92    $50.88    $48.33      $51.18    $45.25    $42.48    $40.19
Enterprise ASPs                   $150.00     $144.66   $121.39   $143.76   $143.41   $143.41   $144.84   $143.39     $143.76   $139.12   $134.31   $130.98
Consumer Electronics ASPs          $48.52      $46.09    $38.90    $47.81    $44.53    $42.75    $41.90    $38.96      $42.08    $36.48    $33.98    $31.56
Total Average ASPs                 $53.12      $51.32    $53.13    $64.83    $60.80    $60.04    $59.03    $58.39      $59.56    $57.01    $55.61    $54.75

Year/Year change
  Mobile                           -13.9%       -3.9%     4.3%     11.4%    -18.4%    -11.7%     -6.5%     -5.4%       -11.0%     -3.7%     -3.2%     -2.2%
  Desktop                          -11.9%       -2.5%       NM     28.6%    -18.2%    -15.1%    -15.8%    -14.6%       -16.0%    -11.6%     -6.1%     -5.4%
  Enterprise                         1.3%       -3.6%       NM     18.4%     -4.9%     -0.5%      2.2%      4.1%         0.0%     -3.2%     -3.5%     -2.5%
  Consumer Electronics             -12.7%       -5.0%   -15.6%     22.9%    -10.3%    -10.7%    -11.2%    -16.3%       -12.0%    -13.3%     -6.8%     -7.1%
Total                              -13.0%       -3.4%     3.5%     22.0%    -13.5%     -8.3%     -4.5%     -4.8%        -8.1%     -4.3%     -2.5%     -1.5%
Quarter/Quarter change
  Mobile                                                                     -2.5%     -2.0%      0.0%     -1.0%
  Desktop                                                                    -5.5%     -3.0%     -2.0%     -5.0%
  Enterprise                                                                  4.2%      0.0%      1.0%     -1.0%
  Consumer Electronics                                                       -4.3%     -4.0%     -2.0%     -7.0%
Total                                                                        -0.9%     -1.3%     -1.7%     -1.1%
Source: IDC, Gartner & Barclays Research Estimates



                                              Networking could see growth from new product cycles, storage remains OK,
                                              but servers should remain weak
                                              While weak near term, we believe networking and storage markets can improve later in the
Weaker federal spending
                                              year; server markets seem weak over the long term given virtualization. In networking, we
trends may pressure
                                              estimate that the WLAN market will grow 16% y/y to $8 billion in 2013 and the switching
networking growth in the near
                                              market will grow 5% y/y to $22 billion. In addition, we expect Application Delivery Controllers
term but long term seems
                                              to grow 10% to a $1.8 billion market in 2013 and we also expect a $13.3 billion market for
stable despite threats.
                                              routing. While networking is seeing the benefits from a refresh cycle, we believe that storage
                                              will remain a high priority in IT spending and expect storage spending to be $26.2 billion,
                                              growing 6% y/y in 2013. Lastly, we believe overall servers will see spending of about $53
                                              billion in 2013, representing a 3% decline in y/y growth. Within servers, we look for a flat x86
                                              server market y/y, with $38.2 billion of total spending.




16 May 2013                                                                                                                                                 27
Barclays | Global Technology Outlook


FIGURE 28
Barclays global WLAN unit model
 Units (000's)
 Calendar Year                   2010           2011      2012    1Q13E    2Q13E    3Q13E    4Q13E    2013E     2014E     2015E
 Total                         76,026       90,430      100,114   24,621   27,060   29,669   33,666   115,016   125,391   130,295
            Y/Y                   19%            19%      11%        3%      7%      18%      30%       15%         9%        4%
            Q/Q                                                     -5%     10%      10%      13%
 Enterprise                      3,935          6,029     7,492    1,872    2,191    2,510    2,564     9,137     9,853    10,539
            Y/Y                 26.9%       53.2%        24.3%      21%      9%      29%      29%      22.0%      7.8%      7.0%
            Q/Q                                                    -5.5%   17.0%    14.6%     2.1%
         % of Total                5%             7%        7%       8%      8%       8%       8%         8%        8%        8%
 SOHO                          71,983       84,302       92,449   22,696   24,817   27,108   31,048   105,669   115,283   119,452
            Y/Y                 18.4%       17.1%         9.7%       2%      7%      17%      30%      14.3%      9.1%      3.6%
            Q/Q                                                    -4.6%    9.3%     9.2%    14.5%
         % of Total               95%            93%      92%       92%     92%      91%      92%       92%       92%       92%
 Outdoor Mesh Node                 108            99       172       52       52       52       54       210       254       304
            Y/Y               123.0%            -9.0%    74.0%      77%     53%       5%       -8%     22.2%     21.2%     19.5%
            Q/Q                                                   -12.2%    0.0%    -0.2%     4.8%
         % of Total                0%             0%        0%       0%      0%       0%       0%         0%        0%        0%
Source: Dell’Oro, Barclays Research Estimates



FIGURE 29
Barclays global WLAN value model
 Value (in $ millions)
 Calendar Year                   2010           2011      2012    1Q13E    2Q13E    3Q13E    4Q13E    2013E     2014E     2015E
 Total                           5,374          6,417     7,504    1,878    2,067    2,297    2,482     8,725     9,466    10,109
            Y/Y                   25%            19%      17%       12%     12%      16%      24%       16%         8%        7%
            Q/Q                                                     -6%     10%      11%       8%
 Enterprise                      2,163          2,852     3,455     872      975     1,097    1,157     4,101     4,411     4,844
            Y/Y                 34.4%       31.9%        21.1%      18%     12%      21%      23%      18.7%      7.6%      9.8%
            Q/Q                                                     -7%     12%      13%       5%
         % of Total               40%            44%      46%       46%     47%      48%      47%       47%       47%       48%
 SOHO                            3,080          3,399     3,796     932     1,021    1,131    1,254     4,337     4,756     4,959
            Y/Y                 18.1%       10.3%        11.7%       5%     10%      12%      30%      14.3%      9.7%      4.3%
            Q/Q                                                     -4%     10%      11%      11%
         % of Total               57%            53%      51%       50%     49%      49%      51%       50%       50%       49%
 Outdoor Mesh Node                 130           166       252       75       71       69       71       286       298       306
            Y/Y                 65.5%       27.0%        52.3%      65%     36%       5%      -20%     13.4%      4.3%      2.7%
            Q/Q                                                   -16.3%   -4.3%    -3.1%     3.3%
         % of Total                2%             3%        3%       4%      3%       3%       3%         3%        3%        3%
Source: Dell’Oro, Barclays Research Estimates




16 May 2013                                                                                                                   28
Barclays | Global Technology Outlook


FIGURE 30
Barclays global Level 2 & Level 3 networking unit model
 Ports (000's)
 Calendar Year              2010          2011         2012      1Q13E       2Q13E       3Q13E       4Q13E      2013E      2014E      2015E
 Total                   363,352       395,879       405,351      98,734    102,480     106,443      108,110   415,767    420,137    422,486
         Y/Y                 19%                9%       2%          2%         1%          4%           4%        3%         1%         1%
         Q/Q                                                        -5%         4%          4%           2%
 Modular                  28,862        26,572        23,837       5,810      5,945       6,341        6,101    24,198     24,960     25,408
         Y/Y               34.9%         -7.9%        -10.3%         2%        -2%          4%           2%       1.5%       3.2%       1.8%
         Q/Q                                                      -2.6%        2.3%        6.7%       -3.8%
    % of Total                 8%               7%       6%          6%         6%          6%           6%        6%         6%         6%
 Fixed                   334,491       369,306       381,514      92,923     96,534     100,102      102,009   391,569    395,176    397,078
         Y/Y               18.2%         10.4%          3.3%         2%         1%          4%           4%       2.6%       0.9%       0.5%
         Q/Q                                                      -5.5%        3.9%        3.7%        1.9%
    % of Total               92%           93%          94%         94%        94%         94%         94%        94%        94%        94%
Source: Dell’Oro, Barclays Research Estimates



FIGURE 31
Barclays global Level 2 & Level 3 networking value model
 Value (in $ millions)
 Calendar Year              2010          2011         2012      1Q13E       2Q13E       3Q13E       4Q13E      2013E      2014E      2015E
 Total                 $20,068.4 $20,058.3 $20,928.7             5,101.1     5,338.8     5,626.2     5,924.3 $21,990.4 $23,534.4 $23,700.6
         Y/Y                 30%                0%       4%          3%         0%          9%           8%        5%         7%         1%
         Q/Q                                                        -7%         5%          5%           5%
 Modular                $8,439.1      $7,210.4       $6,796.3    1,653.3     1,657.9     1,732.9     1,733.8   $6,777.8   $6,919.4   $6,598.4
         Y/Y               30.0%        -14.6%         -5.7%        -1%        -5%          3%           2%      -0.3%       2.1%      -4.6%
         Q/Q                                                        -3%         0%          5%           0%
    % of Total               42%           36%          32%         32%        31%         31%         29%        31%        29%        28%
 Fixed                 $11,629.3 $12,847.9 $14,132.4            3,447.85    3,680.94    3,893.32    4,190.46 $15,212.6 $16,615.0 $17,102.2
         Y/Y               29.8%         10.5%        10.0%          5%         2%         12%         10%        7.6%       9.2%       2.9%
         Q/Q                                                        -9%         7%          6%           8%
    % of Total               58%           64%          68%         68%        69%         69%         71%        69%        71%        72%
Source: Dell’Oro, Barclays Research Estimates



FIGURE 32
Barclays global Application Delivery Controller (ADC) unit model
 Units in (000)
 Calendar Year             2010          2011         2012      1Q13E      2Q13E       3Q13E       4Q13E       2013E      2014E       2015E
 Total                       56.0         63.3          81.1      21.9       23.6        25.5        27.5        98.5       111.6      120.5
         Y/Y                15%           13%          28%        16%        17%         25%         28%        21%         13%          8%
         Q/Q                                                       2%         8%          8%          8%
 Physical                    54.7         59.3          64.7      15.0       15.3        15.5        15.9        61.6        62.5        67.1
         Y/Y                12%             9%           9%      -7.5%      -9.5%       -3.1%       1.1%         -5%          1%         7%
         Q/Q                                                     -4.8%      1.9%        1.4%        2.8%
 Virtual                     1.34         4.00         16.39       6.9        8.3        10.1        11.6        36.9        49.1        53.4
         Y/Y                             198%         310%      150.2%     153.2%      122.1%      100.4%      125%         33%          9%
         Q/Q                                                    20.0%      20.0%       21.0%       15.0%
Source: Dell’Oro, Barclays Research Estimates




16 May 2013                                                                                                                               29
Barclays | Global Technology Outlook


FIGURE 33
Barclays global Application Delivery Controller (ADC) value model
 Value (in $ millions)
 Calendar Year             2010          2011      2012      1Q13E      2Q13E      3Q13E     4Q13E       2013E       2014E       2015E
 Total                   1,196.8       1,406.9    1,603.4     396.9      422.1      458.9      484.9     1,762.9     1,978.1    2,095.2
         Y/Y                25%           18%       14%         2%         8%        11%       18%         10%         12%          6%
         Q/Q                                                   -4%         6%         9%        6%
 Physical                1,184.1       1,365.2    1,468.2     341.7      351.4      370.9      384.7     1,448.8     1,521.6    1,618.2
         Y/Y                24%           15%        8%       -5.8%      -2.4%      -1.8%      4.7%         -1%         5%          6%
         Q/Q                                                  -7.0%       2.8%      5.5%       3.7%
 Virtual                     12.8         41.7     135.2       55.2       70.7       88.0      100.2      314.1       456.5       477.0
         Y/Y                             227%      224%      121.0%     140.4%     141.1%    126.3%       132%         45%          5%
         Q/Q                                                 24.6%      28.1%      24.5%      13.9%
Source: Dell’Oro, Barclays Research Estimates



FIGURE 34
Barclays global routing unit model
 Units
 Calendar Year              2010         2011       2012      1Q13E      2Q13E     3Q13E     4Q13E       2013E       2014E       2015E
 Total                 1,402,698 1,587,201       1,619,909   410,027    419,214    434,106   432,847   1,696,193   1,771,639   1,877,608
           Y/Y                 8%         13%         2%         5%         5%         5%        4%         5%          4%          6%
           Q/Q                                                  -2%         2%         4%        0%
 Enterprise            1,261,139 1,352,396       1,331,162   332,639    342,292    353,209   352,688   1,380,828   1,438,363   1,527,881
           Y/Y               3.3%         7.2%      -1.6%        2%         3%         4%        6%        3.7%        4.2%        6.2%
           Q/Q                                                 -0.2%       2.9%      3.2%     -0.1%
     % of Total              90%          85%        82%        81%        82%       81%       81%         81%         81%         81%
 Service Provider        141,558      234,805     288,747     77,388     76,922     80,897    80,158    315,365     333,276     349,728
           Y/Y             89.8%        65.9%       23.0%       20%        16%         9%       -4%        9.2%        5.7%        4.9%
           Q/Q                                                 -7.7%      -0.6%      5.2%     -0.9%
     % of Total              10%          15%        18%        19%        18%       19%       19%         19%         19%         19%
Source: Dell’Oro, Barclays Research Estimates



FIGURE 35
Barclays global routing value model
 Value (in $ millions)
 Calendar Year              2010         2011       2012      1Q13E      2Q13E     3Q13E     4Q13E       2013E       2014E       2015E
 Total                 $11,873.3 $12,810.0       $12,670.6    3,159.3    3,259.3   3,397.8   3,533.9   $13,350.3   $14,379.3   $15,238.8
           Y/Y               18%            8%        -1%        2%         3%         9%        8%         5%          8%          6%
           Q/Q                                                  -4%         3%         4%        4%
 Enterprise              $3,293.8     $3,416.6    $3,405.1     838.6      863.0      899.4     939.4    $3,540.4    $3,715.7    $3,891.4
           Y/Y             11.7%          3.7%      -0.3%       -1%         1%         5%      10%         4.0%        5.0%        4.7%
           Q/Q                                                  -1%         3%         4%        4%
     % of Total              28%          27%        27%        27%        26%       26%       27%         27%         26%         26%
 Service Provider        $8,579.6     $9,393.4    $9,265.4    2,320.7    2,396.3   2,498.4   2,594.5    $9,809.9   $10,663.6   $11,347.4
           Y/Y             20.5%          9.5%      -1.4%        3%         4%       10%         7%        5.9%        8.7%        6.4%
           Q/Q                                                  -5%         3%         4%        4%
     % of Total              72%          73%        73%        73%        74%       74%       73%         73%         74%         74%
Source: Dell’Oro, Barclays Research Estimates




16 May 2013                                                                                                                          30
Barclays | Global Technology Outlook


FIGURE 36
Barclays global storage systems market model
Value in $M                                                                                                ESTIMATES
Calendar Year                      2009       2010        2011           2012     1Q13E       2Q13E      3Q13E   4Q13E        2013E       2014E        2015E       2016E
Worldwide External Storage
Value                             $ 17,961 $ 21,287 $ 23,570 $ 24,669 $ 6,215 $ 6,277 $ 6,391 $ 7,270 $ 26,153 $ 27,680 $ 29,299 $ 31,058
                Y/Y                  -10.6%   18.5%    10.7%     4.7%      3%      5%      7%      8%     6.0%     5.8%     5.9%     6.0%
                Q/Q                                                       -7%      1%      2%     14%



DAS                               $ 3,475 $    3,023 $ 2,699 $ 2,562 $                 621 $     609 $     621 $    621 $ 2,472 $ 2,359 $ 2,224 $ 2,094
                Y/Y                  -16%       -13%    -11%      -5%                  -4%        0%       -3%      -7%      -4%     -5%     -6%     -6%
                Q/Q                                                                    -7%       -2%        2%       0%

         DAS % of $ Ttl               19%        14%          11%          10%         10%       10%        10%      9%           9%             9%           8%       7%

SAN                               $ 9,146 $ 10,357 $ 11,841 $ 12,584 $ 3,129 $ 3,161 $ 3,224 $ 3,804 $ 13,319 $ 14,027 $ 14,879 $ 15,804
                Y/Y                  -17%      13%      14%       6%      1%      3%      7%     11%       6%       5%       6%       6%
                Q/Q                                                      -9%      1%      2%     18%
         SAN % of $ Ttl               51%        49%          50%          51%         50%       50%        50%     52%          51%         51%          51%         51%

NAS                               $ 3,534 $    5,280 $ 5,873 $ 6,120 $ 1,595 $ 1,595 $ 1,643 $ 1,824 $ 6,656 $ 7,252 $ 7,860 $ 8,521
                Y/Y                    4%        49%     11%      4%      8%     10%     11%      6%      9%      9%      8%      8%
                Q/Q                                                      -7%      0%      3%     11%
         NAS % of $ Ttl               20%        25%          25%          25%         26%       25%        26%     25%          25%         26%          27%         27%

iSCSI                             $ 1,806 $    2,627 $ 3,157 $ 3,403 $                 869 $     913 $     904 $ 1,021 $ 3,707 $ 4,041 $ 4,337 $ 4,639
                Y/Y                   21%        45%     20%      8%                    4%        8%        8%     15%      9%      9%      7%      7%
                Q/Q                                                                    -2%        5%       -1%     13%
         iSCSI % of $ Ttl             10%        12%          13%          14%         14%       15%        14%     14%          14%         15%          15%         15%
Source: IDC, Gartner & Barclays Research Estimates



FIGURE 37
Barclays Total Server Spending Model(x86, UNIX, mainframe, $ in millions)
 Value (in $ millions)
 Calendar Year                     2010         2011            2012   1Q13E   2Q13E   3Q13E   4Q13E                              2013E            2014E            2015E
 Worldwide                   $   53,677 $     56,584 $        54,890 $13,038 $12,732 $12,876 $14,360 $                           53,006 $         48,031 $         43,953
 Y/Y                                15%           5%             -3%      3%     -5%     -2%     -9%                                -3%              -9%              -8%
 Q/Q                                                                    -17%     -2%      1%     12%

 U.S.                        $   22,504   $   22,588      $   22,250       $ 5,293     $ 5,392        $ 5,312   $ 6,080   $      22,078      $    20,136       $   19,044
 Y/Y                               23%               0%             -1%           8%         -4%          3%       -8%                -1%              -9%            -5%
 Q/Q                                                                            -20%          2%         -1%       14%
 % of Total                        42%           40%              41%            41%         42%         41%       42%                42%              42%            43%

 Western Europe              $   11,106   $   11,273      $      9,898     $ 2,359     $ 2,154        $ 2,054   $ 2,496   $       9,063      $        7,825    $    6,740
 Y/Y                                6%               2%          -12%            -4%         -9%         -6%       -14%               -8%             -14%           -14%
 Q/Q                                                                            -19%         -9%         -5%        22%
 % of Total                        21%           20%              18%            18%         17%         16%        17%               17%              16%            15%

 Japan                       $    5,497   $    6,291      $      5,971     $ 1,437     $ 1,132        $ 1,413   $ 1,268   $       5,250      $        4,766    $    4,121
 Y/Y                                -1%          14%                -5%         -13%         -18%        -8%        -8%               -12%             -9%           -14%
 Q/Q                                                                              4%         -21%        25%       -10%
 % of Total                        10%           11%              11%            11%           9%        11%         9%               10%              10%             9%

 Asia Pacific                $    8,643   $   10,119      $   10,553       $ 2,419     $ 2,529        $ 2,535   $ 2,775   $      10,259      $        9,793    $    8,981
 Y/Y                               16%           17%                4%            6%         -3%         -8%       -5%                -3%              -5%            -8%
 Q/Q                                                                            -17%          5%          0%        9%
 % of Total                        16%           18%              19%            19%         20%         20%       19%                19%              20%            20%

 Rest of World               $    5,927   $    6,313      $      6,217     $ 1,530     $ 1,525        $ 1,561   $ 1,741   $       6,356      $        5,511    $    5,067
 Y/Y                               17%               7%             -2%          11%          6%          8%       -11%                2%             -13%            -8%
 Q/Q                                                                            -21%          0%          2%        12%
 % of Total                        11%           11%              11%            12%         12%         12%        12%               12%              11%            12%
Source: IDC, Gartner & Barclays Research Estimates



16 May 2013                                                                                                                                                            31
Barclays | Global Technology Outlook


                                    IT spending still slow in 2014, but 2H13 could
                                    be better than 1H13
Barclays’ analysts are              Still looking for modest IT spending growth: Despite growing concerns around Europe and
forecasting lower single digit IT   ongoing uncertainty in the U.S., Barclays’ analysts forecast global IT spending growth in the
spending growth in 2013.            lower-single digits for 2013 and 2014. This view is supported by our bi-annual CIO surveys for
                                    the U.S. and Europe as well as our regional analysis of key IT markets. Our colleagues in global
                                    economics research, led by Julian Callow, forecast 2013 global real GDP growth of 3.2% and
                                    2014 growth of 4.0% (see Financial Conditions At Record Strength, published May 10, 2013).
                                    Please see our updated Barclays economic forecasts below.




16 May 2013                                                                                                                      32
Barclays | Global Technology Outlook


FIGURE 38
Barclays global economics forecast
                                                   Real GDP                              Real GDP                Consumer prices              Consumer prices
                                         % over previous period, saar                 % annual change           % over a year ago             % annual change

                         Weight* 4Q12       1Q13     2Q13     3Q13      4Q13   2011    2012    2013     2014   1Q13   2Q13     4Q13    2011    2012    2013     2014
 Global                    100.0      2.5    2.8      3.6    4.1   4.5   3.8            3.1    3.2   4.0        2.6     2.6    2.9    3.8        2.9     2.7   3.1
    Advanced                50.5     -0.5    1.5      1.4    2.0   2.1   1.4            1.2    1.1   2.0        1.4     1.2    1.5    2.5        1.8     1.4   2.0
    Emerging                49.5      5.7    4.2      5.9    6.3   7.0   6.5            5.0    5.3   6.0        4.7     4.8    5.2    6.3        4.7     4.9   4.9
        BRIC                31.2      6.6    5.4      6.7    7.1   8.1   7.6            6.0    6.4   6.9        4.3     4.3    4.6 ↓ 6.6         4.1     4.4   4.4
 Americas                   32.1      1.3    2.5      2.1    2.5   2.7   2.6            2.4    2.2   2.7        3.1     3.1    3.6 ↑ 4.2         3.3     3.3   3.7
   United States            21.3      0.4    2.5      1.5    2.0   2.0   1.8            2.2    1.8   2.3        1.7     1.5    2.0 ↑ 3.2         2.1     1.7   2.3
   Canada                    2.0      0.6    2.0      2.0    2.5   2.5   2.4            1.8    1.7   2.2        0.9     1.1    1.8    2.9        1.5     1.3   1.8
   Latin America             8.8      3.7    2.6      3.8    3.7   4.3   4.5            2.9    3.2   3.9        7.9     8.6    8.9    8.1        7.4     8.6   8.5
       Argentina             1.0      6.5    1.0      4.5    2.5   2.5   8.9            1.9    2.9   3.2       27.4    28.0   28.8   22.3       24.0    28.2  29.8
       Brazil                3.3      2.2    4.5      2.8    3.2   3.6   2.7            0.9    3.0   3.5        6.3     6.5    6.1    6.6        5.4     6.4   5.7
       Chile                 0.4      2.5    5.3      5.0    5.4   5.6   6.0            5.6    5.3   5.5        1.5     2.3    2.9    3.3        3.0     2.6   3.0
       Colombia              0.7      7.4    4.0      5.0    4.5   5.0   5.9            4.0    4.2   4.5        1.9     2.0    2.3   3.4         3.1     2.1   2.9
       Mexico                2.4      3.1    1.5 ↓    5.2    4.5   4.2   3.9            3.9    3.3   4.0        3.6     3.8    3.5   3.4        4.1      3.5   3.9
       Peru                  0.5      7.4    6.3      7.6    5.5   6.7   6.9            6.3    6.6   6.5        2.5     2.2    2.4   3.4        3.7      2.3   2.5
       Venezuela             0.5      2.4   -8.3     -4.3    0.8   7.4   4.2            5.6    -1.4  2.7       23.4    29.8   37.6   26.1       21.1    31.4  32.0
 Asia/Pacific               40.3      5.7    4.7      6.5    6.8   7.1   6.0            5.4    5.6   6.2        2.2     2.2    2.8 ↓ 3.7        2.4      2.4   3.3
    Japan                    6.2      0.2    2.0      2.8    3.7   4.5   -0.6           2.0    1.3   2.2       -0.3    -0.3    0.2   -0.3       -0.1    -0.1   2.2
    Australia                1.3      2.4    4.2      2.5    3.2   2.3   2.4            3.6    3.0   2.3        2.5     2.6    2.2   3.3        1.8     2.3   2.4
    Emerging Asia           32.8      6.9    5.2      7.4    7.5   7.7   7.5            6.2    6.6   7.1        3.2     3.2    3.9 ↓ 5.6        3.4     3.5   3.8
        China               17.8      8.4    6.4      8.2    9.1   8.7   9.3            7.8    7.9   8.1        2.4     2.6    3.6 ↓ 5.4        2.6     3.0 ↓ 3.5
        Hong Kong            0.5      4.9    2.0      2.4    4.1   4.1   4.9            1.4    3.0   3.5        3.7     4.2    3.1   5.3        4.1     4.0   4.5
        India                6.6      3.9    5.7      7.6    5.4   7.5   7.2            5.1    5.6   7.0        6.8     6.1    5.9   9.5        7.5     6.2   5.6
        Indonesia            1.7      7.0    5.3      7.1    6.3   7.4   6.5            6.2    6.3   6.4        5.0     5.2    5.5   5.4        4.3     5.3   4.5
        South Korea          2.2      1.1    3.5      4.5    7.4   5.3   3.7            2.0    3.3   4.0        1.4     1.7    2.5   4.0        2.2     2.0   3.0
        Malaysia             0.7     10.9    5.0      4.0   -1.5  10.0   5.1            5.6    5.1   5.7        1.5     1.7    2.4   3.2        1.7     1.9   3.0
        Philippines          0.6      5.1   10.0      5.0    5.1   4.6   3.9            6.6    6.2   6.3        3.2     3.5    4.4   4.8        3.1     3.8   4.1
        Singapore            0.4      3.3    1.0      3.6    6.0   4.5   5.2            1.3    2.0   3.4        4.3     2.7    3.2   5.2        4.6     3.3   3.1
        Taiwan               1.3      7.3   -3.2      8.2    7.8   7.6   4.1            1.3    4.0   4.3        2.1     1.3    2.0   1.4        1.9     1.6   2.8
        Thailand             0.9     15.0   -3.5      5.5    4.5   1.5   0.0            6.5    5.0   5.5        3.1     2.9    3.0   3.8        3.0     2.9   3.1
 Europe and Africa          27.6     -0.5    0.5      1.2    2.1   3.0   2.4            0.5    0.8   2.1        2.6     2.4    2.1   3.5        3.0     2.4   2.2
    Euro area               14.9     -2.3   -0.4      0.6    1.1   1.2   1.5            -0.5   -0.3  1.4        1.9     1.3    1.1   2.7        2.5     1.4   1.3
        Belgium             0.6      -0.5    0.4      0.6    1.4   1.4   1.8            -0.2   0.2   1.5        1.4     1.2 ↑ 0.6 ↑ 3.4         2.6     1.0 ↑ 1.2
        France              3.0      -1.2   -0.9      0.8    1.3   1.0   1.7            0.0    0.0   1.4        1.2     0.8    1.0   2.3        2.2     1.0   1.1
        Germany             4.3      -2.3    1.7      2.4    2.2   1.9   3.1            0.9    1.0   2.0        1.8     1.2    1.3   2.5        2.1     1.3   1.6
        Greece              0.4     -16.2   -5.5     -5.2   -2.7  -1.0   -7.2           -6.4   -6.3  -0.4       0.0    -0.6   -1.1   3.1        1.0     -0.6  -0.7
        Ireland             0.3      -0.2    1.5      1.6    2.0   1.6   1.4            0.9    1.0   2.3        1.1     0.5 ↑ 0.8 ↑ 1.2         1.9     0.7 ↑ 1.3
        Italy               2.4      -3.7   -2.0     -0.8    0.5   0.8   0.5            -2.4   -1.5  1.0        2.1     1.2    1.3   2.9        3.3     1.5   1.4
        Netherlands         1.0      -1.7   -0.2     -0.1    0.7   1.2   1.1            -1.0   -0.7  1.2        3.2     2.9    1.9   2.5        2.8     2.7   1.7
        Portugal            0.3      -7.1   -1.8     -0.4    0.4   1.1   -1.6           -3.2   -2.5  0.5        0.4     0.6    0.4   3.6        2.8     0.5   0.1
        Spain               1.9      -3.1   -2.0     -1.2   -0.3   0.1   0.4            -1.4   -1.6  0.8        2.8     1.6    0.7   3.1        2.4     1.5   0.8
    United Kingdom          3.1      -1.2    1.0      1.4    1.5   1.5   1.0            0.3    0.9   1.9        2.8     3.0    2.5   4.5        2.8     2.8   2.6
    Switzerland             0.5       1.0    1.2      1.2    1.2   1.2   1.9            1.0    1.2   1.5       -0.3    -0.2    0.2   0.2        -0.7    -0.1  0.2
    Sweden                  0.5       0.1    0.8      1.6    2.3   2.5   3.7            1.2    1.4   2.5       -0.1     0.1    1.3   3.0        0.9     0.5   1.9
    Norway (mainland)       0.4       1.2    2.8      2.8    3.2   3.2   2.5            3.5    2.7   3.0        1.2     1.7    1.6   1.3        0.7     1.6   1.6
    Denmark                 0.3       0.8    1.2      1.6    2.0   2.8   0.8            -0.4   1.0   1.8        1.2     1.6    2.2   2.8        2.4     1.9   1.8
    EM Europe & Africa      7.9       3.1    1.8      2.1    4.2   7.3   4.9            2.5    2.7   3.5        5.8     5.7    5.1   6.4        5.5     5.6   4.6
        Czech Repub.        0.4      -1.4 ↓ -0.6 ↓    0.1    0.7   1.0 ↑ 1.7            -1.2   -0.5  0.8        2.0     1.6    2.0 ↓ 1.9        3.3     1.9   1.7
        Hungary             0.3      -3.4   -0.3      0.4    3.1   3.2   1.6            -1.8   -0.4  1.2        2.9     2.5    1.9   3.8        5.7     2.3   2.9
        Poland              1.1       0.8    0.4      0.8    2.0   2.0   4.3            2.0    1.0   2.8        2.5     2.0    2.2   3.9        4.0     2.2   0.6
        Russia              3.5       6.5    0.9      0.5    4.1  10.3   4.3            3.4    3.0   3.5        7.2     7.0    5.9   8.6        5.1     6.6   5.6
        Turkey              1.6      -0.2    5.3      6.1    7.4   9.1   8.8            2.2    4.4   4.9        7.2     7.4    6.9   6.5        8.9     7.4   5.5
        Israel              0.3       2.6    2.3 ↓    4.9 ↑ 4.9 ↑ 5.2    4.7            3.0    3.5 ↑ 4.1 ↑      1.4     1.4    2.0   3.4        1.6     1.7   1.9
        South Africa        0.8       2.1    2.8      3.2    3.4   3.5   3.5            2.5    2.7   3.4        5.7     6.0    6.0   5.0        5.7     6.0   5.8
Note: Arrows appear next to numbers if current forecasts differ from that of the previous week by 0.5pp or more for quarterly annualized GDP, by 0.2pp or more for
annual GDP and by 0.2pp or more for Inflation. Weights used for real GDP are based on IMF PPP-based GDP (5yr centred moving averages). Weights used for
consumer prices are based on IMF nominal GDP (5yr centred moving averages)”. * IMF PPP-based GDP weights for 2013.
Source: Barclays Research, Financial Conditions At Record Strength, published May 10, 2013




16 May 2013                                                                                                                                                      33
Barclays | Global Technology Outlook


                                   FIGURE 39
                                   2H13 CIO IT spending expectations

                                                          35%                                                             Overall, 22% expect y/y
                                                                Overall, 55% expect y/y
                                                                                                                             declines in 2H13
                                                                   growth in 2H13
                                                          30%

                                                          25%




                                       % of respondents
                                                          20%

                                                          15%

                                                          10%

                                                          5%

                                                          0%
                                                                Up 10%+    Up 5-10%       Up 0-5%       Flat    Down 0-5%       Down 5-   Down 10%+
                                                                                              Overall   US   EU                  10%

                                   Source: Barclays Research, CIO Survey, April 2013



                                   FIGURE 40
                                   2013 CIO IT spending expectations

                                                          40%
                                                                 Overall, 50% expect
                                                          35%                                                                   Overall, 20% expect
                                                                 y/y growth in 2013
                                                                                                                                y/y declines in 2013
                                                          30%
                                       % of respondents




                                                          25%

                                                          20%

                                                          15%

                                                          10%

                                                           5%

                                                           0%
                                                                Up 10%+     Up 5-10%      Up 0-5%       Flat        Down 0-5%   Down 5- Down 10%+
                                                                                                                                 10%
                                                                                              Overall   US     EU

                                   Source: Barclays Research, CIO Survey, April 2013



Recent industry checks suggest     Recent industry checks as well as data points from our recent bi-annual Barclays CIO Survey in
a tougher near-term                April 2013 suggest that IT spending is still pressured by the macroeconomic environment but
environment, but pent-up           2H13 could be a bit better. We still believe that software, storage, and networking will show
demand could help in 2H13.         signs of stable demand in the enterprise. Indications from CIOs and our channel checks also
                                   suggest that spending for storage and software could continue to grow, while PCs are not a
                                   priority at all and tablets are gaining importance in the enterprise. While our checks indicate
                                   some caution at the macro levels, especially in Federal, our recent distributor checks
                                   suggest networking appears to be perhaps one of the strongest categories on a relative
                                   basis vs. other segments. As a result, we see limited upside to our estimates for IT spending
                                   growth in the near term but believe 2H13 holds some promise for a rebound.




16 May 2013                                                                                                                                            34
Barclays | Global Technology Outlook


                                   FIGURE 41
                                   CIO IT spending priorities – April 2013 CIO Survey

                                                          35%


                                                          30%


                                                          25%




                                       % of respondents
                                                          20%


                                                          15%


                                                          10%


                                                          5%


                                                          0%
                                                                   SW –        Storage       SW --      Networking   IT Services   Servers   Other   No priorities   PCs
                                                                Applications             Infrastructure
                                                                                                            Apr-13         Sep-12

                                   Source: Barclays Research, CIO Survey, April 2013




16 May 2013                                                                                                                                                                35
Barclays | Global Technology Outlook


                                                      Sector performance, models and charts
                                                      We highlight the performance of the tech sector as well as specific industries compared to
                                                      the market and relevant industries. We have also included a list of some of the leaders and
                                                      laggards in selected sectors of the technology industry.

FIGURE 42:
The S&P 500 Information Technology sector has generally outperformed YTD (NEW)



 145


 135


 125


 115


 105


   95
                                                                    Jun-12




                                                                                               Sep-12
                 Jan-12




                                                                                                                                    Jan-13
                                                  Apr-12




                                                                                                        Oct-12


                                                                                                                  Nov-12




                                                                                                                                                               Apr-13
                             Feb-12




                                                                                                                                             Feb-13
                                                                                      Aug-12
        Dec-11




                                      Mar-12




                                                                                                                           Dec-12




                                                                                                                                                      Mar-13
                                                                             Jul-12
                                                           May-12




                          S&P Small Cap 600 / Information Technology                                        S&P 500 / Financials
                          S&P 500 / Health Care                                                             S&P 500 / Telecommunications Services
                          S&P 500 / Industrials                                                             S&P 500 / Information Technology
                          S&P 500

Source: FactSet. Prices as of May 10, 2013.




16 May 2013                                                                                                                                                             36
Barclays | Global Technology Outlook


                                   The figure below summarizes group valuations relative to historical averages across the
                                   tech sector for both price to earnings and enterprise value to sales ratios. The majority of
                                   the Barclays global technology sectors are trading above their five-year P/E averages.

                                   FIGURE 43
                                   Barclays global technology composite valuations by subsector
                                                                                                                           EV/FWD   5-Yr
                                       Barclays Global Technology Composites                 P/E FY1   P/E FY2 5-Yr Avg.    Sales   Avg.

