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					                                          Americas Morning Summary
                                          November 4, 2010



The Goldman Sachs Group, Inc.
                                          Focus Items
This document contains comments
related to the following stocks:           Americas: Healthcare: Biotechnology: Initiate as Cautious on big biotech; Sell
                                                                                                                                                                   1
                                           AMGN & BIIB; ALXN CL Buy
AGCO Corp. (AGCO)                          Americas: Options Research: AMGN: Continue to buy Jan-11 options ahead of
                                                                                                                                                                   2
Agrium Inc. (AGU)                          key catalysts
Akamai Technologies, Inc. (AKAM)
Alexion Pharmaceuticals, Inc.              Americas: Multi-Industry: Day 1 of GS Industrials conference reinforced our
                                                                                                                                                                   3
(ALXN)                                     constructive view
Amdocs Limited (DOX)                       Global: Agriculture: Commodities in Crosshairs                                                                          4
Amgen Inc. (AMGN)
Avis Budget Group, Inc. (CAR)              QUALCOMM, Inc. (QCOM): Reiterate Conviction Buy as smartphone growth fuels
Banco Santander Brasil                                                                                                                                             5
                                           EPS upside
(SANB11.SA)
Banco Santander Brasil (ADR)               EOG Resources Inc. (EOG): Off the CL, but buying opportunity for the M-T and L-
                                                                                                                                                                   6
(BSBR)                                     T focused
Bancolombia (CIB)
Becton Dickinson & Co. (BDX)               Jones Lang LaSalle Inc. (JLL) Buy: Upgrade to Buy following pull back on 3Q
                                                                                                                                                                   7
BGC Partners, Inc. (BGCP)                  costs; See 11% upside
Biogen Idec, Inc. (BIIB)
Boise Inc. (BZ)
BR Malls (BRML3.SA)
                                          Key Data Changes
Canadian Pacific Railway Ltd.             Investment List Additions
(CP.TO)
                                                                                                                       Investment List Additions
Celgene Corp. (CELG)                       Company                                            Ticker
Cemex, S.A.B. de C.V. (ADS) (CX)                                                                                           Americas Buy List
                                           Alexion Pharmaceuticals, Inc.                      ALXN
CenturyLink Inc. (CTL)                                                                                                Americas Conviction Buy List
CF Industries Holdings, Inc. (CF)
                                           Amgen Inc.                                      AMGN                             Americas Sell List
Charles River Laboratories (CRL)
Cielo (CIEL3.SA)                           Biogen Idec, Inc.                                  BIIB                          Americas Sell List
Con-way Inc. (CNW)                         Jones Lang LaSalle Inc.                             JLL                         Americas Buy List
Covance Inc. (CVD)
Devon Energy Corp. (DVN)                  Investment List Removals
Domtar Corp. (UFS)
DreamWorks Animation SKG, Inc.             Company                                         Ticker                     Investment List Removals
(DWA)                                      EOG Resources Inc.                                 EOG                     Americas Conviction Buy List
EOG Resources Inc. (EOG)
ExlService Holdings, Inc. (EXLS)          Initiations
FedEx Corp. (FDX)                                                                      Rating/
                                           Company                         Ticker                      Price Target    Current Year       Next Year   Fiscal y/e
FLIR Systems, Inc. (FLIR)                                                           Coverage view
Garmin Ltd. (GRMN)                         Amgen Inc.                      AMGN         S/C              $50.00            $5.13            $5.05       Dec
Gilead Sciences Inc. (GILD)
Graco Inc. (GGG)                           Biogen Idec, Inc.               BIIB         S/C              $50.00            $4.85            $5.33       Dec
Heartland Payment Systems, Inc.            Celgene Corp.                   CELG         N/C              $60.00            $2.81            $3.30       Dec
(HPY)
                                           Gilead Sciences Inc.            GILD         N/C              $38.00            $3.68            $3.98       Dec
Hexcel Corp. (HXL)
Honeywell International Inc. (HON)
                                          Rating and price target changes
For further product information,
contact:

New York Investment Research
(212) 902-1000
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Global Investment Research
Hubei Yihua Chemical Industry                                                         Rating/
(000422.SZ)                                                                          Coverage                    Price Target                                       Estimates
                                                                                       view
Illinois Tool Works (ITW)
                                                                                                                                                    Current            Next      Fiscal
Ingersoll-Rand PLC (IR)              Company                            Ticker      New      Old           New           Old          % chg
                                                                                                                                                     Year              Year       y/e
Intrepid Potash, Inc. (IPI)
                                     Alexion Pharmaceuticals, Inc.      ALXN        B/C      CS        $81.00             --            --             $1.74           $2.18     Dec
Jones Lang LaSalle Inc. (JLL)
KAR Auction Services, Inc. (KAR)     Amdocs Limited                     DOX         B/A      unch     ↓ $32.00         $35.00         (8.6%)           $2.11           $2.22     Sep
Limelight Networks, Inc. (LLNW)      Amgen Inc.                        AMGN         S/C       --       $50.00             --            --             $5.13           $5.05     Dec
Lumber Liquidators Holdings, Inc.
(LL)                                 Banco Santander Brasil          SANB11.SA      N/A      unch ↑ R$28.40 R$28.30                    0.4%         R$1.90            R$2.51     Dec
Minerva S.A. (BEEF3.SA)              Banco Santander Brasil
                                                                        BSBR        N/A      unch     ↑ $15.60         $15.50          0.6%            $1.08           $1.40     Dec
Molson Coors Brewing Co. (TAP)       (ADR)
Monsanto Co. (MON)                   BGC Partners, Inc.                 BGCP        N/N      unch     ↑ $7.25           $6.50         11.5%            $0.65           $0.73     Dec
Motricity, Inc. (MOTR)
                                     Biogen Idec, Inc.                   BIIB       S/C       --       $50.00             --            --             $4.85           $5.33     Dec
The News Corp. (A) (NWS__A)
The News Corp. (B) (NWS)             Boise Inc.                          BZ         N/N      unch     ↑ $8.50           $7.50         13.3%            $0.92           $1.15     Dec
Norfolk Southern Corporation (NSC)   Celgene Corp.                      CELG        N/C       --       $60.00             --            --             $2.81           $3.30     Dec
OfficeMax Inc. (OMX)
ON Semiconductor Corp. (ONNN)        CenturyLink Inc.                    CTL        B/N      unch     ↑ $44.00         $42.00          4.8%            $3.44           $3.39     Dec
Par Pharmaceutical Cos., Inc.        Con-way Inc.                       CNW         N/N      unch     ↑ $34.00         $31.00          9.7%            $0.90           $2.09     Dec
(PRX)
                                     Covance Inc.                       CVD         N/N      unch     ↑ $46.00         $44.00          4.5%            $2.12           $3.04     Dec
Parker Hannifin Corp. (PH)
Pentair, Inc. (PNR)                  Devon Energy Corp.                 DVN         B/N      unch     ↑ $82.00         $80.00          2.5%            $6.40           $6.65     Dec
PulteGroup, Inc. (PHM)               Domtar Corp.                        UFS        B/N      unch     ↑ $93.00         $73.00         27.4%           $11.85          $10.50     Dec
QUALCOMM, Inc. (QCOM)
Quanta Services, Inc. (PWR)          EOG Resources Inc.                 EOG         B/N      unch    ↓ $110.00 $129.00 (14.7%)                         $1.50           $6.09     Dec
Qwest Communications Intl. (Q)       Garmin Ltd.                       GRMN         N/N      unch     ↑ $30.00         $29.00          3.4%            $2.47           $2.40     Dec
Rockwell Collins Corp. (COL)
                                     Gilead Sciences Inc.               GILD        N/C       --       $38.00             --            --             $3.68           $3.98     Dec
Roper Industries, Inc. (ROP)
Sinofert Holdings (0297.HK)          Heartland Payment Systems,
                                                                        HPY         N/N      unch     ↓ $13.00         $15.00         (13.3%)          $0.67           $0.81     Dec
SolarWinds, Inc. (SWI)               Inc.
Solera Holdings, Inc. (SLH)          Jones Lang LaSalle Inc.             JLL        ↑ B/N    N/N       $88.00            unch           --             $3.36           $4.80     Dec
Soriana (SORIANA.MX)                 Limelight Networks, Inc.           LLNW        N/A      unch     ↑ $5.50           $5.00         10.0%         ($0.13)           ($0.15)    Dec
Spectra Energy Corp. (SE)
SPX Corporation (SPW)                Molson Coors Brewing Co.            TAP        N/A      unch     ↑ $51.00         $48.00          6.3%            $3.59           $3.85     Dec
Syngenta (SYNN.VX)                   Par Pharmaceutical Cos., Inc.      PRX         N/N      unch     ↑ $34.00         $30.00         13.3%            $3.06           $3.25     Dec
Time Warner Inc. (TWX)
                                     PulteGroup, Inc.                   PHM         N/N      unch     ↓ $8.00           $9.00         (11.1%)       ($0.11)            $0.03     Dec
Tyson Foods, Inc. (TSN)
United Technologies Corp. (UTX)      QUALCOMM, Inc.                    QCOM         B/N      unch     ↑ $58.00         $52.00         11.5%            $2.03           $2.45     Sep
Universal American Corp. (UAM)       Quanta Services, Inc.              PWR         N/N      unch     ↓ $19.00         $21.00         (9.5%)           $0.73           $0.97     Dec
Uralkali (URKAq.L)
Vilmorin & Cie (VILM.PA)             Qwest Communications Intl.            Q        B/N      unch     ↑ $7.25           $7.00          3.6%            $0.39           $0.42     Dec
Wal-Mart de Mexico                   Solera Holdings, Inc.               SLH        N/N      unch     ↑ $51.00         $46.00         10.9%            $1.73           $1.96      Jun
(WALMEXV.MX)
                                     Soriana                         SORIANA.MX     S/N      unch    ↓ P$35.80 P$35.90                (0.3%)        P$1.76            P$1.97     Dec
Wal-Mart de Mexico (WMMVY)
WebMD Health Corp. (WBMD)            SPX Corporation                    SPW         N/A      unch     ↑ $74.00         $69.00          7.2%            $3.62           $4.90     Dec
WMS Industries, Inc. (WMS)           Time Warner Inc.                   TWX         N/A      unch     ↓ $37.00         $39.00         (5.1%)           $2.31           $2.63     Dec
                                     Universal American Corp.           UAM         S/A      unch     ↑ $14.00         $13.00          7.7%            $2.15           $1.80     Dec
                                     Wal-Mart de Mexico              WALMEXV.MX     N/N      unch    ↑ P$34.80 P$34.10                 2.1%         P$1.12            P$1.33     Dec
                                     Wal-Mart de Mexico                WMMVY        N/N      unch     ↑ $27.20         $26.60          2.3%       P$11.19             P$13.30    Dec
                                     WebMD Health Corp.                WBMD         N/N      unch     ↑ $58.00         $55.00          5.5%            $1.58           $1.89     Dec
                                     WMS Industries, Inc.               WMS         B/C      unch     ↑ $46.00         $45.00          2.2%            $2.10           $2.50      Jun