                                       S&P 500                                                  15x     14x       14x       NM      NM
                                        U.S. Internet                                          29.9x    24.2x    22.3x      3.4x    2.9x
                                        European Technology Hardware                           31.0x    18.3x    14.4x      1.0x    0.8x
                                        U.S. IT Consulting & Computer Services                 19.5x    16.9x    13.4x      3.0x    1.8x
                                        European Software & IT Services                        17.9x    15.8x    18.9x      2.7x    2.1x
                                        Japan Precision Instruments                            17.3x    14.2x    18.0x      0.8x    0.8x
                                        U.S. Semiconductors                                    15.5x    13.7x    17.2x      2.8x    2.7x
                                        U.S. Software                                          14.4x    12.9x    15.5x      3.7x    3.5x
                                        Asia Ex-Japan Telecom Services                         13.4x    12.7x    12.8x      1.7x    2.0x
                                        Asia Ex-Japan Wireless Equipment & Products            14.6x    11.9x    14.4x      0.6x    0.6x
                                        Israel Technology                                      13.1x    11.7x    10.8x      1.9x    2.4x
                                        U.S. Data Networking & Wireline Equipment              11.9x    10.7x    16.6x      1.8x    2.3x
                                        Asia Ex-Japan LCD Displays                             13.4x    10.2x    13.8x      0.6x    0.8x
                                        Asia Ex-Japan IT Hardware                              11.5x    10.0x    13.5x      0.3x    0.3x
                                        U.S. IT Hardware                                       10.9x    9.9x     14.0x      1.4x    1.4x
                                        U.S. Wireless Equipment                                9.7x     8.5x     16.3x      1.6x    1.6x
                                        Asia Ex-Japan Semiconductors                           9.2x     8.1x     15.5x      1.7x    1.5x
                                   Source: Barclays Research, FactSet. Prices as of May 10, 2013.




16 May 2013                                                                                                                           37
Barclays | Global Technology Outlook


                                   Software & services solid so far in 2013, as
                                   Japan benefits from Yen as well
                                   Year-to-date, the tech sector has underperformed both the S&P 500 and the Dow Jones
                                   Industrial Average. The S&P Information Technology Index is up about 8% year-to-date (as
                                   of 10 May, 2013. Looking at our Barclays Global Technology Composites, a few sectors
                                   outperformed the market YTD, including Japan Precision Instruments, European
                                   Technology Hardware, and U.S. Internet. Japanese stocks have seen solid appreciation as
                                   the Yen has rapidly depreciated. We also note that software and services sectors in the
                                   Barclays tech universe generally outperformed that of hardware-focused sectors. We also
                                   highlight performance across all tech areas identifying both sector leaders and laggards.

Software and services shine so     Software and services seem to be benefitting from the shift to the cloud so far this year and
far in a tough environment for     its performance is an example of the rapid shift in the value of enterprise technology away
tech.                              from hardware toward software. While the U.S. IT Hardware sector performed relatively
                                   poorly a significant amount of underperformance was driven by weakness at Apple early in
                                   the year.

FIGURE 44
Index Performance Summary

 Market Indices                                    1-Month % 3-Month % 6-Month %         1-Year %      QTD        YTD %
   S&P 500                                             2.9         7.6         18.4        20.3        4.1         14.5
   Dow Jones Industrial Average                        2.1         8.0         18.0        17.6        3.7         15.4
   Japan Nikkei 225                                    9.9         31.0        66.8        62.1         9.4        40.5
   Hong Kong Hang Seng Index                           6.0          0.2        10.5        16.2         4.8         3.5
   Taiwan TWSE Index                                   6.8          4.7        13.5        10.6         6.4         7.5
   Korea KOSPI Index                                   0.5         -0.3         2.1         0.0        -1.9        -2.6
   Singapore Straits Times Index                       4.6          5.3        14.4        18.6        4.2          8.7
   Shanghai Composite                                  0.9         -7.6         8.6        -6.8        1.7         -1.0
   UK FTSE 100                                         3.7         5.8         14.8        19.5        4.5         12.3
   Germany DAX Index                                   6.0         8.2         15.6        27.0        7.3          8.8
   MSCI Europe Index                                   4.0         6.1         15.0        23.1        4.2         10.7
   MSCI The World Index                                3.6         8.1         20.1        23.3         5.0        14.7
Technology Indices                                 1-Month % 3-Month % 6-Month %        1-Year %       QTD        YTD %
   NASDAQ Composite Index                              4.2         7.6        18.3         17.1        5.2         13.8
   Semiconductor HOLDRs Trust (SMH)                    9.2         9.9        23.7         17.9        9.1         19.9
   PHLX / Semiconductor Index (SOX)                    6.5         9.7        26.0         18.9        6.7         21.3
   MSCI Global Technology Index                        3.7         5.9        15.4         11.3        4.5         10.2


S&P 500 GICS Sectors                               1-Month % 3-Month % 6-Month %        1-Year %       QTD        YTD %
   Utilities                                          -0.9        8.3         15.0         10.9        1.5         13.6
   Consumer Staples                                   1.8         9.6         18.9         20.9        3.4         17.6
   Health Care                                        1.6         11.1        23.1         30.2        4.6         20.6
   Consumer Discretionary                              5.8        11.9        25.1         28.4        7.0         19.6
   Energy                                              1.7         2.1        13.5         16.4        1.2         10.9
   Information Technology                              3.4         4.9        11.3          7.9        3.8          8.2
   Industrials                                         2.7         6.1        18.4         20.9        3.1         13.5
   Telecommunications Services                         2.2        10.1        15.5         22.2        5.5         14.2
   Materials                                           3.4         2.6        13.7         15.1        3.1          7.4
   Financials                                          3.8         9.2        24.2         28.5        5.5         17.0




16 May 2013                                                                                                                  38
Barclays | Global Technology Outlook


FIGURE 44
Index Performance Summary

 Barclays Global Technology Composites                           1-Month % 3-Month % 6-Month %   1-Year %   QTD     YTD %
    Japan Precision Instruments                                     8.6%     20.6%     56.1%       24.3%    14.7%    21.5%
    European Technology Hardware                                    9.4%      4.9%     30.7%       36.1%     7.3%    18.8%
    U.S. Internet                                                   5.2%      6.5%     28.6%       25.0%     6.5%    17.0%
    U.S. IT Consulting & Computer Services                          3.5%      6.8%     20.7%       33.4%     2.6%    14.3%
    U.S. Semiconductors                                             3.1%      5.2%     14.3%        2.2%     3.3%    11.9%
    European Software & IT Services                                 4.7%      7.4%     20.1%       38.8%     2.2%    11.6%
    Israel Technology                                               7.8%     12.6%     14.9%        7.5%     7.1%    11.1%
    U.S. Software                                                   4.4%      7.1%     13.8%       14.5%     6.6%    10.5%
    Asia Ex-Japan Wireless Equipment & Products                     6.9%     12.9%     13.4%       -0.2%     8.4%     7.8%
    Asia Ex-Japan Semiconductors                                    4.5%      4.9%     15.5%       21.1%     3.2%     4.3%
    U.S. Data Networking & Wireline Equipment                      -2.2%     -3.8%     20.3%       17.3%    -0.8%     3.9%
    Asia Ex-Japan LCD Displays                                     -2.8%      8.4%      1.7%       12.9%    -2.3%     1.8%
    Asia Ex-Japan IT Hardware                                      1.3%      -1.9%     -2.0%       -3.4%    -1.9%    -0.8%
    U.S. IT Hardware                                               1.1%      -0.8%     -4.0%      -11.8%    -0.3%    -3.9%
    U.S. Wireless Equipment                                        2.7%      -3.4%     -9.1%      -11.5%    1.4%    -11.8%
Source: FactSet, Barclays Research. Prices as of May 10, 2013.




16 May 2013                                                                                                                  39
Barclays | Global Technology Outlook




FIGURE 45
Technology sector leaders year-to-date
Sector                                                                        Company and Price Return

Asia ex-Japan IT Hardware                   Darfon Electronics Corp. (40%), Delta Electronics Inc. (37%)
Asia ex-Japan LCD Displays                  Advanced Process Systems Corporation (85%), SFA Engineering Corp. (35%)
Asia ex-Japan Semiconductors                Elan Microelectronics Corp. (65%), Vanguard International Semiconductor Corp. (60%)
Asia ex-Japan Wireless Equipment            AAC Technologies Holdings Inc. (51%), Lite-On Technology Corp. (34%)
Europe Software                             Temenos Group AG (45%), Amadeus IT Holding S.A. (23%)
Europe Technology Hardware                  CSR PLC (60%), ARM Holdings PLC (39%)
Israel Technology                           Corning Inc. (21%), Orbotech Ltd. (20%)
Japan Prescision Instruments                Jeol Ltd. (107%), Seiko Epson Corp. (80%)
US Consulting and IT Services               Camelot Information Systems Inc. ADS (70%), RPX Corp. (65%)
US Internet                                 Netflix Inc. (146%), Pandora Media Inc. (73%)
US IT Hardware                              Hewlett-Packard Co. (49%), Western Digital Corp. (37%)
US Data Networking and Wireline Equipment   Cisco Systems Inc. (8%), Juniper Networks Inc. (-12%)
US Semiconductors                           Freescale Semiconductor Ltd (42%), RF Micro Devices Inc. (26%)
US Software                                 Splunk Inc (54%), NetSuite Inc. (36%)
Source: Barclays Research, Factset




FIGURE 46
Technology Sector Laggards Year-to-Date
Sector                                                                        Company and Price Return

Asia ex-Japan IT Hardware                   Digital China Holdings Ltd. (-21%), Samsung SDI Co. Ltd. (-16%)
Asia ex-Japan LCD Displays                  G-TECH Optoelectronics Corp. (-13%), Iljin Display Co. Ltd. (-11%)
Asia ex-Japan Semiconductors                Richtek Technology Corp. (-8%),
Asia ex-Japan Wireless Equipment            Career Technology (Mfg.) Co. Ltd. (-14%), Young Fast Optoelectronics Co. Ltd. (-10%)
Europe Software                             Software AG (-18%), Groupe Steria S.C.A. (-16%)
Europe Technology Hardware                  Imagination Technologies Group PLC (-21%), Dialog Semiconductor PLC (-13%)
Israel Technology                           Allot Communications Ltd. (-31%), EZchip Semiconductor Ltd. (-22%)
Japan Prescision Instruments                Nikon Corp. (3%), Dainippon Screen Mfg. Co. Ltd. (6%)
US Consulting and IT Services               VeriFone Systems Inc. (-22%), Cognizant Technology Solutions Corp. (-15%)
US Internet                                 Expedia Inc. (-4%), Facebook Inc. (1%)
US IT Hardware                              Fusion-io Inc. (-34%), Apple Inc. (-15%)
US Data Networking and Wireline Equipment   F5 Networks Inc. (-19%), Aruba Networks Inc. (-16%)
US Semiconductors                           Entropic Communications Inc. (-22%), Cirrus Logic Inc. (-22%)
US Software                                 VMware Inc. (-19%), Teradata Corp. (-12%)
Source: Barclays Research, Factset




16 May 2013                                                                                                                        40
Barclays | Global Technology Outlook


FIGURE 47                                                                                                 FIGURE 48
Japan Precision Instruments                                                                               Asia ex-Japan IT Hardware

 112

 102                                                                                                       121

  92
                                                                                                           101
  82

  72                                                                                                        81

  62
                                                                                                            61
  52

  42                                                                                                        41
       May-08




                         May-09




                                           May-10




                                                             May-11




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                                                                                                                 May-08




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                Nov-08




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                                                                                                                                                                                                  Nov-12
                                    Japan Precision Instruments                                                                                 Asia Ex-Japan IT Hardware

Source: FactSet, Prices as of May 10, 2013.                                                               Source: FactSet, Prices as of May 10, 2013.



FIGURE 49                                                                                                 FIGURE 50
U.S. IT Hardware                                                                                          European Technology Hardware

 200
                                                                                                           101
 170                                                                                                        91

 140                                                                                                        81

                                                                                                            71
 110
                                                                                                            61
  80
                                                                                                            51

  50                                                                                                        41
       May-08




                         May-09




                                           May-10




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                Nov-08




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                                                                                                                                                                                                  Nov-12
                                            U.S. IT Hardware                                                                                European Technology Hardware

Source: FactSet, Prices as of May 10, 2013.                                                               Source: FactSet, Prices as of May 10, 2013.


FIGURE 51                                                                                                 FIGURE 52
U.S. Software                                                                                             European Software & IT Services


 134                                                                                                       185

 114                                                                                                       155

  94                                                                                                       125


  74                                                                                                        95


  54                                                                                                        65
       May-08




                         May-09




                                           May-10




                                                             May-11




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                                                                                                 May-13




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                Nov-08




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                                                U.S. Software                                                                               European Software & IT Services

Source: FactSet, Prices as of May 10, 2013.                                                               Source: FactSet, Prices as of May 10, 2013.



16 May 2013                                                                                                                                                                                                41
Barclays | Global Technology Outlook


FIGURE 53                                                                                                    FIGURE 54
U.S. Consulting & IT Services                                                                                Israel Technology


 172
                                                                                                               94

 142
                                                                                                               74
 112

                                                                                                               54
  82


  52                                                                                                           34
       May-08




                         May-09




                                           May-10




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                                                                                                    May-13




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                Nov-08




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                                                                                                                                                                  Nov-10




                                                                                                                                                                                    Nov-11




                                                                                                                                                                                                      Nov-12
                                  U.S. IT Consulting & Computer …                                                                                        Israel Technology

Source: FactSet, Prices as of May 10, 2013.                                                                  Source: FactSet, Prices as of May 10, 2013.



FIGURE 55                                                                                                    FIGURE 56
U.S. Internet                                                                                                U.S. Semiconductors


                                                                                                              131
 161

                                                                                                              111
 131

                                                                                                               91
 101


  71                                                                                                           71


  41                                                                                                           51
       May-08




                         May-09




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                Nov-08




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                                                                                                                                                                  Nov-10




                                                                                                                                                                                    Nov-11




                                                                                                                                                                                                      Nov-12
                                                    U.S. Internet                                                                                       U.S. Semiconductors

Source: FactSet, Prices as of May 10, 2013.                                                                  Source: FactSet, Prices as of May 10, 2013.


FIGURE 57                                                                                                    FIGURE 58
Asia ex-Japan Semiconductors                                                                                 Asia ex-Japan LCD Displays
                                                                                                              110
 162
                                                                                                              100
 142
                                                                                                               90
 122
                                                                                                               80
 102
                                                                                                               70
  82
                                                                                                               60
  62                                                                                                           50

  42                                                                                                           40
       May-08




                         May-09




                                           May-10




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                                                                                  May-12




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                                                                                                                    May-08




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                Nov-08




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                                                                                                                                                                  Nov-10




                                                                                                                                                                                    Nov-11




                                                                                                                                                                                                      Nov-12




                                  Asia Ex-Japan Semiconductors                                                                                    Asia Ex-Japan LCD Displays

Source: FactSet, Prices as of May 10, 2013.                                                                  Source: FactSet, Prices as of May 10, 2013.



16 May 2013                                                                                                                                                                                                    42
Barclays | Global Technology Outlook


FIGURE 59                                                                                                  FIGURE 60
Asia ex-Japan Wireless Equipment                                                                           U.S. Data Networking
 131
                                                                                                            110
 111                                                                                                        100

  91                                                                                                         90

                                                                                                             80
  71
                                                                                                             70
  51
                                                                                                             60

  31                                                                                                         50
       May-08




                         May-09




                                            May-10




                                                              May-11




                                                                                May-12




                                                                                                  May-13




                                                                                                                  May-08




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                                                                                                                                                                                                            May-13
                Nov-08




                                   Nov-09




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                                                                                         Nov-12




                                                                                                                           Nov-08




                                                                                                                                             Nov-09




                                                                                                                                                               Nov-10




                                                                                                                                                                                 Nov-11




                                                                                                                                                                                                   Nov-12
                                  Asia Ex-Japan Wireless Equipment …                                                                         U.S. Data Networking & Wireline…

Source: FactSet, Prices as of May 10, 2013.                                                                Source: FactSet, Prices as of May 10, 2013.




16 May 2013                                                                                                                                                                                                 43
Barclays | Global Technology Outlook




                                       Credit: U.S. High Grade
                                                   Technology




16 May 2013                                                  44
Barclays | Global Technology Outlook


U.S. HIGH GRADE TECHNOLOGY RESEARCH

                                   Leveraging up
Danish Agboatwala*                     • Leveraging theme gains momentum. The overarching credit theme for the
+1 212 412 2573                           technology sector this year has been leveraging of balance sheets, as evidenced by
danish.agboatwala@barclays.com            several recent LBO announcements. Conditions remain ripe for issuers to push
                                          leverage higher to fuel returns. This holds particularly true for the tech sector, which
Parth Shah*                               has comparatively lower leverage and high offshore cash holdings.
+1 212 412 2079
                                       • Banner year for technology issuance. Year-to-date sector issuance has already
Parth.Shah@barclays.com
                                          exceeded $26bn, well on course to exceed the $44bn/year pace of 2011-12. We
                                          expect the heavy pace of issuance to continue and to likely include several
*The author is from the Fixed
                                          infrequent/inaugural issuers.
Income, Currencies and
Commodities Research department        • We remain Market Weight technology. Sector performance has lagged the broader
and is not an equity research             credit indices, reflecting the emergence of event risk and tighter starting spread levels.
analyst.                                  As a result, sector valuations are now more attractive and we believe fairly reflect the
                                          increased event risk and softer earning/macro outlook. However, we see pockets of
                                          value in select wider-trading credits that should continue to benefit from the reach for
                                          yield (e.g., Arrow) and in certain higher quality credits that have lagged on
                                          secular/cyclical concerns, despite strong credit profiles (e.g., Intel).


                                   Leveraging balance sheets to fuel equity returns
                                   The technology sector, along with the broader industrial sectors, is in the midst of a
                                   (re)leveraging cycle. With issuer funding costs at record lows, market volatility ebbing,
                                   softer organic growth, and equity valuations perceived to be at attractive levels, conditions
                                   are ripe for issuers to push leverage higher to fuel returns.

                                   The investment grade technology sector, which has comparably lower leverage and higher
                                   (trapped) offshore cash holdings than other industrial sectors, screens as particularly well
                                   suited for this. Notable examples include Dell and BMC’s LBOs. Based on a representative
                                   set of technology issuers, we estimate that gross debt balances have risen from $92bn in
                                   2007 to $177bn today, and LTM leverage has increased from a relatively modest 1.3-1.4x in
                                   2007 to 1.6x today, reflecting EBITDA growth, and remains below that of most industrial
                                   sectors (Figures 1 and 2).

                                   While technology issuers have historically been hesitant to use balance sheet leverage
                                   aggressively given their inherent technology risk and high degree of cyclicality, we expect
                                   current market conditions and precedent transactions to attract a number of inaugural
                                   issuers. We also expect the larger blue-chip tech companies (e.g., Microsoft, Intel, Cisco) to
                                   continue use issuance to synthetically “unlock” foreign cash holdings.

                                   For small- to mid-cap issuers, we see growing event risk related to leveraging transactions
                                   (leveraged buyouts and recapitalizations). Given the market’s view that LBOs of Dell and
                                   BMC are possible, we think that other, albeit less dramatic, leveraging events are now much
                                   more likely in the technology sector. We think the best starting point for gauging event risk
                                   is screening for companies with equity that has underperformed both sector indices and the
                                   S&P500 and that are trading at relatively low EV/EBITDA multiples.

                                   We highlight our credit strategy team’s recent report on the topic (U.S. Investment Grade:
                                   LBO Baskets), as well as our note on BMC’s LBO announcement (BMC Software: Go-private
                                   Transaction Announced; Tech LBO Theme Gains Momentum), which includes a list of
                                   technology issuers that have previously been listed as candidates for buyouts or have
                                   activist investors that could push for recapitalizations of the companies.

16 May 2013                                                                                                                      45
Barclays | Global Technology Outlook


FIGURE 61                                                                   FIGURE 62
Total gross debt outstanding ($mn)                                          Investment Grade Technology sector gross leverage trends
                                                                             Sector                2007    2008    2009    2010     2011   2012    LTM
                                                        $177,462 $176,825                                                                         1Q'13
                                             $164,985                        IT Hardware            0.9x    1.0x    1.6x    1.2x    1.4x   1.6x    1.5x
                                                                             Supply Chain           1.6x    1.5x    1.9x    1.5x    1.3x   1.9x    1.9x
                                  $130,588                                   Software & Services    1.9x    1.4x    1.5x    1.4x    1.4x   1.4x    1.5x
                                                                             Average                1.4x    1.3x    1.6x    1.3x    1.4x   1.6x    1.6x
             $103,347 $105,497
   $91,478




    2007       2008       2009       2010       2011      2012    1Q'13

Note: Average of select technology credits.                                 Note: Average of select technology credits.
Source: Company filings, Bloomberg, Barclays Research                       Source: Company filings, Bloomberg, Barclays Research




                                             Sector recommendation: Market Weight
                                             We maintain a Market Weight rating on technology. The sector has lagged the broader
                                             U.S. Credit index and other industrial sectors, reflecting the re-emergence of event risk
                                             following Dell’s LBO announcements and relatively tighter starting spread levels. Through
                                             April, the sector has generated +41bp of excess returns, lagging the U.S. Credit Index by
                                             approximately 25bp.

                                             As a result, sector valuations are now more attractive and we believe fairly reflect increased
                                             event risk and a softer earnings outlook; we expect the sector generally to perform in line
                                             with the U.S. Credit Index. The technology sector OAS is now +123bp, or essentially flat to
                                             the U.S. Credit Index (three-year range -72bp to +9bp; average -32bp). See Figure 3 for
                                             details.

                                             Our Market Weight rating also reflects the sector’s bias toward higher-quality, lower-
                                             leveraged credits. The top seven credits (IBM, Oracle, Hewlett Packard, Cisco, Microsoft,
                                             Apple, Intel) compose ~63% of the sector’s index weighting and, with the exception of HPQ,
                                             are all single-A rated or higher.

                                             While forward outlooks have worsened recently, as long as volatility remains subdued, we
                                             do not expect sector credit spreads in aggregate to be especially sensitive to changes in
                                             operating results, given the robust equity cushion. However, we advocate a more cautious
                                             stance toward lower-quality credits with heavy exposure to secularly challenged verticals or
                                             that screen for event risk.

                                             Top Picks
                                             Within the sector, we see several pockets of value. We expect the reach for yield to benefit
                                             higher beta credits and highlight Arrow as a preferred pick within that grouping. ARW’s
                                             spreads remain among the widest in the tech sector, and we believe offer an attractive carry
                                             opportunity given our constructive view on the credit. Among the higher-quality names, our
                                             top pick is Intel. Despite the near-term headwinds, we view INTC’s credit profile as strong,
                                             do not expect any credit shocks, and view the discount to other “blue-chip” tech names as
                                             attractive. For a full list of our ratings and top trading recommendations, see our recent note
                                             (High Grade Technology: Assuming Coverage at Market Weight).




16 May 2013                                                                                                                                         46
Barclays | Global Technology Outlook


                                   FIGURE 63
                                   The Technology sector has underperformed the broader credit market
                                        20

                                         0

                                        -20

                                        -40

                                        -60

                                        -80

                                       -100

                                       -120




                                                                               Tech Sector OAS vs. US Credit Index
                                   Click here to access Interactive chart via Barclays Live
                                   Source: Barclays Research




                                   Sector issuance
                                   We expect 2013 to be another banner year for investment grade technology issuance.
                                   Year-to-date supply has already passed $26bn, well on pace to exceed the ~$44bn in 2011
                                   and 2012 (Figure 4). Notably, there has been a material pickup in the pace of supply, with
                                   Microsoft, Texas Instruments, and IBM all issuing over the past several weeks.

                                   We expect the heavy pace of issuance to continue. While it is difficult to predict supply
                                   volumes, as the tech sector tends to be largely opportunistic rather than driven by liquidity
                                   needs, we would not be surprised to see sector issuance exceed $50-55bn. We also expect
                                   a pickup in issuance from extremely infrequent borrowers or inaugural issuers looking to
                                   take advantage of the attractive market environment.


                                   FIGURE 64
                                   Tech issuance on track to exceed prior years ($mn)

                                                        $44,425         $44,050




                                         $29,325
                                                                                                                               $26,015




                                                                                                       $9,875
                                                                                                                     $8,100




                                         2010A           2011A           2012A                         2011YTD       2012YTD   2013YTD
                                   Note: 2013 YTD as of May 10, 2013; 2011, 2012 YTD as of April 30.
                                   Source: Barclays Research, Bloomberg, company reports.




16 May 2013                                                                                                                          47
Barclays | Global Technology Outlook




                                       Europe and Israel Technology




16 May 2013                                                       48
 Barclays | Global Technology Outlook


 EUROPEAN TECHNOLOGY HARDWARE & EUROPEAN SOFTWARE & IT SERVICES

                                      Looking past traditional ‘cash machines’
EUROPEAN SOFTWARE & IT                • The premium paid for growth and ‘quality’ remains at decade-long highs – and in
SERVICES                                 hardware we find this largely justified and stick with structural winners such as ARM
Gerardus Vos                             Holdings and ASML. However, in European Software we find more longevity to slower-
+44 (0)203 134 6690                      growth stories (Micro Focus, Temenos) due to stable maintenance bases, and see the IT
Gerardus.Vos@barclays.com                Services companies as well-positioned to drive improvement via cost base and balance
Barclays, London                         sheet restructuring (Capgemini, Atos).

EUROPEAN TECHNOLOGY                   • European Technology has several structurally mature names and many/most have
HARDWARE                                 turned to cash returns to bolster their valuations (eg., Micro Focus, CSR, Sage).
Andrew Gardiner                          These names tick the boxes of low-growth and high-cash conversion and are therefore
+44(0)203 134 7217                       prime candidates. However, given the lack of M&A in the sector we think atypical names
Andrew.Gardiner@barclays.com             like ARM (which is high growth) and Capgemini (cyclical) could provide the next wave
Barclays, London                         of equity returns.

                                      • Capgemini (Overweight – European Software & IT Services) – Capgemini offers
                                         significant late-cyclical exposure which we deem a positive as growth picks up in
                                         2H. Moreover, as we highlight below the company has significant latent capacity for self
                                         help as a result of its inefficient balance sheet; something we expect will be addressed
                                         over coming quarters.

                                      • ARM Holdings (Overweight – European Technology Hardware) – ARM may not be
                                         the most obvious choice when it comes to looking for shareholder returns, but we
                                         think it one worth considering. It is clearly a growth story, but with over 90% gross
                                         and 50% operating margins and a high degree of cash conversion, it also generates
Technology Hardware and Software &       consistent cash flow that should result in higher shareholder returns over time.
                        IT Services

                      Industry View   The next phase of cash returns
                        NEUTRAL       Many technology companies are relatively mature in Europe. To measure this we have
                                      defined “mature growth” as <1x than nominal global GDP growth (c. 5%), “growth” as 1-2x
                                      and “emerging growth” as >2x. As can be seen in Figure 65, over 40% of our Euro tech
                                      coverage list is mature (growing slower than global GDP). To drive a respectable return
                                      companies ought to focus on i) acquisitions; ii) optimising operational return by operating
                                      expense efficiencies/restructuring; and iii) financial leverage and balance sheet
                                      optimisation. As inorganic activities are hit-and-miss and empirical evidence is pointing to
                                      value migration from acquirer shareholders to target shareholders, we tend to prefer the
                                      latter of the two.




 16 May 2013                                                                                                                   49
Barclays | Global Technology Outlook


FIGURE 65
European technology grouped by revenue CAGR
 3 year revenue CAGR                                                                                       >2x GDP growth
   40%
   35%
                                                                      >1 and <2x GDP growth
   30%
   25%
   20%                          Below-GDP growth
   15%
   10%
    5%
    0%
   -5%
  -10%




Source: Barclays Research estimates between 2013-15


                                            We believe the two Euro technology stocks which will benefit most from a shareholder
                                            return strategy are Capgemini and ARM, closely followed by Amadeus.


                                            Capgemini: Opportunity to redress the growth/returns
                                            balance
                                            For most of the last cycle, Capgemini has been managed for growth but with an average
                                            organic growth of just 3.5% over the last ten years we argue this strategy needs to change.
                                            It seems that new CFO Aiman Ezzat is already starting a new approach with his focus on
                                            improving cash earnings, by i) ongoing margin increases (and move away from the cyclical
                                            swings); ii) reducing the restructuring costs (10 year average of 160bp); iii) improving
                                            balance sheet efficiency.

                                            At the end of 2012 Cap had €0.9bn in net cash on the balance sheet, but over €2bn in gross
                                            cash, making it highly inefficient. The outstanding debt is broken down in: i) OCEANE 2009
                                            €575mn convertible; and ii) €500mn bond redeemable in Nov ’16. The convertible matures
                                            on January 1 ’14 with a strike of €34.

                                            If converted this will leave Cap with over €1.5bn in net cash (assuming €250-300mn FCF) or
                                            c.20% of the current market cap and just €500mn debt on January 1, ’14 and leaves room
                                            for an increase in shareholders returns. The alternative could be the return of acquisitions,
                                            particularly in the US, due to the large amount of deferred tax assets. While we see this as a
                                            less preferred route, given the company’s mixed acquisition track record, it is likely to be
                                            highly accretive due to the deferred tax assets and the current inefficient balance sheet.

                                            The above scenario provides a level of self-help while we wait for the cyclical upturn which
                                            we expect to start impacting 2H13. At just 11x FY14 P/E and just below 8x if adjusted for
                                            the cash, this is an attractive stock, in our view.


                                            ARM still emerging growth but strong cash position
                                            ARM may not be the most obvious choice when it comes to looking for a maturing cash
                                            return story… and that’s because it is anything but mature. However, when it comes to the
                                            potential for significant shareholder returns, we think it is one worth considering given its
                                            unique characteristics.



16 May 2013                                                                                                                            50
Barclays | Global Technology Outlook


                                   ARM is clearly a growth story, and we model 19% CAGR from 2012-15. With over 90%
                                   gross and 50% operating margins and a high degree of cash conversion, however, ARM
                                   also generates consistently high cash flow. ARM’s cash balance has increased over four-fold
                                   since the end of 2009, leaving it with £650mn in net cash at the end of 1Q13 or 5% of the
                                   current market cap.

                                   With ARM generating c.30% operating cash flow margins, we forecast this cash pile to
                                   continue building, to the tune of £145mn in 2013 and £200mn in 2014. As such, we see a
                                   material increase to the payout ratio as plausible. In 2012, ARM paid £52mn in dividends,
                                   roughly 30% payout of normalized earnings and 40% of operating cash flow, on a trailing
                                   basis. We see strong organic growth and limited need for significant M&A, so find that ARM
                                   could materially increase its level of returns over time.

                                   Even if ARM increased its dividend or returned to a share buyback, its total return yield is
                                   unlikely to match the more mature names in the tech space. However, a doubling in the
                                   dividend payout to the 50-60% payout level would give ARM a yield of around 1%, which
                                   provides further support to an already compelling investment case, in our view. We believe
                                   ARM’s premium multiples of 40x and 32x 2014 and 2015 P/E, respectively, are justified
                                   given the company’s long-term positioning, growth, profitability and cash flow. We believe
                                   its ability to return increased cash to shareholders just sweetens the story that bit further.




16 May 2013                                                                                                                   51
Barclays | Global Technology Outlook


ISRAEL TECHNOLOGY

                                    Focused on LCDs, handsets, cash returns
Joseph Wolf
+972 3 623 8746                     • The turning point in the LCD cycle: We recently upgraded Corning (GLW) and
joseph.wolf@barclays.com               Orbotech (ORBK) to OW as the LCD business begins to stabilize. We don’t expect
Barclays, London                       significant improvements in 2013 for either player but do believe that the combination
                                       of larger sized TVs, continued growth in smartphones and tablets, and potential take-up
David Kaplan                           of touch notebooks will drive an LCD recovery in 2014.
+972 3 623 8747                     • Sticking with data monetization and smartphones: We expect CEVA (CEVA) to benefit
david.kaplan@barclays.com              from the proliferation of low-end smartphones in emerging markets over the next few
Barclays, London                       months. Amdocs (DOX) remains poised to capitalize on growing data usage as carriers
                                       aggressively search for ways to extract higher payments for consumed data offerings.
Tavy Rosner
+972 3 623 8628                     • A new era of cash return: GLW is a good example of tech companies returning cash to
tavy.rosner@barclays.com               investors, which was reinforced with the 1Q announcement of a $2 billion share buyback
Barclays, London                       and an increase of the dividend. DOX’ $0.13/share dividend has become an implied
                                       expectation while share repurchases are used to meet management’s 7-10% return goal.


                    Industry View   Navigating through the challenging macro
                      POSITIVE      Most of the companies in our Israel Technology industry coverage are sensitive to the
                                    macro trends. Allot Communications (ALLT) and the DPI market are facing an end market
                                    where CFOs are under pressure to realize cost savings. Ceragon (CRNT) and Radwear
                                    (RDWR) are dealing with longer sales cycle. EZchip (EZCH) is confronted with carriers’
                                    capex cuts. We are concerned that the server market could impact Mellanox’ (MLNX) sales
                                    in 2014 based on HP weakness; the potential sale of IBM’s server business; and the launch
                                    of Intel’s new server platform.

                                    We therefore favour solid companies that operate in more favourable segments.

                                    LCD cycle
                                    Industry data increase our confidence that the LCD business has bottomed out. Our Tech
                                    colleagues in Asia recently indicated that they believe the global LCD panel cycle could
                                    begin accelerating in mid-2Q13, on a muted supply increase and healthy demand growth
                                    on an ‘area’ basis, due to size migration to larger TVs (see: LCD TV size migration to drive
                                    tight supply from mid 2Q13, 25 Feb 2013).

                                    Data monetization and smartphones
                                    CEVA revenues are correlated with the mobile phones industry. We expect CEVA’s revenues
                                    and earnings to begin rebounding over the next few months as low-end smartphones
                                    proliferate in emerging markets. Key relationships with Broadcom, Spreadtrum and
                                    Samsung along with sales into the “white-box” market in Asia should make 2013 the
                                    inflection point for the transition to 3G from 2G.

                                    DOX remains poised to capitalize on growing data usage as carriers aggressively search for
                                    ways to extract higher payments for consumed data offerings. In addition, DOX’ share
                                    repurchase program has been implemented by management to provide a 7-10% return
                                    goal. Although DOX doesn’t have a formal dividend policy, the company has been
                                    distributing $0.13/share of dividends over the past two quarters; we see this as an implied
                                    expectation going forward.




16 May 2013                                                                                                                  52
Barclays | Global Technology Outlook


                                             Top picks: GLW, CEVA, DOX
                                             Corning: As the LCD business begins to stabilize, we favour GLW, which is set to benefit
                                             from a growth recovery in larger sized TVs as well as smartphones and tablets. In addition,
                                             GLW is returning cash to investors, as reinforced with the 1Q announcement of a $2 billion
                                             share buyback and the increase of its quarterly dividend.

                                             CEVA: We expect CEVA’s revenues and earnings to begin rebounding over the next few
                                             months as low-end smartphones proliferate in emerging markets. Key relationships with
                                             BRCM, SPRD and Samsung along with sales into the “white-box” market in Asia should
                                             make 2013 the inflection point for the transition to 3G from 2G. DOX remains poised to
                                             capitalize on growing data usage as carriers aggressively search for ways to extract higher
                                             payments for consumed data offerings.

                                             Amdocs: Amdocs’ recent set of results further boosts our confidence in its management’s
                                             ability to maintain growth across its business, win important contracts in growing markets,
                                             defend its market share in developed markets, and provide shareholders with cash and
                                             buyback generated returns of 7-10% per year. DOX has grown revenues in North America
                                             for two consecutive quarters, which highlights the company’s market strength and ability to
                                             quickly recover once consolidation projects are completed (or in the case with AT&T, not
                                             completed).


FIGURE 66
Israel Technology – Stock performance LTM

  120
  100
    80
    60
    40
    20
     0
   -20
   -40
   -60
   -80
                    Jun-12




                                                                                                          Jan-13




                                                                                                                                      Mar-13
         May-12




                                                                                                                                                      Apr-13



                                                                                                                                                               May-13
                                Jul-12




                                                         Sep-12




                                                                                 Nov-12
                                            Aug-12




                                                                        Oct-12




                                                                                                 Dec-12




                                                                                                                           Feb-13




                  ALLT                   CRNT                     ORBK                    DOX                      EZCH                        RDWR

                  CEVA                   MLNX                     GLW                     NICE                     Nasdaq Composite

Source: Thomson Datastream, Barclays Research. Priced as close of 10 May 2013.




16 May 2013                                                                                                                                                      53
Barclays | Global Technology Outlook




                                       U.S. Technology




16 May 2013                                          54
Barclays | Global Technology Outlook


U.S. SOFTWARE

                                      Performance gap between structural vendors
                                      and legacy software continues to expand
Raimo Lenschow
                                      • Software continues to perform relatively well, thanks to its significant exposure to
+1 212 526 2712                           key secular technology themes. Within our space, SaaS companies have stood out for
raimo.lenschow@barclays.com
                                          delivering healthy results, while enterprise tech names have struggled.
BCI, New York                         • The secular themes of Big Data and cloud/SaaS, which ranked as the top two priorities
                                          in our recent CIO survey should continue to be relevant for the next few years.
David Wang
+1 212 526 4352                       • For the next 6-12 months we like VMware, as we expect the software defined
david.wang5@barclays.com                  datacenter and hybrid cloud growth story to come through. We also highlight PTC as
BCI, New York                             being inexpensive and having an attractive internally driven margin and earnings
                                          growth story.
Chris Hogan
+1 212 526 8431                       Structural theme exposure driving software performance
chris.hogan@barclays.com
                                      Software has performed relatively well vs. the general Tech sector over the past six months
BCI, New York
                                      (Figure 67). This is likely due to software’s close exposure to the structural technology
                                      themes, such as Big Data, cloud, and security. This point was reiterated in our recent
                                      Barclays CIO survey, 24 April 2013, where these three areas ranked as the top three themes

                                    for CIOs in 2013. Additionally, Software Applications was the highest rated spending priority
                     Industry View
                                    and Software Infrastructure was the third most important area. We think the trends seen in
                           POSITIVE technology at the moment are multi-year themes, and hence software should continue to
                                    disproportionately benefit from growth.


                                      FIGURE 67
                                      Software has outperformed broader Tech over the past six months

                                        115
                                                                             Global Software          Global Technology
                                        110


                                        105


                                        100


                                         95


                                         90
                                          Nov-12 Nov-12 Dec-12            Jan-13   Jan-13      Feb-13 Mar-13 Mar-13 Apr-13 May-13

                                      Source: Bloomberg. Prices as of 5/10/13.


                                      Cash returns in Software limited relative to other sectors in Tech
                                      It is well known that the software maintenance stream is high margin and cash generative.
                                      However, cash redistribution in the form of dividends and buybacks relative to the amount
                                      of cash and FCF is arguably limited in the software sector, as many companies prefer to
                                      invest for growth, have a ‘war chest for acquisitions’, and often a large portion of the cash
                                      balance is offshore.


16 May 2013                                                                                                                         55
Barclays | Global Technology Outlook


                                   We highlight Microsoft and Symantec for their cash return out of the companies under our
                                   coverage. Microsoft offers the highest dividend yield in our coverage at just over 3% for
                                   CY14. Microsoft also engages in a decent amount of share buybacks. Over the past eight
                                   years, Microsoft has spent an average 111% of FCF on dividends and buybacks.

                                   For Symantec, a dividend was initiated with a target yield of 2.5%, which would be the
                                   second highest in our coverage universe. The company currently has a $1bn share
                                   repurchase plan in place, originally announced at the 3QFY13 results in January. The
                                   company has stated a longer-term goal of returning ~50% of FCF to shareholders, of which
                                   half will be as a dividend.

                                   We think Oracle has the capacity to return more cash to shareholders. While the company
                                   announced a $10bn share repurchase program with the 4QFY12 results and has
                                   repurchased $8.2bn worth of stock in the first three fiscal quarters of FY13, the dividend
                                   yield is only ~1%. Over the past eight years, average dividend and stock repurchase have
                                   been 43% of FCF, whereas cash spent on acquisitions has averaged 93% of FCF over the
                                   same period (Microsoft’s eight year average for acquisition spending has been 62%). In our
                                   view, Oracle could comfortably commit to a dividend yield comparable to Microsoft and
                                   Symantec, as well as a long-term FCF return range of 50-60% without significantly
                                   impacting its acquisition ability.


                                   Finding value despite strong software performance
                                   VMware (VMW): Investor sentiment on VMware shares remains overwhelmingly negative,
                                   in our view, as management’s 2Q13 revenue guidance surprised the Street. We believe the
                                   company’s refocused strategy around its three key growth initiatives – the software defined
                                   dataceter, hybrid cloud enablement, and end user computing (EUC) – will drive revenue
                                   acceleration into the second half of FY13. Additionally, we are confident in the second half
                                   tailwind from the company’s enterprise license agreement (ELA) renewal pool, as well as
                                   the ramping productivity of the recently hired sales capacity in the EUC business. Further,
                                   we believe the competitive dynamics around OpenStack are misunderstood, but
                                   nevertheless are weighing on the shares. As we progress throughout the year, we expect
                                   these competitive concerns to ease as investors realize the complementary nature of many
                                   of the components of the OpenStack framework with VMware’s strategy. Accordingly, at
                                   the sub-$80 level, we believe the shares are very compelling.

                                   PTC (PMTC): PTC remains one of the cheapest stocks in our coverage universe trading at
                                   close to 10x CY14 P/E. The company continues to execute on its margin expansion
                                   strategy, as it achieved close to 200bp of operating margin expansion in FY12 despite
                                   growing total revenue by just 7.6% y/y. This margin expansion helped drive earnings
                                   growth of nearly 20% in FY12. Looking into 2013 and beyond, we expect PTC to be able to
                                   deliver close to 20% earnings growth through 2015, despite relatively weak revenue
                                   growth, particularly license sales. If global manufacturing strengthens, there could be
                                   considerable upside to earnings growth, but importantly the story should work regardless of
                                   the macro in 2013. As such, we believe a CY14 PE of 15x is a very reasonable valuation and
                                   implies significant value in the shares.




16 May 2013                                                                                                                 56
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U.S. SEMICONDUCTORS

                                    Slower growth in Semis lies ahead
Blayne Curtis                       • Muted growth means a muted snapback: We believe the growth in semis is much
+1 617 342 4101                        slower than many anticipate. We expect overall semi revenue growth in the low-single
blayne.curtis@barclays.com             digits vs. the 7-8% 20-year CAGR many look for, as computing and wireless
BCI, New York                          communications accounted for the vast majority of growth due to rising penetration of
                                       PCs/laptops and mobile phones. We see slower growth as PCs are likely in permanent
                                       secular decline; smartphone growth is slowing; and most of the smartphone content
                                       tailwinds are transitioning to lower-cost Asian manufacturers.

                                    • One of the strongest areas in semis is still mobility, particularly Samsung and China,
                                       with Apple likely to inflect in 2H: With few growth areas, we continue to focus on
                                       smartphone/tablet product cycles, with particular focus on Apple and Samsung ramps.
                                       We believe near-term softness at AAPL is well contemplated and expect early iPhone 5S
                                       shipments to turn the supply chain around in the July quarter. We also expect the strong
                                       Samsung supply chain to offset much of the AAPL weakness in the near term, but
                                       remain cognizant of the possibility for inventory adjustments in 2H13 given the strong
                                       ramps in 1H13.

                                    • Dividends becoming an entry fee for semiconductors. Our top picks Avago and NXP
                                       Semiconductors have EPS growth drivers and the ability to increase/initiate dividends.


                    Industry View   The era of cash return in tech is already upon us in Semis
                      NEUTRAL       We view dividends as an entry ticket to garner semi investor attention, with a handful of our
                                    names under coverage already paying a dividend of 3%+, particularly in analog (Analog
                                    Devices, Maxim Integrated, Texas Instruments in analog as well as Cypress and Intel). We
                                    have seen dividends increase consistently across many of these names with the industry
                                    continuing to mature, but we believe a new era of cash return in Tech is likely to occur, and
                                    see the ability for continued dividend increases across our coverage universe to arrive at
                                    3%+ yield. We also believe there are several non-dividend paying names that are able to
                                    sustain a dividend, and could initiate one. We highlight Atmel, LSI Logic, NXPI and Silicon
                                    Laboratories as the most likely candidates.




16 May 2013                                                                                                                   57
Barclays | Global Technology Outlook


                                                                                FIGURE 68
                                                                                U.S. Semiconductor coverage dividend payers

                                                                                                 A handful of our names under
                                                                                                 coverage pay a 3%+ dividend...

                                                                                      4.5%      4.3%

                                                                                      4.0%                 3.7%                                          .. with several more that are able to
                                                                                      3.5%                                                             increase their returns to shareholders...
                                                                                                                       3.0%    3.0%    3.0%
                                                                                      3.0%
                                                                                                                                                2.6%
                                                                                      2.5%                                                               2.3%                                               .. while ATML, LSI,
                                                                                                                                                                 2.3%     2.2%   2.2%                          NXPI and SLAB
                                                                                      2.0%                                                                                                                generatie sufficient CF
                                                                                                                                                                                                           to initiate dividends.
                                                                                      1.5%                                                                                               1.2%     1.2%

                                                                                      1.0%

                                                                                      0.5%
                                                                                                                                                                                                         0.0%   0.0%   0.0%   0.0%
                                                                                      0.0%
                                                                                                  CY       INTC        MXIM    TXN      ADI     XLNX     AVGO   MRVL      NVDA QCOM BRCM          ALTR   ATML   LSI    NXPI   SLAB


                                                                                Source: FactSet, Barclays Research



                                                                                Dividends signal a maturing industry – Semi growth is slowing
Muted Snapback – The 7%                                                         We maintain our outlook that long-term semiconductor revenue growth has slowed
annual growth many expect                                                       considerably, which is in contrast to widely-held expectations that semis remain a secular
from Semis is 16% above                                                         growth industry that should expand faster than GDP over the long term. While the industry’s
Barclays’ bottom up model in                                                    track record through the late-1990s certainly supported this view, we believe the
2015.                                                                           semiconductor industry is on a much different growth trajectory due to a declining PC
                                                                                industry; a maturing smartphone market (only Emerging markets are growing and U.S.
                                                                                companies have limited participation); a lack of new consumer products; and the
                                                                                disappearance of whole product categories (Figure 70) as Disruptive Mobility remains a
                                                                                continuing theme. Going forward, we expect a low-single digit growth rate (even flat) vs. the
                                                                                7-8% CAGR experienced over the past 20 years (Figure 69). Hence, we expect a much more
                                                                                modest snapback in earnings for the cyclical names that led the rally over the last four
                                                                                months.


FIGURE 69
Worldwide Semiconductor revenues (2001-15E)
                               375,000
                                                                                       ... but that growth has slowed, with
                                                                                     revenue growing at +3.7% CAGR from
                                                                                                    2004-2012...
                               325,000
 Semiconductor Revenues ($M)




                                             Semi revenues grew at +7% CAGR
                                                     from 1993-2012...
                               275,000




                               225,000
                                                                                                                                                   ... and we believe growth is slowing
                                                                                                                                                                   further

                               175,000




                               125,000
                                      2001       2002     2003    2004        2005     2006         2007        2008          2009      2010     2011        2012       2013E    2014E    2015E

                                                                          Actual (Barclays estimates in dotted line)                  7% CAGR                 3.7% CAGR

Source: Gartner, Barclays Research Estimates




16 May 2013                                                                                                                                                                                                                    58
Barclays | Global Technology Outlook


FIGURE 70
Where have all the product cycles gone?




Source: Gartner and Barclays Research




                                        Key picks
                                        While we believe the importance of cash return is gaining traction within our coverage
                                        universe, we remain concerned by the challenges highlighted above. Though dividends and
                                        buybacks may increase in frequency and size, slowing growth may limit the opportunity in
                                        much of the sector. As a result, we advocate selectivity and highlight two companies we
                                        believe have the best mix of growth in both earnings and capital returns.

                                        Avago: Avago is well positioned to capitalize on secular drivers in both its wireless (FBAR
                                        leadership driving 3G/4G & iPhone ramps) and wired (custom ASICs & parallel optics)
                                        businesses. AVGO’s leadership in FBAR filters is a differentiator in certain tough cellular
                                        3G/4G bands, which should drive continued growth. Moreover, we believe its wired
                                        business is the next leg of the story as it ramps wins in custom ASICs and parallel optics.
                                        With an improving proprietary products mix, we believe Avago can increase GM by 100bp
                                        or more per year.

                                        NXP Semiconductor: NXPI is one of our top picks as we see upside to GMs (standard
                                        products GMs improve plus 300bp of additional leverage still on track), beatable 2H
                                        estimates (AAPL ramps), de-leveraging/refinancing should lower interest expense, and the
                                        potential to initiate and support a 3%+ dividend before debt is paid down further to
                                        accomplish its long-term target of $2bn (gross debt).




16 May 2013                                                                                                                     59
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U.S. INTERNET

                                    Structural growth story remains intact
Anthony DiClemente, CFA             • We have a Positive industry view on U.S. Internet, as we believe continued growth of
+1 212 526 4008                        connected devices and internet penetration will drive structural growth of
anthony.diclemente@barclays.com        subsectors such as online advertising, online travel, and eCommerce, all of which
BCI, New York                          will outweigh cyclical headwinds.

Ryan Ripp
                                    • In Internet, important themes across the space include: 1) the margin impact of the
                                       increasing mix shift toward paid channels in online travel for companies such as
+1 212 526 4008
                                       Priceline, Expedia, and TripAdvisor; 2) the potential unlocking of value via asset sales for
ryan.ripp@barclays.com
                                       companies including Yahoo! and AOL; 3) progress in improving monetization in mobile
BCI, New York
                                       advertising for companies like Google, Facebook, and Pandora; and 4) how eCommerce
                                       companies can offset slowing top-line growth and competitive pressures through
Sean Leimbach
                                       margin expansion.
+1 212 526 7827
sean.leimbach@barclays.com          • Our top two picks are Google and Yahoo!. We see significant growth ahead for
BCI, New York                          Google’s core advertising business, and believe the implementation of Enhanced
                                       Campaigns by early 3Q13 can accelerate the pace of mobile monetization. Yahoo!’s
                                       stakes in Alibaba and Yahoo Japan continue to appreciate in value, and we believe
                                       monetization of these assets will lead to significant capital returns.

                    Industry View   Capital returns story improving in Internet
                      POSITIVE      YTD performance for U.S. Internet stocks has been mixed, with outsized appreciation from
                                    names including NFLX, YHOO, TRIP, and AOL offset by flattish performances from the likes
                                    of EBAY, AMZN, and FB. Interestingly, we have seen strong performance from a number
                                    of companies that have announced incremental capital returns in the past year, and we
                                    believe that the capital return story in Internet is gradually becoming a better one.

                                    For instance, AOL returned the $1.1 billion of its patent sale proceeds in 2012 and
                                    subsequently announced another $100 million buyback in February of this year. Since
                                    announcing its patent sale on April 5, 2012, AOL is up 140% (vs. SPX +16.8% through May

                                    10, 2013). AOL’s capex needs are not overly demanding, and we believe the company can
                                    continue to use free cash flow to return capital to shareholders. Moreover, we believe the
                                    company has other assets, such as real estate and NOLs, for which it can unlock value and
                                    return capital.

                                    Similarly, we see significant value in Yahoo!’s Asian assets, namely Alibaba and Yahoo
                                    Japan. Yahoo! has a framework in place for monetization of its remaining 24% stake in
                                    Alibaba, which at our assumed $70 billion valuation is worth $11.2 billion to Yahoo! after-
                                    tax. We expect a significant portion of the proceeds from any Alibaba monetization to be
                                    returned to shareholders. Moreover, Yahoo! owns a 35% stake in Yahoo Japan, which we
                                    estimate is worth $6.15 billion after-tax. Though a framework for monetization is not in
                                    place, we believe discussions between Yahoo! and Yahoo Japan are ongoing and believe an
                                    agreement will be reached at some point, with significant capital returns to follow.

                                    Of the companies in our coverage, we believe Google is best positioned to unlock
                                    substantial shareholder value with a return of capital. Google’s cash balance of $50.1 billion
                                    is over 4x the size of EBAY’s, which has the second largest cash balance in our coverage
                                    universe (Figure 71), and its cash as a percentage of its market cap is among the largest
                                    (Figure 72).



16 May 2013                                                                                                                     60
Barclays | Global Technology Outlook


                                   FIGURE 71
                                   Current cash balance as of April 30, 2013
                                       55,000

                                       50,000

                                       45,000

                                       40,000

                                       35,000   62%

                                       30,000

                                       25,000

                                       20,000

                                       15,000
                                                               7%
                                       10,000
                                                        67%
                                                                       48%      10%
                                        5,000
                                                                                        60%         3%
                                                                                                                6%          53%          10%          -
                                           0
                                                GOOG    EBAY   FB     AMZN     YHOO     PCLN*      EXPE        NFLX*        TRIP*        AOL          P*
                                                                                  Onshore       Offshore
                                   Source: Company reports
                                   *As of 12/31/12



                                   FIGURE 72
                                   Cash Balance as a percentage of market cap
                                        30%
                                                 26%
                                        25%


                                        20%              18%
                                                                17%      17%
                                                                                  15%
                                        15%                                                 14%          14%


                                        10%                                                                            8%
                                                                                                                                    7%         6%
                                         5%                                                                                                                4%


                                         0%
                                                 EXPE   YHOO   GOOG     EBAY      AOL         FB      PCLN           TRIP      AMZN            NFLX        P

                                   Source: Company reports, FactSet, Barclays Research. Prices as of 5/8/13.


                                   Google does not appear to be interested in returning capital in the near term, however, as
                                   we believe the company plans to continue to invest for growth, and appears to want a
                                   sizeable war chest on hand so that it can be opportunistic in making acquisitions. Were
                                   Google to return cash, we believe it would be in the form of share repurchases as opposed
                                   to dividends, and we believe a substantial repurchase program would create significant
                                   value for shareholders. While Google would be unlikely to repatriate its international cash in
                                   any capital return scenario, the company still has $19 billion of cash in the U.S. Were it to
                                   use $10 billion of onshore cash to repurchase shares at $840/share, we estimate that it
                                   would be 3.6% accretive to our current EPS estimate of $47.15, yielding EPS closer to
                                   $48.90 (Figure 73).




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Barclays | Global Technology Outlook


                                   FIGURE 73
                                   Google share repurchase EPS accretion analysis
                                                                                      Capital Returned ($ in millions)
                                                                          2,000    4,000      6,000     8,000      10,000     12,000    14,000




                                          Repurchase Price ($)
                                                                 740      47.53    47.92     48.31      48.71      49.12       49.53     49.95
                                                                 760      47.52    47.90     48.28      48.67      49.06       49.46     49.87
                                                                 780      47.51    47.88     48.25      48.63      49.01       49.40     49.80
                                                                 800      47.50    47.86     48.22      48.59      48.96       49.34     49.73
                                                                 820      47.50    47.84     48.20      48.55      48.92       49.29     49.66
                                                                 840      47.49    47.83     48.17      48.52      48.87       49.23     49.60
                                                                 860      47.48    47.81     48.15      48.49      48.83       49.18     49.54
                                   Source: Company reports, Barclays Research estimates


                                   Assuming this accretion under such a repurchase scenario, and applying the same 18x P/E
                                   multiple as Google trades at today, this would imply a share price of $880 for Google
                                   (Figure 74), though in a capital return scenario we believe multiple expansion would be
                                   likely and could see Google reaching a share price of $930-975.


                                   FIGURE 74
                                   Share price under various repurchase scenarios
                                                                                                   P/E Multiple
                                                                            15x       16x         17x       18x             19x        20x        21x
                                                                  2,000     $712      $760        $807      $855            $902       $950       $997
                                       Capital Returned
                                        ($ in millions)




                                                                  4,000     $717      $765        $813      $861            $909       $957      $1,004
                                                                  6,000     $723      $771        $819      $867            $915       $963      $1,012
                                                                  8,000     $728      $776        $825      $873            $922       $970      $1,019
                                                                 10,000     $733      $782        $831      $880            $929       $977      $1,026
                                                                 12,000     $738      $788        $837      $886            $935       $985      $1,034
                                                                 14,000     $744      $794        $843      $893            $942       $992      $1,042
                                   Source: Company reports, Barclays Research estimates



                                   Key drivers/outlook
                                   We remain constructive on the U.S. Internet space, as we believe continued growth of
                                   connected devices and internet penetration will drive structural growth of subsectors such
                                   as online advertising, online travel, and eCommerce, all of which will outweigh cyclical
                                   headwinds. In the online advertising space, we believe the most important driver of growth
                                   going forward will be the ability to better monetize mobile usage. We believe that Google
                                   has a head start relative to other names such as Facebook, AOL, and Yahoo!, as the rollout
                                   of Enhanced Campaigns in 3Q13 should accelerate the growth of mobile CPCs, and
                                   Google’s existing mobile ecosystem including the Android Operating System, Chrome
                                   mobile browser, Google Maps, and the Google Play app store will enable Google to control
                                   the user experience on mobile and better monetize its users. Facebook, Yahoo!, and AOL
                                   must continue to develop innovative mobile ad units that can drive mobile CPMs higher.

                                   In online travel, the ongoing debate centers around the issue of whether structural growth
                                   of online bookings at Priceline and Expedia can overcome the margin pressures from the
                                   increasing mix to paid channels such as TripAdvisor, Google, and Kayak. In our view, while
                                   margin headwinds will persist for the foreseeable future, we expect structural growth to
                                   prevail and for shares of Priceline and Expedia to move higher.

                                   And as eCommerce penetration grows, names such as Amazon and EBAY are faced with
                                   slowing growth owing to the law of large numbers, as well as from increased competition
                                   as traditional retailers have adopted an omnichannel model and improved their eCommerce
                                   offerings. In order for AMZN and EBAY shares to move higher, we believe AMZN will need


16 May 2013                                                                                                                                           62
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                                   to show operating leverage on its multi-year investment cycle, while EBAY will need to show
                                   increased traction in adjacent businesses such as offline payments and its initial forays into
                                   offline commerce such as EBAY Now.


                                   Key picks
                                   Google: We see significant growth ahead for Google’s advertising business, and believe the
                                   roll-out of Enhanced Campaigns, which will be completed in 3Q13, will accelerate the
                                   growth of mobile CPCs, helping to remove the overhang of mobile monetization concerns.
                                   Google also continues to expand on its ecosystem of web services, including YouTube,
                                   Chrome, Maps, and Gmail giving the company more user data and more opportunities to
                                   serve relevant advertisements. Longer term, though not part of our core investment case,
                                   we also believe Google’s philosophy for moving technology forward gives investors an
                                   implicit call option on major innovations such as self-driving cars and Google Glass.

                                   Yahoo: Our investment case for Yahoo! is based on a substantial return of cash to
                                   shareholders. We see significant value in Yahoo!’s Asian assets, Alibaba and Yahoo Japan. We
                                   believe Yahoo’s stake in Alibaba is worth $11.2 billion after-tax, and its stake in Yahoo Japan is
                                   worth $6.15 billion after-tax. Due to the value of these assets, Yahoo’s core business is trading
                                   at a 3.5x 2013 EBITDA multiple, well below the average for large-cap Internet, giving investors
                                   a relatively cheap call option on a potential turnaround for core Yahoo!.




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U.S. IT CONSULTING & COMPUTER SERVICES

                                     Payment names continue to benefit from
                                     strong underlying drivers; mixed trends in IT
                                     Services
Darrin D. Peller                     • We continue to view payments stocks as well positioned to benefit from strong
+1 212 526 7144                         secular growth trends. We favor stocks with sustainable EPS growth, strong free cash
darrin.peller@barclays.com              flow generation, and/or potential positive catalysts.
BCI, New York
                                     • Our outlook continues to be conservative for IT Services names, which have
                                        exhibited mixed fundamental trends across the space and demand pressures in the
                                        first quarter of 2013. While we believe the industry continues to have longer-term
                                        opportunities, we would focus selectively on names whose valuations now reflect a
                                        material discount to underlying revenue growth potential.

                                     • Key picks include Visa, Lender Processing Services, and Total System Services.

                                     Payment names continue to benefit from strong
                     Industry View   fundamentals
                       NEUTRAL
                                     Despite tepid macro, underlying volume & transaction metrics show
                                     continued resilience in the U.S.; Strong, secular growth internationally
                                     Visa and MasterCard recently provided updated spend metrics through April 28, 2013,
                                     which continued to demonstrate further resilience in the U.S. and strong, secular growth
                                     internationally.

                                     • Visa: U.S. payments volume growth was up 12% y/y (with credit growth holding at
                                        calendar 1Q (F2Q) levels and improved growth in debit due to the lapping of the U.S.
                                        debit regulations). Cross-border volumes grew 10% y/y constant currency (vs. 10% in
                                        F2Q13), with a U.S. growth rate of 7% y/y (vs. 9% y/y in F2Q13) and rest of world
                                        growth rate of 12% y/y (vs. 11% y/y in F2Q13). Growth in transactions processed
                                        accelerated to 15% y/y (vs. 6% in F1Q13), driven by the lapping of the adverse impact
                                        from the non-exclusivity of the U.S. debit regulations.

                                     • MasterCard: Cross-border volumes grew 15% y/y, modestly lower than the growth
                                        seen during 1Q due to slower growth in Europe and Latin America. In the U.S.,
                                        processed GDV grew 6% y/y, an acceleration versus 1Q growth due to improvements in
                                        both debit and prepaid (with U.S. credit GDV growth relatively consistent with levels
                                        seen in 1Q). Rest of world processed GDV grew 14% y/y, about equal to 1Q13 (with
                                        European processed GDV growth in the low-teens, similar to 1Q13). While growth in
                                        transactions processed slowed to 8% y/y due to the full lapping of U.S. PIN debit wins
                                        and merchant routing decisions that began last April, management stated that it
                                        expects transaction growth for the entire second quarter to be closer to the company’s
                                        normalized growth rate of about 10-11% as the impact of merchant routing decisions
                                        settle out. We note that MA faced a particularly tough comparison in April 2013 as
                                        merchant routing decisions were not made until late April and early May.

                                     Emerging payments: Mobility at the POS a near-term industry driver
                                     While we recognize that the widespread adoption and usage of mobile payments remains
                                     more of a medium-term event, we view the opportunity around mobility at the point-of-sale
                                     (POS) – leveraging smartphone and tablet-based solutions for the acceptance of payments


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                                   as a near-term industry driver. Overall, our research finds the following industry
                                   implications: 1) the networks should remain the backbone amongst most traditional and
                                   emerging players in the industry, with little risk of disintermediation. Both V and MA will
                                   continue to balance working with emerging players while also protecting their models
                                   through further investments and offering more value-add to both issuers and merchants; 2)
                                   merchant acquirers will likely increase the number and size of acquisitions in search of
                                   differentiation at the POS, price protection, and growth. Some may fall to pricing and
                                   commoditization of the basic services, however, we do not see material risk of
                                   disintermediation of acquirers and select acquirers will stand out and excel; 3) POS terminal
                                   manufacturers will continue to increase both tuck-in deals and R&D spend as they shift
                                   toward more services models; 4) issuers may look to invest in additional payment services;
                                   5) pricing rules may change, particularly as networks revisit Card-Not-Present dynamics.

                                   On the mortgage processing front, origination services continue to benefit from solid refi
                                   volumes and a recent pickup in the new purchases. We believe that refi momentum will
                                   continue in 2013, albeit at slower growth rates than in 2012 and with some deceleration
                                   possible in 2H13. We continue to see a healthy pipeline of homes that consumers should
                                   want to refinance at current ~3.5% 30-year mortgage rates, in addition to a pickup in new
                                   purchases. Overall, we estimate 2013 total originations at ~$1.7-1.8 trillion, about $300
                                   billion above the MBA forecast. Further, the recent Federal Housing Finance Agency’s
                                   decision to extend the Home Affordable Refinance Program deadline through the end of
                                   2015 indicates that some refi momentum may continue in 2014-15 as well. Both CoreLogic
                                   and Lender Processing Services reported robust growth in Origination Services revenue
                                   segments for 1Q13, at 25% and 12% y/y, respectively. Recall, Origination Services revenue
                                   segment makes up approximately 40% and 30% of total revenue at CoreLogic and Lender
                                   Processing Services, respectively.


                                   Consulting softness continues, as outsourcing provides
                                   resilience
                                   Outsourcing continues to provide resilience in 2013, offsetting softer
                                   consulting trends
                                   Consulting continues to be relatively soft across the main verticals in the IT Services space,
                                   as discretionary spend remains pressured by macro softness, particularly in Europe. While
                                   we have seen meaningful improvements in the consulting space over the past 12 months,
                                   we believe that companies will continue to be cautious around their IT consulting budgets,
                                   as some macro uncertainty persists in 2013. On the outsourcing side, we continue to see
                                   robust performance, although latest TPI results indicate that there has been some softness
                                   in IT outsourcing in both Europe and U.S. Business process outsourcing, in the meantime,
                                   remains solid and accounts for much of the outsourcing resilience.

                                   March quarter earnings results were mixed, with Infosys and Wipro reporting performance
                                   below expectations, largely impacted by pricing declines. Tata Consultancy results were
                                   relatively in line, with steady demand in the manufacturing sector. Overall, we believe that
                                   consulting and outsourcing performance has been sector-specific over the last several
                                   quarters, with Financial Services (mainly Banking), Telecom, and Health Care (mainly
                                   Pharma) exhibiting some softness. We believe that there is a significant number of “on
                                   hold” consulting projects that currently exist in these industries in particular, and we should
                                   see further turnaround as soon as they start translating into project wins/contract
                                   extensions for the IT Services space.




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                                   Key picks
                                   We favor companies with strong organic growth potential driven by sustainable secular
                                   trends and proven business model resilience. Key picks include:

                                   Visa: We continue to see solid underlying trends at Visa despite what remains a tepid
                                   macroeconomic environment and see potential upside to our FY13 and FY14 estimates
                                   from: 1) conservatism around transaction growth, rebates, data processing yields; 2) a
                                   greater amount of capital returned versus prior year buyback levels; and 3) a potential
                                   exercise of the Visa Europe put option.

                                   Total Systems: We expect core issuer processing revenue growth to accelerate in 2H13 and
                                   into 2014 due to the anniversary of headwinds and a number of key portfolio conversions in
                                   North America. We continue to view shares as undervalued on a FCF basis and believe that
                                   TSS will outperform over the course of the year as this becomes reflected in the valuation.

                                   Lender Processing Services: We believe that Lender Processing Services should benefit
                                   from the better-than-expected refi activity in 2013. Further, with legal overhang largely
                                   gone, we anticipate at least $100 million in share repurchases in 2013. With solid growth
                                   opportunities in the company’s core/higher multiple TD&A segment, ~$300 million in
                                   estimated FCF for 2013 (13% FCF yield), and a series of catalysts we see helping to unlock
                                   value, we believe the shares offer an attractive risk/reward.




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U.S. IT HARDWARE & DATA NETWORKING

                                    Hardware sectors ripe for cash return
Ben Reitzes                            The U.S. IT Hardware and Data Networking sectors could use higher cash returns.
+1 212 526 9517                          Apple is finally making full use of its balance sheet and recent appreciation in its stock
Benjamin.reitzes@barclays.com            price shows how positively cash return is viewed. Cisco seems set to return much more
BCI, New York                            cash over the coming years as well. We believe more companies should follow suit
                                         including NetApp and EMC – who need more coherent cash policies.

                                       Heading into 2H13, we look for some areas of the sector to see a rebound with new
                                         products and seasonality. Apple, EMC, Cisco and several networking players could
                                         benefit from the ramp of new products in C2H13. However, we continue to see secular
                                         challenges for PCs and Printers.

                                       We highlight Apple’s potentials going into new product launches; our top long-term
                                        pick in Data Networking is Cisco. Apple has a significant cash return policy now and
                                        could take control of its narrative with new products. Cisco is following IBM’s lead of
                                        “Industrialization” with even more room for increased cash to be returned to
                                        shareholders.


                    Industry View
                                    Time for balance sheet optimization in Hardware
                       NEUTRAL      We believe that the cash return theme is very relevant to both the IT Hardware and Data
                                    Networking sectors. We believe many companies could benefit from greater payout ratios
                                    and better articulated cash policies. We believe that IBM has benefited from its clear cash
                                    policy since 2007 and that Cisco could be the next in our coverage to benefit. A coherent
                                    cash strategy is something that outperforming non-tech companies tend to have – and
                                    benefit from. In fact, in our view, being more like an “industrials” or “consumer” stock is
                                    frankly something many tech companies should want to be – the Industrials sector boasts
                                    P/E ratios in the 14.5x range and the Consumer Staples sector posts a P/E ratio of 17.0x on
                                    average vs. 10.5x for our IT Hardware sector. We believe that a move toward greater cash
                                    return could help bring P/E multiple expansion and stability to the sector.

                                    Despite a weak first quarter, IBM’s shares seem to have avoided a major correction due in
                                    part to investors’ confidence in its cash return policy backed by recurring revenues. We
                                    believe other tech companies like Cisco have begun to emulate IBM’s practices. For its 2015
                                    roadmap, IBM expects to use about $50 billion for share repurchases (share repurchases
                                    should contribute $2.80 of EPS in total from 2010-15), about $20 billion for dividends,
                                    another $20 billion for acquisitions, and about $25 billion in capital expenditures. The
                                    company still seems very confident in its ability to generate cash consistently, and more
                                    importantly, has laid out its plans for investors in a responsible way. Even secularly
                                    challenged companies such as Lexmark, Seagate, and Western Digital are doing a better job
                                    articulating cash policies than most in our coverage universe, with each company driving
                                    significant shareholder value through increased buybacks and dividends.




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                                   FIGURE 75
                                   Company performance YTD vs. cash policy

                                       Company             Ticker           YTD Performance              Well Articulated Cash Policy

                                       Apple*              AAPL                   -14.9%                               X
                                       Aruba               ARUN                   -16.7%
                                       Cisco**             CSCO                    7.4%                                X
                                       EMC                 EMC                     -7.7%
                                       F5                  FFIV                   -17.7%
                                       Fusion-io           FIO                    -34.4%
                                       Hewlett-Packard     HPQ                    51.2%
                                       IBM                 IBM                     6.7%                                X
                                       Ingram Micro        IM                      6.7%
                                       Juniper             JNPR                   -11.7%
                                       Lexmark             LXK                    33.2%                                X
                                       NetApp              NTAP                    7.7%
                                       Seagate             STX                    33.1%                                X
                                       Tech Data           TECD                    7.1%
                                       Western Digital     WDC                    37.6%                                X
                                       Xerox               XRX                    32.0%                                X

                                       S&P 500                                    14.5%
                                       Nasdaq                                     13.8%
                                   *Apple announced an expanded repurchase program and increased dividend on 4/23/13
                                   **Cisco increased its quarterly dividend on 3/28/13
                                   Source: FactSet, Barclays Research. Prices as of May 10, 2013.


                                   We believe Apple’s recent announcement that it would raise debt and buy back more stock
                                   could serve as a catalyst for other hardware-related companies to consider making similar
                                   moves, depending on capabilities. Since April 23rd, Apple’s shares have surged 12% vs.
                                   3.5% for the S&P 500 as investors applauded its new plan for $60 billion in buybacks over
                                   three years along with a dividend increase. The share repurchase could help smooth the
                                   ongoing transition from growth to value holders, and also help make the stock more
                                   investable in a more competitive environment. We would not be surprised if more
                                   companies in both the IT Hardware and Data Networking sectors raised more debt in order
                                   to return more cash to shareholders, following Apple’s lead. It appears that the “repatriation
                                   tax excuse” does not hold water in today’s low rate environment.




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                                   FIGURE 76
                                   Apple YTD Performance

                                       115
                                       110
                                       105
                                       100
                                        95                                                         Apple announced expanded
                                        90                                                              buyback on 4/23
                                        85
                                        80
                                        75
                                        70




                                                                                 AAPL    S&P 500

                                   Source: FactSet. Prices as of May 10, 2013.