                                     Estimate changes
                                                                                   Rating/                 Current Year                                Next Year                 Fiscal
                                                                                  Coverage                                                                                        y/e
                                     Company                         Ticker         view           New            Old          % chg          New          Old          % chg
                                     Agrium Inc.                     AGU            NR         ↓ $4.64           $4.78         (3.0%)        ↓ $6.44      $6.55         (1.7%)    Dec
                                     Alexion Pharmaceuticals,
                                                                     ALXN           B/C            $1.74          --             --           $2.18            --         --      Dec
                                     Inc.
                                     Amdocs Limited                  DOX            B/A        ↑ $2.11           $2.09         1.1%          ↓ $2.22      $2.31         (3.9%)    Sep
                                     Amgen Inc.                      AMGN           S/C            $5.13          --             --           $5.05            --         --      Dec
Banco Santander Brasil     SANB11.SA    N/A     ↓ R$1.90    R$1.92    (1.2%)    ↓ R$2.51    R$2.52    (0.3%)    Dec
Banco Santander Brasil
                             BSBR       N/A      ↓ $1.08    $1.09     (1.2%)     $1.40       unch       --      Dec
(ADR)
BGC Partners, Inc.           BGCP       N/N      ↑ $0.65    $0.62      4.8%     ↑ $0.73     $0.66     11.4%     Dec
Biogen Idec, Inc.             BIIB      S/C       $4.85       --        --       $5.33        --        --      Dec
Boise Inc.                     BZ       N/N      ↑ $0.92    $0.80     15.0%     ↑ $1.15     $1.05      9.4%     Dec
Celgene Corp.                CELG       N/C       $2.81       --        --       $3.30        --        --      Dec
Cemex, S.A.B. de C.V.
                              CX        N/A     ↓ ($0.86)   ($0.79)   (8.4%)    ↓ ($0.26)   ($0.22)   (17.4%)   Dec
(ADS)
CenturyLink Inc.              CTL       B/N      ↓ $3.44    $3.46     (0.7%)    ↓ $3.39     $3.43     (1.4%)    Dec
Con-way Inc.                  CNW       N/N      ↑ $0.90    $0.86      4.3%     ↑ $2.09     $1.97      6.0%     Dec
Covance Inc.                  CVD       N/N      ↓ $2.12    $2.20     (3.6%)    ↑ $3.04     $2.80      8.6%     Dec
Devon Energy Corp.            DVN       B/N      ↓ $6.40    $6.51     (1.8%)    ↓ $6.65     $6.78     (2.0%)    Dec
Domtar Corp.                  UFS       B/N     ↑ $11.85    $9.65     22.8%     ↑ $10.50    $7.85     33.7%     Dec
EOG Resources Inc.            EOG       B/N      ↓ $1.50    $1.75     (14.7%)   ↓ $6.09     $7.56     (19.4%)   Dec
Garmin Ltd.                  GRMN       N/N      ↑ $2.47    $2.40      3.3%     ↑ $2.40     $2.36      1.8%     Dec
Gilead Sciences Inc.          GILD      N/C       $3.68       --        --       $3.98        --        --      Dec
Heartland Payment
                              HPY       N/N      ↓ $0.67    $0.82     (18.8%)   ↓ $0.81     $0.96     (16.0%)   Dec
Systems, Inc.
Molson Coors Brewing
                              TAP       N/A      ↑ $3.59    $3.48      3.0%     ↑ $3.85     $3.69      4.4%     Dec
Co.
The News Corp. (A)          NWS__A      B/A      ↑ $1.14    $1.12      2.0%     ↑ $1.30     $1.29      0.9%     Jun
The News Corp. (B)            NWS       B/A      ↑ $1.14    $1.12      2.0%     ↑ $1.30     $1.29      0.9%     Jun
OfficeMax Inc.                OMX       B/N       $0.82      unch       --      ↑ $0.95     $0.90      5.4%     Dec
ON Semiconductor Corp.       ONNN       B/A      ↓ $0.90    $0.95     (6.0%)    ↓ $1.00     $1.10     (9.6%)    Dec
Par Pharmaceutical Cos.,
                              PRX       N/N      ↑ $3.06    $2.47     23.9%     ↑ $3.25     $2.58     25.9%     Dec
Inc.
PulteGroup, Inc.              PHM       N/N     ↓ ($0.11)   ($0.09)   (27.6%)    $0.03       unch       --      Dec
QUALCOMM, Inc.               QCOM       B/N      ↑ $2.03    $2.00      1.6%     ↑ $2.45     $2.42      1.3%     Sep
Quanta Services, Inc.         PWR       N/N      ↓ $0.73    $0.83     (11.9%)   ↓ $0.97     $1.05     (7.5%)    Dec
Qwest Communications
                               Q        B/N      ↑ $0.39    $0.37      4.9%     ↑ $0.42     $0.38      8.6%     Dec
Intl.
Solera Holdings, Inc.         SLH       N/N      ↑ $1.73    $1.55     11.6%     ↑ $1.96     $1.85      5.6%     Jun
Soriana                    SORIANA.MX   S/N     ↓ P$1.76    P$1.88    (6.4%)    ↓ P$1.97    P$2.07    (4.8%)    Dec
Time Warner Inc.              TWX       N/A      ↑ $2.31    $2.26      2.2%     ↑ $2.63     $2.62      0.6%     Dec
Universal American Corp.      UAM       S/A      ↑ $2.15    $1.89     13.8%     ↑ $1.80     $1.66      8.4%     Dec
Wal-Mart de Mexico         WALMEXV.MX   N/N     ↓ P$1.12    P$1.15    (2.4%)    ↓ P$1.33    P$1.36    (2.2%)    Dec
Wal-Mart de Mexico           WMMVY      N/N     ↓ P$11.19 P$11.46     (2.4%) ↓ P$13.30 P$13.59        (2.2%)    Dec
WebMD Health Corp.           WBMD       N/N      ↑ $1.58    $1.52      4.0%     ↑ $1.89     $1.83      3.6%     Dec