                                   IBM and Cisco stand out in terms of their cash return strategy

                                   In Hardware and Data Networking, we believe that Cisco and IBM are leading the way in
                                   terms of the transformation in thinking by establishing well-defined plans for steady and
                                   consistent growth. HP may not be ready to outline a more detailed cash plan for a few more
                                   quarters. We believe IBM is really the prime example of a company that has already
                                   optimized its balance sheet and has taken on characteristics of an industrials company. The
                                   company boasts a well-defined EPS growth strategy, solid cash flows, and a favorable cash
                                   return policy. We also believe that Cisco is the best positioned in our sector to follow IBM’s
                                   path and take on similar characteristics of an industrials stock. While we expect Cisco to
                                   deliver revenue growth only in the mid-single digit range long term, we believe the company
                                   is adding more software value to its products to sustain margins. Cisco is returning more
                                   cash to shareholders despite having to adjust its business model around the cloud. We
                                   project that Cisco can raise its debt load systematically by at least $5bn per year on average,
                                   if desired, and we believe Cisco will continue to increase its dividend over time. In addition,
                                   we believe that Cisco’s balance sheet could easily be optimized to raise its debt/capital ratio
                                   to well over 30% (includes financing) vs. ~21% currently, which gives the company the
                                   ability to access well over $5bn more in domestic cash. We expect overseas cash to be used
                                   as collateral for this debt and for funding of foreign operations, overseas capex, and
                                   continuing its strategy of making international acquisitions.

                                   However, not all companies we cover can benefit by simply returning more cash given the
                                   need for acquisitions and ongoing investments in R&D (to remain relevant given the
                                   ongoing shift to cloud environments). In terms of other networking companies, we believe
                                   that Aruba, Juniper and F5 in networking do not really fit this bill – and may be better served
                                   by making acquisitions. However, Cisco is transitioning into a broad strategic IT player with
                                   plenty of room to do it all, including taking on more debt to return cash to shareholders. In
                                   IT Hardware, we believe that EMC and NetApp may never be able to fully appease investor
                                   concerns around the cloud and transitions taking place in the storage market. However, we
                                   believe there is plenty more share to take from server vendors and some steady
                                   maintenance streams. Also, storage may be one area where “old guard” companies like
                                   NetApp and EMC merely see growth rates flatten, but we still see strong cash flow for years.
                                   As a result, we believe NetApp and EMC are the most ripe for greater shareholder return
                                   from current levels in IT Hardware.




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                                   FIGURE 77
                                   Estimated buyback and dividend payout ratios over next 12 months
                                       Company                       Ticker                                 Payout Ratio

                                       Apple                         AAPL                                      63%
                                       Aruba                         ARUN                                      36%
                                       Cisco                         CSCO                                      52%
                                       EMC                           EMC                                       32%
                                       F5                            FFIV                                      57%
                                       Fusion-io                     FIO                                        0%
                                       Hewlett-Packard               HPQ                                       31%
                                       IBM                           IBM                                       78%
                                       Ingram Micro                  IM                                         6%
                                       Juniper                       JNPR                                      99%
                                       Lexmark                       LXK                                       55%
                                       NetApp                        NTAP                                      58%
                                       Seagate                       STX                                       108%
                                       Tech Data                     TECD                                       0%
                                       Western Digital               WDC                                       50%
                                       Xerox                         XRX                                       46%
                                   Source: Company Reports, Barclays Research Estimates
                                   Note: Payout ratio = (Dividend expense + share repurchases)/Net Income


                                   In terms of candidates in our group that could and should get more cash into the hands of
                                   shareholders, we believe that NetApp is best suited to deliver. The company has a really
                                   strong balance sheet with prospects for free cash flow to stay well above net income.
                                   NetApp finished the January quarter with $6.7 billion in cash or over $12/share in net cash –
                                   although NetApp still has convertible debt maturing this June for over $1.2 billion (included
                                   in our net cash calculation). That being said, we still believe that NetApp has the ability to
                                   return cash to shareholders at an accelerated rate given its cash cushion. We note that late
                                   last year, the company approved an additional $1.5 billion share repurchase authorization
                                   and we believe NetApp may also look at potential acquisitions. However, given that the
                                   company’s track record with acquisitions has not been as strong, we believe NetApp should
                                   really look harder at shareholder return and consider that its business may not grow faster
                                   than a mid-single digit clip long term.

                                   EMC also has a strong balance sheet, but given its onshore cash needs, we believe it should
                                   take advantage of the ability to tap credit markets (and borrow against overseas cash). We
                                   would like to see the company increase its buyback for 2013, which currently stands at
                                   $1 billion. However, investors need to realize that EMC’s free cash flow is not as strong as it
                                   seems given its share repurchase requirements to maintain its 80% stake in VMW as well as
                                   its funding requirements for its various JVs (VCE and now Pivotal), which are not reflected in
                                   FCF.

                                   IT Hardware and Data Networking could see a 2H13 rebound helped by new
                                   products

                                   Our current checks indicate spending intentions for 2013 remain slow and relatively stable
                                   with improving sentiment in Europe, offset somewhat by more muted expectations in U.S.
                                   Federal. However, we anticipate improved sentiment around 2H13 that could result in
                                   stronger IT spending as we proceed throughout the year, especially if a Federal budget is
                                   passed. In terms of end markets, we expect strength in software (infrastructure and
                                   especially applications), storage, and a possible rebound in networking. In terms of key
                                   trends, tablets and cyber-security should remain an integral part of near-term tech

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                                   spending, and we do not see Big Data trailing off as a spending priority any time soon. Into
                                   the second half of the year, we expect IT spending to grow in the 3-4% range y/y compared
                                   to relatively stagnant growth in 1H13.


                                   FIGURE 78
                                   CIO survey question: Of your current budget what is your biggest IT spending priority for
                                   2013

                                                          35%


                                                          30%


                                                          25%
                                       % of respondents
                                                          20%


                                                          15%


                                                          10%


                                                          5%


                                                          0%
                                                                   SW –        Storage       SW --      Networking   IT Services   Servers   Other   No priorities   PCs
                                                                Applications             Infrastructure
                                                                                                         Apr-13         Sep-12

                                   Source: Barclays CIO Survey, April 2013


                                   As we enter the second half of 2013, we look for a few certain product ramps to drive news
                                   flow and share appreciation. The release of an iPhone 5S and a lower cost iPhone could be
                                   one of the most important product launch in Tech impacting shares of semiconductor and
                                   supply chain players as well. We believe that Apple could have two new phones with the
                                   current screen sizes out by early fall. We believe that the lower cost model of the iPhone 5 is
                                   coming and its design will be very interesting for certain customers; and its margin may be
                                   higher than some expect. Also the iPhone 5S could have very interesting services attached
                                   to it that create some excitement, including a foray into payments. We believe the new
                                   services in iOS 7, married to the 5S are in fact the real hope that Apple has in regaining
                                   some excitement in the story this year. In addition, EMC is poised to announce a new VNX
                                   appliance and a new offering from Data Domain. In terms of Networking, we are looking for
                                   a new product cycle to help drive revenues in the back half of the year, especially for Cisco
                                   who should unveil its Insieme “spin-in” soon.


                                   Key picks
                                   With IT Hardware/Networking underperforming the S&P 500 YTD – down 2.9% vs. +14.5%,
                                   we believe that the sector is poised for a rebound based on seasonality, new products, and
                                   increased cash return. Our top picks are companies that have embraced the industrialization
                                   of IT, are active returning cash to shareholders, and have new product cycles.

                                   Apple (AAPL) – We believe the near term set up for Apple is quite positive. We feel better
                                   about gross margins in C2H13 than we did earlier in the year. We believe that our estimates
                                   for margins in the June thru December quarters are conservative given potential trends in
                                   warranty accruals, mix, and Apple’s pricing plans. Also, we feel Apple is about to change the
                                   narrative and get investors, analysts, customers, and the media finally talking about new
                                   products again – with new services, software, and products set to launch starting in
                                   September. We believe the increased buyback plans for Apple are a significant relief and
                                   should help provide significant support to shares.




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                                   Cisco (CSCO) – We believe that Cisco is emerging as the next way to play a theme we call
                                   the “Industrialization of Tech”, as it returns more cash to shareholders and adjusts around
                                   the cloud. In addition, we believe that the company is set to take advantage of a refresh
                                   cycle that should impact Networking as a whole in 2H13. Over the long term, we expect
                                   Cisco to deliver revenue growth only in the mid-single digit range, but view it as a steady
                                   performer and share gainer in general. We also believe that the company’s efforts to add
                                   more software value to its products could allow it to sustain margins around current levels
                                   (we model 61.7% for April) – even in a flatter revenue environment. Cisco still has the
                                   opportunity to further optimize its balance sheet, which could lead to much greater cash
                                   return for shareholders. Furthermore, our checks suggest Cisco seems to have gained share
                                   in several categories: Wireless, Switching, Routers & Servers, which could further help
                                   results standout vs. peers’ longer term.

                                   Cisco could also be on its way toward changing its perception a bit with regard to its secular
                                   threats. Cisco’s Insieme may be developing a fabric controller for high-performance, high-
                                   density leaf-spine data center networks that could enable orchestration beyond the network
                                   to the entire data center infrastructure, allowing Cisco to leverage its network resources into
                                   areas including storage. We are excited about this effort as it may provide Cisco with
                                   additional opportunities in newer markets and even help change current perceptions
                                   around the company’s challenges. We expect this technology to be unveiled in late June.




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                                       Asia ex-Japan Technology




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ASIA EX-JAPAN IT HARDWARE

                                         PC outlook going from bad to worse; Apple
                                         supply chain also under pressure
Kirk Yang                                • We still prefer branded PC companies over original design manufacturers (ODMs),
+852 2903 4635                              as they are taking market share from their US peers. We maintain our cautious view
kirk.yang@barclays.com                      on ODMs as we think no further market share gains for ODMs are possible and that the
Barclays Bank, Hong Kong                    entire industry is declining in tandem with global PC weakness.

Wayne Dong
                                         • We suggest investors position themselves defensively in the sector. We prefer
                                            companies that are able to gain market share in the non-PC space, win new orders, tap
+886 2 6638 4696
                                            into non-Apple growth, and have solid cash-generating capability.
wayne.dong@barclays.com
BCSTW, Taiwan                            • Our top picks in the Asia ex-Japan IT Hardware industry remain Lenovo (OW) and
                                            Asustek (OW) given their market share gains, improved profitability, and solid cash-
Jerry Wu                                    generating capability.
+886 2 6638 4685
jerry.wu@barclays.com
                                         Stay defensive through 2013 on tough PC headwinds
BCSTW, Taiwan
                                         As Barclays’ economists believe the global economy will remain soft in 2013, we prefer the
                                         industry leaders that are more defensive in the current challenging environment.

                                         Global PC demand to remain weak through 2013
                         Industry View
                                         We recently downgraded our ratings for Hon Hai, Quanta, Largan and Cheng Uei (all to EW
                           NEUTRAL       from OW), and Foxconn Tech and Simplo (both to UW from OW), on the back of one of the
                                         worst quarters for PCs and Apple demand concerns – click here for our report dated 24
                                         April 2013. As we pointed out in the latest Asia PC Pulse (click here for our report dated 12
                                         April 2013), we also expect 2Q13 to be a transitional quarter, before any meaningful pick up
                                         in shipments in 3Q13, although this might only be “sell-in”, not “sell-through”, given the
                                         absence of ground-breaking products and tepid economic growth, especially in China. We
                                         would use any share price strength into the next Apple product cycle build to switch into
                                         our top defensive picks. Our outlook for the next several months is even more cautious –
                                         our defensive ideas are companies that are able to gain market share in the non-PC space
                                         (Lenovo), win new orders (Pegatron), or have solid cash dividends (Delta and Lite-On Tech).

                                         Maintain 2Q13 NB shipment growth forecast of 3% q/q, below seasonal
                                         trend of 6%

                                         We expect 2Q13 NB shipment growth to be below the seasonal trend (five-year average
                                         +6%) for the fifth quarter in a row. Weak end-demand will likely continue to put pressure on
                                         ODM companies throughout the quarter, and we see limited upside before new models
                                         start to ramp up in June. Given the relatively limited visibility, we maintain our NB shipment
                                         growth estimate for 2Q13 of only 3% q/q (below the seasonal trend of +6%) for the
                                         following reasons: 1) inventory adjustments from PC OEM companies ahead of the release
                                         of Intel’s Haswell platform in June; 2) new models being delayed so that they can run
                                         Microsoft’s next operating system, Windows Blue; 3) potential downside risk to PC demand
                                         in China; and 4) substitution competition from 7- to 8-inch tablets, especially for the lower-
                                         priced models, and 5- to 7-inch Phablets, which are all competing for consumers’ pockets.
                                         As a result, we expect NB demand to remain soft and for 2Q13 to be the fifth consecutive
                                         quarter of below-seasonal growth, following +5% q/q growth in 2Q12 (vs normal growth of
                                         +6%), -2% q/q in 3Q12 (vs normal growth of +16%), +3% q/q in 4Q12 (vs normal growth
                                         +6%), and -17% q/q in 1Q13E (vs normal growth of -8%).


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                                   Although ODM companies are forecasting only moderate growth in NB shipments with a
                                   low single-digit percentage gain in 2013, the supply chain could get a small boost at end-
                                   2Q13, or more likely in 3Q13, due to lower inventory levels after the clear-out of Windows 7
                                   NB inventory, in addition to the release of the Windows 8 refresh. If the macro environment
                                   improves and there is a better-than-expected recovery in China and the European market,
                                   there could be some rush orders in the next few months.


                                   Key picks
                                   Lenovo (992 HK; OW; PT HK$9.0) and Asustek (2357 TT; OW; PT NT$400) – our top
                                   picks in the branded PC space: We expect both companies to continue to gain market
                                   share from their US competitors (mainly HP and Dell, covered by our US IT Hardware
                                   analyst, Ben Reitzes), and maintain our OW ratings on these two names. Both companies
                                   are also making progress in non-PC products, such as smartphones and tablets, with
                                   improving margin profiles driven by increasing procurement scale and market share gains.
                                   We also like both companies for their solid balance sheets, net cash positions, and strong
                                   cash-generating capability.


                                   Valuations
                                   Asustek (2357 TT; OW; PT NT$400): We base our 12-month price target on a P/E of 12x
                                   for 2013E. This target P/E level is still at the low end of its five-year trading range of 9-25x.
                                   We look for a re-rating of the stock as we expect the company’s operating profit growth to
                                   resume a double-digit CAGR over the next two years. We also look for its solid R&D and
                                   market share gains to provide potential upside surprises to our earnings estimates.

                                   Lenovo (992 HK; OW; PT HK$9.0): We base our 12-month price target on a P/E multiple of
                                   13x applied to our EPS forecast for 2014 plus HK$1.50 per share to account for excess cash.
                                   Our target forward P/E is in line with those of Lenovo’s brand peers and already represents
                                   a discount from its historical trading range of 12-20x given concerns over tablet PC growth
                                   and cannibalisation.




16 May 2013                                                                                                                      75
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ASIA EX-JAPAN WIRELESS EQUIPMENT

                                    Stronger China smartphone growth
Dale Gai                            • We remain positive on the outlook for larger-screen smartphone penetration in
+886266384697                          China and other Asian markets in 2013-14.
Dale.gai@barclays.com
BCSTW, Taiwan
                                    • We expect components makers in the supply chain to benefit more than assembly
                                       companies. We highlight that cameras, acoustic parts, and metal casings are part of a
                                       secular growth trend.

                                    • Our top picks are AAC Technologies (OW) and Catcher (OW).


                    Industry View   China’s year of the phablet
                        POSITIVE    This year the penetration of phablets (larger-screen smartphones) is rising in China and
                                    other Asia markets. We expect demand for the product to accelerate component upgrades
                                    in cameras and acoustics parts in 2013 and likely metal casings in 2014, along with
                                    migration of CPUs/displays. Our bill of materials (BOM) cost analysis and projection
                                    concludes that smartphones with a 5-inch high-resolution screen and quad-core CPU will
                                    likely be sold at cRMB2,000 (US$350) in 2013 and will be half that price at cRMB1,000 in
                                    2015. This implies a strong product cycle for 32/28/20nm geometry CPUs, driver ICs,
                                    camera lenses and displays/touch screens. However, the higher volume growth of phablets
                                    implies further cannibalization of PCs and Win8 NBs. We think there could be possible
                                    upside to our forecasts for global smartphone shipments driven by display upgrades.

                                    Strong 2Q13 outlook following short inventory adjustment cycle in 1Q13
                                    Our supply chain checks on inventory suggest that: 1) the worst-performing segment is
                                    high-end models (RMB2,000-3,000) produced by Chinese brands that have suffered from
                                    over-competitiveness since 3Q12 while their addressable market size has not grown (they
                                    represent only 9% of total volumes for local vendors); and 2) the softness in the EDGE/2G
                                    smartphone market is due to product migration to low-end 3G models priced at RMB500-
                                    800. 1Q13 was likely a transitional quarter for the supply chain as we expect the new quad-
                                    core CPU models (eg., Huawei’s G520 that uses MediaTek’s MT6589) to lead the upgrade
                                    cycle from 2Q13 on attractive pricing (sub-RMB1,500/US$225).

                                    Key trends in China smartphones in 2013
                                    We forecast 320mn handset units will be sold in 2013. The key factors we see for 2013 in
                                    this space are: 1) Lenovo’s China unit shipment volumes to exceed Samsung’s due to
                                    Lenovo’s strength in the sub-RMB1,000 market; 2) the top four local brands (Lenovo,
                                    Huawei, ZTE, and CoolPad) to have a 37% market share in 2013, from 35% in 2012, with
                                    small share gains from white-box makers (up 100-200bp from 2012); and 3) the potential
                                    launch of the iPhone by China Mobile (or potential launch of a low-priced iPhone in 2H13).


                                    Key picks
                                    AAC Technologies (2018 HK, OW, PT HK$50): AAC has promoted its speaker box solution
                                    with LDS antenna to China smartphone clients, and we expect Xiaomi to become one of
                                    AAC’s top five clients in 2013 on its 2x y/y volume growth based on our projections. We
                                    expect potential design wins from global clients, such as Samsung, to drive both higher
                                    market share and higher product margins for AAC – our model does not factor in any
                                    upside for this in 2013-14 sales and earnings.

                                    AAC remains our top pick in the sector. We forecast the company to deliver an above-
                                    industry earnings CAGR of 33% for 2012-15 and ROE of 35% in 2013, driven by better

16 May 2013                                                                                                                 76
Barclays | Global Technology Outlook


                                            customer diversification amid the secular smartphone/tablet trend. We base our 12-month
                                            price target of HK$50 on a P/E of 17x applied to the average of our EPS estimates for 2013
                                            and 2014 of HK$2.96.

                                            Catcher (2474 TT, OW, PT NT$190): Catcher is likely to be one of the major beneficiaries of
                                            the growing penetration of metal casings in smartphones. We think the form factor and
                                            industrial design of smartphones will become the next focus area for new products. Our
                                            channel checks suggest that even Chinese smartphone brands are considering HTC-like
                                            designs in 2014, although they might use metal casings from cheaper sources. We expect
                                            the adoption rate of metal casings in high-end phones (FOB price >US$300) to rise
                                            significantly from the current 15% (except from Samsung/Apple) beyond 2013. Our PT on
                                            Catcher is based on 12x 2013-14 average EPS.


FIGURE 79:                                                                     FIGURE 80:
AAC – revenue breakdown by customer, 2013E                                     Catcher – HTC sales contribution to Catcher

                                         Nokia                                 NT$mn
                            Others
                             8%           9%                                    50,000
                                                                                                                                               43,333
                                                                                45,000
          Chinese
                                                                                40,000                          35,914             37,029
           15%
                                                                                35,000
                                               Apple                            30,000
             HTC
                                               42%                              25,000           21,845
             2%
                                                                                20,000
                                                                                15,000
                                                                                10,000                       7,274                          7,861
          Amazon                                                                                                             4,357
           3%                                                                    5,000       1,952
                                                                                     0
                       Samsung                                                                 2010            2011            2012          2013E
                         16%                                                              Sales from HTC (NT$mn)            Total sales (NT$mn)
Note: Chinese customers are the top 5 smartphone/tablet makers – Huawei, ZTE   Source: Company data, Barclays Research estimates
Lenovo and Xiaomi. Others include second-tier global vendors.
Source: Barclays Research estimates




16 May 2013                                                                                                                                          77
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ASIA EX-JAPAN SEMICONDUCTORS

                                      Investment themes beyond semi cycles
Andrew Lu                             • We are positive on the foundry/OSAT recovery that started in March 2013. We
+886 2 663 84698                         forecast foundry and outsourced semiconductor assembly and test (OSAT) sales growth
andrew.lu@barclays.com                   of 10-15% y/y for 2013 and 8-10% y/y for 2014-16E for both subsectors, driven mainly
BCSTW, Taiwan                            by smartphones and tablets. Our foundry leading indicator, US backend equipment
                                         bookings, and y/y sales charts show no signs of peaking yet.
SC Bae
+82 2 2126 2932
                                      • Three key drivers: Apple’s expected order shift, AMD game console CPU/GPU orders
                                         going to TSMC/SPIL, and smartphones as a commodity. We believe three key drivers for
sc.bae@barclays.com
                                         investors to focus on in the next one to two years are: 1) Apple’s expected shift of some
BCSL, Seoul
                                         ARM application processor (AP) and OSAT orders to TSMC, ASE and Kinsus starting in
                                         1Q14E; 2) AMD’s new game console CPU/GPU orders being placed to TSMC/SPIL; and
                                         3) the possibility of smartphones becoming a commodity product.

                                      • We like MediaTek for its quad/octa core 3G/4G smartphone SoC turnkey solution, and
                                         Kinsus for its strong FC CSP (flip chip chip scale packaging) exposure to MediaTek and
                                         Apple in 2013-15E, as well as multiple drivers that should boost its operating margins.


                      Industry View   Beyond the cycle
                         POSITIVE     Change in semi cycles? We believe months of inventory (MOI) is not as important an indicator
                                      as it used to be, due to shorter cycles for new smartphones and tablets – from 12 months to
                                      six months. The shorter cycles suggest that more than two-thirds of inventory in the
                                      smartphone/tablet space is either obsolete or out of date by the time new products are
                                      launched. This has resulted in our foundry leading indicator, US backend equipment bookings,
                                      and y/y sales charts showing no sign of peaking for Asia ex-Japan semiconductor vendors.

                                      We forecast foundry, OSAT and fabless sales growth of 10-15% y/y for 2013 (0-5% y/y
                                      device growth plus 10% y/y growth for smartphones and tablets) and 8-10% y/y for 2014-
                                      16, driven by stronger smartphone and tablet demand. In particular, we expect sales of
                                      OSAT vendors to resume their cyclical pattern given the year-to-date decline in the gold
                                      spot price and likely lower average y/y price in 2013, strong FC CSP migration (which would
                                      boost ASPs and margins), and the addition of Apple’s ARM AP and fingerprint OSAT orders.




16 May 2013                                                                                                                    78
Barclays | Global Technology Outlook


FIGURE 81                                                              FIGURE 82
MOI (months of inventory) for US/Taiwan fabless vendors                Taiwan semiconductor sales and index y/y comparison
                                                                         Y/Y comp
     Months of
                                                                        150%
 3.0 Inventory                                                          130%
                                                                        110%
 2.5                                                                     90%
                                                                         70%
 2.0                                                                     50%
                                                                         30%
 1.5                                                                     10%
                                                                        -10%
 1.0                                                                    -30%
                                                                        -50%
 0.5




                                                                               Jun-08
                                                                                        Sep-08
                                                                                                 Dec-08


                                                                                                                   Jun-09
                                                                                                                            Sep-09
                                                                                                                                     Dec-09


                                                                                                                                                       Jun-10
                                                                                                                                                                Sep-10
                                                                                                                                                                         Dec-10


                                                                                                                                                                                           Jun-11
                                                                                                                                                                                                    Sep-11
                                                                                                                                                                                                             Dec-11




                                                                                                                                                                                                                                        Sep-12
                                                                                                                                                                                                                                                 Dec-12
                                                                                                          Mar-09




                                                                                                                                              Mar-10




                                                                                                                                                                                  Mar-11




                                                                                                                                                                                                                      Mar-12
                                                                                                                                                                                                                               Jun-12
  -
       1Q064Q063Q072Q081Q094Q093Q102Q111Q124Q12                                                                                 Twn semi sales                                Twn semi index y/y


                 US fabless MOI            Taiwan fabless MOI



Source: Company data, Barclays Research                                Source: TEJ, Company data, Barclays Research



                                          Key drivers/outlook
                                          Positive drivers for vendors in 2013-15E: Based on our supply chain checks, we expect
                                          Apple to shift some ARM AP and OSAT orders to TSMC (foundry), ASE/Amkor/STATS
                                          ChipPAC (OSAT), and Ibiden/Kinsus (substrate) from Samsung/Semco starting in 1Q14.
                                          Foundry vendors such as TSMC and customers should benefit from the move to 16nm
                                          FinFET technology (from 20nm HKMG), which is expected to result in a 35% performance
                                          gain, a 35% reduction in power consumption, and a 25-30% reduction in costs. Foundry
                                          vendors and their customers are also likely to benefit from shorter upgrade cycles, from 8-9
                                          quarters to 4-5 quarters. A blended tech die shrinkage of 25-30% y/y by TSMC will drive a
                                          4-5% CAGR in wafer prices during 2013-15, on our estimates.

                                          The expected introduction of the xBOX 720 and PS4 in 2H13 should benefit TSMC and SPIL
                                          by boosting 28nm foundry orders and the OSAT business for AMD graphic GPU/CPUs.
                                          Resolution upgrades will likely use Ramless drivers from Novatek due to its industry
                                          leadership. New fingerprint technology ICs driven by Apple we expect will be manufactured
                                          by TSMC and ASE/Amkor. Lastly, Google Glass and the iWatch will likely use ARM AP, WiFi
                                          and Bluetooth ICs from foundry/OSAT customers.

                                          Negative drivers for vendors in 2013-15E: Competition from Intel and Samsung’s foundry
We see a negative driver if               business is unlikely to end soon, and we believe both companies see TSMC as their major
smartphones become a                      competitor in the future. Intel has formed a dedicated foundry business lately. We think
commodity                                 Samsung is likely to increase insourcing or could spin off its foundry division as a new
                                          Samsung foundry, which we discussed in our TSMC report “Raise PT after rethinking book
                                          value in this in-depth report,” dated 8 April 2013. In addition, we are concerned about what
                                          would happen if consumers decide they do not need octa core, 6-8” touch display, 30mn
                                          pixel DSC or full HD (1920x1080) LCD resolution smartphones; and what would happen if
                                          smartphones become a commodity? If this happens, we estimate the price of low-end
                                          smartphone IC solutions would fall to US$3-5 from US$7-10 currently and the price of high-
                                          end solutions to US$10-12 from US$15-30 currently. Geometry migration to
                                          16nm/14nm/10nm might also be slower than expected if smartphones become a
                                          commodity product.




16 May 2013                                                                                                                                                                                                                                               79
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                                   Key picks
                                   MediaTek (2454 TT, OW, PT: NT$405): MediaTek has led competitors in the introduction
                                   of the 28nm quad-core 3G SoC since Jan 2013E and will likely lead on the octa core 4G SoC
                                   ramp-up in 2014. By accelerating turnkey design integration on 28nm, MediaTek aims to
                                   maintain its gross margin at 42-43% but boost its operating margin to 18-20% (from 13-
                                   14% in the past two years) by leveraging strong sales.

                                   Kinsus (3189 TT, OW, PT: NT$130): We expect Kinsus to take the No. 1 source position to
                                   provide MediaTek 28nm FC CSP substrate for MT6589 and advanced wirebonding CSP
                                   substrates for MT6572. Post the qualification stage with Apple in 2Q13, we expect Kinsus to
                                   get 30-40% of FC CSP substrate allocations from Apple starting in 1Q14, and for this to
                                   represent about 6-9% of Kinsus’ sales by 2H14 once Apple ramps up AP wafer processing
                                   from TSMC. Lastly, we see multiple drivers potentially boosting margins, such as a shift to
                                   higher-margin FC CSP, a reduction in the losses at PioTek and the company’s China factory
                                   and the recent correction in the gold price.




16 May 2013                                                                                                                80
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ASIA EX-JAPAN LCD DISPLAYS

                                      Recovery to accelerate into 2H13
SC Bae                                • We maintain our positive view on the global LCD panel industry. We expect the
+822-2126-2932                           supply-demand dynamics of the global LCD panel industry to tighten from end-2Q13
sc.bae@barclays.com                      following a downturn in 1H13 on a seasonal pickup in demand and continued migration
BCSL, Seoul                              to large-size TVs. Longer term, we believe the migration in demand to 4Kx2K panels will
                                         have a significant positive impact on both supply and demand as this will likely drive
Jamie Yeh                                ultra-large-size panel demand. 4Kx2K panels also require more capacity than full high-
+886-2-663-84689                         definition (FHD) panels.
jamie.yeh@ barclays.com
BCSTW, Taiwan
                                      • Our key picks. LG Display (OW) and Samsung SDI (OW) remain our top picks in the
                                         Korean display space, while Elan Microelectronics (OW), TPK (OW), and Novatek (OW)
                                         are our preferred names in Taiwan. Please see the Key picks section for more details.
Sunwoo Kim
+822-2126-2934
Sunwoo.kim@ barclays.com              Remain positive on the display industry
BCSL, Seoul                           TFT-LCD: We maintain our positive view on the global LCD panel industry. We expect the
                                      supply-demand dynamics of the industry to tighten from the end of 2Q13 following a
Sebastian Hou                         seasonal downturn in 1H13 on: 1) a seasonal pickup in demand; 2) continued migration to
+886-2-663-84687
sebastian.hou@ barclays.com           large-size TVs; and 3) demand migration to 4Kx2K panels. We believe 4Kx2K in particular
BCSTW, Taiwan                         will have a significant positive impact on both supply and demand as it will likely drive ultra-
                                      large-size panel demand. 4Kx2K panels also requires more capacity (20-30% more) than
Sang Uk Kim                           FHD panels.
+822-2126-2937
                                      Specialty panel momentum has remained weak so far in 1H13 due to soft demand from
sanguk.kim@ barclays.com
                                      Apple. However, we expect momentum to pick up from 3Q13 due to the anticipated launch
BCSL, Seoul
                                      of the iPhone 5S and the low-cost iPhone. Longer term, we think the potential size migration
                                      of the iPhone should more than offset the negative impact of weaker-than-expected unit
                                      demand growth, in our view. On the other hand, we see a proliferation of specialty panel
                                      adoption outside Apple by other manufacturers. More and more smartphone
                                      manufacturers are adopting LTPS-based FHD panels for their high-end line ups, and IPS-
                                      based panels have also penetrated the monitor and notebook space. We think this will
                                      support an increase of blended ASPs and further conversion of commodity lines to specialty
                      Industry View
                          POSITIVE    lines, which require many more mask steps.

                                      Touch: We are more positive than the market on the adoption of touch panels in NBs. We
                                      forecast the use of touch screens in NBs to rise to 30% of all NBs by end-2013 vs our earlier
                                      forecast of 20%, underpinned by the following: 1) both Microsoft and Intel are offering
                                      subsidies to customers to encourage touch adoption in NBs and all-in-one PCs, and to
                                      regain market share from Apple. Thus, it is more profitable for NB-branded customers to
                                      ship touch-enabled NBs than non-touch models; 2) users may find it easier to use their
                                      fingers rather than a mouse on the new metro interface designed by Microsoft; and 3) there
                                      is a high touch adoption rate on the new hybrid form factor, targeted at consumers looking
                                      for both productivity and portability.

                                      OLED: We are positive on the organic light-emitting diode (OLED) business for mobile
                                      applications, which continues to show growth both in terms of shipments and technology.
                                      Samsung Display is the dominant player in this space with a 90%+ global market share as of
                                      1Q13 on the back of surging demand for Samsung Electronics’ Galaxy smartphones. We
                                      believe Samsung is likely to introduce its first plastic-based display with Samsung Display’s
                                      OLED technology in 2H13 and that this will have a major impact on the smartphone
                                      landscape as the form-factor could evolve into new phase (curved or bent). We also believe

16 May 2013                                                                                                                        81
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                                   the next-generation OLEDs will lead to technological changes for touch solutions, as the
                                   current On-cell technology would not be applicable for plastic display. We think advanced
                                   touch panels such as PF1 and PF2 (plastic cover + one layer of ITO film) will likely be
                                   introduced by end-2013.

                                   We maintain our conservative view on the OLED TV market as we believe the technology
                                   roadmap is not clear for Samsung, and that LG Display is struggling to secure a mature
                                   production yield with its oxide solution and white OLED technology.


                                   Key picks
                                   LG Display (034220 KS, OW, PT W45,000, covered by SC Bae): We reiterate our positive
                                   view on LG Display. Despite the lukewarm share price performance recently (the shares
                                   have underperformed Kospi by 19% in the past six months) due to investors’ lack of
                                   conviction regarding the company’s earnings dynamics, we expect earnings to drive a share
                                   price recovery from 2Q13. We think the market may be underestimating the demand
                                   impact from the migration to larger-size TVs and that it is overly concerned about the
                                   negative impact from Apple. The shares’ valuation remains attractive, in our view, at a 1.0x
                                   P/B vs a range of 0.7x-1.5x (2010-12).

                                   Elan Microelectronics (2458 TT, OW, PT TWD100, covered by Jamie Yeh): Touch
                                   controller IC designer Elan Microelectronics is a proven leader in the NB touch space with a
                                   c60% global market share in 2012. We expect it to benefit from the proliferation of touch
                                   panels on NBs/all-in-one PCs, supported by a growing supply of touch sensors, as it offers:
                                   1) optimized design with its early-mover advantage as Microsoft’s partner; 2) time-to-
                                   market capability from on-site cooperation with sensor makers/NB customers; and 3) a
                                   superior cost structure – its single-chip solution is 50% cheaper than the multi-chip solution
                                   of global peers. We base our 12-month price target of NT$100 on a P/E of 15x (historical
                                   three-year average) 2014E EPS of NT$6.7. Despite the shares’ +50% outperformance vs the
                                   Taiex YTD, we still see 30% upside potential from here – our FY13/14 EPS forecasts are
                                   16%/48% higher than consensus – unless touch sensor supply remains the bottleneck to
                                   Elan’s shipments or overall demand for NB units declines by 20% y/y.

                                   TPK (3673 TT, OW, PT TWD680, covered by Jamie Yeh): We expect solid earnings growth
                                   for TPK in 2013/2014 given the tabletisation process across all three major operating
                                   systems. TPK commands a market share of 50% for tablets, and its customisation expertise
                                   has set higher barriers to entry and leaves it better positioned to drive down customer costs,
                                   in our view. We believe TPK is well positioned for competition; it has the ability to drive
                                   down costs through design change flexibility and economies of scale, as it did with the
                                   iPhone and iPad.

                                   Novatek (3034 TT, OW, PT TWD199, covered by Jamie Yeh): We expect Novatek to benefit
                                   from the resolution upgrade theme, including higher-resolution phablets, high-resolution
                                   tablets/NBs and 4K2K TVs. The usage of driver ICs is 3-4 times for 4K2K compared with Full
                                   HD TVs. Also, we believe Novatek will gain market share in the TV controller space after
                                   Mstar and MTK merge, which is tentatively scheduled to occur in Aug 2013, as Mstar/MTK
                                   together will have a global market share of over 75%. We believe this should help Novatek’s
                                   gross margin expansion, and thus we continue to like the name.

                                   Samsung SDI (006400 KS, OW, PT W190,000, covered by Sunwoo Kim): We maintain our
                                   bullish view on Samsung SDI given: 1) the company’s solid growth momentum in the
                                   battery business on the back of robust demand for prismatic batteries from Samsung
                                   Electronics’ high-end smartphones and polymer batteries from tablets/Ultrabooks; 2) the
                                   strong earnings contribution from Samsung Display; and 3) its attractive valuation based on



16 May 2013                                                                                                                   82
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                                   our SOTP methodology. Our price target is equivalent to 10x 2013E P/E and 0.8x 2013E
                                   P/B, vs its three-year average historical multiples of 22x and 1.2x, respectively.




16 May 2013                                                                                                         83
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                                       Japan Technology




16 May 2013                                           84
   Barclays | Global Technology Outlook


   JAPAN PRECISION INSTRUMENTS

                                       Focus on business structure reforms
Masahiro Nakanomyo                    • We expect a weak yen to boost the sector in 2H, see potential upside for laggards.
+81 3 4530 2962
masahiro.nakanomyo@barclays.com
                                      • Focus on whether precision companies can leverage a healthy macro environment to
                                          accelerate reforms.
BSJL, Tokyo
                                      • Our top picks are Canon on low investor expectations despite a strong balance sheet
Makoto Bizen                              and substantial forex sensitivity, and Topcon on potential for market growth in major
+81 3 4530 2923                           products and business structure reforms.
makoto.bizen@barclays.com
BSJL, Tokyo                           Tough market conditions offset weak yen impact in Jan-Mar
                                      Many precision companies faced tough conditions that offset anticipated weak yen benefits
                                       in Jan-Mar 2013. Following one-time disruptions from the Japan earthquake and Thai
                                       flooding in 2011, they increased output of digital cameras and other products to resolve
                                       supply shortages or regain market share. Subsequent economic slowdowns in Europe and
                                       China, however, stalled demand recovery and widened supply-demand gaps. With the
                                       impact of this lingering in 2013, makers’ price reductions and higher spending on sales
                                       promotions and other initiatives to remove supply gluts have eroded the benefits of a
                                       weaker yen. However, we believe these companies still possess international
                                       competitiveness and we look for a larger profit boost from yen depreciation once supply-
                                       demand gaps are eliminated.

                      Industry View    Important to leverage favorable macro environment to accelerate reforms
                        NEUTRAL        Precision profits generally peaked in FY2007 and declined thereafter amid strong yen
                                       advances, only recovering modestly after the financial crisis. We project 30-40% y/y profit
                                       growth in FY2013, aided by the correction of the strong yen trend, with earnings returning
                                       to about 70% of FY2007 levels. However, market growth potential remains sluggish in
                                       office equipment, digital cameras, and other major products. We think precision companies
                                       need to capitalize on the better macro environment in 2013 and establish foundations for
                                       future growth by revisiting their business areas, reinforcing their earnings base, and revising
                                       capital policy.


                                       Focus on progress with structural reforms
                                       Canon (7751, OW)
                                       Canon shares rose 21% from the beginning of December 2012 through the end of April
                                       2013, when the yen weakened, but lagged average market gains (the Nikkei 225 rose 46%
                                       over the same period). We attribute the disparity to sluggish earnings recovery and investor
                                       concerns about longer-term growth potential for the office equipment market. Still, we
                                       expect earnings recovery – with the weak yen making a substantial contribution – once the
                                       D-SLR market finishes correcting and laser printers stage a moderate recovery.

                                       Canon reported JPY593bn in surplus liquidity at the end of March 2013 and holds
                                       JPY811.7bn in treasury shares. It has implemented a capital policy of stable dividends and
                                       share buybacks adjusted to cash flow, and we expect the company to continue this
                                       approach for the time being. However, we see longer-term potential in the capital policy
                                       because of Canon’s robust balance sheet and ability to generate cash flow, which give it
                                       significant flexibility.




   16 May 2013                                                                                                                      85
Barclays | Global Technology Outlook


                                                                    Topcon (7732, OW)
                                                                    We see a fresh opportunity for Topcon in combining mainstay GPS surveying devices with
                                                                    construction and farming machinery. It made a joint announcement with Komatsu in April
                                                                    on plans for a global rollout of bulldozers and hydraulic excavators equipped with Topcon’s
                                                                    GPS machine control technology. We think it is likely to seek out further alliances. Topcon
                                                                    implemented structural reforms through FY3/13 and is moving swiftly to achieve growth.


FIGURE 83                                                                                                             FIGURE 84
SLR - shipments and real sales trend                                                                                  Laser printers, regional breakdown - Emerging market
                                                                                                                      recovery scenario
         0000 units
                                                                                                                              000' units
   600                                                                                                         80%
                                                                                                                        100,000                                                                                                               4000

                                                                                                                         90,000                                                                                                               2000
   500                                                                                                         60%
                                                                                                                         80,000
                                                                                                                                                                                                                                              0

                                                                                                                         70,000
   400                                                                                                         40%                                                                                                                            -2000
                                                                                                                         60,000
                                                                                                                                                                                                                                              -4000
                                                                                                                         50,000
   300                                                                                                         20%
                                                                                                                                                                                                                                              -6000
                                                                                                                         40,000
                                                                                                                                                                                                                                              -8000
   200                                                                                                         0%        30,000

                                                                                                                                                                                                                                              -10000
                                                                                                                         20,000

   100                                                                                                         -20%      10,000                                                                                                               -12000


                                                                                                                             0                                                                                                                -14000
                                                                                                                                  2004     2005     2006      2007     2008      2009    2010   2011     2012     2013      2014     2015
    0                                                                                                          -40%
         10/2Q 10/3Q 10/4Q 11/1Q 11/2Q 11/3Q 11/4Q 12/1Q 12/2Q 12/3Q 12/4Q 13/1Q 13/2QE 13/3QE 13/4QE 14/1QE
                                                                                                                                  JP/US/Europe (developed area, lhs)                             Asia/Others (emerging area, lhs)
                      SLR sales units                                 SLR shipment units                                          Difference from 4years average line (developed area)           Difference from 4years average line (emerging area)
                      SLR sales YoY growth                            SLR shipment YoY growth

Note: Actual sales numbers are Barclays Research estimates                                                            Note: Estimates from 2013. LBP shipment estimates one of several scenarios
Source: Compiled by Barclays Research from CIPA data, Barclays Research                                               Source: Compiled by Barclays Research from Garter data, Barclays Research
estimates                                                                                                             estimates.




16 May 2013                                                                                                                                                                                                                                            86
Barclays | Global Technology Outlook


EQUITY VALUATION TABLES
U.S. IT Hardware (Neutral)                                                                                                                                                                                  Ben Reitzes
                                                         Price               Market            EV/Sales, x              Price/Earnings, x         Sales Growth (%)              FY2 Ests.         Consensus FY2 Ests.
Ticker     Company Name                      Currency 5/10/2013   Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E      2013E    5Y Avg.      2012E   2013E%        Sales (M)        EPS    Sales (M)      EPS
AAPL       Apple                               USD      452.97     OW        426,841      2.3      2.2     2.4     11.6       11.1       10.8      8.86%     2.56%   #    174,736       40.80     189,626     44.08
EMC        EMC                                 USD       23.34     OW         48,403      2.0      1.9     2.2     12.5       11.0       12.9      7.57%     7.86%   #     25,195         2.10     25,332      2.06
HPQ        Hewlett-Packard                     USD       21.54     EW         41,505      0.5      0.5     0.5      6.3        6.6        5.5     -6.82%    -4.97%   #    106,164         3.25    111,327      3.61
IBM        International Business Machines     USD      204.47     OW        224,498      2.4      2.3     2.3     12.1       11.0       11.8     -0.22%     3.41%   #    107,827       18.43     106,135     18.35
IM         Ingram Micro                        USD      18.05      EW         2,727       0.1      0.1     0.1      8.3        7.7        8.2     15.22%     3.43%   #    45,078          2.32     45,100      2.38
LXK        Lexmark International               USD      30.89      UW         1,940       0.5      0.5     0.4      8.2        8.7        6.8     -7.15%    -6.41%   #     3,300          3.55      3,296      3.64
NTAP       NetApp                              USD      36.15      OW        13,007       1.4      1.2     1.7     15.8       14.3       15.9      2.36%     9.15%   #     6,964          2.52      6,920      2.54
STX        Seagate Technology                  USD      40.50      UW        14,439       1.1      1.2     0.8      7.6       8.1         5.0     -3.64%    -6.91%   #    13,401          5.00     14,052      5.50
FIO        Fusion-io                           USD      15.05      EW         1,390       2.8      2.1     3.8     72.6      131.9       76.0     21.30% 32.12%      #      576           0.11       572       0.26
TECD       Tech Data                           USD      48.77      EW         1,820       0.1      0.1     0.1     9.2        8.6         8.4      7.44%     2.53%   #    27,937          5.62     28,210      5.74
WDC        Western Digital                     USD      58.47      EW        13,689       0.8      0.8     0.5     7.0        7.5         5.5     22.13%    -5.79%   #    14,357          7.75     14,939      7.98
XRX        Xerox                               USD       9.00      EW        10,916       0.9      0.9     0.8     8.2        7.7         6.6     -1.35%    0.21%    #    22,135          1.16     22,544      1.17

U.S. Software (Positive)                                                                                                                                                                                Raimo Lenschow
                                                         Price               Market            EV/Sales, x               Price/Earnings, x        Sales Growth (%)              FY2 Ests.         Consensus FY2 Ests.
Ticker     Company Name                      Currency 5/10/2013   Rating   Cap (USD M)   2012E    2013E 5Y Avg.    2012E      2013E    5Y Avg.     2012E   2013E%    #   Sales (M)        EPS    Sales (M)       EPS
ADSK       Autodesk                            USD      39.75      EW         8,706       3.1      2.9     2.7      18.2       15.6       15.6     6.14%    9.78%    #     2,694          2.50     2,649        2.45
CTXS       Citrix Systems                      USD      66.56      EW        12,313        3.9     3.4     4.4      21.3       17.9       22.4    15.10% 14.42%      #     3,406          3.68     3,335        3.52
CSOD       Cornerstone OnDemand                USD      38.75      OW         1,929       10.2     7.1     6.6     -210.8     1265.0     -100.6   54.35% 44.34%      #      263           0.03       256        0.03
TRAK       DealerTrack Holdings                USD      30.61      EW         1,325        2.8     2.5     2.5      24.2       20.7       22.7    17.88% 15.58%      #      530           1.47       516        1.45
ELLI       Ellie Mae                           USD      25.38      OW           658        5.0      3.5    3.7       22.7      15.3       24.5    30.20% 42.61%      #      189           1.63       159        1.33
FLTX       Fleetmatics                         USD      25.04      OW           853        4.3      3.4    4.6       33.7      25.1       34.5    31.03% 24.91%      #      209           0.98       205        0.97
INFA       Informatica                         USD      35.28      OW          3,776       3.6      3.1    3.8       23.9      19.3       21.7    13.50% 15.26%      #     1,062          1.81      1,019       1.64
INTU       Intuit                              USD      60.20      EW         17,484       3.9      3.6    3.8       17.8       15.9       17.5    8.84%    10.21%   #     4,979          3.72      4,919       3.67
LOGM       LogMeIn                             USD      23.54      EW           578        2.4      2.1    3.0       44.8       27.0       33.0   15.24% 15.63%      #      185           0.88       181        0.77
MSFT       Microsoft                           USD      32.69      EW        275,837       2.8      2.6    2.5       12.2       10.8        9.5    6.72%     7.39%   #    84,489          3.05     84,932       3.07
N          NetSuite                            USD      90.99      OW          6,796      15.7     12.0    9.5      368.4      224.7      181.3   33.12% 30.21%      #      535           0.41       519        0.44
NOW        ServiceNow                          USD      38.99      OW          5,206      11.5      7.9    9.6     -986.8      164.5     -423.2   63.43% 46.12%      #      582           0.24       577        0.20
ORCL       Oracle                              USD      34.02      OW        159,126       4.0      3.7    3.6       12.6       11.3       11.4    0.65%     6.95%   #    39,959          3.00     39,606       2.92
PANW       Palo Alto Networks                  USD      49.73      EW          3,476       7.6      5.5    8.8      239.4      111.7      354.0   57.13% 39.46%      #      559           0.45       553        0.44
PMTC       PTC Inc.                            USD      24.24      OW          2,866       2.3      2.1    1.9       13.5       11.1       12.2    4.51%    10.05%   #     1,444          2.16      1,386       1.99
QLIK       Qlik Technologies                   USD      28.94      EW          2,454       4.7      3.8    4.0       66.0       45.1       49.5   23.08% 22.23%      #      585           0.63       574        0.61
RHT        Red Hat                             USD      51.90      OW         10,038       6.0      5.3    5.4       38.8       32.1       33.4   15.93% 14.87%      #     1,770          1.62      1,748       1.58
CRM        Salesforce.com                      USD      44.17      OW         25,743       6.4      5.1    5.4       88.4       62.8       70.7   29.27% 25.79%      #     4,960          0.70      4,812       0.63
SAP        SAP AG                              USD      82.38      EW         97,869       4.1      3.7    4.5       24.0       20.5       18.8   14.98% 10.64%      #    19,854          4.00     19,714       3.93
SPLK       Splunk                              USD      44.89      OW          4,541       4.5      3.3    8.7    -4425.0      340.4      436.3   44.51% 37.57%      #      396           0.13       361        0.11
SYMC       Symantec                            USD      24.35      OW         16,692       2.3      2.2    1.7       12.8       11.4        9.7    1.88%     3.43%   #     7,277          2.12      7,208       2.12
TDC        Teradata                            USD      55.25      OW          8,799       3.0      2.7    3.4       17.7       15.3       19.9    4.74%    12.07%   #     3,128          3.51      3,084       3.42
TIBX       TIBCO Software                      USD      20.89      EW          3,382       3.0      2.7    3.6       19.1       15.3       20.0    4.88%    10.79%   #     1,191          1.35      1,167       1.26
TNGO       Tangoe                              USD      13.25      OW           492        2.6      2.1    3.3       19.0       14.1       25.3   23.61% 23.56%      #      236           0.93       226        0.86
VMW        VMware                              USD      76.90      OW         32,871       5.5      4.7    6.5       22.9       19.7       28.6   13.37% 16.23%      #     6,068          3.90      5,947        3.77
WDAY       Workday                             USD      67.41      EW         11,006      22.8     14.8    20.3     -87.2      -77.1      -74.2   59.47% 54.56%      #      675         -0.86        656        -0.73




16 May 2013                                                                                                                                                                                                         87
Barclays | Global Technology Outlook


EQUITY VALUATION TABLES
U.S. Internet (Positive)                                                                                                                                                                                Anthony DiClemente
                                                               Price               Market            EV/Sales, x              Price/Earnings, x       Sales Growth (%)               FY2 Ests.        Consensus FY2 Ests.
Ticker     Company Name                            Currency 5/10/2013   Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E      2013E    5Y Avg.    2012E   2013E%     #   Sales (M)        EPS    Sales (M)     EPS
AMZN       Amazon.com Inc.                           USD      263.63     EW        120,416      1.6      1.3     1.1     124.8      52.7       83.9   23.68% 20.96%       #    91,394          5.02    90,972       3.26
AOL        AOL Inc                                   USD       39.06     OW          2,959      1.2      1.2     0.9      24.7      18.7       24.4    5.04%    1.84%     #     2,272          2.04     2,292       1.83
EBAY       eBay Inc.                                 USD       55.65     EW        71,807       4.2      3.6     3.1      20.3      17.0       15.4   15.86% 16.98%       #    19,073          3.25    19,019       3.22
EXPE       Expedia Inc.                              USD       58.87     EW          8,031      1.6      1.5     1.5      19.1      18.2       14.6   16.74%    9.25%     #     5,140          3.27     5,440       3.96
FB         Facebook Inc.                             USD       26.68     EW         64,848      9.2      7.6     8.0      50.6      38.9       48.8   28.06% 20.85%       #     7,876          0.69     8,505       0.77
GOOG       Google Inc. Cl A                          USD      880.23     OW        291,135      5.4      4.6     3.6      18.6      16.3       13.0   -6.72%      na      #    54,261        53.93     69,338      53.16
NFLX       Netflix Inc.                              USD      217.69     EW        12,879       3.1      2.7     1.5     257.7     119.5      180.4   18.67% 15.25%       #     4,936          1.92     5,056       3.18
P          Pandora Media Inc.                        USD       15.58     UW         2,711       4.2      3.1     2.8    1568.0     104.5       57.0   45.02% 34.92%       #      836           0.15      841        0.19
PCLN       priceline.com Inc.                        USD      765.41     OW        38,919       5.5      4.5     4.5     19.3       15.7       16.0   25.32% 21.94%       #     8,039        49.38      7,798      46.36
TRIP       TripAdvisor Inc.                          USD      53.84      EW         7,854       8.5      6.9     6.2     33.2       28.1       23.2   22.52% 23.11%       #     1,151          1.95     1,140       2.20
YHOO       Yahoo! Inc.                               USD      26.83      OW        29,063       5.9      5.7     3.6     18.3       16.7       15.8   -9.15%    3.21%     #     4,676          1.58     4,658       1.53

U.S. IT Consulting & Computer Services (Neutral)                                                                                                                                                                Darrin Peller
                                                               Price               Market            EV/Sales, x             Price/Earnings, x         Sales Growth (%)              FY2 Ests.        Consensus FY2 Ests.
Ticker     Company Name                            Currency 5/10/2013   Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E     2013E    5Y Avg.      2012E   2013E%    #   Sales (M)        EPS    Sales (M)      EPS
ACTG       Acacia Research Corp                      USD      23.81      EW         1,164       2.9      2.5     3.4     21.3      13.8       18.4    18.23% 16.67%       #      346           1.71      338        1.43
ACN        Accenture                                 USD      80.48      EW        54,504       1.8      1.7     1.4     18.8      17.0       15.3     -2.31%    7.20%    #    31,185          4.70    30,966       4.67
ADS        Alliance Data Systems                     USD      177.19     OW         8,659       4.2      3.8     3.6     17.6      14.5       13.9    18.13%     9.46%    #     4,708        12.15      4,610       11.87
CIS        Camelot Information Systems               USD       1.70      EW           75         na       na     0.1     13.1      17.0        5.7      7.89%    6.32%    #      291           0.10      291         0.10
CTSH       Cognizant Technology Solutions            USD       65.03     OW        18,966       1.9      1.6     2.1     15.8      13.4       17.0    17.13% 17.11%       #    10,078          4.69    10,028        4.64
CSC        Computer Sciences                         USD       49.29     EW         7,488       0.5      0.5     0.4     17.9      14.7       12.4     -2.07%    -2.65%   #    15,136          3.32    14,807        3.40
CLGX       CoreLogic                                 USD       28.23     OW         2,633       2.1      2.1     1.9     15.8      15.1       14.4      2.03%    -1.68%   #     1,573          1.82     1,584        1.79
EPAM       EPAM Systems Inc                          USD       23.10     OW         1,026       1.8      1.5     1.4     14.5      12.3       12.3    24.19% 20.81%       #      651           1.85      641         1.89
FISV       Fiserv                                    USD       89.52     EW        11,903       3.4      3.2     2.8     15.0      13.4       12.8      4.32%       na    #     4,972          6.68     5,083        6.62
FLT        FleetCor Technologies                     USD       81.25     EW         6,699       8.8      7.9     5.8     21.7      18.7       14.9    16.98% 11.70%       #      925           4.40      933         4.37
GPN        Global Payments                           USD       46.78     EW         3,549       1.8      1.6     1.6     12.5      11.4       12.0      8.72%     9.32%   #     2,619          4.10     2,583        4.08
IDCC       InterDigital                              USD       47.02     EW         1,941       7.8      7.5     4.7    -57.5     -362.8       9.6    -71.04%     5.21%   #      202         -0.13       217        -0.20
LPS        Lender Processing Services                USD       28.48     OW         2,409       1.8      1.9     1.5     10.6      10.7        8.8     -6.84%    -4.79%   #     1,772          2.66     1,796        2.62
MA         MasterCard                                USD      555.13     OW        67,572       7.8      6.9     6.3     22.2      18.7       17.9     10.51% 11.94%      #     9,143        29.71      9,158       30.04
RPXC       RPX                                       USD       15.00     OW          771        2.2      1.9     1.9     15.0      13.6       13.2     18.20% 11.86%      #      261           1.10      255         1.08
TSS        Total System Services                     USD       24.24     OW         4,481       2.3      2.1     2.2     16.8      13.8       15.9      5.69%    11.13%   #     2,198          1.73     2,176        1.62
PAY        VeriFone Systems                          USD       23.06     OW         2,512       1.9      1.8     2.3     11.9       9.2       11.2     -4.06%     6.30%   #     1,903          2.52     1,925        2.30
V          Visa                                      USD      178.75     OW        141,712      14.1     12.8    10.8    24.0      20.9       18.9     20.09%     9.92%   #    12,826          8.56    12,985        8.65
WU         Western Union                             USD       15.99     UW         9,031        2.1      2.0     2.1    11.4      10.4        9.5     -3.75%     3.77%   #     5,658          1.56     5,651        1.59
XOOM       Xoom                                      USD       20.51     OW          633         2.5      1.9     2.1   -64.1     -152.9     -62.3     31.91% 31.83%      #      139         -0.13       137        -0.12

U.S. Data Networking (Neutral)                                                                                                                                                                                  Ben Reitzes
                                                               Price               Market            EV/Sales, x             Price/Earnings, x        Sales Growth (%)               FY2 Ests.        Consensus FY2 Ests.
Ticker     Company Name                            Currency 5/10/2013   Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E     2013E    5Y Avg.     2012E   2013E%     #   Sales (M)        EPS    Sales (M)     EPS
ARUN       Aruba Networks                            USD      17.28      OW         1,979       2.9      2.5     3.1     25.2      20.0       24.2    16.13% 16.48%       #      699           0.87      704       0.88
CSCO       Cisco Systems                             USD      21.10      OW        113,411      1.7      1.6     1.5     10.7       9.9        9.8    5.70%     5.40%     #    51,315          2.14    51,325      2.10
FFIV       F5 Networks                               USD      79.99      EW         6,173       3.9      3.6     4.9     17.6      16.0       20.5    5.52%     7.85%     #     1,567          4.89     1,635      5.09
JNPR       Juniper Networks                          USD      17.36      EW         8,743       1.6      1.5     1.7     16.6      14.8       15.4    2.20%     6.99%     #     4,773          1.17     4,788      1.29




16 May 2013                                                                                                                                                                                                               88
Barclays | Global Technology Outlook


EQUITY VALUATION TABLES
U.S. Semiconductors (Neutral)                                                                                                                                                                               Blayne Curtis
                                                          Price               Market            EV/Sales, x              Price/Earnings, x        Sales Growth (%)               FY2 Ests.        Consensus FY2 Ests.
Ticker    Company Name                        Currency 5/10/2013   Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E      2013E    5Y Avg.     2012E   2013E%     #   Sales (M)        EPS    Sales (M)      EPS
ALTR      Altera Corp.                          USD      33.05      EW         10,504      4.6      4.1     4.2     23.9       19.9       17.1    -2.80%    11.08%    #     1,925          1.65     2,012        1.76
ADI       Analog Devices Inc.                   USD      46.79      EW         14,152      4.1      3.7     3.0     21.6       17.8       14.4    -0.65%    10.90%    #     2,976          2.60     2,978        2.67
ATML      Atmel Corp.                           USD       6.80      EW          2,958      1.9      1.8     1.8     23.8       12.3       15.1    -1.17%     7.55%    #     1,522          0.56     1,581        0.59
AVGO      Avago Technologies Ltd.               USD      34.06      OW          8,280      3.1      2.7     2.9     12.6       11.0       12.3     1.09%    11.05%    #     2,654          3.05     2,643        2.82
BRCM      Broadcom Corp. Cl A                   USD      36.62      UW         20,676      2.4      2.3     2.1     12.7       13.3       11.0     7.16%     3.47%    #     8,877          2.72     9,456        3.15
CAVM      Cavium Inc.                           USD      35.74      OW          1,803      5.7      4.5     4.7     34.8       22.0       25.9    30.58% 25.20%       #      385           1.60      373         1.35
CRUS      Cirrus Logic Inc.                     USD      23.11      EW          1,460      1.7      1.6     1.9      7.0       11.0        7.6     3.31%     6.96%    #      895           2.06      907         2.50
CY        Cypress Semiconductor Corp.           USD      10.83      EW          1,562      2.2      2.0     2.3     25.3       14.8       14.4    -0.58%     9.42%    #      837           0.72      844         0.77
ENTR      Entropic Communications Inc.          USD       4.19      EW           367       0.9      0.8     1.0     51.8       17.3       14.0    -5.43%    15.81%    #      352           0.24      350         0.22
FSL       Freescale Semiconductor Ltd           USD      16.01      EW          4,021      2.3      2.2     2.0     34.4       11.6       19.9     4.33%     4.44%    #     4,299          1.36     4,396        1.38
IDTI      Integrated Device Technology Inc.     USD       7.75      EW          1,104      1.7      1.5     1.1     26.1       16.8       17.3     1.18%    10.55%    #      545           0.45      536         0.46
INTC      Intel Corp.                           USD      24.50      EW        119,702      2.2      2.2     2.1     12.7       13.2       10.5    -0.11%    -0.13%    #    53,211          1.82    55,880        2.03
LSI       LSI Corp.                             USD       7.03      EW          3,753      1.4      1.3     1.3     11.2       10.8       10.2    -5.51%     3.10%    #     2,441          0.63     2,614        0.71
MX        MagnaChip Semiconductor Corp.         USD      15.84      OW           562       0.7      0.6     0.5      6.4        5.7        5.7     7.58%     7.18%    #      945           2.78      962         2.88
MRVL      Marvell Technology Group Ltd.         USD      10.93      EW          5,554      1.3      1.2     1.3     14.4       12.3       11.0    -2.03%     3.56%    #     3,215          0.90     3,314        0.90
MXIM      Maxim Integrated Products Inc.        USD      32.32      EW          9,336      3.6      3.3     2.9     17.7       15.9       15.7     2.30%     7.17%    #     2,635          2.01     2,658        2.06
MTSI      MA-Com Technology Solutions Holdings USD       13.60      OW           623       1.7      1.6     1.9     14.6       11.9       13.8     4.27%    10.19%    #      347           1.14      353         1.13
QCOM      QUALCOMM Inc.                         USD      64.64      OW        111,990      4.1      3.8     4.2     14.4       14.2       14.5    28.53%     7.72%    #    26,474          4.57    27,123        4.91
NVDA      NVIDIA Corp.                          USD      14.54      EW          8,802      1.2      1.2     1.2     19.5       19.2       15.2    -1.36%     2.08%    #     4,310          0.74     4,494        0.82
NXPI      NXP Semiconductors N.V.               USD      30.22      OW          7,472      2.2      2.0     2.0     10.2        7.8        8.9    11.30%     8.47%    #     5,261          3.82     5,091        3.54
RFMD      RF Micro Devices Inc.                 USD       5.71      OW          1,585      1.2      1.1     1.1     13.8        9.3       13.7    25.82%     9.08%    #     1,323          0.61     1,319        0.53
SLAB      Silicon Laboratories Inc.             USD      41.19      OW          1,728      2.6      2.5     2.6     18.9       16.8       19.1     3.76%     7.25%    #      627           2.42      646         2.52
SWKS      Skyworks Solutions Inc.               USD      23.69      EW          4,505      2.3      2.1     2.4     10.9       10.0       11.0    13.84%     8.04%    #     1,929          2.35     1,979        2.51
CODE      Spansion Inc. Cl A                    USD      13.26      EW           795       1.0      0.8     0.8     12.1        9.8        8.3    -1.47%    16.08%    #     1,048          1.36      999         1.44
TXN       Texas Instruments Incorporated        USD      37.04      EW         40,529      3.5      3.5     2.8     21.2       18.3       15.5    -5.42%     2.38%    #    12,419          2.00    12,879        2.11
TQNT      TriQuint Semiconductor Inc.           USD       6.04      EW           971       1.0      0.9     0.8    -31.3       33.1       18.9     2.57%     6.63%    #      907           0.18      986         0.31
XLNX      Xilinx Inc.                           USD      38.56      EW          9,911      4.3      3.9     3.5     19.3       16.0       15.9     5.13%    10.39%    #     2,517          2.37     2,539        2.29

European Technology Hardware (Neutral)                                                                                                                                                                  Andrew Gardiner
                                                         Price                Market            EV/Sales, x               Price/Earnings, x        Sales Growth (%)              FY2 Ests.        Consensus FY2 Ests.
Ticker    Company Name                       Currency 5/10/2013    Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E       2013E    5Y Avg.     2012E   2013E%    #   Sales (M)        EPS    Sales (M)     EPS
AIXA-DE Aixtron SE                             EUR      11.35       EW         1,488        3.4      2.7     2.4    -56.8       70.9        9.3    21.58% 25.29%      #      347           0.16      391        0.33
ALU-FR    Alcatel-Lucent                       EUR       1.16       EW         3,469        0.2      0.2     0.3     -2.3       -3.0        3.1    -0.60%     1.66%   #     14,598       -0.38      14,628     -0.04
ARM-LON ARM Holdings                           GBP      10.72       OW        22,626       20.5     17.5    13.6     49.9       40.2       35.9    22.88% 16.88%      #      829           0.27      817        0.25
ASML-NL ASML Holding                           EUR      59.80       OW        32,683       4.9      3.6     2.5      24.9       13.6       11.9     1.32%    38.21%   #     6,626          4.42     6,160       3.65
CSR-LON CSR                                    GBP       5.44       EW         1,390       0.8      0.9     0.3     11.4        10.9        7.5    -9.11% -10.41%     #      835           0.49      893        0.50
DLG-DE Dialog Semiconductor PLC                EUR      11.23       OW         1,022       0.8      0.7     0.8      9.3         6.0        9.1   13.50% 20.84%       #     1,061          1.92      989        1.50
ERIC.B-SE Ericsson                             SEK      82.05       EW        39,971       1.0      1.0     0.8     19.0        16.4       12.6     0.64%     1.83%   #    233,440         5.00    243,467      5.96
GTO-NL Gemalto                                 EUR      58.20       OW         6,413       1.9      1.7     2.2     16.7        12.7       16.8   12.22% 12.70%       #     2,840          4.63     2,753       4.02
IFX-DE    Infineon Technologies                EUR       6.66       OW         9,257       1.4      1.3     1.3     28.8        15.8       17.6    -3.30%    10.91%   #     4,187          0.42     4,128       0.39
IMG-LON Imagination Technologies Group PLC     GBP       3.06       OW         1,266       5.2      3.6     8.5     26.7        16.9       32.9   22.98% 43.37%       #      225           0.19      206        0.14
ING-PAR Ingenico                               EUR      51.54       OW         3,486       2.5      2.3     2.0     21.7        18.5       16.8   14.55%      9.77%   #     1,517          2.78     1,500       3.02
LOGN-SWXLogitech International                 CHF       6.21       UW         1,130       0.4      0.4     0.4      29.8       18.4       14.2    -6.07%     1.15%   #     1,995          0.34     2,020       0.44
NOK1V-HE Nokia                                 EUR       2.82       UW        14,178       0.3      0.3     0.3     294.2      294.2       17.3   -12.78%     2.49%   #     26,973         0.01     27,726      0.14
PIC-GB    Pace                                 GBP       2.64       EW         1,247        0.6      0.6     0.3      6.1        5.8        3.2     1.94%    -0.78%   #     2,431          0.45     2,604       0.43
STM-PAR STMicroelectronics                     EUR       7.20       EW         8,142       0.8      0.8     0.4    -353.2       13.6        8.9     0.97%     5.05%   #     8,888          0.52     8,690       0.52
TOM2-AMS  TomTom                               EUR       3.63       UW         1,047       0.9      0.9     0.9      18.2       19.1       14.8   -14.06% -0.86%      #      901           0.19      931        0.27




16 May 2013                                                                                                                                                                                                           89
Barclays | Global Technology Outlook


EQUITY VALUATION TABLES
European Software & IT Services (Neutral)                                                                                                                                                                     Gerardus Vos
                                                        Price               Market            EV/Sales, x              Price/Earnings, x        Sales Growth (%)              FY2 Ests.             Consensus FY2 Ests.
Ticker    Company Name                      Currency 5/10/2013   Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E      2013E    5Y Avg.     2012E   2013E%    #   Sales (M)        EPS         Sales (M)      EPS
AMS-MCE Amadeus IT                            EUR       23.24     EW        13,489       3.8      3.6      3.0    16.1        14.9      11.3     6.60%     5.78%   #     3,282          1.57          3,241        1.47
AIE-LON Anite                                 GBP        1.29     EW          590        2.7      2.4     3.0     16.7        14.1      18.2    12.61% 16.67%      #      161           0.09           161         0.09
ATO-PAR ATOS                                  EUR       55.26     OW         6,164       0.6      0.6     0.4     12.5        11.1       9.0     0.18%     3.33%   #     9,155          5.00          9,119        4.98
AVV-LON Aveva Group                           GBP       22.53     EW         2,356       6.8      6.1     5.3     30.9        26.9      23.2    11.77% 11.87%      #      245           0.84           250         0.87
CAP-PAR Capgemini                             EUR       39.32     OW         8,142       0.6      0.6     0.5     13.3        12.1      10.9    -1.73%     3.75%   #    10,464          3.23         10,649        3.21
DSY-FR    Dassault Systemes                   EUR       92.03     UW        14,855       4.8      4.5     3.6     24.8        22.7      19.0     6.00%     8.00%   #     2,322          4.05          2,322        4.09
HEXA.B-SE Hexagon                             SEK      186.40     OW        10,678       3.9      3.7     25.8   172.6       151.4     155.3     6.58%     5.72%   #     2,682          1.32          2,707        1.31
IDR-MCE Indra Sistemas                        EUR       10.58     UW         2,231       0.8      0.8     0.7     12.0         9.9       8.5     1.29%     5.20%   #     3,134          1.06          3,104        1.00
MCRO-LON  Micro Focus International PLC       GBP        6.85     OW         1,570       4.1      4.0     2.1      8.7         7.5       6.8    -3.87%     3.83%   #      434           0.92           434         0.93
MONI-LONMonitise                              GBP        0.38     OW          922        4.7      3.2     3.7    -19.5       -39.0     -22.2   105.06% 48.65%      #      110         -0.01            111        -0.01
SGE-LON Sage Group                            GBP       3.51      UW         6,288       3.3      3.3     2.6     15.9        14.2      13.4     3.72%     0.07%   #     1,391          0.25          1,417        0.24
SAP-DE    SAP                                 EUR      63.30      EW        98,092       4.3      3.9     3.3     18.5       15.9       13.5     9.15%    10.62%   #    19,587          3.99         19,577        3.86
SOW-DE Software                               EUR      26.61      EW         2,986       2.7      2.5     2.3     14.2       12.6       12.2    -1.91%     6.49%   #     1,092          2.10          1,090        2.25
SPT-GB    Spirent                             GBP       1.39      OW         1,375       2.4      2.3     1.4     11.5       10.6       10.1     0.25%    6.21%    #      503           0.13           514         0.13
RIA-FR    Groupe Steria                       EUR      11.85      OW          468        0.4      0.3     0.4      4.8        4.2        5.2    -3.57%    4.23%    #     1,837          2.82          1,869        2.41
TEMN-CH Temenos Group                         CHF      23.95      OW         1,745       2.7      2.5     2.5     19.8       15.4       12.8    7.28%     9.94%    #      531           1.51           515         1.30
WDI-DE Wirecard                               EUR      20.91      OW         3,053       na       na      2.7     25.3       20.3       17.1   20.53% 18.74%       #      564           1.03           552         0.97

Israel Technology (Positive)                                                                                                                                                                   Joseph Wolf and David Kalpan
                                                        Price               Market            EV/Sales, x             Price/Earnings, x         Sales Growth (%)              FY2 Ests.               Consensus FY2 Ests.
Ticker     Company Name                     Currency 5/10/2013   Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E     2013E    5Y Avg.      2012E   2013E%    #   Sales (M)        EPS          Sales (M)      EPS
ALLT       Allot                              USD       12.34     EW          403        3.4      2.7     na      31.7      15.5       31.7     17.42% 22.76%      #      151           0.80            134         0.62
DOX        Amdocs                             USD       36.20     OW         5,830       1.5      1.4     1.3     12.4      12.0       11.1      3.27%     3.52%   #     3,471          3.00           3,492        3.12
CRNT       Ceragon Networks                   USD        4.05     EW          148        0.6      0.5     0.5    -12.6      22.3        7.9    -16.90% 12.16%      #      415           0.18            415         0.23
CEVA       CEVA                               USD       15.77     OW          353        4.2      3.5     5.0     24.1      15.3       19.3      1.53%    18.72%   #       65           1.04             57         0.82
GLW        Corning                            USD       15.10     OW        22,480       2.5      2.2     2.0     10.3       9.2        9.3      0.14%    13.11%   #     9,075          1.65           8,658        1.40
ESLT-IL    Elbit Systems                      ILS      155.00     EW         1,791       na        na     2.1      na        na        26.4        na        na    #       na            na            2,992        3.98
EZCH       EZchip Semiconductor               USD       26.03     EW          742        8.5      6.1     7.7     24.1      15.8       16.6     26.13% 40.58%      #       97           1.65             90         1.48
MLNX       Mellanox Technologies              USD      53.79      EW         2,268       4.7      3.1     3.8     52.8      15.7       19.7    -21.13% 53.16%      #      605           3.35            543         2.65
RDWR       Radware                            USD      15.39      OW          688        na       na      na      21.0      15.0       17.3      2.98%    10.37%   #      215           1.02            212         0.89
ORBK       Orbotech                           USD      10.03      OW          437        0.6      0.5     0.5     10.3       8.1       12.5     5.81%     11.79%   #      474           1.25            439         0.84
NICE       NICE-Systems                       USD      36.46      EW         2,198       2.1      1.8     1.8     13.9      13.6       13.0     7.17%     11.89%   #     1,054          2.66           1,043        2.88