Other Headlines
Basic Materials
Intrepid Potash, Inc. (IPI): 3Q2010 beats; upbeat outlook but some competitive challenges                             8
Boise Inc. (BZ): Delivers strong 3Q2010 results; FCF yield is still compelling; Neutral                               9
Agrium Inc. (AGU): Optimistic outlook despite the 3Q2010 headline miss                                            10
Domtar Corp. (UFS): Raising estimates post 3Q results; top value idea in sector; Buy                              11

Consumer Cyclicals
PulteGroup, Inc. (PHM): 3Q10 results uninspiring but reflected in shares; Maintain Neutral                        12
The News Corp. (B) (NWS): Cable nets grow at Discovery pace off bigger-than-Discovery base                        13
KAR Auction Services, Inc. (KAR): First Take: 3Q beats on credit business; vehicle volumes soft   14
Avis Budget Group, Inc. (CAR): First Take: 3Q results in-line with October 7 pre-announcement     15
Lumber Liquidators Holdings, Inc. (LL): First Take: SAP issue hurts 3Q, but underlying trends
                                                                                                  16
also softer
Time Warner Inc. (TWX): Good cost control; weak HBO subs and US ad growth                         17
WMS Industries, Inc. (WMS): Maintaining EPS forecasts but raising price target                    18
OfficeMax Inc. (OMX): Management meeting details margin drivers; hike estimates; Buy              19
Mexico: Retail: More of the same in 3Q10, with slow sales and higher expenses                     20
Americas: Automobiles: October SAAR of 12.3mn shows continued momentum in retail                  21
DreamWorks Animation SKG, Inc. (DWA): "Mega" opening: Tracking to $50 - $55 mn, in-line with
                                                                                                  22
consensus

Consumer Staples
Molson Coors Brewing Co. (TAP): Profit outlook healthy; waiting for sustained volume
                                                                                                  23
improvement

Energy
Devon Energy Corp. (DVN): Collection of liquids plays becoming material; Buy                      24

Financial Services
Bancolombia (CIB): First Take: 3Q2010 above GSe on lower provisions                               25
BR Malls (BRML3.SA): First Take: 3Q2010 strong and in line with our high expectations             26
Cielo (CIEL3.SA): First take: 3Q2010 above GS as prepayment offset higher expenses                27
Banco Santander Brasil (SANB11.SA): Fundamentals improve, but Neutral on relative risk            28
BGC Partners, Inc. (BGCP): Hiring and product positioning drives industry outperformance          29

Healthcare
Par Pharmaceutical Cos., Inc. (PRX): 3Q2010 upside on solid revenues and gross margin             30
Becton Dickinson & Co. (BDX): FY2011 guidance highlights dependence on financial leverage         31
Charles River Laboratories (CRL): First Take: Continued preclinical weakness brings more cost
                                                                                                  32
cutting
Covance Inc. (CVD): Significant cost initiatives but still challenged fundamentals; Neutral       33
Universal American Corp. (UAM): Solid 3Q. Raise 2010-12 EPS but maintain Sell on MA risks         34

Industrials
Americas: Aerospace & Defense: A&D takeaways from Day 1 of the 2010 GS Industrials
                                                                                                  35
Conference
Quanta Services, Inc. (PWR): In-line but low-quality 3Q10 EPS and weak outlook; stay Neutral      36
Cemex, S.A.B. de C.V. (ADS) (CX): Lower US cement demand; still Neutral on CX after 3Q10          37
SPX Corporation (SPW): Solid 3Q, but lackluster 4Q guidance; remain Neutral                       38

Technology
Motricity, Inc. (MOTR): 10-Q shows mix shift in top clients and contribution from new client      39
WebMD Health Corp. (WBMD): 4Q2010 guidance implies strong ad growth despite tough comp            40
Americas: Technology: Software: CDNs ready to ride wave of web video (AKAM, LLNW)                 41
Garmin Ltd. (GRMN): Challenging fundamentals though valuation keeps us Neutral                    42
ExlService Holdings, Inc. (EXLS): First Take: 3Q tops, 2010 revenue and margin outlook raised     43
ON Semiconductor Corp. (ONNN): Near-term revenue headwinds; long-term earnings power still
                                                                                                  44
solid
Amdocs Limited (DOX): New CEO weighs in and resets margins, LT prospects intact; Buy               45
SolarWinds, Inc. (SWI): Street surprised to learn SolarWinds story same as it ever was             46
Solera Holdings, Inc. (SLH): Strong start into FY11, momentum strengthening; raising estimates     47
Heartland Payment Systems, Inc. (HPY): Weak margins still the story, though we expect CY11
                                                                                                   48
improvement

Telecom Services
CenturyLink Inc. (CTL): Conservative guidance, attractive yield support further upside             49
Qwest Communications Intl. (Q): Further revenue moderation sets stage for 4Q EBITDA beat           50

Transportation
Con-way Inc. (CNW): Near-term positive, longer term guarded, maintain Neutral                      51
Americas: Transportation: Transportation highlights from GS Industrials Conference                 52

Utilities
Spectra Energy Corp. (SE) Buy: Best combination of growth & returns at lower risk; reiterate CL-
                                                                                                   53
Buy

Reports Published
Americas Morning Summary                                                                                                        November 4, 2010




Focus Items

Americas: Healthcare: Biotechnology: Initiate as Cautious on big biotech; Sell AMGN & BIIB; ALXN CL                                           1
Buy

                                 Sapna Srivastava (New York): sapna.srivastava@gs.com, (212) 357-7528
                                 Goldman Sachs & Co.
                                 Hema Srinivasan (New York): hema.srinivasan@gs.com, (212) 902-6761
                                 Goldman Sachs & Co.

                                 Initiate with a Cautious coverage view: We still see downside
                                 Unlike the Street, we expect continued downward revisions to revenue, the key valuation driver for large-cap
                                 biotech. Consensus underestimates the risks of: (1) increasing competition and cost containment on core
                                 franchise sales; (2) inflated values of key pipeline products, which are or will be high-priced drugs in
                                 saturated markets, and (3) overreliance on high pricing in a cost-conscious environment. We forecast 2010-
                                 2013 industry revenue growth of 3% vs. consensus of 6%. We initiate with a Sell on AMGN and BIIB, as
                                 valuations do not capture their exposure to these risks.
                                 No easy fix: We expect multi-year underperformance
                                 Current capital allocation (largely buybacks) has been ineffective. Bolder action is needed: more forward-
                                 looking M&A and efficient R&D investment, because innovation is the only solution for sustainable value
                                 creation. Given Biotech’s structural challenges and weak pipelines, we expect it will take three to five years
                                 for sustainable innovation to occur. We believe this reinvention phase will be marked by stock
                                 underperformance, as already seen with pharma and software. During this period, if cash must be returned,
                                 we advocate (special) dividends, especially for AMGN and GILD.
                                 Our best ideas: Sell large caps AMGN and BIIB, Buy mid cap ALXN
                                 Amgen (Sell): Our 12-month price target of $50 implies 13% downside. We have a negative stance on the
                                 potential of its key growth driver, denosumab (not just Phase III metastases prevention trial). We believe its
                                 modest benefit will not offset the premium pricing in the competitive markets of osteoporosis and cancer. We
                                 also expect negative Phase III met prevention data in 4Q to shift sentiment and trigger downward revisions.
                                 Our peak densoumab sales in 2014 are $1.9 bn vs. consensus of $2.7 bn.
                                 Biogen (Sell): Our 12-month price target of $50 implies 21% downside, as we believe oral competition will be
                                 disruptive to the core multiple sclerosis (MS) franchise. Our peak sales for the MS franchise in 2014 are $2.6
                                 bn vs. $3.5 bn for the Street. Given our sales outlook, we believe the current premium on the stock is
                                 misplaced.
                                 Alexion (CL Buy): Our 12-month price target of $81 implies 17% upside. Soliris is one of the best biologic
                                 assets to own, with high growth and long terminal value, making the company an attractive M&A candidate.
                                 Gilead and Celgene (Neutral): We see current valuations as appropriate.



Americas: Options Research: AMGN: Continue to buy Jan-11 options ahead of key catalysts                                                       2

                                 Maria Grant, CFA (New York): maria.grant@gs.com, (212) 855-0070
                                 Goldman Sachs & Co.
                                 John Marshall (New York): john.marshall@gs.com, (212) 902-6848
                                 Goldman Sachs & Co.

                                 Sell-rated on AMGN: denosumab likely to disappoint
                                 Goldman Sachs Biotechnology analyst, Sapna Srivastava, initiated coverage of Amgen (AMGN) with a Sell
                                 rating and a $50 12-month price target, implying 13% downside. Her investment view is driven by her out-of-
                                 consensus negative stance on AMGN’s key growth driver, denosumab, and a faster erosion of the core
                                 business than what is implied in consensus estimates. Her sales estimates for denosumab in 2014E are $1.9
                                 bn vs. $2.7 bn for the Street; her total sales estimates are $14.8 bn vs. $16.7 bn for the Street.
                                 Important catalysts ahead for AMGN should drive volatility
                                 November 18 Pdufa date for denosumab in skeletal related events (SRE): Like the Street, our analyst
                                 expects approval, which could be a positive headline; however, she believes consensus estimates for the
                                 market size of denosumab will need to fall.
                                 4Q2010: Phase III data for Prolia in prevention of bone metastases. Likely the most important upcoming




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                        November 4, 2010



                                 event for AMGN. Our analyst’s bias is for this trial to disappoint; however, it is difficult to handicap given
                                 limited data. A positive surprise would move the stock meaningfully; a failure likely has a negative impact and
                                 could be a catalyst for the Street to revise denosumab numbers down broadly (although this indication is not
                                 in Street numbers).
                                 January options attractive given catalysts; buy $57.50 straddles
                                 We’d buy January $57.50 straddles for $6.50 or 11% to position for volatility in AMGN. We see a strong
                                 likelihood of profiting on the straddles given that AMGN has moved more than 11% in a similar time frame
                                 roughly a third of the time over the past decade, and there are key catalysts upcoming. 3-month implied
                                 volatility (30%) is up in recent weeks but is well below recent highs. For long investors looking to hedge, we
                                 suggest buying the Jan-11 $55 puts for $2.19 (3.8%).
                                 Risks
                                 Option buyers risk loss of their premium paid. Timing is also a risk with these types of catalysts as
                                 approvals/data could be delayed.



Americas: Multi-Industry: Day 1 of GS Industrials conference reinforced our constructive view                                                   3

                                 Terry Darling (New York): terry.darling@gs.com, (212) 357-0379
                                 Goldman Sachs & Co.
                                 Adam Samuelson (New York): adam.samuelson@gs.com, (212) 902-6764
                                 Goldman Sachs & Co.
                                 Eddie Szeto, CFA (New York): eddie.szeto@gs.com, (212) 357-3320
                                 Goldman Sachs & Co.
                                 Tim Rothery, CFA (London): tim.rothery@gs.com, +44(20)7774-6987
                                 Goldman Sachs International
                                 Ankit Rastogi, CFA (Bangalore): ankit.rastogi@gs.com, (212) 934-6798
                                 Goldman Sachs India SPL

                                 Presentations reinforced potential for continued estimate revisions
                                 Day 1 of the GS Industrials Conference featured presentations from PH, ROP, HON, UTX, IR, PNR and GGG
                                 that reinforced our confidence in upside potential to our 2011 EPS estimates, which are 4% above
                                 consensus.
                                 (1) More positive tone on 2011 organic revenue growth. While managements did not provide formal 2011
                                 guidance, commentary on end market expectations and company-specific growth initiatives on emerging
                                 markets and new technologies pointed to potential for 2011 organic revenue growth to be in the upper single
                                 digits, above the typical 5-7% through-cycle levels most companies target, as well as assumption of 6%
                                 growth across the sector. Commentary from HON, ROP and ITW in particular was most positive. For HON,
                                 rising backlogs in later-cycle process / refining markets, new platform wins at Turbo, commercial aerospace
                                 and energy efficiency, as well as emerging markets penetration suggest 2011 growth, could be at the high-
                                 end of the company’s long-term +6-8% growth target vs. our estimate of +5.5%. For ROP, stronger organic in
                                 Medical and RF from new technologies and (in 2012) recent acquisitions suggest upside to our 2011/12
                                 estimates of +8%/+5.5%. For ITW, recovery in later-cycle welding, food equipment, and test and
                                 measurement and share gains in auto could result in organic growth +6-8% in 2011 vs. GS +4%.
                                 (2) Balance sheet optionality still a source of upside. ROP, PH, and ITW were all optimistic on the M&A
                                 pipeline into 2011, with ROP and PH pointing to larger deals that could also drive EPS upside in 2012. UTX
                                 was more positive on buy-back, with upside to its $2bn target for 2010. IR also looks poised to raise its
                                 dividend and resume buy-back in 2011.

                                 (3) October was in line with plan – no ISM-like order acceleration. PH and ITW indicated they did not see an
                                 acceleration in orders in October as suggested by the recent ISM report, but many were optimistic about a
                                 renewal in the US R&D tax credit in December, which could broadly drive upside to 4Q guidance and
                                 consensus.
                                 Preview of Day 2: focus on 3M, DHR, ETN
                                 We expect Day 2 to reinforce the upbeat tone from Day 1, with DHR (Buy), GE (Buy), MMM (Buy), CBE
                                 (Neutral) and ETN (Neutral) presenting.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                           November 4, 2010




Global: Agriculture: Commodities in Crosshairs                                                                                                    4

                                 Robert Koort, CFA (Houston): robert.koort@gs.com, (713) 654-8480
                                 Goldman Sachs & Co.
                                 Damien Courvalin (New York): damien.courvalin@gs.com, (212) 902-3307
                                 Goldman Sachs & Co.
                                 Allison Nathan (New York): allison.nathan@gs.com, (212) 357-7504
                                 Goldman Sachs & Co.
                                 Lindsay Drucker Mann, CFA (New York): lindsay.mann@gs.com, (212) 357-4993
                                 Goldman Sachs & Co.
                                 Jerry Revich, CFA (New York): jerry.revich@gs.com, (212) 902-4116
                                 Goldman Sachs & Co.
                                 Vasily Nikolaev (Moscow): vasily.nikolaev@gs.com, +7(495)645-4011
                                 OOO Goldman Sachs Bank
                                 Ruth Rodgers, CFA (London): ruth.rodgers@gs.com, +44(20)7051-1781
                                 Goldman Sachs International
                                 Gustavo Wigman (Sao Paulo): gustavo.wigman@gs.com, +55(11)3371-0839
                                 Goldman Sachs Brasil Bco Múlt S.A.
                                 Jessie Pinglun Lai (Beijing): jessie.p.lai@ghsl.cn, +86(10)6627-3461
                                 Beijing Gao Hua Securities Company Limited
                                 Alex Stewart (London): alex.stewart@gs.com, +44(20)7774-1115
                                 Goldman Sachs International
                                 Richard Logan, CFA (London): richard.logan@gs.com, +44(20)7552-1801
                                 Goldman Sachs International
                                 Karan Khemani (London): karan.khemani@gs.com, +44(20)7774-1153
                                 Goldman Sachs International
                                 Claudio Lensing (Sao Paulo): claudio.lensing@gs.com, +55(11)3372-0101
                                 Goldman Sachs Brasil Bco Múlt S.A.
                                 Temilade Olatunde (London): temilade.olatunde@gs.com, +44(20)7552-3139
                                 Goldman Sachs International

                                 Global opportunities in Agriculture stocks
                                 In this report we identify our best stock ideas in agriculture across key sectors and regions. With agricultural
                                 globalization in full force, investors with a global view can gain an edge in identifying opportunities over those
                                 with a purely regional scope. This advantage is pronounced in the current environment of volatility seen both
                                 in the broader economy and specifically in ag. We highlight attractive opportunities in the global fertilizer, crop
                                 chemicals and seed, equipment, and protein sectors, all influenced by the unique fundamental backdrop in
                                 today’s ag market.
                                 Tightened balances dominate the outlook
                                 Consecutive years of negative weather shocks coupled with persistent demand growth from biofuels and
                                 emerging markets have driven tighter balances and upward price action across key global crops. We expect
                                 further strengthening in corn along with some reversal in soybeans and wheat in coming months, with our
                                 price forecasts suggesting another year of robust farmer returns by historic standards is in store.
                                 Bias for sectors leveraged to farmer income
                                 We are bullish on sectors positioned to benefit from farmer reinvestment, particularly those focused on
                                 delivering yield improvement to planted acreage. We highlight global Fertilizer names CF (CF, CL-Buy),
                                 Uralkali (URKAq.L, Buy), Incitec Pivot (IPL.AX, Buy), Sinofert (0297.HK, Buy), and Hubei Yihua (000422.SZ,
                                 CL-Buy). We also see attractive opportunities in Seed with Monsanto (MON, Buy) and Vilmoran (VILM.PA,
                                 Buy) as well as in Crop Chemicals with Syngenta (SYNN.VX, CL-Buy). We see selective opportunities in
                                 sectors driven by acreage expansion with Agco (AGCO, Buy) our best idea in equipment.
                                 Grain costs alter the playing field in Protein
                                 Higher crop prices will challenge North American Protein companies because of the significance of corn and
                                 soybeans in animal raising costs. We see particular risk for Tyson (TSN, CL-Sell) given our outlook for
                                 chicken oversupply in 2011. Brazilian beef is grass fed, so higher grain costs enhance its competitive position
                                 in the global trade. We see Minerva (BEEF3.SA, Buy) as a key beneficiary.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  November 4, 2010