16 May 2013                                                                                                                                                                                                             90
Barclays | Global Technology Outlook


EQUITY VALUATION TABLES
Japan Precision Instruments (Neutral)                                                                                                                                                                  Masahiro Nakanomyo
                                                         Price                Market            EV/Sales, x             Price/Earnings, x         Sales Growth (%)               FY2 Ests.            Consensus FY2 Ests.
Ticker     Company Name                      Currency 5/10/2013    Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E     2013E    5Y Avg.      2012E   2013E%    #    Sales (M)        EPS       Sales (M)      EPS
7751-TKS   Canon Inc.                          JPY     3555.00      OW        41,072       1.0      1.0     0.9     13.9      12.2       12.1      8.63%     2.65%   #    3,880,000     296.67       4,002,659    294.04
8060-TKS   Canon Marketing Japan Inc.          JPY     1453.00      EW         1,984       0.1      0.1     0.0     18.2      15.8       15.7      0.41%     2.05%   #     698,000       96.18        693,500      98.39
7762-TKS   Citizen Holdings Co. Ltd.           JPY      624.00      OW         2,060       0.8      0.8     0.5     18.7      13.4       12.7      0.79%     3.19%   #     291,000       48.15        295,825      43.09
7735-TKS   Dainippon Screen Mfg. Co. Ltd.      JPY      536.00      EW         1,290       0.8      0.7     0.6     54.7      21.5       20.4      7.41%     9.31%   #     223,000       25.70        230,872      35.48
4901-TKS   FUJIFILM Holdings Corp.             JPY     2402.00      EW        11,803       0.6      0.6     0.4     18.8      14.0        9.8      2.81%     0.92%   #    2,298,000     178.48       2,336,960    164.88
6674-TKS   GS Yuasa Corp.                      JPY      422.00      UW         1,806       0.8      0.8     0.7     14.8      13.3       11.7     19.85%    -4.38%   #     314,600       33.43        324,263      33.48
8036-TKS   Hitachi High-Technologies Corp.     JPY     2565.00      OW         3,500       0.5      0.5     0.3     19.2      15.0       10.9     10.52%     3.77%   #     660,000      173.04        654,295     177.66
6856-TKS   Horiba Ltd.                         JPY     3710.00      EW         1,546       1.0      1.0     0.7     17.9      17.1       12.0     10.54%     5.38%   #     137,000      217.51        139,426     223.73
7741-TKS   Hoya Corp.                          JPY     2021.00      EW         8,575       1.8      1.7     1.4     18.2      17.1       13.1     -8.07%     7.39%   #     407,000      118.19        399,887     127.45
6951-TKS   Jeol Ltd.                           JPY      479.00      OW          365        0.9      0.8     0.6     31.0      17.7       13.5     -5.64%    13.12%   #      88,800       26.82         88,800      26.82
4902-TKS   Konica Minolta Inc.                 JPY      759.00      EW         3,831       0.5      0.5     0.4     15.5      13.2       12.9     10.70%    -2.78%   #     875,000       55.63        872,614      63.14
7731-TKS   Nikon Corp.                         JPY     2500.00      OW        10,177       0.9      0.9     0.8     15.9      15.6       13.1      8.17%     2.74%   #    1,123,000     167.17       1,109,398    167.93
7733-TKS   Olympus Corp.                       JPY     2707.00      EW         7,319       1.5      1.7     1.1    135.4      30.0       37.8    -13.62% -6.96%      #     682,000       88.58        690,203      87.46
6645-TKS   OMRON Corp.                         JPY     3150.00      OW         7,021       1.0      0.9     0.6     18.6      17.8       10.8      7.31%     5.16%   #     734,000      182.23        734,060     200.99
7752-TKS   Ricoh Co. Ltd.                      JPY     1153.00      EW         8,530       0.7      0.7     0.6     14.0      12.4       10.4      7.82%     1.35%   #    2,103,000      96.55       2,075,579    113.96
6724-TKS   Seiko Epson Corp.                   JPY     1240.00      EW         2,210       0.4      0.4     0.3     16.1      11.5        9.6      3.14%    -0.34%   #     875,040      109.00        883,243     105.90
6590-TKS   Shibaura Mechatronics Corp.         JPY      305.00      OW          153        0.7      0.6     0.4     12.5       7.4        9.0     25.99% 14.36%      #      43,800       42.50         43,800      42.50
7701-TKS   Shimadzu Corp.                      JPY      740.00      OW         2,441       0.9      0.9     0.6     21.0      16.9       12.2      7.18%    4.24%    #     295,000       49.84        293,000      46.70
8035-TKS   Tokyo Electron Ltd.                 JPY     5490.00      EW         9,721       1.4      1.3     0.7     61.8      29.1       22.1      9.39%    7.72%    #     586,000      189.75        628,667     215.85
7732-TKS   Topcon Corp.                        JPY     1280.00      OW         1,179       1.5      1.3     0.9     28.0      18.7       12.0     11.46%    8.76%    #     118,000       69.39        109,943      50.33
6728-TKS   ULVAC Inc.                          JPY      907.00      EW          454        0.7      0.7     0.7     23.1      14.0       14.8    -14.64% 11.31%      #     187,000       66.87        186,838      88.49

Asia Ex-Japan Semiconductors (Positive)                                                                                                                                                                   Andrew Lu & SC Bae
                                                         Price                Market            EV/Sales, x              Price/Earnings, x        Sales Growth (%)                 FY2 Ests.          Consensus FY2 Ests.
Ticker    Company Name                       Currency 5/10/2013    Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E      2013E    5Y Avg.     2012E   2013E%    #     Sales (M)         EPS      Sales (M)      EPS
2311-TW Advanced Semiconductor Engineering     TWD       25.90      OW          6,510      1.2      1.1     1.1     13.2       11.4       10.4    11.69%     9.13%   #      236,415          2.24      226,981       2.30
6147-TW Chipbond Technology Corp.              TWD       81.30      OW          1,592      2.5      2.1     2.2     13.6       11.7       10.9    25.87% 20.83%      #       22,834          6.82       21,657       6.57
2360-TW Chroma Ate Inc.                        TWD       63.80      OW           803       5.1      4.1     4.7     18.1       13.7       17.8   -62.10% 24.73%      #        5,553          4.66        5,676       4.50
2458-TW Elan Micro Electronics                 TWD       77.40      OW          1,022       na       na     na       na         na         na        na        na    #          na            na         9,775       4.61
3658-TW Hermes Microvision Inc.                TWD      859.00      OW         1,880       9.7      7.5     6.3     27.0       20.9       19.3   30.89% 29.10%       #        7,063        40.62         7,640      47.62
000660-KR SK hynix Inc                         KRW     29100.00     OW         18,262      2.0      2.0     1.8     13.7       12.9       13.1    20.52%     1.47%   #    12,427,000 2,253.12        13,653,769 3,346.54
3189-TW Kinsus Interconnect Technology         TWD      107.50      OW          1,609      1.7      1.5     1.4     13.8       10.7       11.6     8.65%    18.10%   #       28,273        10.05        25,093       8.75
2454-TW MediaTek                               TWD      369.00      OW         16,710      2.3      1.6     2.0     21.4       16.2       15.4    38.77% 42.97%      #      196,936        22.79       156,926      22.95
3697-TW MStar Semiconductor                    TWD      257.00      OW          4,603       na       na     1.6     17.3        na        12.1       na        na    #          na            na        43,012      13.98
8046-TW Nan Ya Printed Circuit Board           TWD       34.00      UW           744       0.3       na     0.5      3.6        na         6.0   109.23%       na    #          na            na        34,862       2.27
3034-TW Novatek Microelectronics Corp.         TWD      141.50      OW          2,928      1.6      1.6     1.0     14.4       12.4        8.7    31.72%     0.00%   #       48,774        11.57        49,167      10.56
6286-TW Richtek Technology Corp.               TWD      160.00      OW           778       1.8      1.7     1.8     13.6       12.2       13.9     3.38%     6.08%   #       12,362        12.74        12,883      12.98
005930-KR Samsung Electronics                  KRW    1476000.00    OW        173,840      0.7      0.6     0.7      7.1        6.2        7.8   19.43% 14.29%       #   274,504,992 237,935.00     265,336,128 237,372.50
2325-TW Siliconware Precision Industries       TWD       35.00      OW         3,692       1.6      1.5     1.2     19.6       14.5       14.1    4.40%     11.94%   #       75,556          2.44       75,662       2.50
2330-TW Taiwan Semiconductor Manufacturing     TWD      114.50      OW        99,607       4.8      4.2     3.9     16.0       14.6       13.9   19.66% 14.48%       #      693,482          7.83      696,361       8.21
2303-TW United Microelectronics                TWD      12.60       EW         5,541       1.4      1.3     1.2      9.6       14.2       10.2   15.50%      5.78%   #      137,415          0.92      132,955       0.78
5347-TW Vanguard International Semiconductor   TWD      31.90       UW         1,683       1.9      1.8     0.9     13.7       13.5       11.1   20.63%     7.15%    #      22,183           2.39       22,295       2.70
2455-TW Visual Photonics Epitaxy Co. Ltd.      TWD      35.10       EW           290       3.1      3.1     2.9     16.8       17.5       14.4    2.42%     1.95%    #       2,348           2.01       2,454        2.17
3105-TW Win Semiconductors Corp.               TWD      35.55       OW           902       2.2      1.9     2.1     10.6       10.2       13.5   16.80% 15.28%       #      15,131           3.49      14,909        3.40




16 May 2013                                                                                                                                                                                                              91
Barclays | Global Technology Outlook


EQUITY VALUATION TABLES
Asia Ex-Japan LCD Displays (Positive)                                                                                                                                        Jamie Yeh, SC Bae, Sunwoo Kim & Sebastian Hou
                                                          Price               Market            EV/Sales, x              Price/Earnings, x        Sales Growth (%)               FY2 Ests.            Consensus FY2 Ests.
Ticker    Company Name                        Currency 5/10/2013   Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E      2013E    5Y Avg.     2012E   2013E%    #    Sales (M)        EPS       Sales (M)      EPS
054620-KR Advanced Process Systems Corporation KRW      13100.00    EW          263        na        na     na      16.5        8.8        9.4       na        na    #        na        1,528.38      346,618    1,499.54
2409-TW AU Optronics                            TWD       13.25     OW         3,955       0.6      0.6     0.6     16.5        9.2       76.5    14.59%     4.19%   #     451,831         1.45       439,075       1.42
001300-KR Cheil Industries Inc.                 KRW     93500.00    EW         4,260       0.9      0.8     0.9     16.5       13.6       14.8    12.02% 16.40%      #    7,836,000     6,859.98     7,558,211   7,246.29
5371-TW Coretronic                              TWD       24.80     UW          578        0.2      0.2     0.2     10.7        8.8        9.8     3.21%       na    #      75,752         2.71        76,092       2.17
8069-TAI E Ink Holdings                         TWD       21.15     OW          756        0.9      0.9     1.1     13.3        6.0       10.1    12.94%       na    #      32,423         3.45        31,984       1.10
3149-TW G-TECH Optoelectronics                  TWD       66.60     EW          585        1.5      1.2     1.6     15.0       11.6       14.7    41.65% 20.45%      #      15,994         5.64        16,434       5.96
020760-KR Iljin Display                         KRW     20150.00    EW          485        na        na     na       na         na         na        na        na    #        na            na        894,182    2,631.73
3481-TW Innolux                                 TWD       18.60     UW         5,696       0.8      0.8     0.7     14.0       18.3        2.0     0.85%    -0.38%   #     485,874         1.02       518,958      1.82
034220-KR LG Display                            KRW     29100.00    OW         9,495       0.4      0.4     0.4      7.0        6.2        7.0     7.70%     9.03%   #   34,453,000 4,751.08        32,098,636 3,428.02
096640-KR Melfas                                KRW     18700.00    OW          291        na       na      na       na         na         na        na        na    #        na            na        669,033    2,278.22
6176-TW Radiant Opto-Electronics                TWD      117.00     OW         1,780       0.7      0.6     0.6     9.9        8.6         9.5    -3.72%    13.56%   #     83,324         13.70        81,251     13.14
056190-KR SFA Engineering Corp.                 KRW     64900.00    EW          974        1.4      1.0     0.9     15.0       11.4       11.4    20.60% 35.13%      #     827,000      5,588.07      858,368    6,102.13
6278-TW Taiwan Surface Mounting Technology Co TWD         50.80     OW          423        0.3      0.2     0.2     10.4        9.0        9.6    -1.03%    17.18%   #      57,796         5.46        58,525       5.46
3673-TW TPK Holding                             TWD      586.00     OW         6,247       1.0      0.8     0.8      9.4        8.1        8.8    28.85% 14.50%      #     256,198        70.20       249,911     60.96
2384-TW Wintek                                  TWD       14.85     UW          912        0.7      0.6     0.6    1470.0      20.7       69.9   -15.20% 13.99%      #     98,773          0.71        91,590      -0.25

Asia Ex-Japan IT Hardware (Neutral)                                                                                                                                                                            Kirk Yang
                                                         Price                Market            EV/Sales, x              Price/Earnings, x       Sales Growth (%)                FY2 Ests.          Consensus FY2 Ests.
Ticker    Company Name                       Currency 5/10/2013    Rating   Cap (USD M)   2012E    2013E 5Y Avg.   2012E      2013E    5Y Avg.    2012E   2013E%     #   Sales (M)         EPS     Sales (M)      EPS
2353-TAI Acer                                  TWD       24.10      EW         2,252       0.1      0.1     0.1     25.4       13.8       10.1    4.77%    0.00%     #    450,000          1.73     445,752      1.07
2357-TAI ASUSTeK Computer                      TWD      346.00      OW         8,564       0.4      0.4     0.4     10.2        9.8        9.0    6.98%    13.54%    #    545,000        34.66      537,597     33.99
2392-TAI Cheng Uei Precision Industry          TWD       60.60      EW          997        0.4      0.3     0.4     11.9       10.7        9.2   19.19% 21.27%       #    148,693          5.61     150,253      5.55
2385-TAI Chicony Electronics                   TWD       82.40      EW         1,765       0.8      0.7     0.6     12.2       11.7        9.9   10.62%     7.30%    #     79,936          7.00      83,921      7.25
2324-TAI Compal Electronics                    TWD       18.80      UW         2,760       0.1       na     0.1      4.1        na         6.1   52.29%       na     #        na            na      773,385      2.06
8163-TAI Darfon Electronics                    TWD       27.30      OW          288         na       na     0.2     17.5        na        11.5      na        na     #        na            na         na          na
2308-TW Delta Electronics Inc.                 TWD      145.00      OW        11,887       1.9      1.7     1.4     18.9       16.4       15.6    5.29%     9.16%    #    193,706          8.88     193,761      8.79
861-HKG Digital China Holdings                 HKD       10.76      OW         1,479       0.2      0.2     0.2      8.1        7.0        9.4    9.50%    14.29%    #     88,000          1.51      82,078      1.44
3211-TAI Dynapack International Technology     TWD      101.50      EW          509        0.3      0.3     0.5      9.6        9.0       11.6   22.83%       na     #     39,791        11.15       32,437      7.56
2448-TW EPISTAR                                TWD       54.50      OW         1,697        na       na     2.5      na         na        19.8      na        na     #        na            na       23,304      2.25
2354-TW Foxconn Technology                     TWD       80.80      UW         3,334       0.5      0.5     0.6     14.6       13.0       10.1   14.11%     1.26%    #    154,398          6.16     153,983      7.96
2317-TAI Hon Hai Precision Industry            TWD       80.50      EW        31,614       0.2      0.2     0.2      9.6        8.6        7.7    8.82%     8.24%    #   4,600,000         9.27    4,289,669     9.68
2356-TAI Inventec                              TWD       12.05      UW         1,481       0.1      0.1     0.1      9.5        9.6        8.2   -0.15%     2.44%    #    420,000          1.28     420,000      1.28
011070-KR LG Innotek                           KRW     89600.00     EW         1,662       0.6      0.5     0.6     40.0       15.8       49.9   21.22%    9.95%     #   7,085,000     5,805.48    6,927,266   7,485.99
992-HKG Lenovo Group                           HKD        6.85      OW         8,956       0.1      0.1     1.9    113.6       94.5      110.3   14.63% 12.98%       #     38,300          0.07      37,580      0.07
4938-TW Pegatron                               TWD       50.70      OW         3,897       0.1      0.1     0.2      8.2        6.7        7.7   17.93% 13.46%       #   1,180,000         7.62    1,045,397     5.50
2382-TAI Quanta Computer                       TWD       63.10      EW         7,940       0.2      0.2     0.2      9.3        8.6        9.6    4.66%     4.23%    #   1,110,000         7.13    1,064,793     6.59
006400-KR Samsung SDI Co. Ltd.                 KRW    126500.00     OW         4,934       1.0      0.9     1.1      9.7        6.3        9.4    0.62%    7.04%     #   6,216,000 20,000.07       6,137,416 15,098.15
3376-TW Shin Zu Shing Co.                      TWD       76.60      EW          448        1.2      1.1     1.1     10.6        9.3       12.9    4.74%     8.49%    #      9,235          8.30      10,042      8.94
6121-TAI Simplo Technology                     TWD      135.00      UW         1,371       0.6      0.5     0.6     12.4       11.8        9.5    1.52%    28.29%    #     76,623        11.26       70,882     12.03
751-HKG Skyworth Digital Holdings              HKD        5.65      OW         1,937       0.5      0.4     0.4      9.4        7.8        6.6   20.84% 14.71%       #     39,000          0.70      42,103      0.69
2387-TAI Sunrex Technology                     TWD       12.05      UW          144         na       na     0.4      na         na         9.1      na        na     #        na            na         na          na
2347-TAI Synnex Technology International       TWD       50.50      EW         2,653       0.3      0.3     0.3     12.9       11.5       12.5    3.02%     8.73%    #    349,514          4.36     361,577      4.42
903-HKG TPV Technology                         HKD        2.09      EW          620         na       na     0.3     40.0        na        33.7      na        na     #        na            na       12,855      0.05
3231-TAI Wistron                               TWD       29.20      UW         2,146       0.1      0.1     0.1      8.6        8.0        7.3   14.01% 10.67%       #    830,000          3.67     710,843      3.62




16 May 2013                                                                                                                                                                                                            92
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EQUITY VALUATION TABLES
 Asia Ex-Japan Wireless Equipment & Products (Positive)                                                                                                                                                           Dale Gai, SC Bae
                                                         Price                   Market              EV/Sales, x                  Price/Earnings, x       Sales Growth (%)               FY2 Ests.         Consensus FY2 Ests.
 Ticker    Company Name                      Currency 5/10/2013       Rating   Cap (USD M)     2012E    2013E 5Y Avg.       2012E      2013E    5Y Avg.    2012E   2013E%    #   Sales (M)         EPS     Sales (M)       EPS
 2018-HK AAC Technologies Holdings             HKD       40.00         OW         6,487         4.5      3.3     4.0         20.7       14.9       14.1   39.89% 35.65%      #     11,922          2.75      10,695       2.36
 6153-TW Career Technologies                   TWD       34.30         UW          366          0.8      0.7     0.9         10.5       10.2        9.9   21.36% 24.35%      #     21,629          3.28      17,760       3.30
 2474-TW Catcher Technology                    TWD      160.00         OW         4,043         2.6      2.2     2.5          9.7        9.3       10.6   16.00% 17.96%      #     50,668        17.24       47,447      15.84
 8078-TW Compal Communications                 TWD       37.95         UW          824          0.3      0.3     0.2         18.7       18.3       13.0    9.37%     2.17%   #     50,812          2.22      49,411       2.64
 6269-TW Flexium Interconnect Inc.             TWD      106.00         UW          674          1.4      1.1     1.4         11.3       10.0       10.1   28.03% 33.25%      #     18,900        10.64       16,280      11.36
 2038-HK Foxconn International Holdings        HKD        3.35         EW         3,272         0.1      0.1     3.1        341.0      113.7       85.8   49.83% 20.57%      #      9,466          0.03       7,143       0.02
 2498-TW HTC                                   TWD      279.00         UW         7,839         0.6      0.6     0.7         16.8       16.9       10.8    2.09%    11.39%   #    321,726        16.67      316,229      19.11
 3008-TW LARGAN Precision                      TWD      845.00         EW         3,723         4.2      3.8     3.4         16.0       14.5       12.1   20.70% 10.92%      #     26,873        56.99       29,108      61.51
 066570-KR LG Electronics Inc.                 KRW     83300.00        EW        12,247         0.3      0.3     0.3         11.3        9.9       10.7   21.50%     7.81%   #   66,749,000 8,394.89      63,578,464 9,168.12
 2301-TW Lite-On Technology                    TWD       51.30         OW         3,926         0.3      0.3     0.3         12.3       10.2        9.7    5.46%     9.32%   #    248,640          5.07     180,887       4.53
 3311-TW Silitech Technology                   TWD       53.50         OW          325          0.7      0.7     0.7         10.5        9.4        9.7   -2.07%     7.93%   #      9,568          5.60      10,130       5.13
 3044-TW Tripod Technology                     TWD       69.70         UW         1,203         0.8      0.8     0.8         11.6       11.0        8.8    8.67%     6.24%   #     45,165          6.22      45,891       6.59
 3042-TW TXC Corp.                             TWD       45.05         OW          454          1.2      1.1     1.3          9.0        7.9        9.8   20.43%       na    #     15,023          5.67      13,038       4.92
 3037-TW UniMicron Technology                  TWD       31.35         OW         1,575         0.8      0.7     0.8         10.7        8.7        8.3    0.94%    14.68%   #     78,124          3.51      74,349       3.03
 6285-TW Wistron NeWeb                         TWD       47.60         OW          477           na       na     0.4          7.8        na         8.1      na        na    #        na            na       42,000       4.86
 3622-TW Young Fast Optoelectronics            TWD       53.70         OW          269          0.3      0.2     0.3         23.9       23.4       15.1   29.40%       na    #     22,023          2.27      17,006       2.49
 763-HK    ZTE                                 HKD       14.04         EW         6,179         0.5      0.4     0.6         23.2       16.4       15.8   24.03%       na    #    122,457          0.85     109,737       0.78
 4958-TW Zhen Ding Technology Holding Limited TWD        73.60         OW         1,740         1.2      1.0     1.2         10.4        8.8       11.0   17.19% 14.59%      #     74,353          8.33      69,751       8.25


Source: Company reports, FactSet, Barclays Research. Stock ratings: OW: Overweight; EW: Equal Weight; UW: Underweight. Industry views: Pos: Positive; Neu: Neutral; Neg: Negative.
For full disclosures on each covered company, including details of our company-specific valuation methodology and risks, please refer to http://publicresearch.barcap.com




16 May 2013                                                                                                                                                                                                                    93
Barclays | Global Technology Outlook


EQUITY PERFORMANCE TABLES
U.S. IT Hardware (Neutral)                                                                                                                                                                     Ben Reitzes
                                                                  Price      Market          52 Week       Current vs. 52 Week (%)                  Historical Price Performance (%)
Ticker      Company Name                            Currency   5/10/2013   Cap (USD M)    High     Low        High          Low      1M      3M         6M           1Y        5Y      YTD        QTD
AAPL        Apple Inc.                                USD        452.97      426,841     705.07 385.10        -35.8         17.6      5.8    -2.6      -16.2       -19.8    139.4      -14.6        2.7
DELL        Dell Inc.                                 USD         13.45       24,082      15.65    8.69       -14.1         54.8     -4.0    -1.8       43.8       -12.3     -32.4      33.3       -5.7
EMC         EMC Corp.                                 USD         23.34       48,403      28.18   21.45       -17.2          8.8     -0.3    -4.9       -3.6       -12.6      44.2      -8.9       -3.6
HPQ         Hewlett-Packard Co.                       USD         21.54       41,505      24.05   11.35       -10.4         89.8      2.2    25.5       62.5        -7.8     -51.8      49.8      -10.4
IBM         International Business Machines Corp.     USD        204.47      224,498     215.90 181.85         -5.3         12.4     -4.2     1.2        7.5         0.6      60.0       5.7       -5.1
IM          Ingram Micro Inc. Shs -A-                 USD        18.05        2,727      20.21    14.42       -10.7         25.2     -3.3    -3.1       14.2        -4.1      -0.8       5.8       -9.0
LXK         Lexmark International Inc.                USD        30.89        1,940      31.36    16.10        -1.5         91.9     13.7    31.1       41.0         8.8      -9.1      32.8       16.6
NTAP        NetApp Inc.                               USD        36.15       13,007      37.02    26.26        -2.4         37.7      1.8     0.8       37.1         0.0      39.8       7.6        5.6
STX         Seagate Technology Inc.                   USD        40.50       14,439      42.50    21.62        -4.7         87.3     11.6    15.0       44.2        29.3    100.8       32.4       10.2
FIO         Fusion-io Inc.                            USD        15.05        1,390      32.63    13.13       -53.9         14.6     -1.1   -13.8      -34.6       -32.2       NA      -36.7      -11.4
TECD        Tech Data Corp.                           USD        48.77        1,820      54.60    42.25       -10.7         15.4      7.4    -7.9        7.3        -5.2      34.1      5.9        5.7
WDC         Western Digital Corp.                     USD        58.47       13,689      59.55    28.31        -1.8        106.5     10.7   19.1        67.0       43.7       85.3     36.3       15.2
XRX         Xerox Corp.                               USD         9.00       10,916       9.38     6.10        -4.1        47.5      -1.9   11.1        38.5       16.5      -38.6     30.4        3.4
U.S. Software (Positive)                                                                                                                                                                Raimo Lenschow
                                                                 Price       Market          52 Week       Current vs. 52 Week (%)                  Historical Price Performance (%)
Ticker      Company Name                            Currency   5/10/2013   Cap (USD M)    High      Low       High          Low      1M      3M         6M           1Y       5Y       YTD        QTD
ADSK        Autodesk Inc.                             USD        39.75         8,706      41.42    27.70       -4.0         43.5      1.4     0.6       27.0         7.3     -2.9       10.0       -5.7
CTXS        Citrix Systems Inc.                       USD        66.56        12,313      85.65   56.57       -22.3         17.7     -6.5    -9.1       13.6       -17.2     91.9        0.3       -8.8
CSOD        Cornerstone OnDemand Inc.                 USD        38.75         1,929     40.06    18.02        -3.3        115.0     13.9    22.1       39.1       101.6      NA        28.5       11.3
TRAK        Dealertrack Technologies Inc.             USD        30.61         1,325     33.62    23.31        -9.0         31.3      7.3    -6.5       21.7        -2.8     55.2        6.1        3.7
ELLI        ELLIE MAE Inc.                            USD        25.38          658      30.59    14.30       -17.0         77.5      0.3    16.4       10.1        62.5      NA        -9.8        4.0
FLTX        FleetMatics Group PLC                     USD        25.04          853      27.45    19.20        -8.8         30.4      4.8    -0.7       13.0         NA       NA        -2.1        1.6
INFA        Informatica Corp.                         USD        35.28         3,776     46.37    23.83       -23.9         48.0      3.9    -3.4       31.1       -22.8    101.4       15.2        1.4
INTU        Intuit Inc.                               USD        60.20        17,484     68.41    53.38       -12.0         12.8     -8.8    -4.0       -0.4         5.7    115.5       -0.8      -10.2
LOGM        LogMeIn Inc.                              USD        23.54          578      34.43    16.12       -31.6         46.0     33.7     3.5       11.3       -28.4      NA         6.1       23.7
MSFT        Microsoft Corp.                           USD        32.69       275,837     33.91    26.26        -3.6         24.5     14.7    17.8       21.9         6.0     10.9       23.7       15.5
N           NetSuite Inc.                             USD        90.99        6,796      92.93    40.94        -2.1        122.2     16.4    38.8       53.3       116.1    406.7       36.9       15.1
NOW         ServiceNow Inc                            USD        38.99        5,206      43.99    22.62       -11.4        72.4      12.2    32.5       33.9         NA       NA        31.4        9.0
ORCL        Oracle Corp.                              USD        34.02       159,126     36.43    25.33        -6.6        34.3       1.0    -3.5       12.5        25.1     55.9        1.4        4.5
PANW        Palo Alto Networks Inc.                   USD        49.73        3,476      72.61    47.00       -31.5         5.8      -5.4    -8.8       -5.5         NA       NA        -6.1      -11.2
PMTC        PTC Inc.                                  USD        24.24        2,866      26.19    17.62        -7.4        37.6       2.8     0.5       21.3        18.4     33.0        6.4       -6.0
QLIK        Qlik Technologies Inc.                    USD        28.94        2,454      29.26    16.71        -1.1        73.2      10.1    29.1       65.1        14.5      NA        30.8        9.9
RHT         Red Hat Inc.                              USD        51.90       10,038      60.00    46.34       -13.5        12.0       2.8    -4.7        9.6        -8.3    135.1       -1.9        2.8
CRM         salesforce.com inc.                       USD        44.17       25,743      46.99    30.05        -6.0        47.0       3.7     2.1       24.6        27.6    158.8        4.6       -1.7
SAP         SAP AG ADS                                USD        82.38       97,869      84.66    54.78        -2.7        50.4       5.2     1.7       14.7        30.6     63.4        2.1        1.9
SPLK        Splunk Inc                                USD        44.89        4,541      45.16    25.15        -0.6        78.5       4.7    28.3       68.3        41.1      NA        52.5      10.5
SYMC        Symantec Corp.                            USD        24.35       16,692      25.26    13.06        -3.6        86.5      -0.1     7.1       36.1        56.8     17.4       28.7       -1.9
TDC         Teradata Corp.                            USD        55.25        8,799      80.97    48.81       -31.8        13.2      -2.4   -12.7      -16.1       -24.3    124.2      -13.0       -8.0
TIBX        TIBCO Software Inc.                       USD        20.89        3,382      32.95    18.18       -36.6        14.9      2.3     -7.4      -14.4       -31.5    152.9       -6.2       2.0
TNGO        Tangoe Inc.                               USD        13.25          492      23.00    11.53       -42.4        14.9      4.4    -18.4       -1.6       -42.3      NA        10.4        5.7
VMW         VMware Inc.                               USD        76.90        32,871     103.97   70.05       -26.0          9.8      0.1     3.4      -11.4       -25.0     16.1      -18.5       -2.7
WDAY        Workday Inc.                              USD        67.41        11,006     67.75    45.05        -0.5         49.6      8.2    28.6       41.1         NA       NA        21.7        7.6




16 May 2013                                                                                                                                                                                            94
Barclays | Global Technology Outlook


EQUITY PERFORMANCE TABLES
U.S. Internet (Positive)                                                                                                                                                             Anthony DiClemente
                                                                   Price      Market          52 Week       Current vs. 52 Week (%)                  Historical Price Performance (%)
Ticker       Company Name                           Currency    5/10/2013   Cap (USD M)    High     Low        High          Low      1M      3M         6M           1Y       5Y      YTD       QTD
AMZN         Amazon.com Inc.                          USD         263.63      120,416     284.72 206.37         -7.4         27.7     -3.1    -1.8       16.7        16.2    254.8       5.4      -0.7
AOL          AOL Inc                                  USD          39.06        2,959      43.93   24.96       -11.1         56.5     -2.5     3.2       -0.1        46.6      NA       29.0      -0.7
EBAY         eBay Inc.                                USD          55.65       71,807      58.04   38.00        -4.1         46.4     -3.5    -3.0       15.9        35.8     76.2       8.5       2.0
EXPE         Expedia Inc.                             USD          58.87        8,031      68.09   40.36       -13.5         45.9     -7.8    -9.2        3.9        44.6    161.0      -3.3      -1.0
FB           Facebook Inc.                            USD          26.68       64,848      45.00   17.55       -40.7         52.0     -2.1    -3.9       35.0         NA       NA        0.8       4.8
GOOG         Google Inc. Cl A                         USD         880.23      291,135     882.47 556.52         -0.3         58.2     11.1    12.1       33.2        45.0     50.5      24.1      10.5
NFLX         Netflix Inc.                             USD         217.69      12,879      229.69   52.81        -5.2        312.2     32.4    23.1      188.1       196.4    648.1     147.7      21.2
P            Pandora Media Inc.                       USD          15.58       2,711       16.42    7.08        -5.1        120.1     16.3    29.7      104.7       69.3      NA       70.8       10.7
PCLN         priceline.com Inc.                       USD         765.41      38,919      779.25 553.43         -1.8        38.3      4.6     10.4       23.3       15.1     456.7     25.3       13.0
TRIP         TripAdvisor Inc.                         USD         53.84        7,854      56.80    28.63        -5.2        88.1      4.4     16.8       54.2       31.3      NA       30.7        4.3
YHOO         Yahoo! Inc.                              USD         26.83       29,063      26.86    14.59        -0.1        83.9      6.9     24.8       47.8       73.7      -0.6     32.6       12.2

U.S. IT Consulting & Computer Services (Neutral)                                                                                                                                               Darrin Peller
                                                                   Price      Market          52 Week       Current vs. 52 Week (%)                 Historical Price Performance (%)
Ticker       Company Name                            Currency   5/10/2013   Cap (USD M)    High      Low       High          Low       1M      3M       6M           1Y        5Y      YTD          QTD
ACTG         Acacia Research Corp.-Acacia Technologi   USD         23.81        1,164      40.32    19.86      -40.9         19.9     -21.9   -16.9      8.1       -38.2    333.3       -7.8        -21.6
ACN          Accenture PLC                             USD         80.48       54,504      82.18   54.94        -2.1         46.5       3.5     8.6     20.6        36.4    111.4       20.2          5.2
ADS          Alliance Data Systems Corp.               USD        177.19        8,659     177.84 119.56         -0.4         48.2      11.5    15.6     23.7        38.4    196.7       21.6          8.7
CIS          Camelot Information Systems Inc. ADS      USD          1.70          75        2.56    0.93       -33.6         82.8      -0.6    18.9     31.8       -29.8       NA       70.0          0.0
CTSH         Cognizant Technology Solutions Corp.      USD         65.03       18,966      81.08   53.92       -19.8         20.6     -16.8   -17.7     -3.7         2.6    110.2      -14.9        -17.9
CSC          Computer Sciences Corp.                   USD         49.29        7,488      50.59   22.19        -2.6        122.2       4.5     4.2     38.5        80.0       6.0      21.8         -0.9
CLGX         CoreLogic Inc.                            USD         28.23        2,633      29.50   15.95        -4.3         77.0       7.7    -2.7     16.0        57.6      37.5       2.4          6.6
EPAM         EPAM Systems Inc                          USD         23.10        1,026      23.80   13.94        -2.9         65.7      -1.3    11.8     14.2        30.7       NA       25.4         -2.3
FISV         Fiserv Inc.                               USD         89.52       11,903      91.16   64.48        -1.8         38.8       1.8    11.0     21.1        34.3      69.0      13.1          1.7
FLT          FleetCor Technologies Inc.                USD         81.25        6,699      85.56   33.73        -5.0        140.9       6.9    24.7     69.7       107.5       NA       53.5          7.4
GPN          Global Payments Inc.                      USD         46.78        3,549      51.24   39.37        -8.7         18.8       2.2    -6.5     11.1         7.3       4.3       2.8         -6.2
IDCC         InterDigital Inc.                         USD         47.02        1,941      48.68   22.37        -3.4        110.2       7.6     7.4     14.5        76.2    109.0       14.8         -1.5
LPS          Lender Processing Services Inc.           USD         28.48        2,409      30.88   21.14        -7.8        34.7      10.9     12.5     16.9        14.9       NA       15.2         11.4
MA           MasterCard Inc. Cl A                      USD        555.13       67,572     558.41 389.90         -0.6        42.4        4.3     7.1     18.0        31.6      92.5      13.1          2.7
RPXC         RPX Corp.                                 USD         15.00         771       15.94    8.55        -5.9        75.4      10.3     14.9     69.6         1.7       NA       65.8          6.2
TSS          Total System Services Inc.                USD         24.24       4,481       25.06   21.10        -3.3        14.9       -3.8    4.1       9.3         4.7      -3.7      11.9         -3.3
PAY          VeriFone Systems Inc.                     USD         23.06       2,512       47.82   17.93       -51.8        28.6      10.2    -30.0    -22.8       -47.6      72.5     -21.9         12.1
V            Visa Inc.                                 USD        178.75      141,712     180.84 111.94         -1.2        59.7        8.0   15.6      25.6       51.7     117.2      18.0          5.4
WU           Western Union Co.                         USD        15.99        9,031      19.14    11.93       -16.5        34.0        7.8   14.4      28.7        -5.3     -32.2     19.1          7.8
XOOM         Xoom Corporation                          USD        20.51          633      26.00    17.80       -21.1        15.2       -3.3    NA       NA          NA        NA        NA          -13.0

U.S. Data Networking (Neutral)                                                                                                                                                                 Ben Reitzes
                                                                  Price       Market          52 Week       Current vs. 52 Week (%)                 Historical Price Performance (%)
Ticker       Company Name                           Currency    5/10/2013   Cap (USD M)    High      Low       High         Low        1M      3M       6M           1Y       5Y       YTD          QTD
ARUN         Aruba                                    USD         17.28        1,979       26.78    12.36      -35.5        39.8      -25.1   -17.9     -5.6         5.0    159.3      -16.2        -29.8
CSCO         Cisco                                    USD         21.10       113,411      21.98    14.96       -4.0        41.0       -1.3    0.6      26.2        28.9     -17.8      8.2          1.8
FFIV         F5 Networks                              USD         79.99        6,173      127.47    70.60      -37.2        13.3       4.5    -23.4     -9.5       -37.8    181.1      -19.4        -12.1
JNPR         Juniper                                  USD         17.36        8,743       22.98    14.01      -24.4        23.9       -7.7   -20.3     -0.5        -3.8     -36.7     -12.2         -6.9




16 May 2013                                                                                                                                                                                              95
Barclays | Global Technology Outlook


EQUITY PERFORMANCE TABLES
U.S. Semiconductors (Neutral)                                                                                                                                                        Blayne Curtis
                                                              Price       Market         52 Week      Current vs. 52 Week (%)                 Historical Price Performance (%)
Ticker      Company Name                         Currency   5/10/2013   Cap (USD M)   High     Low       High          Low      1M       3M       6M           1Y        5Y      YTD      QTD
ALTR        Altera Corp.                           USD        33.05        10,504     38.80   29.59      -14.8         11.7     -1.5     -7.7      7.2        -2.7      44.0      -4.6     -7.5
ADI         Analog Devices Inc.                    USD        46.79        14,152     47.27   34.25       -1.0         36.6      3.7      0.0     14.3        23.9      34.2      10.0     -0.5
ATML        Atmel Corp.                            USD         6.80         2,958      7.80    4.37      -12.8         55.6      2.7      4.5     46.8       -10.2      67.9       5.3     -0.8
AVGO        Avago Technologies Ltd.                USD        34.06         8,280     37.88   29.70      -10.1         14.7     -3.7     -4.4      1.0         8.7       NA        6.2     -6.4
BRCM        Broadcom Corp. Cl A                    USD        36.62        20,676     37.00   28.60       -1.0         28.0      6.9      7.4     19.0         7.2      31.8       9.0      4.4
CAVM        Cavium Inc.                            USD        35.74        1,803      39.52   22.30       -9.6         60.3      5.2     -4.7     14.3        45.2      66.7      12.6     -9.5
CRUS        Cirrus Logic Inc.                      USD        23.11        1,460      45.49   17.33      -49.2         33.4      6.0    -18.0    -26.2       -13.6    270.0      -21.7     -0.3
CY          Cypress Semiconductor Corp.            USD        10.83        1,562      14.20    8.70      -23.7         24.5     -5.4      6.8     13.6       -22.4    133.6       -2.0     -3.7
ENTR        Entropic Communications Inc.           USD         4.19          367       6.64    3.40      -36.9         23.2      0.7    -10.4     -6.3         5.3     -16.7     -21.7      1.8
FSL         Freescale Semiconductor Ltd            USD        16.01        4,021      16.27    7.63       -1.6        109.8      8.9      0.6     92.5        41.3      NA       43.7       6.2
IDTI        Integrated Device Technology Inc.      USD         7.75        1,104       7.85    4.60       -1.3        68.5       4.6      5.4     31.8        29.4     -39.4      3.8       1.5
INTC        Intel Corp.                            USD        24.50       119,702     27.95   19.23      -12.3        27.4      11.1    13.3      18.7       -12.8      1.3      16.8     10.3
LSI         LSI Corp.                              USD         7.03        3,753       8.10    5.59      -13.2        25.8      6.7      -3.9      1.9       -11.8      2.1       -3.4     0.7
MX          MagnaChip Semiconductor Corp.          USD        15.84          562      18.25    8.38      -13.2        89.0      -0.7     -0.6     31.0        42.3      NA        -0.3     -8.3
MRVL        Marvell Technology Group Ltd.          USD        10.93        5,554      14.00    6.98      -21.9        56.6      6.0     17.9      46.4       -19.8     -22.6     52.5      4.7
MXIM        Maxim Integrated Products Inc.         USD        32.32        9,336      33.67   23.55       -4.0        37.2      -1.0     -1.8     12.8       18.9      47.8       8.6      -2.2
MTSI        MA-Com Technology Solutions Holdings   USD        13.60          623      19.14   10.01      -28.9         35.9     -4.3    -18.1     26.5       -13.7       NA       -9.2    -15.4
QCOM        QUALCOMM Inc.                          USD        64.64       111,990     68.50   53.09       -5.6         21.8     -2.8     -1.0      4.3         4.8      45.4       4.8     -3.2
NVDA        NVIDIA Corp.                           USD        14.54         8,802     15.22   11.15       -4.5         30.4      8.8     15.1     20.4         7.8     -33.6      16.2    11.0
NXPI        NXP Semiconductors N.V.                USD        30.22         7,472     32.99   18.57       -8.4         62.7      1.9     -9.5     21.3        23.2       NA       12.8     -2.0
RFMD        RF Micro Devices Inc.                  USD         5.71         1,585      5.75    3.45       -0.6         65.5      6.8      6.6     37.6        41.4      62.0      26.6      6.6
SLAB        Silicon Laboratories Inc.              USD        41.19         1,728     47.41   32.00      -13.1         28.7     -4.1     -7.3     -0.5        18.7      13.2      -2.6     -1.6
SWKS        Skyworks Solutions Inc.                USD        23.69         4,505     31.44   19.21      -24.7         23.3      6.6     -3.0     13.0        -7.2    181.1       16.1      7.0
CODE        Spansion Inc. Cl A                     USD        13.26          795      14.54    9.42       -8.8         40.8     11.7     13.1     17.7        21.3       NA       -4.5      3.3
TXN         Texas Instruments Incorporated         USD        37.04        40,529     37.36   26.06       -0.8         42.1      1.9      8.4     24.4        18.9      22.3      18.3      3.0
TQNT        TriQuint Semiconductor Inc.            USD         6.04          971       6.10    4.30       -1.0         40.5     17.4     21.9     27.1        17.8     -10.1      23.2    17.6
XLNX        Xilinx Inc.                            USD        38.56        9,911      39.43   30.25       -2.2         27.5      2.2      0.2     14.2        14.0      43.8       5.7     -0.7
European Technology Hardware (Neutral)                                                                                                                                            Andrew Gardiner
                                                              Price       Market         52 Week      Current vs. 52 Week (%)                 Historical Price Performance (%)
Ticker      Company Name                         Currency   5/10/2013   Cap (USD M)   High     Low       High          Low       1M      3M       6M           1Y        5Y      YTD      QTD
AIXA-DE     AIXTRON SE                             EUR        11.35        1,488      13.35    8.38      -15.0         35.5       0.9    17.3     19.2       -14.1      21.4      27.8      1.5
ALU-FR      Alcatel-Lucent                         EUR         1.16        3,469       1.44    0.71      -19.1         63.8       2.0    -7.3     31.4        -6.0     -75.7      14.4     10.3
ARM-LON     ARM Holdings PLC                       GBP        10.72       22,626      10.76    4.64       -0.4        131.2      19.2    15.2     48.3       110.7    912.3       39.1     17.2
ASML-NL     ASML Holding N.V.                      EUR        59.80       32,683      60.50   35.80       -1.2         67.0      14.4     8.5     33.4        54.0    210.4       24.9     15.5
CSR-LON     CSR PLC                                GBP         5.44        1,390       5.53    1.97       -1.6        176.1       7.7    37.2     54.3       138.8      59.9      60.3     12.1
DLG-DE      Dialog Semiconductor PLC               EUR        11.23        1,022      17.69    8.44      -36.5         33.1       9.1   -10.8    -19.8       -32.9    763.4      -13.0     13.0
ERIC.B-SE   Ericsson LM Shs B                      SEK        82.05       39,971      86.40   55.90       -5.0         46.8       6.7     4.8     39.8        29.0       5.5      25.9     -0.6
GTO-FR      Gemalto N.V.                           EUR        63.43        #N/A       75.95   49.00      -16.5         29.5      -5.0    -6.7    -11.3        13.2    194.9       -6.7     -5.8
IFX-DE      Infineon Technologies AG               EUR         6.66        9,257       6.97    4.87       -4.4         36.9      11.7     3.2     26.6        -3.8      10.1       8.3      8.9
IMG-LON     Imagination Technologies Group PLC     GBP         3.06        1,266       6.45    2.91      -52.6          5.0     -30.5   -40.4    -32.9       -49.4    322.9      -21.1    -36.1
ING-PAR     Ingenico S.A.                          EUR        51.54        3,486      51.90   33.14       -0.7         55.5     13.4      7.4     33.9        38.5    137.2      19.6     12.5
LOGN-SWX    Logitech International S.A.            CHF         6.21        1,130      9.91     5.73      -37.3         8.4       -4.9    -2.2     -4.7       -27.4     -79.1      -9.8     -3.9
NOK1V-HEL   Nokia Corp.                            EUR         2.82       14,178      3.64     1.33      -22.5        112.0     12.4     -2.6     38.5        16.8     -83.9       0.5    17.8
PIC-GB      Pace PLC                               GBP         2.64        1,247      2.65     0.80       -0.4        229.8      9.6      9.1     34.6       216.1    205.1      39.3      8.9
STM-PAR     STMicroelectronics N.V.                EUR         7.20        8,142      7.24     3.64       -0.5        97.8      18.7      9.8     61.0       72.4      -13.5     31.6     19.0
TOM2-AMS    TomTom N.V.                            EUR         3.63        1,047      4.40     2.93      -17.5        23.8       7.2     -0.1     -0.9        2.1      -83.1      -4.3    18.1




16 May 2013                                                                                                                                                                                    96
Barclays | Global Technology Outlook


EQUITY PERFORMANCE TABLES
European Software & IT Services (Neutral)                                                                                                                                           Gerardus Vos
                                                          Price      Market          52 Week       Current vs. 52 Week (%)                   Historical Price Performance (%)
Ticker      Company Name                    Currency   5/10/2013   Cap (USD M)    High      Low       High          Low      1M       3M         6M           1Y        5Y      YTD      QTD
AMS-MCE     Amadeus IT Holding S.A.           EUR         23.24      13,489       23.55    14.44       -1.3         61.0      9.0     21.5       20.9        54.1       NA       22.8     12.3
AIE-LON     Anite PLC                         GBP          1.29        590         1.63     1.05      -20.9         22.6      9.1    -19.5       -3.7         6.0    153.3       -9.6      3.3
ATO-PAR     ATOS                              EUR         55.26       6,164       59.22    41.34       -6.7         33.7      6.8     -1.6        3.6        20.7      43.0       5.0      4.5
AVV-LON     Aveva Group PLC                   GBP         22.53       2,356       23.41    14.63       -3.8         54.0      6.6      1.9       12.7        41.0      74.7       3.4      0.7
CAP-PAR     Capgemini                         EUR         39.32       8,142       39.50    25.24       -0.5         55.8     14.2      8.5       24.3        33.2      -1.5      19.1     11.4
DSY-FR      Dassault Systemes S.A.            EUR         92.03      14,855       93.15    68.73       -1.2         33.9      3.4     11.0       11.6        27.5    132.6        9.1      3.0
HEXA.B-SE   Hexagon AB                        SEK        186.40      10,678      202.10 110.50         -7.8         68.7      9.9      9.4       27.3        46.9    113.7       22.6     10.9
IDR-MCE     Indra Sistemas S.A.               EUR         10.58       2,231       10.85     6.08       -2.5         74.0      7.7     13.9       21.9        36.6     -42.1       4.5     13.8
MCRO-LON    Micro Focus International PLC     GBP         6.85        1,570       7.08      4.24       -3.2         61.4      2.3      5.3       20.7        46.0    161.3       17.9      1.1
MONI-LON    Monitise PLC                      GBP         0.38         922        0.40      0.18       -5.6        107.4      9.9     14.7       13.9        16.4    254.5       14.7     6.5
SGE-LON     Sage Group PLC                    GBP         3.51        6,288       3.56      2.45       -1.6         42.9      2.7      5.3       15.1        34.1      60.3      19.3     3.5
SAP-DE      SAP AG                            EUR        63.30       98,092      65.00     43.62       -2.6         45.1      6.8     5.7        12.2        29.7      95.7       4.4     2.5
SOW-DE      Software AG                       EUR        26.61        2,986      35.45     21.80      -24.9         22.1     -3.8    -11.2      -16.9         9.7      74.3     -17.6    -11.3
SPT-GB      Spirent Communications PLC        GBP         1.39        1,375       1.72      1.06      -19.3         30.7      8.8    -18.2       -4.4       -16.1    101.8       -8.6     -5.5
RIA-FR      Groupe Steria S.C.A.              EUR        11.85         468       15.86     10.08      -25.3         17.6      5.5    -14.6        1.4       -19.0     -47.1     -16.4    13.9
TEMN-CH     Temenos Group AG                  CHF        23.95        1,745      24.20      9.96       -1.0        140.5     16.6    19.0        51.6       44.1      -26.0      45.0     1.8
WDI-DE      Wirecard AG                       EUR        20.91        3,053      22.08     13.32       -5.3         56.9      2.5    11.3        13.3       55.9      86.6      12.7      -1.7

Israel Technology (Positive)                                                                                                                                       Joseph Wolf and David Kalpan
                                                         Price       Market          52 Week       Current vs. 52 Week (%)                 Historical Price Performance (%)
Ticker      Company Name                    Currency   05/10/13    Cap (USD M)    High      Low       High         Low        1M      3M       6M           1Y        5Y      YTD       QTD
ALLT        Allot Communications Ltd.         USD        12.34         403       29.05     10.75      -57.5        14.8       5.8    -12.6    -42.5       -47.5    277.1     -30.6       3.6
DOX         Amdocs Ltd.                       USD        36.20        5,830      36.73     28.16       -1.4        28.6       2.4     -0.5     10.4        19.8     13.0       6.0       -0.6
CRNT        Ceragon Networks Ltd.             USD         4.05         148        9.44      3.46      -57.1        17.1       9.2    -12.4    -11.1       -56.4     -60.8     -8.8       -6.9
CEVA        CEVA Inc.                         USD        15.77         353       19.06     12.96      -17.3        21.7       4.6     3.9      10.2        -6.3      62.1      0.9       1.9
GLW         Corning Inc.                      USD        15.10       22,480      15.50     10.62       -2.5        42.2      14.6     19.2     36.6        14.5     -40.9     20.8       14.3
ESLT-IL     Elbit Systems Ltd.                 ILS      155.00        1,791      157.90 115.20         -1.8        34.5       -1.2     7.6     11.6        12.3     -17.5      2.9        0.8
EZCH        EZchip Semiconductor Ltd.         USD        26.03         742        41.81    21.25      -37.7        22.5      14.9      1.9    -28.0       -35.6      79.7    -21.2        8.0
MLNX        Mellanox Technologies Ltd.        USD        53.79        2,268      120.05    41.75      -55.2        28.8      -13.3    -2.6    -39.3        -9.1    212.9     -11.1       -5.0
RDWR        Radware Ltd.                      USD        15.39         688        20.42    13.38      -24.6        15.0       4.7    -14.4     -3.3       -14.2    209.8      -7.0      -18.6
ORBK        Orbotech Ltd.                     USD        10.03         437        10.99     6.43       -8.7        56.0       0.4     10.0     20.8        -0.5     -44.1     19.2        0.2
NICE        NICE-Systems Ltd. ADS             USD        36.46        2,198       38.28    29.51       -4.8        23.6        3.3    -1.5     13.2        -3.9      17.0      8.2       -1.7




16 May 2013                                                                                                                                                                                  97
Barclays | Global Technology Outlook


EQUITY PERFORMANCE TABLES
Japan Precision Instruments (Neutral)                                                                                                                            Masahiro Nakanomyo
                                                                     Price      Market      52 Week     Current vs. 52 Week (%)         Historical Price Performance (%)
Ticker      Company Name                             Currency     05/10/13    Cap (USD M)     High    Low         High       Low        1M         3M            6M          1Y       5Y    YTD     QTD
7751-TKS    Canon Inc.                                 JPY         3555.00      41,072        3840    2308        -7.4       54.0          -1.4       11.2      48.5        4.6     -33.0    8.5    -2.9
8060-TKS    Canon Marketing Japan Inc.                 JPY         1453.00       1,984        1526     887        -4.8       63.8          1.9        22.1      37.0       56.1     -24.0   22.8     0.6
7762-TKS    Citizen Holdings Co. Ltd.                  JPY          624.00       2,060         650     346        -4.0       80.3          20.5       34.8      81.2       38.0     -22.1   43.1    24.8
7735-TKS    Dainippon Screen Mfg. Co. Ltd.              JPY         536.00       1,290         686     361       -21.9       48.5          22.9       42.2      34.5       -16.8     18.7    5.7    20.8
4901-TKS    FUJIFILM Holdings Corp.                     JPY        2402.00      11,803        2525    1240        -4.9       93.7          20.8       38.6      95.8        52.5    -38.0   44.7    24.3
6674-TKS    GS Yuasa Corp.                              JPY         422.00       1,806         475     286       -11.2       47.6          13.2       37.3      50.3        23.6     35.3   28.6     4.9
8036-TKS    Hitachi High-Technologies Corp.             JPY        2565.00       3,500        2607    1644        -1.6       56.0          21.8       34.9      54.8        36.4     19.6   45.9    21.9
6856-TKS    Horiba Ltd.                                 JPY        3710.00       1,546        3765    2058        -1.5       80.3          19.8       41.1      67.0        27.9      9.1   49.5    16.0
7741-TKS    Hoya Corp.                                  JPY        2021.00       8,575        2062    1517        -2.0       33.2           3.7       13.9      31.6        13.1    -32.3   19.6     5.8
6951-TKS    Jeol Ltd.                                   JPY         479.00        365          489     152        -2.0       215.1         11.8       43.1      198.7      112.1      8.4   106.5    4.8
4902-TKS    Konica Minolta Inc.                         JPY         759.00       3,831         784     491        -3.2        54.6          1.4        5.6       43.8       15.9    -58.3    19.3   -0.8
7731-TKS    Nikon Corp.                                 JPY        2500.00      10,177        2750    1786        -9.1        40.0         17.2       25.6       43.8        5.5    -18.2     3.4    9.4
7733-TKS    Olympus Corp.                               JPY        2707.00       7,319        2758    1061        -1.8       155.1         14.1       31.7      102.0      135.4    -20.4    59.8   10.5
6645-TKS    OMRON Corp.                                 JPY        3150.00       7,021        3245    1436        -2.9       119.4         18.9       49.4       96.0       87.1     45.5    57.8   26.5
7752-TKS    Ricoh Co. Ltd.                              JPY        1153.00       8,530        1239     486        -6.9       137.2         -0.9       22.4       84.7       86.4    -34.8    32.0    8.7
6724-TKS    Seiko Epson Corp.                           JPY        1240.00       2,210        1286     431        -3.6       187.7         17.9       37.5      185.0       36.3    -50.2    80.3   27.6
6590-TKS    Shibaura Mechatronics Corp.                 JPY         305.00        153          333     112        -8.4       172.3         49.1       56.4      146.9       66.3    -47.9    75.6   47.5
7701-TKS    Shimadzu Corp.                              JPY         740.00       2,441         858     481       -13.8        53.8         20.6       44.2       72.5       18.3    -19.3    43.4   16.7
8035-TKS    Tokyo Electron Ltd.                         JPY        5490.00       9,721        5610    3155        -2.1        74.0         24.7       40.6       61.6       39.4    -19.2    40.3   27.8
7732-TKS    Topcon Corp.                                JPY        1280.00       1,179        1320     344        -3.0       272.1         40.8       52.0      182.8      113.7     27.5    75.7   38.7
6728-TKS    ULVAC Inc.                                  JPY         907.00        454          944     381        -3.9       138.1         20.6       24.6       81.0      107.5    -77.7    17.3   11.0

Asia Ex-Japan Semiconductors (Positive)                                                                                                                            Andrew Lu & SC Bae
                                                                   Price       Market       52 Week        Current vs. 52 Week (%)       Historical Price Performance (%)
Ticker     Company Name                              Currency    05/10/13    Cap (USD M)      High      Low          High        Low     1M         3M           6M           1Y      5Y    YTD     QTD
2311-TW    Advanced Semiconductor Engineering Inc      TWD         25.90         6,510         27        19          -4.1        36.4        4.9        6.3      15.4        -0.5     9.0    1.2     5.7
6147-TW    Chipbond Technology Corp.                   TWD         81.30         1,592         83        35          -2.4       135.7       19.6       34.1      58.0       106.7   122.4   39.8    18.3
2360-TW    Chroma Ate Inc.                             TWD         63.80          803          74        54         -13.2        17.7       -5.8        -5.5      3.2        -6.3     3.5   -1.4    -11.1
2458-TW    Elan Microelectronics Corp.                 TWD         77.40         1,022         80        35          -3.3       121.1       15.2       37.6      74.7        94.0    28.9   65.1     17.9
3658-TW    Hermes Microvision Inc.                     TWD        859.00         1,880        905       265          -5.1       224.2       15.8       39.4      68.8       160.4     NA    59.6     17.5
000660-KRX SK hynix Inc                                KRW       29100.00       18,262       30000     20100         -3.0        44.8        1.0       14.1      14.8        14.6    -0.3   13.0     -0.4
3189-TW    Kinsus Interconnect Technology Corp.        TWD        107.50         1,609        112        78          -3.6        38.2       19.0       13.8      23.3        19.4    22.5   18.0    16.9
2454-TW    MediaTek Inc.                               TWD        369.00        16,710        380       236          -2.9        56.7        6.8       13.5      15.3        40.3    -8.7   14.1     8.9
3697-TW    MStar Semiconductor Inc.                    TWD        257.00         4,603        269       167          -4.5        53.9        4.9       16.3       5.1        43.9     NA    18.1      7.0
8046-TW    Nan Ya Printed Circuit Board Corp.          TWD         34.00          744          56        31         -39.6        10.7        5.5        -2.7     -2.0       -34.9   -77.8   -4.5      6.4
3034-TW    Novatek Microelectronics Corp.              TWD        141.50         2,928        158        80         -10.4        76.9        6.7       22.6      28.6        64.6    24.9   22.6     10.7
6286-TW    Richtek Technology Corp.                    TWD        160.00          778         202       151         -20.8         6.0       -5.7       -12.6     -4.9       -19.4   -40.0   -8.0     -9.0
005930-KRX Samsung Electronics Co. Ltd.                KRW      1476000.00     173,840      1584000   1091000        -6.8        35.3       -2.6        -0.7      9.5        13.4   101.0   -3.0     -2.1
2325-TW    Siliconware Precision Industries Co. Ltd.   TWD         35.00         3,692         36        27          -2.5        29.6        9.1       16.9      28.4         4.7   -33.1   13.9     4.2
2330-TW    Taiwan Semiconductor Manufacturing Co TWD              114.50        99,607        116        74          -1.3        55.1       13.9        9.0      26.8        33.9    67.8   18.0    14.9
2303-TW    United Microelectronics Corp.               TWD         12.60         5,541         15        10         -14.9        26.0       18.1       15.0      24.3       -11.2   -28.6   11.5    18.0
5347-TW    Vanguard International Semiconductor C      TWD         31.90         1,683         35        12          -8.9       170.3        7.7       36.3      70.0       123.5    54.6   60.3    17.4
2455-TW    Visual Photonics Epitaxy Co. Ltd.           TWD         35.10          290          48        30         -26.5        18.6        2.6        2.5      11.1       -24.7    27.4   -1.4     3.6
3105-TW    Win Semiconductors Corp.                    TWD         35.55          902          47        28         -23.5        26.1        8.5        8.4      13.5       -19.2     NA     9.0     6.5




16 May 2013                                                                                                                                                                                                98
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EQUITY PERFORMANCE TABLES
Asia Ex-Japan LCD Displays (Positive)                                                                                                           Jamie Yeh, SC Bae, Sunwoo Kim & Sebastian Hou
                                                               Price       Market      52 Week         Current vs. 52 Week (%)      Historical Price Performance (%)
Ticker     Company Name                          Currency    05/10/13    Cap (USD M)      High    Low            High        Low    1M         3M            6M          1Y      5Y     YTD     QTD
054620-KRX Advanced Process Systems Corporation    KRW       13100.00        263         14300    6080           -8.4       115.5      14.4       66.7       61.5       -1.8   120.2     85.4    22.3
2409-TW    AU Optronics Corp.                      TWD         13.25        3,955          14        8           -8.3        61.8       1.5       18.1       16.1        2.3   -76.2      2.7     3.1
001300-KRX Cheil Industries Inc.                   KRW       93500.00       4,260       108500   82100          -13.8        13.9       2.2        4.5        8.1      -10.0    72.1     -0.6    6.2
5371-TW    Coretronic Corp.                        TWD         24.80         578           31       19          -19.7        31.2       8.2        6.0       15.0       -7.4   -38.2      5.8     7.3
8069-TAI   E Ink Holdings Inc.                     TWD         21.15         756           35       19          -39.1        12.2      -6.1        2.2        0.7      -28.5   -46.1     -5.9    -9.0
3149-TW    G-TECH Optoelectronics Corp.            TWD         66.60         585           95       62          -29.9         6.7      -2.8        -4.9     -14.0      -24.6    48.5    -13.4    -4.4
020760-KRX Iljin Display Co. Ltd.                  KRW       20150.00        485         24100   10550          -16.4        91.0     -11.9        2.3      -15.3       53.3   323.9    -10.9   -12.0
3481-TW    Innolux Corporation.                    TWD         18.60        5,696          20        8           -5.1       120.2       4.8       23.9       69.5       56.7   -76.3     19.6     1.7
034220-KRX LG Display Co. Ltd.                     KRW       29100.00       9,495        36950   19600          -21.2        48.5      -7.1        0.0      -15.8       32.9   -40.9     -5.0    -8.6
096640-KRX Melfas Inc.                             KRW       18700.00        291         29250   16600          -36.1        12.7       3.1        -2.2     -30.3      -10.8     NA     -33.1    -5.7
6176-TW    Radiant Opto-Electronics Corp.          TWD        117.00        1,780         154      104          -24.0        13.0      -2.5        6.8       -8.6       -4.7   199.0     -1.7    -0.1
056190-KRX SFA Engineering Corp.                   KRW       64900.00        974         66500   39750           -2.4        63.3       2.9       19.0       56.9       12.1    77.2    35.2     6.2
6278-TW    Taiwan Surface Mounting Technology Co   TWD         50.80         423           61       40          -16.4        26.2       3.5       14.8       11.9      -16.2    18.7    11.1     -0.3
3673-TW    TPK Holding Co. Ltd.                    TWD        586.00        6,247         642      272           -8.7       115.4     -10.4       10.3       37.1      107.4     NA      10.9    -3.9
2384-TW    Wintek Corp.                            TWD         14.85         912           19       11          -21.4        33.2      -1.0        9.3       25.6      -20.5   -41.4     -4.5    -5.4

Asia Ex-Japan IT Hardware (Neutral)                                                                                                                                Kirk Yang
                                                                Price      Market      52 Week         Current vs. 52 Week (%)      Historical Price Performance (%)
Ticker     Company Name                           Currency   05/10/13    Cap (USD M)      High     Low           High       Low     1M         3M            6M          1Y      5Y     YTD     QTD
2353-TAI   Acer Inc.                                TWD         24.10       2,252          33       23          -27.0        6.9       -1.8        -4.8       1.7      -25.3   -64.4     -5.2    -7.4
2357-TAI   ASUSTeK Computer Inc.                    TWD        346.00       8,564         382      257           -9.4       34.9        4.3        -4.8       7.6       13.2     0.1      3.8    -4.3
2392-TAI   Cheng Uei Precision Industry Co. Ltd.    TWD         60.60        997           73       52          -17.0       15.9        6.4         9.9      -7.4        6.5    -2.7     -3.7     7.1
2385-TAI   Chicony Electronics Co. Ltd.             TWD         82.40       1,765          87       51           -5.5       62.4        3.1         3.7      31.1       51.1    63.5     22.5     4.0
2324-TAI   Compal Electronics Inc.                  TWD         18.80       2,760          34       18          -43.9        7.4       -4.8        -9.2       3.9      -42.6   -46.8     -3.6   -10.1
8163-TAI   Darfon Electronics Corp.                 TWD         27.30        288           30       14           -9.6       90.9        2.3        49.4      67.6       40.1   -60.9     40.1    -8.5
2308-TW    Delta Electronics Inc.                   TWD        145.00      11,887         150       77           -3.3       88.8       11.0        35.2      39.7       55.5    62.1     37.1    17.2
861-HKG    Digital China Holdings Ltd.              HKD         10.76       1,479          15        9          -28.3       16.1        0.2        -8.4     -25.5      -25.7    97.0    -20.6     0.0
3211-TAI   Dynapack International Technology Corp   TWD        101.50        509          168       97          -39.6        4.2       -2.0        -9.5      -7.0      -36.9   -14.9    -12.7    -4.0
2448-TW    EPISTAR Corp.                            TWD         54.50       1,697          71       40          -23.6       36.3        5.8         1.5      19.5      -21.9   -42.7      3.4     2.8
2354-TW    Foxconn Technology Co. Ltd.              TWD         80.80       3,334         123       77          -34.3        4.9        1.9        -5.0     -15.3      -13.5   -30.7    -11.7    -2.2
2317-TAI   Hon Hai Precision Industry Co. Ltd.      TWD         80.50      31,614          98       72          -18.2       12.1        1.3        -4.8      -9.2        1.3   -16.1    -10.5    -3.4
2356-TAI   Inventec Corp.                           TWD         12.05       1,481          13        9           -4.0       40.1       10.8         3.8      27.9       23.0   -20.8     10.3     9.7
011070-KRX LG Innotek Co. Ltd.                      KRW       89600.00      1,662        96200    68800          -6.9       30.2       4.1         26.3      18.2       16.1     NA     11.3     17.7
992-HKG    Lenovo Group Ltd.                        HKD          6.85       8,956           9        5          -24.5       28.0       0.6        -23.2      -1.8       -7.1     7.9     -4.6   -13.1
4938-TW    Pegatron Corp.                           TWD         50.70       3,897          51       34           -0.4       50.0       16.0        28.0      40.8       18.5     NA      35.0    11.1
2382-TAI   Quanta Computer Inc.                     TWD         63.10       7,940          84       56          -24.6       11.9        2.8        -9.4     -11.9      -24.2    23.0     -9.8    -6.1
006400-KRX Samsung SDI Co. Ltd.                     KRW      126500.00      4,934       170000   120500         -25.6        5.0       1.2        -10.6     -14.8      -23.6    72.1    -16.2    -9.9
3376-TW    Shin Zu Shing Co. Ltd.                   TWD         76.60        448          117       70          -34.5        9.7       -3.9       -12.3     -17.7       -3.6   -47.7    -13.5   -13.9
6121-TAI   Simplo Technology Co. Ltd.               TWD        135.00       1,371         202      121          -33.1       11.6        2.3         0.4      -2.9      -33.1    29.7     -9.2    -3.6
751-HKG    Skyworth Digital Holdings Ltd.           HKD          5.65       1,937           7        3          -15.3       96.2       -1.3         9.7      28.4       80.4   524.1     36.8     4.2
2387-TAI   Sunrex Technology Corp.                  TWD         12.05        144           17       11          -27.4        7.6        0.4        -2.0      -3.2      -26.7   -64.9     -4.0    -6.7
2347-TAI   Synnex Technology International Corp.    TWD         50.50       2,653          74       48          -31.3        4.6       -3.5       -18.2     -11.5      -29.3   -20.8     -6.5    -7.1
903-HKG    TPV Technology Ltd.                      HKD          2.09        620            3        1          -26.4       54.8       -3.3       -18.7      23.5       23.5   -62.4     -1.9    -6.8
3231-TAI   Wistron Corp.                            TWD         29.20       2,146          41       27          -28.7        6.8       -3.9       -12.4       4.3      -28.0   -26.1     -2.7   -10.1




16 May 2013                                                                                                                                                                                         99
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EQUITY PERFORMANCE TABLES
 Asia Ex-Japan Wireless Equipment & Products (Positive)                                                                                                              Dale Gai, SC Bae
                                                                    Price       Market      52 Week        Current vs. 52 Week (%)       Historical Price Performance (%)
 Ticker     Company Name                               Currency   05/10/13    Cap (USD M)     High     Low           High       Low      1M         3M            6M          1Y      5Y        YTD     QTD
 2018-HK    AAC Technologies Holdings Inc.               HKD        40.00        6,487         41       20           -2.6       99.0         6.4        33.8      41.9       70.1   421.0        51.3     9.9
 6153-TW    Career Technology (Mfg.) Co. Ltd.            TWD        34.30         366          51       33          -32.6        2.8        -5.8        -9.1     -15.8      -19.0   128.2       -14.1   -11.5
 2474-TW    Catcher Technology Co. Ltd.                  TWD       160.00        4,043        207      123          -22.5       30.1        12.2        19.3      23.9      -13.7    68.1        11.5   20.2
 8078-TW    Compal Communications Inc.                   TWD        37.95         824          43       25          -12.2       53.0        14.9        32.7      46.6       -1.2   -23.2        25.5   28.9
 6269-TW    Flexium Interconnect Inc.                    TWD       106.00         674         136       83          -22.0       28.5        13.0        7.0       -9.8       18.9   534.5        3.9     7.4
 2038-HK    Foxconn International Holdings Ltd.          HKD         3.35        3,272          4        2          -20.2       50.9        23.6       11.4      -10.5       -3.7   -71.5        -9.3   17.6
 2498-TW    HTC Corp.                                    TWD       279.00        7,839        446      191          -37.4       46.1        7.5         3.5      24.9       -34.7   -50.1        -6.5   15.6
 3008-TW    LARGAN Precision Co. Ltd.                    TWD       845.00        3,723        899      462           -6.0       82.9        7.1         2.7      21.6       75.2    104.9        6.3     6.4
 066570-KRX LG Electronics Inc.                          KRW      83300.00      12,247       91800    55800          -9.3       49.3        -2.3        14.0       6.1       16.2   -44.2        13.0     2.3
 2301-TW    Lite-On Technology Corp.                     TWD        51.30        3,926         54       34           -5.2       52.5         0.6        21.4      43.3       43.9    49.0        33.9     6.8
 3311-TW    Silitech Technology Corp.                    TWD        53.50         325          69       42          -22.7       27.4        -0.4        -5.1      21.2      -22.7   -45.8         4.8    -4.2
 3044-TW    Tripod Technology Corp.                      TWD        69.70        1,203         92       51          -24.2       37.7         7.1        15.8      24.5      -25.4   -22.8         9.5     3.1
 3042-TW    TXC Corp.                                    TWD        45.05         454          53       39          -14.7       16.7         3.0        -7.1     -11.8        4.4    -9.7        -6.3    -0.2
 3037-TW    UniMicron Technology Corp.                   TWD        31.35        1,575         36       28          -14.0       13.8         2.7        7.0        8.2        1.5   -29.3        -1.0    -0.3
 6285-TW    Wistron NeWeb Corp.                          TWD        47.60         477          62       40          -22.6       18.9        -4.9       -11.7      12.1      -12.4    3.8         -4.4    -7.4
 3622-TW    Young Fast Optoelectronics Co. Ltd.          TWD        53.70         269          76       49          -29.6       10.3        -0.9        0.6      -13.0      -13.5   -57.1       -10.3    -7.6
 763-HK     ZTE CORP H                                   HKD        14.04        6,179         18        9          -21.6       52.1        16.4        0.0      22.1       -21.2    -1.3        6.7     4.0
 4958-TW    Zhen Ding Technology Holding Limited         TWD        73.60        1,740        103       64          -28.5       14.5        4.7         5.6       -5.8      -16.3    NA          3.1     4.2

 Indices
                                                                      Price      Market          52 Week       Current vs. 52 Week (%)                       Historical Price Performance (%)
 Ticker      Company Name                          Currency       5/10/2013   Cap (USD M)    High        Low      High         Low          1M        3M         6M          1Y         5Y      YTD     QTD
 SP50        S&P 500                                 USD            1633.70    14,576,210    1636       1267       -0.1        29.0         2.8        7.5       18.9       20.7       16.4     14.6     4.1
 SP701       S&P 500 / Information Technology -SEC   USD             501.83     2,607,826     507        437       -1.1        15.0         4.2        4.9       12.3        7.7       29.8      7.9     3.5
 SP704-SPX   S&P Small Cap 600 / Information Techno USD             302.06       100,609     302         236       0.0         28.2         4.0       3.2        22.1       17.6      38.0      11.7     1.6
 UKX-FTX     FTSE 100                                GBP            6624.98     2,589,715    6638       5230       -0.2        26.7         3.9        4.3       14.6       18.9        6.8     12.4     4.5
 E1TEC-DJX   Dow Jones Euro / Technology             USD             242.15                   244        159       -0.7        52.3         7.7        2.9       27.0       35.0      -10.2     12.6     6.7
 NIK-NKX     Japan Nikkei 225                        JPY           14607.54                 14849       8239       -1.6        77.3         9.6       31.4       70.7       65.1        5.9     42.2    10.7
 HSI-HKX     Hang Seng Index                         HKD           23321.22     934,302     23945      18056       -2.6        29.2         4.1       -1.0        8.5       15.2      -10.0      1.5     3.1
 P1TEC-DJX   Dow Jones Asia Pacific / Technology     USD             217.64                   221        172       -1.7        26.6         4.1        3.7       13.0        9.4       -1.5      4.5     3.2


Source: Company reports, FactSet, Barclays Research.