QUALCOMM, Inc. (QCOM): Reiterate Conviction Buy as smartphone growth fuels EPS upside                                                                   5

QCOM, $45.69                                Simona Jankowski, CFA (San Francisco): simona.jankowski@gs.com, (415) 249-7437
Market cap                  $75,023 mn
                                            Goldman Sachs & Co.
                                            Thomas D. Lee (New York): thomas.d.lee@gs.com, (212) 902-2066
Target price                       $58.00
                                            Goldman Sachs & Co.
Fiscal y/e Sep            2010E    2011E    Amanda O'Brien (San Francisco): amanda.obrien@gs.com, (415) 249-7467
EPS ($)                    2.03      2.45   Goldman Sachs & Co.
P/E                       22.5X    18.6X

EPS Quarter/Interim
                      *
                           0.53      0.49
                                            What's changed
                                            Qualcomm reported a solid top- and bottom-line F4Q (Sep.) beat, with revenue/non-GAAP EPS at $2.95
Investment Lists                            bn/$0.68 vs. GS at $2.93 bn/$0.60 and the Street at $2.85 bn/$0.59. It guided F1Q revenue of $3.05 bn-
                    Americas Buy List       $3.35 bn, above GS/Street at $3.12 bn/$2.99 bn, and EPS of $0.70-$0.74, vs. GS/Street at $0.68/$0.64.
          Americas Conviction Buy List      FY11 sales guidance of $12.4 bn-$13.0 bn was above GS/Street at $12.82 bn/$12.10 bn, and EPS of $2.63-
Coverage view                     Neutral   $2.77 vs. GS/Street at $2.83/$2.59.
*Current and a year ago                     Implications
                                            We reiterate our CL-Buy on QCOM as we continue to see upside to estimates driven by significant leverage
                                            to smartphone growth, the rise of tablets, and the transition to LTE. All three of these factors benefit QCOM
                                            by driving higher ASPs, higher margins, and higher market share as a result of Qualcomm’s technology
                                            leadership. Consistent with that thesis, Qualcomm’s chipset ASPs were up 2% qoq, the first sequential
                                            increase in seven quarters, and chipset operating margins were 28%, well above our 24% estimate.
                                            Moreover, Qualcomm expects both its chipset ASPs and margins to increase again in F1Q (Dec.) as a result
                                            of the richer smartphone mix. The royalty business is also a big beneficiary of smartphone and tablet growth,
                                            with F1Q device sales (for handsets shipped in the September quarter) 14% above consensus on stronger
                                            ASPs and units. While tablet royalties will be lower than high-end smartphones as a result of a voluntary cap
                                            (consistent with our expectations), they are a significant incremental profit stream. We raise our FY10/11/12
                                            non-GAAP EPS estimates to $2.46/$2.95/$3.25 from $2.38/$2.83/$3.25.
                                            Valuation
                                            We raise our 12-month price target to $58 from $52, based on a SOTP analysis, with $34 from licensing
                                            (from $33) and $24 from the chipset business (from $19). Our price target implies a non-GAAP CY11 P/E of
                                            19X.
                                            Key risks
                                            The primary downside risks to our CL-Buy rating are unfavorable license negotiations, lower-than expected
                                            ASPs, and increasing competition.



EOG Resources Inc. (EOG): Off the CL, but buying opportunity for the M-T and L-T focused                                                                6

EOG, $88.64                                 Brian Singer, CFA (New York): brian.singer@gs.com, (212) 902-8259
Market cap                  $22,382 mn
                                            Goldman Sachs & Co.
                                            Pavan Hoskote (New York): pavan.hoskote@gs.com, (917) 343-9044
Target price                      $110.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E    Andre Benjamin (New York): andre.benjamin@gs.com, (212) 855-0470
EPS ($)                    1.50      6.09   Goldman Sachs & Co.
P/E                       59.3X    14.5X

EPS Quarter/Interim*       0.68      0.92
                                            What happened
                                            We remove EOG from the Conviction List but maintain our Buy rating – we view the secular story as still
Investment Lists                            intact though with less clarity if shares will recognize this near term. We underestimated the impact
                      Americas Buy List     midstream and fracture stimulation delays could have on the ability of EOG to grow oil production. We revise
Coverage view                     Neutral   estimates to reflect lower production (we assume 10% growth in 2010-2012. Our 2011/2011/2012 EPS are
                                            $1.50/$6.09/$9.51 from $1.75/$7.56/$12.05. We lower our six-month, DCF- and multiples-based target price
*Current and a year ago
                                            to $110 from $129 to reflect lower EBITDA. Since adding EOG to the CL on 08/09/10, EOG/S&P 500/EPX
                                            are -11%/+6%/+8% (TTM: -2%/12%/15%).
                                            Current view
                                            We maintain our Buy rating for four reasons: (1) EOG has an attractive exploration/development assets and
                                            remains a leader developing new horizontal oil/gas plays; (2) EOG should still show above-average returns




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  November 4, 2010



                                           vs. peers; (3) EOG’s oil growth/impact remains better than peers even at revised estimates; and (4) our
                                           bullish oil view.
                                           We believe revised oil production guidance is easily achievable, as the implied quarter-to-quarter growth in
                                           2011-2012 is not dissimilar from 2H 2010. However, we recognize that in the short term the Street may need
                                           to see more tangible signs of execution from a company that tends to disclose very little inter-quarter and has
                                           provided insufficient clarity on capital spending.
                                           While short-term-focused investors looking at 2011 multiples may need to be bullish on commodity prices to
                                           find EOG valuation attractive, shares are attractively valued on 2012 EV/EBITDA at strip prices. We believe
                                           this will appeal to those willing to take a medium- to longer-term time horizon.
                                           Our price target assumes 5.9X/4.4X 2011/2012 EV/EBITDA on base-case WTI oil/Henry Hub gas forecasts
                                           of $100/$5.25 and $110/$5.75. Using strip prices, our price target implies 7.1X/5.7X vs. a 5.8X historical
                                           average. Commodity volatility, drilling results, costs and gov’t pronouncements are key risks.



Jones Lang LaSalle Inc. (JLL) Buy: Upgrade to Buy following pull back on 3Q costs; See 11% upside                                                          7

JLL, $80.07                                Sloan Bohlen (New York): sloan.bohlen@gs.com, (212) 902-2796
Market cap                  $2,772 mn
                                           Goldman Sachs & Co.
                                           Ji Young Kim (New York): jiyoung.kim@gs.com, (212) 902-4736
Target price                     $88.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E

EPS ($)                   3.36     4.80    Source of opportunity
P/E                    23.8X      16.7X    We upgrade global commercial real estate broker Jones Lang LaSalle to Buy from Neutral as we view the
                                           pull back in the shares following the company’s 3Q as an attractive entry point for relative value in the CRE
EPS Quarter/Interim*      0.84     0.46
                                           space. As we mentioned in our CRE broker recap (10/28/10), we believe investor concerns about expense
Investment Lists                           growth for JLL and rival CB Richard Ellis (also Buy rated) are overblown. We reiterate our core investment
                   Americas Buy List       thesis for improving brokerage activity (particularly CRE sales) and believe both JLL and CBG are best
Coverage view                    Neutral
                                           positioned to take advantage of the multi-year unwind of CRE funding. We see 11% upside potential to our
                                           12-month $88 target.
*Current and a year ago
                                           Catalyst
                                           We recommend investors Buy the shares based on three key reasons:
                                           We believe 4Q consensus estimates ($1.63) are too low and there remains upside bias to our street-high
                                           $1.77 EPS for 4Q. We believe a seasonably strong 4Q for brokerage can serve as the catalyst.
                                           The chase for yield should be a tailwind for JLL’s investment management business. As we have seen with
                                           REITs, strong inflows should help drive fees for JLL in this segment (9% of total revenues).
                                           We believe investors misinterpreted the rise in CRE broker expenses in 3Q. In JLL’s case, we believe much
                                           of the expense hike was either one-time or for revenue-enhancement and new client wins. Neither of these
                                           should limit margin expansion going forward in our view.
                                           Valuation
                                           Our 12-month price target remains $88, based on 16x our blended 2011/12 EPS estimates (long term
                                           average multiple). Trading at 14X 2011/12E we believe JLL and CBG are attractively valued vs. other CRE /
                                           REIT stocks.
                                           Key risks
                                           Key risks include weaker activity in EMEA / Asia or a double dip recession.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                     November 4, 2010