16 May 2013                                                                                                                                                                                                100
 Barclays | Global Technology Outlook


 BARCLAYS GLOBAL TECHNOLOGY TEAM AND OTHER CONTRIBUTORS
U.S. Technology
Ben Reitzes
Global Sector Coordinator
U.S. IT Hardware & Data
Networking
+1 212 526 9517
benjamin.reitzes@barclays.com
Blayne Curtis                      Anthony DiClemente                Darrin Peller                        Raimo Lenschow, CFA
U.S. Semiconductors                U.S. Internet                     U.S. IT Consulting & Computer        U.S. Software
+1 617 342 4101                    +1 212 526 1341                   Services                             +1 212 526 2712
blayne.curtis@barclays.com         anthony.diclemente@barclays.com   +1 212 526 7144                      raimo.lenschow@barclays.com
                                                                     darrin.peller@barclays.com

European Technology
Andrew Gardiner, CFA               Youssef Essaegh                   Joseph Wolf                          Gerardus Vos
European Technology Hardware       European Technology Hardware      Israel Technology                    European Software & IT Services
+44 20 313 47217                                                     +972 3 623 8746                      +44 20 313 46690
                                   +44 203 134 7250
andrew.gardiner@barclays.com                                         joseph.wolf@barclays.com             gerardus.vos@barclays.com
                                   youssef.essaegh@barclays.com
David Kaplan
Israel Technology
+972 3 623 8747
david.kaplan@barclays.com

Asia ex-Japan Technology
SC Bae                             Wayne Dong                        Dale Gai                             Sunwoo Kim
Asia ex-Japan Semiconductors;      Asia ex-Japan IT Hardware         Asia ex-Japan Wireless Equipment &   Asia ex-Japan LCD Displays
LCD Displays; Wireless Equipment   +886 2 6638 4696                  Products                             +822 2126 2934
& Products                         wayne.dong@barclays.com           +886 2 6638 4697                     sunwoo.kim@barclays.com
+82 2126 2932                                                        dale.gai@barclays.com
SC.Bae@barclays.com


Kirk Yang                          Andrew Lu                         Jamie Yeh                            Jerry Wu
Asia ex-Japan Data Networking &    Asia ex-Japan Semiconductors      Asia ex-Japan LCD Displays           Asia ex-Japan IT Hardware
Wireline Equipment; IT Hardware;   +886 2 6638 4698                  +852 290 34670                       +886 2 6638 4685
Wireless Equipment & Products      andrew.lu@barclays.com            jamie.yeh@barclays.com               jerry.wu@barclays.com
+852 290 34635
kirk.yang@barclays.com
Sebastian Hou
Asia ex-Japan LCD Displays
+886 2 6638 4687
sebastian.hou@barclays.com

Japan Technology
Masahiro Nakanomyo
Japan Precision Instruments
+81 3 4530 2962
masahiro.nakanomyo@barclays.com

Other Contributors
Danish Agboatwala                  Parth Shah
Fixed Income Research              Fixed Income Research
+1 212 412 2573                    +1 212 412 2079
danish.agboatwala@barclays.com     parth.shah@barclays.com




 16 May 2013                                                                                                                           101
Barclays | Global Technology Outlook


ANALYST(S) CERTIFICATION(S)
In relation to our respective sections we, Gerardus Vos, Andrew M. Gardiner, CFA, Joseph Wolf, David Kaplan, Blayne Curtis, Anthony DiClemente,
CFA, Darrin D. Peller, Ben A. Reitzes, Kirk Yang, SC Bae, Dale Gai, Andrew Lu, Jamie Yeh, Sebastian Hou, Sunwoo Kim, Masahiro Nakanomyo,
Danish Agboatwala and Parth Shah, hereby certify (1) that the views expressed in this research report accurately reflect our personal views about
any or all of the subject securities or issuers referred to in this research report and (2) no part of our compensation was, is or will be directly or
indirectly related to the specific recommendations or views expressed in this research report.

FIXED INCOME: IMPORTANT DISCLOSURES
Barclays Research is a part of the Corporate and Investment Banking division of Barclays Bank PLC and its affiliates (collectively and each
individually, "Barclays"). For current important disclosures regarding companies that are the subject of this research report, please send a written
request to: Barclays Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barclays.com
or call 212-526-1072.
Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result,
investors should be aware that Barclays may have a conflict of interest that could affect the objectivity of this report. Barclays Capital Inc. and/or
one of its affiliates regularly trades, generally deals as principal and generally provides liquidity (as market maker or otherwise) in the debt
securities that are the subject of this research report (and related derivatives thereof). Barclays trading desks may have either a long and / or
short position in such securities, other financial instruments and / or derivatives, which may pose a conflict with the interests of investing
customers. Where permitted and subject to appropriate information barrier restrictions, Barclays fixed income research analysts regularly interact
with its trading desk personnel regarding current market conditions and prices. Barclays fixed income research analysts receive compensation
based on various factors including, but not limited to, the quality of their work, the overall performance of the firm (including the profitability of
the investment banking department), the profitability and revenues of the Fixed Income, Currencies and Commodities Division and the potential
interest of the firm’s investing clients in research with respect to the asset class covered by the analyst. To the extent that any historical pricing
information was obtained from Barclays trading desks, the firm makes no representation that it is accurate or complete. All levels, prices and
spreads are historical and do not represent current market levels, prices or spreads, some or all of which may have changed since the publication
of this document. Barclays produces various types of research including, but not limited to, fundamental analysis, equity-linked analysis,
quantitative analysis, and trade ideas. Recommendations contained in one type of research may differ from recommendations contained in other
types of research, whether as a result of differing time horizons, methodologies, or otherwise. Unless otherwise indicated, Barclays trade ideas are
provided as of the date of this report and are subject to change without notice due to changes in prices. In order to access Barclays Statement
regarding            Research            Dissemination          Policies          and          Procedures,           please          refer          to
https://live.barcap.com/publiccp/RSR/nyfipubs/disclaimer/disclaimer-research-dissemination.html.
Other Material Conflict:
The Corporate and Investment Banking division of Barclays is providing investment banking services to Silver Lake Partners LP in the acquisition
of Dell Inc (DELL). The rating, price targets and estimates (as applicable) on Dell Inc issued by the Firm's Research department have been
temporarily suspended due to Barclays' role in this potential transaction.
The Corporate and Investment Banking division of Barclays is providing investment banking services to Bain Capital, Golden Gate Capital, GIC
Special Investments, and Insight Venture Partners in relation to their proposed acquisition of BMC Software (BMC).
The Corporate and Investment Banking Division of Barclays is providing investment banking services to Cisco in the potential divestiture of
Cisco’s Home Networking Business Unit (including Linksys) to Belkin.
Explanation of the Barclays Research High Grade Sector Weighting System
Overweight: Expected six-month excess return of the sector exceeds the six-month expected excess return of the Barclays U.S. Credit Index, the
Pan-European Credit Index, or the EM Asia USD High Grade Credit Index, as applicable.
Market Weight: Expected six-month excess return of the sector is in line with the six-month expected excess return of the Barclays U.S. Credit
Index, the Pan-European Credit Index, or the EM Asia USD High Grade Credit Index, as applicable.
Underweight: Expected six-month excess return of the sector is below the six-month expected excess return of the Barclays U.S. Credit Index,
the Pan-European Credit Index, or the EM Asia USD High Grade Credit Index, as applicable.
Explanation of the Barclays Research High Grade Credit Rating System
The High Grade Credit rating system is based on the analyst's view of the expected excess returns over a six-month period of the issuer's index-
eligible corporate debt securities relative to the Barclays U.S. Credit Index, the Pan-European Credit Index or the EM Asia USD High Grade Credit
Index, as applicable.
Overweight: The analyst expects the issuer's index-eligible corporate bonds to provide positive excess returns relative to the Barclays U.S. Credit
Index, the Pan-European Credit Index, or the EM Asia USD High Grade Credit Index over the next six months.
Market Weight: The analyst expects the issuer's index-eligible corporate bonds to provide excess returns in line with the Barclays U.S. Credit
Index, the Pan-European Credit Index, or the EM Asia USD High Grade Credit Index over the next six months.
Underweight: The analyst expects the issuer's index-eligible corporate bonds to provide negative excess returns relative to the Barclays U.S.
Credit Index, the Pan-European Credit Index, or the EM Asia USD High Grade Credit Index over the next six months.




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FIXED INCOME: IMPORTANT DISCLOSURES CONTINUED
Rating Suspended (RS): The rating has been suspended temporarily due to market events that make coverage impracticable or to comply with
applicable regulations and/or firm policies in certain circumstances including where the Corporate and Investment Banking division of Barclays is
acting in an advisory capacity in a merger or strategic transaction involving the company.
Coverage Suspended (CS): Coverage of this issuer has been temporarily suspended.
Not Rated (NR): An issuer which has not been assigned a formal rating.
For Australia issuers, the ratings are relative to the Barclays U.S. Credit Index or Pan-European Credit Index, as applicable.

EQUITY RESEARCH: IMPORTANT DISCLOSURES
When an equity research report covers six or more subject companies, Barclays generally does not include specific conflict of interest disclosures
regarding the subject companies and instead provides the reader with instructions about how to view or obtain the applicable conflict of interest
disclosures. In order to comply with the requirements of the Korea Financial Investment Association, specific disclosures about subject
companies with securities listed on the Korea Exchange are included herein. To access important disclosures, including, where relevant, price
targets, regarding other companies that are the subject of this research report, please send a written request to: Barclays Research Compliance,
745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barclays.com or call 1-212-526-1072.
The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total
revenues, a portion of which is generated by investment banking activities.
Research analysts employed outside the US by affiliates of Barclays Capital Inc. are not registered/qualified as research analysts with FINRA.
These analysts may not be associated persons of the member firm and therefore may not be subject to NASD Rule 2711 and incorporated NYSE
Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst’s account.
Analysts regularly conduct site visits to view the material operations of covered companies, but Barclays policy prohibits them from accepting
payment or reimbursement by any covered company of their travel expenses for such visits.
In order to access Barclays Statement regarding Research Dissemination Policies                              and     Procedures,   please   refer    to
https://live.barcap.com/publiccp/RSR/nyfipubs/disclaimer/disclaimer-research-dissemination.html.
The Corporate and Investment Banking division of Barclays produces a variety of research products including, but not limited to, fundamental
analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ
from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or
otherwise.
Materially Mentioned Stocks (Ticker, Date, Price)
AAC Technologies Holdings (2018.HK, 10-May-2013, HKD 40.00), Overweight/Positive, J
Amdocs Ltd. (DOX, 10-May-2013, USD 36.20), Overweight/Positive, J
Apple, Inc. (AAPL, 10-May-2013, USD 452.97), Overweight/Neutral, A/C/D/J/K/L/M
ARM Holdings PLC (ARM.L, 10-May-2013, GBP 10.72), Overweight/Neutral, C/D/J/L
Asustek Computer Inc. (2357.TW, 10-May-2013, TWD 346.00), Overweight/Neutral, J
Avago Technologies Ltd. (AVGO, 10-May-2013, USD 34.06), Overweight/Neutral, C/D/E/J/K/L/M
Canon Inc. (7751.T, 10-May-2013, JPY 3555), Overweight/Neutral, C/F/J/O
Capgemini (CAPP.PA, 10-May-2013, EUR 39.32), Overweight/Neutral, C/D/F/J/K/L/M
Catcher Technology Co., Ltd. (2474.TW, 10-May-2013, TWD 160.00), Overweight/Positive, C/J
CEVA, Inc. (CEVA, 10-May-2013, USD 15.77), Overweight/Positive, D/J/L
Cisco Systems, Inc. (CSCO, 10-May-2013, USD 21.10), Overweight/Neutral, C/D/J/K/L/M
Other Material Conflicts: The Corporate and Investment Banking Division of Barclays is providing investment banking services to Cisco in the
potential divestiture of Cisco's Home Networking Business Unit (including Linksys) to Belkin.
Corning Inc. (GLW, 10-May-2013, USD 15.10), Overweight/Positive, A/C/D/J/K/L/M/O
Elan Microelectronics (2458.TW, 10-May-2013, TWD 77.40), Overweight/Positive, C/J
Google Inc. (GOOG, 10-May-2013, USD 880.23), Overweight/Positive, C/D/J/K/L/M
Kinsus Interconnect Technology (3189.TW, 10-May-2013, TWD 107.50), Overweight/Positive, C/J
Lender Processing Services, Inc. (LPS, 10-May-2013, USD 28.48), Overweight/Neutral, C/F/J/O
Lenovo Group Ltd. (0992.HK, 10-May-2013, HKD 6.85), Overweight/Neutral, D/J/K/L/M
LG Display (034220.KS, 10-May-2013, KRW 29100.00), Overweight/Positive, C/J/K/M
MediaTek Inc. (2454.TW, 10-May-2013, TWD 369.00), Overweight/Positive, D/J/L
Novatek Microelectronics Corp. (3034.TW, 10-May-2013, TWD 141.50), Overweight/Positive, J
NXP Semiconductors NV (NXPI, 10-May-2013, USD 30.22), Overweight/Neutral, A/C/D/E/J/K/L/M


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PTC Inc. (PMTC, 10-May-2013, USD 24.24), Overweight/Positive, J
Samsung SDI (006400.KS, 10-May-2013, KRW 126500.00), Overweight/Neutral, C/J/K/M
TOPCON CORP. (7732.T, 10-May-2013, JPY 1280), Overweight/Neutral, F/J
Total System Services Inc. (TSS, 10-May-2013, USD 24.24), Overweight/Neutral, C/J/K/M
TPK Holding Co., Ltd. (3673.TW, 10-May-2013, TWD 586.00), Overweight/Positive, J/K/M
Visa Inc. (V, 10-May-2013, USD 178.75), Overweight/Neutral, J/K/M
VMware Inc. (VMW, 10-May-2013, USD 76.90), Overweight/Positive, C/D/J/K/L/M/O
Yahoo! Inc. (YHOO, 10-May-2013, USD 26.83), Overweight/Positive, C/J/K/M


Other Material Conflicts
The Corporate and Investment Banking division of Barclays is providing investment banking services to Silver Lake Partners LP in the acquisition
of Dell Inc (DELL). The rating, price targets and estimates (as applicable) on Dell Inc issued by the Firm's Research department have been
temporarily suspended due to Barclays' role in this potential transaction.
The Corporate and Investment Banking division of Barclays is providing investment banking services to Qualcomm Asia Pacific (QCOM) in
relation to the potential sale of a 49% interest of its India BWA entities to Bharti Airtel Ltd (BRTI.NS).
The Corporate and Investment Banking Division of Barclays is providing investment banking services to Cisco in the potential divestiture of Cisco's
Home Networking Business Unit (including Linksys) to Belkin.


Disclosure Legend:
A: Barclays Bank PLC and/or an affiliate has been lead manager or co-lead manager of a publicly disclosed offer of securities of the issuer in the
previous 12 months.
B: An employee of Barclays Bank PLC and/or an affiliate is a director of this issuer.
C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by this issuer or one of its affiliates.
D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from this issuer in the past 12 months.
E: Barclays Bank PLC and/or an affiliate expects to receive or intends to seek compensation for investment banking services from this issuer
within the next 3 months.
F: Barclays Bank PLC and/or an affiliate beneficially owned 1% or more of a class of equity securities of the issuer as of the end of the month prior
to the research report's issuance.
G: One of the analysts on the coverage team (or a member of his or her household) owns shares of the common stock of this issuer.
H: This issuer beneficially owns 5% or more of any class of common equity securities of Barclays Bank PLC.
I: Barclays Bank PLC and/or an affiliate has a significant financial interest in the securities of this issuer.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of this issuer.
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from this issuer within the past 12 months.
L: This issuer is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.
M: This issuer is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC
and/or an affiliate.
N: This issuer is, or during the past 12 months has been, a non-investment banking client (non-securities related services) of Barclays Bank PLC
and/or an affiliate.
O: Barclays Capital Inc., through Barclays Market Makers, is a Designated Market Maker in this issuer's stock, which is listed on the New York
Stock Exchange. At any given time, its associated Designated Market Maker may have "long" or "short" inventory position in the stock; and its
associated Designated Market Maker may be on the opposite side of orders executed on the floor of the New York Stock Exchange in the stock.
P: A partner, director or officer of Barclays Capital Canada Inc. has, during the preceding 12 months, provided services to the subject company for
remuneration, other than normal course investment advisory or trade execution services.
Q: The Corporate and Investment Banking division of Barclays Bank PLC, is a Corporate Broker to this issuer.
R: Barclays Capital Canada Inc. and/or an affiliate has received compensation for investment banking services from this issuer in the past 12
months.
S: Barclays Capital Canada Inc. is a market-maker in an equity or equity related security issued by this issuer.




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EQUITY RESEARCH: IMPORTANT DISCLOSURES CONTINUED
Guide to the Barclays Fundamental Equity Research Rating System:
Our coverage analysts use a relative rating system in which they rate stocks as Overweight, Equal Weight or Underweight (see definitions below)
relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry (the "industry coverage
universe").
In addition to the stock rating, we provide industry views which rate the outlook for the industry coverage universe as Positive, Neutral or
Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors
should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone.
Stock Rating
Overweight - The stock is expected to outperform the unweighted expected total return of the industry coverage universe over a 12-month
investment horizon.
Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the industry coverage universe over a 12-
month investment horizon.
Underweight - The stock is expected to underperform the unweighted expected total return of the industry coverage universe over a 12-month
investment horizon.
Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or to
comply with applicable regulations and/or firm policies in certain circumstances including where the Corporate and Investment Banking Division
of Barclays is acting in an advisory capacity in a merger or strategic transaction involving the company.
Industry View
Positive - industry coverage universe fundamentals/valuations are improving.
Neutral - industry coverage universe fundamentals/valuations are steady, neither improving nor deteriorating.
Negative - industry coverage universe fundamentals/valuations are deteriorating.
Below is the list of companies that constitute the "industry coverage universe":
Asia ex-Japan IT Hardware
Acer Inc. (2353.TW)                               Asustek Computer Inc. (2357.TW)                  Cheng Uei Precision Industry (2392.TW)
Chicony Electronics (2385.TW)                     Compal Electronics Inc. (2324.TW)                Darfon Electronics (8163.TW)
Delta Electronics Inc. (2308.TW)                  Digital China Holdings Ltd. (0861.HK)            Dynapack Int'l Technology Corp.
                                                                                                   (3211.TWO)
Epistar Corporation (2448.TW)                     Foxconn Technology Co., Ltd. (2354.TW)           Hon Hai Precision Industry Co., Ltd.
                                                                                                   (2317.TW)
Inventec Inc. (2356.TW)                           Lenovo Group Ltd. (0992.HK)                      LG Innotek (011070.KS)
Pegatron Corp. (4938.TW)                          Quanta Computer Inc. (2382.TW)                   Samsung Electro-Mechanics (009150.KS)
Samsung SDI (006400.KS)                           Shin Zu Shing Co., Ltd. (3376.TW)                Simplo Technology Co., Ltd. (6121.TWO)
Skyworth Digital Holdings Ltd. (0751.HK)          Sunrex Technology (2387.TW)                      Synnex Technology International (2347.TW)
TPV Technology Ltd. (0903.HK)                     Wistron Corporation (3231.TW)
Asia ex-Japan LCD Displays
Advanced Process Systems (054620.KQ)              AU Optronics Corp. (2409.TW)                     Cheil Industries (001300.KS)
Coretronic Corporation (5371.TWO)                 E Ink Holdings Inc. (8069.TWO)                   G-TECH Optoelectronics Corp. (3149.TW)
Iljin Display (020760.KS)                         Innolux Corp. (3481.TW)                          LG Display (034220.KS)
Melfas (096640.KS)                                Radiant Opto-Electronics Corp. (6176.TW)         SFA Engineering (056190.KQ)
Taiwan Surface Mounting Technology                TPK Holding Co., Ltd. (3673.TW)                  Wintek Corporation (2384.TW)
(6278.TW)
Asia ex-Japan Semiconductors
Advanced Semiconductor Engineering                Chipbond Technology (6147.TWO)                   Chroma ATE Inc. (2360.TW)
(2311.TW)
Elan Microelectronics (2458.TW)                   Hermes Microvision Inc. (3658.TWO)               Kinsus Interconnect Technology (3189.TW)
MediaTek Inc. (2454.TW)                           MStar Semiconductor, Inc. (3697.TW)              Nan Ya Printed Circuit Board (8046.TW)
Novatek Microelectronics Corp. (3034.TW)          RichTek Technology (6286.TW)                     Samsung Electronics (005930.KS)
Siliconware Precision Industries (2325.TW)        SK Hynix (000660.KS)                             TSMC (2330.TW)
United Microelectronics Corp. (2303.TW)           Vanguard International Semiconductor             Visual Photonics Epitaxy Co., Ltd. (2455.TW)
                                                  (5347.TWO)


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Win Semiconductors Corp. (3105.TWO)
Asia ex-Japan Wireless Equipment & Products
AAC Technologies Holdings (2018.HK)           Career Technology (6153.TW)             Catcher Technology Co., Ltd. (2474.TW)
Compal Communications Inc. (8078.TW)          Flexium Interconnect (6269.TW)          Foxconn International Holdings (2038.HK)
HTC Corp. (2498.TW)                           Largan Precision Co., Ltd. (3008.TW)    LG Electronics (066570.KS)
Lite-on Technology Corp. (2301.TW)            Silitech Technology Corp. (3311.TW)     Tripod Technology Corp. (3044.TW)
TXC Corp. (3042.TW)                           Unimicron Technology Corp. (3037.TW)    Wistron NeWeb Corp. (6285.TW)
Young Fast Optoelectronics (3622.TW)          Zhen Ding Technology (4958.TW)          ZTE Corporation (0763.HK)
European Software & IT Services
Amadeus (AMA.MC)                              Anite (AIE.L)                           AtoS (ATOS.PA)
Aveva (AVV.L)                                 Capgemini (CAPP.PA)                     Dassault Systèmes (DAST.PA)
Hexagon AB (HEXAb.ST)                         Indra (IDR.MC)                          Micro Focus (MCRO.L)
Monitise (MONI.L)                             Sage Group Plc (SGE.L)                  SAP AG (SAPG.DE)
Software AG (SOWG.DE)                         Spirent (SPT.L)                         Steria (TERI.PA)
Temenos (TEMN.S)                              Wirecard (WDIG.DE)
European Technology Hardware
Aixtron AG (AIXGn.DE)                         Alcatel-Lucent (ALUA.PA)                ARM Holdings PLC (ARM.L)
ASML Holding NV (ASML.AS)                     CSR plc (CSR.L)                         Dialog Semiconductor (DLGS.DE)
Ericsson (ERICb.ST)                           Gemalto (GTO.AS)                        Imagination Technologies (IMG.L)
Infineon Technologies AG (IFXGn.DE)           Ingenico (INGC.PA)                      Logitech International SA (LOGN.S)
Nokia (NOK1V.HE)                              Pace plc (PIC.L)                        STMicroelectronics NV (STM.PA)
TomTom NV (TOM2.AS)
Israel Technology
Allot Communications, Ltd. (ALLT)             Amdocs Ltd. (DOX)                       Ceragon Networks Ltd. (CRNT)
CEVA, Inc. (CEVA)                             Corning Inc. (GLW)                      Elbit Systems Ltd. (ESLT)
EZchip Semiconductor (EZCH)                   Mellanox Technologies (MLNX)            Nice Systems (NICE)
Orbotech (ORBK)                               Radware Ltd. (RDWR)
Japan Precision Instruments
Canon Inc. (7751.T)                           Canon Marketing Japan Inc. (8060.T)     Citizen Holdings Co., Ltd. (7762.T)
Dainippon Screen Mfg. Co. Ltd. (7735.T)       FUJIFILM Holdings Corp. (4901.T)        GS Yuasa Corporation (6674.T)
Hitachi High-Technologies Corp. (8036.T)      HORIBA Ltd. (6856.T)                    Hoya Corp. (7741.T)
JEOL Ltd. (6951.T)                            Konica Minolta Inc. (4902.T)            NIKON Corp. (7731.T)
Olympus Corp. (7733.T)                        OMRON Corp. (6645.OS)                   Ricoh Co., Ltd. (7752.T)
Seiko Epson Corp. (6724.T)                    Shibaura Mechatronics Corp. (6590.T)    Shimadzu Corp. (7701.T)
Tokyo Electron Ltd. (8035.T)                  TOPCON CORP. (7732.T)                   ULVAC Inc. (6728.T)
U.S. Data Networking
Aruba Networks Inc. (ARUN)                    Cisco Systems, Inc. (CSCO)              F5 Networks, Inc. (FFIV)
Juniper Networks (JNPR)
U.S. Internet
Amazon.com, Inc. (AMZN)                       AOL Inc. (AOL)                          eBay, Inc. (EBAY)
Expedia, Inc. (EXPE)                          Facebook (FB)                           Google Inc. (GOOG)
Netflix Inc. (NFLX)                           Pandora Media Inc. (P)                  Priceline.com Inc. (PCLN)
TripAdvisor (TRIP)                            Yahoo! Inc. (YHOO)
U.S. IT Consulting & Computer Services
Acacia Research Corp. (ACTG)                  Accenture Plc (ACN)                     Alliance Data Systems Corp. (ADS)
Camelot Information Systems (CIS)             Cognizant Technology Solutions (CTSH)   Computer Sciences Corp. (CSC)


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EQUITY RESEARCH: IMPORTANT DISCLOSURES CONTINUED
CoreLogic, Inc. (CLGX)                       EPAM Systems Inc (EPAM)                                      Fiserv Inc. (FISV)
FleetCor Technologies, Inc. (FLT)            Global Payments Inc. (GPN)                                   InterDigital, Inc. (IDCC)
Lender Processing Services, Inc. (LPS)       MasterCard Inc. (MA)                                         RPX Corporation (RPXC)
Total System Services Inc. (TSS)             VeriFone Systems Inc. (PAY)                                  Visa Inc. (V)
Western Union Co. (WU)                       Xoom Corp. (XOOM)
U.S. IT Hardware
Apple, Inc. (AAPL)                           Dell Inc. (DELL)                                             EMC Corp. (EMC)
Fusion-io Inc. (FIO)                         Hewlett-Packard (HPQ)                                        IBM Corp. (IBM)
Ingram Micro Inc. (IM)                       Lexmark International (LXK)                                  NetApp, Inc. (NTAP)
Seagate Technology (STX)                     Tech Data Corp. (TECD)                                       Western Digital Corp. (WDC)
Xerox Co. (XRX)
U.S. Semiconductors
Altera Corp. (ALTR)                          Analog Devices (ADI)                                         Atmel Corp. (ATML)
Avago Technologies Ltd. (AVGO)               Broadcom Corp. (BRCM)                                        Cavium Inc. (CAVM)
Cirrus Logic Inc. (CRUS)                     Cypress Semiconductor Corp. (CY)                             Entropic Communications Inc. (ENTR)
Freescale Semiconductor Holdings (FSL)       Integrated Device Technology, Inc. (IDTI)                    Intel Corp. (INTC)
LSI Corp. (LSI)                              M/A-COM Technology Solutions Holdings, Inc. (MTSI)           MagnaChip Semiconductor (MX)
Marvell Technology Group, Ltd. (MRVL)        Maxim Integrated Products (MXIM)                             NVIDIA Corp. (NVDA)
NXP Semiconductors NV (NXPI)                 QUALCOMM, Inc. (QCOM)                                        RF Micro Devices (RFMD)
Silicon Laboratories, Inc. (SLAB)            Skyworks Solutions, Inc. (SWKS)                              Spansion Inc. (CODE)
Texas Instruments, Inc. (TXN)                Triquint Semiconductor (TQNT)                                Xilinx, Inc. (XLNX)
U.S. Software
Autodesk Inc. (ADSK)                         Citrix Systems (CTXS)                                        Cornerstone OnDemand Inc. (CSOD)
DealerTrack Holdings (TRAK)                  Ellie Mae Inc. (ELLI)                                        Fleetmatics Group, PLC (FLTX)
Informatica Corp. (INFA)                     Intuit Inc. (INTU)                                           LogMeIn, Inc. (LOGM)
Microsoft Corp. (MSFT)                       NetSuite Inc. (N)                                            Oracle Corp. (ORCL)
Palo Alto Networks (PANW)                    PTC Inc. (PMTC)                                              Qlik Tech (QLIK)
Red Hat Inc. (RHT)                           Salesforce.com Inc. (CRM)                                    SAP AG (SAP)
ServiceNow, Inc. (NOW)                       Splunk Inc. (SPLK)                                           Symantec Corp. (SYMC)
Tangoe Inc (TNGO)                            Teradata Corp. (TDC)                                         TIBCO Software (TIBX)
VMware Inc. (VMW)                            Workday Inc. (WDAY)


Distribution of Ratings:
Barclays Equity Research has 2363 companies under coverage.
43% have been assigned an Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 52% of
companies with this rating are investment banking clients of the Firm.
41% have been assigned an Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 48% of
companies with this rating are investment banking clients of the Firm.
14% have been assigned an Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 41% of
companies with this rating are investment banking clients of the Firm.
Guide to the Barclays Research Price Target:
Each analyst has a single price target on the stocks that they cover. The price target represents that analyst's expectation of where the stock will
trade in the next 12 months. Upside/downside scenarios, where provided, represent potential upside/potential downside to each analyst's price
target over the same 12-month period.




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Barclays offices involved in the production of equity research:
London
Barclays Bank PLC (Barclays, London)
New York
Barclays Capital Inc. (BCI, New York)
Tokyo
Barclays Securities Japan Limited (BSJL, Tokyo)
São Paulo
Banco Barclays S.A. (BBSA, São Paulo)
Hong Kong
Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong)
Toronto
Barclays Capital Canada Inc. (BCCI, Toronto)
Johannesburg
Absa Capital, a division of Absa Bank Limited (Absa Capital, Johannesburg)
Mexico City
Barclays Bank Mexico, S.A. (BBMX, Mexico City)
Taiwan
Barclays Capital Securities Taiwan Limited (BCSTW, Taiwan)
Seoul
Barclays Capital Securities Limited (BCSL, Seoul)
Mumbai
Barclays Securities (India) Private Limited (BSIPL, Mumbai)
Singapore
Barclays Bank PLC, Singapore branch (Barclays Bank, Singapore)




16 May 2013                                                                  108
Barclays | Global Technology Outlook


EQUITY RESEARCH: IMPORTANT DISCLOSURES CONTINUED
LG Display (034220 KS / 034220.KS)                                                      Stock Rating                                     Industry View
KRW 29100.00 (10-May-2013)                                                              OVERWEIGHT                                           POSITIVE
Rating and Price Target Chart - KRW (as of 10-May-2013)                                 Currency=KRW

                                                                                        Date             Closing Price       Rating       Price Target
   46,000
                                                                                        16-Nov-2012         34250.00                         45000.00
   44,000
                                                                                        18-Oct-2012         29200.00                         42000.00
   42,000

   40,000
                                                                                        28-Nov-2011         24450.00      Overweight         36000.00
   38,000

   36,000

   34,000

   32,000

   30,000

   28,000

   26,000

   24,000

   22,000

   20,000

   18,000

   16,000
            Jul- 2010     Jan- 2011     Jul- 2011   Jan- 2012   Jul- 2012   Jan- 2013

                        Closing Price        Target Price       Rating Change


Link to Barclays Live for interactive charting

C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by LG Display or one of its affiliates.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of LG Display.
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from LG Display within the past 12 months.
M: LG Display is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC
and/or an affiliate.
Valuation Methodology: We apply 1 standard deviation to five-year average P/B of 1.2x to set our target price of KRW45,000, given our
expectation of an upcycle in specialty panels (accounting for 25% of revenue) combined with a recovery cycle in commodity panels (accounting
for 75% of revenue). Valuation remains attractive at 1.0x 2013E P/B and 7.3x 2013E P/E.
Risks which May Impede the Achievement of the Barclays Research Price Target: The key risks that could keep our price target from being
achieved, in our view, include the following: 1) weaker-than-expected TV demand in China after the market reaches a saturation point as well as
in Europe due to concerns about the macro economy in that region and 2) execution risks in manufacturing specialty panels, especially for the
New iPad and iPhone 5.




16 May 2013                                                                                                                                         109
Barclays | Global Technology Outlook


EQUITY RESEARCH: IMPORTANT DISCLOSURES CONTINUED
Samsung SDI (006400 KS / 006400.KS)                                                     Stock Rating                                   Industry View
KRW 126500.00 (10-May-2013)                                                             OVERWEIGHT                                         NEUTRAL
Rating and Price Target Chart - KRW (as of 10-May-2013)                                 Currency=KRW

      0.24M                                                                             Date            Closing Price      Rating       Price Target
                                                                                        29-Apr-2013          N/A                          190000.00
      0.22M
                                                                                        30-Jan-2013      141500.00                        200000.00
                                                                                        30-Apr-2012          N/A                          220000.00
      0.20M
                                                                                        10-Feb-2012      151500.00       Overweight       180000.00
      0.18M



      0.16M



      0.14M



      0.12M



      0.10M



   80,000.00
               Jul- 2010   Jan- 2011   Jul- 2011   Jan- 2012    Jul- 2012   Jan- 2013

                      Closing Price       Target Price         Rating Change


Link to Barclays Live for interactive charting

C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Samsung SDI or one of its affiliates.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Samsung SDI.
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Samsung SDI within the past 12
months.
M: Samsung SDI is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC
and/or an affiliate.
Valuation Methodology: Our 12-month price target of KRW190,000 for Samsung SDI is set using a P/B-based SOTP valuation, which is
equivalent to 15x 2013E EPS and 1.2x 2013E BPS. We apply a SOTP valuation to reflect different profitablilty of each division. In valuing SDI's
investment assets, we reflect a 15% discount to the listed companies and a 30% discount to the unlisted companies.
Risks which May Impede the Achievement of the Barclays Research Price Target: The key downside risks that could prevent our 12-month
price target from being achieved in our view, include the following: 1) continued strength in Korean won; 2) aggressive capacity expansion by
battery competitors that could create pressure on product ASP; 3) an unexpected technological hurdle for the production of larger batteries or
OLED panels; and 4) slower-than-expected growth of the tabletization of PCs.




16 May 2013                                                                                                                                      110
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Description: Entering a New Era of Cash Returns for Tech