Other Headlines
Basic Materials

Intrepid Potash, Inc. (IPI): 3Q2010 beats; upbeat outlook but some competitive challenges                                                                   8

IPI, $33.20                                 Robert Koort, CFA (Houston): robert.koort@gs.com, (713) 654-8480
Market cap                   $2,492 mn
                                            Goldman Sachs & Co.
                                            Lindsay Drucker Mann, CFA (New York): lindsay.mann@gs.com, (212) 357-4993
Target price                      $25.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Luisa Hermann (Houston): luisa.hermann@gs.com, (713) 654-8482
EPS ($)                    0.49     1.29    Goldman Sachs & Co.
P/E                       67.2X    25.8X

EPS Quarter/Interim
                      *
                           0.11     0.12
                                            News
                                            IPI reported 3Q2010 EPS of $0.16, ahead of our forecast of $0.11 and the Street at $0.10. The beat was of
Investment Lists                            high quality, with gross profit of $27 mn (up 17% year over year) versus our $22 mn forecast. EBIT was up
                      Americas Sell List    23%, roughly a nickel above our forecast. The upside above the line was offset by higher tax rate.
Coverage view                     Neutral   Analysis
*Current and a year ago
                                            The IPI beat is another positive update from the fertilizer space. Key fundamental highlights include (1) robust
                                            farmer demand driven by favorable farmer returns, (2) healthy price momentum in potash with IPI citing list
                                            prices for red granular potash escalating from $343 per ton FOB Carlsbad in the July quarter to $485 per ton
                                            effective November 1, and
                                            (3) wide consumer acceptance of higher prices with sales accelerating as increases were announced. On the
                                            negative side, IPI highlighted competitive challenges in the standard potash market, where abundant supply
                                            from larger Canadina producers is limiting price appreciation. This dynamic may improve as IPI adds new
                                            granular potash capabilities. Also, IPI expects some sales were pulled forward from 4Q into 3Q, which may
                                            explain some of the EPS upside and dampen 4Q2010 results.
                                            Implications
                                            We are encouraged by the 3Q2010 beat as well as IPI’s positive endorsement of the potash industry outlook,
                                            which is in line with our constructive fertilizer view. However, shares continue to look fully valued to us at 25X
                                            P/E as of today’s close. Our price target and estimates remain unchanged.
                                            Perhaps as relevant to trading tomorrow is the announcement from Canadian Industry Minister Tony Clement
                                            that the government is blocking BHP’s bid for Potash Corp (POT, NR, $145.50). BHP has said that, if it were
                                            to buy POT, it would run the assets at full capacity, which would put downward pressure on realized prices
                                            and pose a challenge for smaller competitors such as IPI.




Boise Inc. (BZ): Delivers strong 3Q2010 results; FCF yield is still compelling; Neutral                                                                     9

BZ, $7.69                                   Richard Skidmore, CFA (New York): richard.skidmore@gs.com, (212) 357-5509
Market cap                   $647.7 mn
                                            Goldman Sachs & Co.
                                            Alex Ovshey (New York): alex.ovshey@gs.com, (212) 902-6751
Target price                       $8.50
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Usha Chundru (Bangalore): usha.chundru@gs.com, (212) 934-5057
EPS ($)                    0.92     1.15    Goldman Sachs India SPL
P/E                        8.4X     6.7X

EPS Quarter/Interim*       0.30     0.05
                                            What's changed
                                            Boise (BZ) reported 3Q2010 EPS (ex. items) of $0.44, well ahead our $0.35 estimate and consensus of
Investment Lists                            $0.33. Stronger operating margins in the Paper and Packaging segments drove the EPS beat vs. our
                                  Neutral   forecast. BZ noted that corrugated box shipments grew 12% yoy owing to strong industrial activity in Texas,
Coverage view                     Neutral   and box demand has been solid thus far in 4Q. Looking ahead to 4Q, BZ expects continued benefits from
                                            higher selling (paper) prices, but expects seasonally lower volumes, higher input costs largely owing to
*Current and a year ago
                                            usage, and higher maintenance expense due to the annual shutdown at the Jackson, Alabama mill.
                                            Separately, BZ announced a special cash dividend of $0.40/share (approx. $32.3 mn). The dividend will be
                                            payable on December 3, 2010.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                    November 4, 2010



                                         Implications
                                         We raise our 2010-2012 EPS estimates to $0.92, $1.15, and $1.20 from $0.80, $1.05, and $1.10 to reflect
                                         the 3Q2010 EPS beat and stronger segment margins. We rate BZ shares Neutral as we prefer greater
                                         exposure to containerboard. That being said, we continue to maintain a constructive view on BZ shares as
                                         (1) we expect paper prices will be sustainable in 2011 and 2012 as we forecast supply/demand fundamentals
                                         to remain balanced, (2) free cash flow generation is robust and the balance sheet is solid, and (3) we expect
                                         BZ will return more cash to shareholders in 2011 via a combination of dividends and share buyback.
                                         Valuation
                                         We raise our 12-month price target to $8.50 from $7.50 to reflect higher cash EPS estimates. Our price target
                                         is based on our 2011 CEPS and EBITDA estimates and forward multiples. Based on our 2011 estimates, BZ
                                         trades at a 20% FCF yield.
                                         Key risks
                                         (1) Lower paper prices, (2) weaker demand, (3) better execution on costs.



Agrium Inc. (AGU): Optimistic outlook despite the 3Q2010 headline miss                                                                                   10

AGU, $84.92                              Robert Koort, CFA (Houston): robert.koort@gs.com, (713) 654-8480
Market cap                 $13,332 mn
                                         Goldman Sachs & Co.
                                         Lindsay Drucker Mann, CFA (New York): lindsay.mann@gs.com, (212) 357-4993
Fiscal y/e Dec         2010E     2011E
                                         Goldman Sachs & Co.
EPS ($)                   4.64    6.44   Luisa Hermann (Houston): luisa.hermann@gs.com, (713) 654-8482
P/E                    18.3X     13.2X   Goldman Sachs & Co.
EPS Quarter/Interim*      0.70    0.16

Investment Lists
                                         What's changed
                                         AGU reported 3Q2010 EPS of $0.70 excluding stock-based compensation expense (-$0.39) and mark-to-
                            Not Rated
                                         market gains (+$0.05), short of the consensus at $0.92 and GS at $0.97. The shortfall versus our number
                                         was driven by weaker-than-expected gross profit in both the Nitrogen and Potash Wholesale divisions. AGU
*Current and a year ago                  issued 4Q2010 EPS guidance of $1.00-1.30, suggesting a full-year EPS range of $4.48-4.78. Anecdotally,
                                         management gave a very optimistic appraisal of 2011 earnings prospects against a favorable demand,
                                         pricing, and cost backdrop.
                                         Implications
                                         We remain optimistic about the earnings potential for the fertilizer stocks into next year, and highlight several
                                         forward looking comments from AGU that support our view: (1) farmer demand for nutrients remains robust,
                                         (2) there is limited slack in the supply chain with facilities operating near capacity, (3) N prices in the quarter
                                         were depressed relative to spot by sales booked on a lag, but realized prices should improve as we enter
                                         2011, (3) P markets remain tight and the Ma’aden project is now not expected hit the market until early 2012,
                                         (4) AGU is confident that recently announced K price hikes will be accepted by customers. We are updating
                                         estimates to $4.64 for 2010, $6.44 for 2011, and $6.88 for 2012 from $4.78, $6.55, and $7.01 prior to reflect
                                         modestly lower realized prices.
                                         Valuation
                                         AGU is currently trading at 13X 2011E P/E and 7X 2011E EV/EBITDA.
                                         Key risks
                                         Company-specific risks include fertilizer prices and corn supply.
                                         Impact on related securities
                                         Favorable demand and margin prospects in Nitrogen and Phosphate are positives for CF’s 2011 outlook,
                                         though given AGU’s 3Q miss we see some incremental earnings risk to our 3Q numbers (report tomorrow
                                         AMC).




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   November 4, 2010




Domtar Corp. (UFS): Raising estimates post 3Q results; top value idea in sector; Buy                                                                    11

UFS, $78.59                                  Richard Skidmore, CFA (New York): richard.skidmore@gs.com, (212) 357-5509
Market cap                    $3,377 mn
                                             Goldman Sachs & Co.
                                             Alex Ovshey (New York): alex.ovshey@gs.com, (212) 902-6751
Target price                       $93.00
                                             Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E     Usha Chundru (Bangalore): usha.chundru@gs.com, (212) 934-5057
EPS ($)                   11.85     10.50    Goldman Sachs India SPL
P/E                        6.6X      7.5X

EPS Quarter/Interim
                      *
                           3.35      1.39
                                             What's changed
                                             Domtar reported (on 10/29) 3Q10 EPS of $4.26 (excluding one-time items of +$0.18), beating our $3.19
Investment Lists                             estimate and consensus of $3.29. Domtar generated $5.32/share in free cash in 3Q – 30% better than
                      Americas Buy List      expected. The upside to our estimates was driven by sharply higher pulp and paper margins driven by more
Coverage view                      Neutral   cost deflation (i.e. fiber) and better execution than we anticipated. Domtar expects 4Q2010 results to be
                                             seasonally weaker on fewer shipments, lower pulp prices, and higher input costs. Separately, Pulp & Paper
*Current and a year ago
                                             Week reported (10/29) uncoated freesheet prices slipped $5-$20 per ton in October due to seasonal slowing
                                             and increased imports.
                                             Implications
                                             We are raising our 2010-2012 EPS estimates to $11.85, $10.50, and $10.00 from $9.65, $7.85, $6.90,
                                             respectively, to reflect the stronger 3Q10 pulp margins, benefits from new fluff pulp capacity ramping up in
                                             4Q10, and slightly higher net prices realizations than previously expected. While we acknowledge we
                                             forecast a decline in EPS and free cash flow yoy in 2011, we maintain our Buy rating on Domtar, especially
                                             for value-oriented investors. We rate Domtar Buy as (1) we forecast strong profitability in uncoated freesheet
                                             and pulp based on our supply/ demand outlook, (2) we expect Domtar to generate $16/share of free cash
                                             and be more aggressive returning cash to shareholders in 2011, and (3) valuation is inexpensive.
                                             Valuation
                                             We raise our 12-month price target for Domtar to $93 (was $73) to reflect our higher cash EPS forecast. Our
                                             price target is based on our 2011 cash EPS and EBITDA estimates of $16.68 and $1,058 mn and forward
                                             multiples of 5.5x and 3.5x, respectively. Based on our 2011 estimates, Domtar trades at 4.7x P/FCF vs.
                                             peers of 10x and at a 21% free cash flow yield.
                                             Key risks
                                             Greater volume declines in paper in 2011. Weaker pulp and paper prices and margins. Less return of cash to
                                             shareholders.



Consumer Cyclicals

PulteGroup, Inc. (PHM): 3Q10 results uninspiring but reflected in shares; Maintain Neutral                                                              12

PHM, $7.45                                   Joshua Pollard (New York): joshua.pollard@gs.com, (212) 902-6716
Market cap                    $2,822 mn
                                             Goldman Sachs & Co.
                                             Anto Savarirajan (New York): anto.savarirajan@gs.com, (646) 446-1758
Target price                        $8.00
                                             Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E

EPS ($)                   (0.11)     0.03    What's changed
P/E                           --        --   Pulte reported 3Q2010 EPS of ($2.63) vs. our/consensus estimates of ($0.20)/ ($0.05). The adjusted EPS
                      *                      was a loss of $0.18, which excludes goodwill and insurance reserves charges of $2.45.
EPS Quarter/Interim       (0.10)    (0.31)
                                             Implications
Investment Lists
                                             We maintain our Neutral rating on Pulte given the various positives and negatives in the 3Q10 results and
                                   Neutral   highlight our following thoughts:
Coverage view                      Neutral   (1) In our view the goodwill write-down was anticipated (but timing was unknown) and removes an investor
                                             overhang over the stock.
*Current and a year ago
                                             (2) We remain concerned about inventory writedowns at Pulte and would not be surprised to see impairments
                                             into 2011.
                                             (3) The negative surprise from the insurance-related charge, while largely one-time in nature, raises investor
                                             concern absent similar comments from other builders. The future margin impact remains unclear, as Pulte




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                November 4, 2010



                                          may have to accrue more for insurance or spend more on inspections.
                                          (4) Pulte’s better-than-expected orders without discounting (-15% q/q vs. -20% to -25% q/q across the group
                                          in 3Q) and the initiative to drive further SG&A savings in 2011 are encouraging and offset some of the
                                          concerns.
                                          (5) While we see Pulte returning to modest profitability in 2H-2011, the loss of share via a shrinking
                                          community count and anemic margins does not provide us much enthusiasm.
                                          Valuation
                                          We lower our 2010 estimate to $(0.11) from $(0.09) to reflect lower margins. Our 2011/2012 estimates are
                                          unchanged at $0.03/$0.58 as lower margins and higher write-downs offset the impact of SG&A cost saves.
                                          We reduce our normalized P/E- and distressed book value-based six-month price target to $8 (from $9),
                                          given the reduction in book value.
                                          Key risks
                                          Upside: Better synergies & margins. Downside: share loss & writedowns.



The News Corp. (B) (NWS): Cable nets grow at Discovery pace off bigger-than-Discovery base                                                           13

NWS, $16.44                               James Mitchell, CFA (New York): james.mitchell@gs.com, (212) 357-1849
Market cap                 $43,171 mn
                                          Goldman Sachs & Co.
                                          Drew Borst (New York): drew.borst@gs.com, (212) 902-7906
Target price                     $17.00
                                          Goldman Sachs & Co.
Fiscal y/e Jun         2011E     2012E    Brian Karimzad (New York): brian.karimzad@gs.com, (212) 357-1745
EPS ($)                   1.14     1.30   Goldman Sachs & Co.
                                          Grace Huan (New York): grace.huan@gs.com, (212) 357-8280
P/E                    14.4X     12.6X
                                          Goldman Sachs & Co.
EPS Quarter/Interim*      0.29     0.25

Investment Lists
                                          What's changed
                   Americas Buy List      News Corp. reported 1QFY11 revenue of $7.43 bn, up 3% yoy (1% below our estimate, 1% above
Coverage view                Attractive   consensus); OI of $1,148 mn, up 8% yoy (1% above us, 3% above consensus); and adjusted EPS of $0.26
                                          (above our $0.25 estimate). OI was above our estimates for cable nets and newspapers, and below for film.
*Current and a year ago
                                          Reported EPS of $0.30 benefited by $0.03 from a low tax rate, and by $0.01 from an asset sale gain at
                                          BSkyB.
NWS__A, $14.84                            Implications
Market cap                 $38,970 mn     - News Corp. reiterated its target of low double digit OI growth in FY2011, with headwinds from poor movie
                                          releases, the MySpace re-launch, and carriage dispute costs matched by tailwinds from positive cable net
Target price                     $17.00
                                          trends and a weaker dollar (thus no forex drag, vs. prior guidance of a 2% drag).
Fiscal y/e Jun         2011E     2012E    - Cable net revenue grew 17% yoy, with US cable net advertising accelerating from +11% yoy last quarter to
EPS ($)                   1.14     1.30   +16% (5 points above our estimate), and US affiliate fees accelerating from +12% to +14% (4 points above).
                                          News Corp.’s cable net portfolio is growing revenue at a similar pace to, and earnings at a faster pace than,
P/E                    13.0X     11.4X
                                          Discovery’s, despite News Corp.’s portfolio being about twice as large as Discovery’s by revenue. Yet
EPS Quarter/Interim*      0.29     0.25   Discovery trades at 20X consensus CY2011 earnings, while News Corp., with 57% of its OI from its cable
Investment Lists
                                          nets, trades at 12X. We believe the youthfulness of News Corp.’s key cable nets, their currently low margins,
                                          and News Corp.’s control of international distribution enable years of further rapid cable net growth.
                   Americas Buy List
                                          - Flowing through 1Q cable net upside, we raise our FY11/12E EPS by 2%/1% to $1.14/$1.30.
Coverage view                Attractive   Valuation
*Current and a year ago                   We maintain a 12-month price target of $17, based on 14X our CY2011 EPS of $1.23 (from $1.22), against a
                                          CY2010-2013 EPS CAGR of about 13%.
                                          Key risks
                                          Tough content comparisons in FY2011, reliance on newspapers and DBS.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                               November 4, 2010




KAR Auction Services, Inc. (KAR): First Take: 3Q beats on credit business; vehicle volumes soft                                                     14

KAR, $12.70                                 Matthew J. Fassler (New York): matt.fassler@gs.com, (212) 902-6740
Market cap                   $1,709 mn
                                            Goldman Sachs & Co.
                                            Ryan Brinkman (New York): ryan.brinkman@gs.com, (917) 343-9516
Target price                      $15.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Mark-Andre Saucier-Nadeau (New York): mark-andre.saucier-nadeau@gs.com, (212) 902-3668
EPS ($)                    1.03     1.13    Goldman Sachs & Co.
                                            Jonathan Baucom (New York): jonathan.baucom@gs.com, (212) 934-4213
P/E                       12.3X    11.2X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        0.26     0.27

Investment Lists
                                            News
                                  Neutral   KAR reported adjusted 3Q10 EBITDA of $121.1 mn vs. $114.0 mn a year ago, slightly above our $118 mn
Coverage view                     Neutral   (same as Street). The company also reported adjusted EPS of $0.28, modestly above our $0.26 and the
                                            Street’s $0.25. The EBITDA beat was entirely driven by the credit segment, while sales and EBITDA were
*Current and a year ago
                                            light of our forecast for Adesa, and at IAAI revenues were light, but adjusted EBITDA beat slightly.
                                            The company maintained its 2010 adjusted EBITDA guidance of $470 mn but raised its adjusted EPS
                                            forecast to $0.92-0.97 from $0.90-0.95.
                                            Analysis
                                            * The whole car (Adesa) segment missed our sales and adjusted EBITDA forecast on lower volumes, offset
                                            in part by higher pricing; lighter gross margin rate; and, a higher expense ratio. These results highlight
                                            continued weakness in auction volumes.
                                            * The salvage (IAAI) segment came in 6% light of our sales forecast (up +5% yoy vs. our +11%) on lower
                                            volumes, as revenue per car was in line, though adjusted EBITDA was 2% better than expected.
                                            * The credit (AFC) segment lead the earnings beat, with sales up +50% vs. our +29%, the sales strength
                                            being broad based with loan transactions and revenue per transaction above our forecast. The gross margin
                                            tracked 850 bp better than expected, modestly offset by a higher expense ratio by 125 bp vs. our estimate.
                                            Implications
                                            We expect a subdued reaction to a modest beat, given that volumes in both automotive businesses tracked a
                                            bit light. Our estimates and price target are under review pending Thursday’s conference call.



Avis Budget Group, Inc. (CAR): First Take: 3Q results in-line with October 7 pre-announcement                                                       15

CAR, $11.81                                 Steven Kent, CFA (New York): steven.kent@gs.com, (212) 902-6752
Market cap                   $1,495 mn
                                            Goldman Sachs & Co.
                                            Neil Portus, CFA (New York): neil.portus@gs.com, (212) 902-2077
Fiscal y/e Dec            2010E   2011E
                                            Goldman Sachs & Co.
EPS ($)                    0.83     1.16    Sinu Padmanabhan (Bangalore): sinu.padmanabhan@gs.com, (212) 934-8950
P/E                       14.3X    10.2X    Goldman Sachs India SPL
                      *
EPS Quarter/Interim        0.73     0.65

Investment Lists
                                            News
                                            Today after the close, Avis Budget reported 3Q2010 earnings that were in-line with the company’s October 7
                             Not Rated
                                            pre-announcement. Revenues of $1.5 bn were in-line with our $1.5 bn estimate while Adjusted Corporate
                                            EBITDA of $219 mn was essentially in-line with our recently revised estimate of $215 mn, implying margins
*Current and a year ago                     of 14.5% vs. our estimate of 14.4%.
                                            Regarding its outlook, though the company does not give Corporate EBITDA or EPS guidance, Avis Budget
                                            expects volumes to increase yoy in 4Q; however, yoy pricing comparisons are expected to remain
                                            challenging in 4Q due to tough leisure pricing comps from last year. Domestic fleet depreciation costs are
                                            expected to be down 9%-11% per unit compared with down 8-10% previously. Management also tightened
                                            its 2010 incremental cost savings projection to $60-$70 mn from $50-$70 mn.
                                            Analysis
                                            In the quarter, domestically, better than expected volumes were offset by lower than expected pricing.
                                            Internationally, volumes and pricing (including FX) both exceeded our forecasts.
                                            Domestically, rental days were up +4% vs. our estimate of +2% while time & mileage rev/day was -4% vs.
                                            our forecast of -1%. Fleet size growth was larger than expected (+5% vs. our estimate of +2%).




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                     November 4, 2010



                                           Internationally, rental days were +3% vs. our estimate of +0.5% while time and mileage rev/day was +4%
                                           (including FX) vs. our +2% forecast. Excluding FX, time & mileage rev/day was -2%. International fleet size
                                           growth was also larger than expected (+4% vs. our estimate of +0.5%).
                                           Implications
                                           We look for additional granularity on Avis’ outlook for corporate demand and pricing on tomorrow’s 9:00am
                                           conference call. No change to our estimates. We are Not Rated on Avis Budget.



Lumber Liquidators Holdings, Inc. (LL): First Take: SAP issue hurts 3Q, but underlying trends also softer                                                  16

LL, $24.89                                 Matthew J. Fassler (New York): matt.fassler@gs.com, (212) 902-6740
Market cap                  $679.4 mn
                                           Goldman Sachs & Co.
                                           Ryan Brinkman (New York): ryan.brinkman@gs.com, (917) 343-9516
Target price                     $25.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Mark-Andre Saucier-Nadeau (New York): mark-andre.saucier-nadeau@gs.com, (212) 902-3668
EPS ($)                   1.15     1.34    Goldman Sachs & Co.
                                           Jonathan Baucom (New York): jonathan.baucom@gs.com, (212) 934-4213
P/E                    21.6X      18.5X
                                           Goldman Sachs & Co.
EPS Quarter/Interim*      0.29     0.28

Investment Lists
                                           News
                                 Neutral   LL reported substantially weaker 3Q10 results after a troubled SAP implementation. In essence, challenges
Coverage view                    Neutral   in product allocation and distribution prevented the firm from fulfilling orders, which in turn derailed focus from
                                           sales generation, magnifying the impact of the problem. EPS of
*Current and a year ago
                                           $0.15 vs. $0.28 a year earlier fell short of our street-low $0.29, which we had recently lowered – not
                                           sufficiently, it turns out – on SAP cost concerns.
                                           Analysis
                                           We understand the SAP problem, which LL quantified as reducing sales by $12mn-$14mn and inflating
                                           customer deposits by about $10mn. That said, a number of issues appear to transcend this direct impact:
                                           * Given a strong start to 3Q (+7% SSS through August 22), backing out the explicit hit to the top-line, SSS
                                           would have hit 3%-4% for the quarter overall, suggesting a slowdown toward flattish levels by quarter’s end.
                                           * The underlying inventory growth rate had been building even before the SAP issue hit, suggesting eroding
                                           working capital productivity.
                                           * 4Q sales get a head start from customer deposits waiting for delivery, and guidance toward low-to-mid
                                           single-digit SSS growth suggests softer underlying levels.
                                           * Gross margin fell further short of our forecast than the 30bp associated with SAP.
                                           * Inventory growth was tracking sharply above sales growth without regard to the overage associated with
                                           SAP.
                                           The critical question for the conference call is whether these issues reflected further damage from SAP due
                                           to lack of focus in the stores, or cyclical factors. The former answer would of course be better for the firm, in
                                           our view.
                                           Implications
                                           We expect the stock to come under pressure, as it did in the aftermarket. Our estimates and target price are
                                           under review pending Thursday’s conference call.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                     November 4, 2010




Time Warner Inc. (TWX): Good cost control; weak HBO subs and US ad growth                                                                                 17

TWX, $32.07                                 Drew Borst (New York): drew.borst@gs.com, (212) 902-7906
Market cap                  $36,496 mn
                                            Goldman Sachs & Co.
                                            James Mitchell, CFA (New York): james.mitchell@gs.com, (212) 357-1849
Target price                      $37.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Brian Karimzad (New York): brian.karimzad@gs.com, (212) 357-1745
EPS ($)                    2.31     2.63    Goldman Sachs & Co.
                                            Grace Huan (New York): grace.huan@gs.com, (212) 357-8280
P/E                       13.9X    12.2X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        0.63     0.63

Investment Lists
                                            What's changed
                                  Neutral   Time Warner reported better-than-expected 3Q earnings driven by lower than expected Network operating
Coverage view                 Attractive    cost. EBIT was 4% ahead of our estimate and EPS was 14% ($0.07) ahead. Our revised 2010/2011/2012
                                            estimates of $2.31/$2.63/$3.07 are 1%-2% higher driven by the 3Q10 beat and a lower tax rate.
*Current and a year ago
                                            Implications
                                            HBO subs are expected to decline by 4% in 2010, lending support to OTT concerns. TWX believes the
                                            decline is not caused by OTT substitution, rather by reduced promotional activity by DTV and declines at
                                            DISH following heavy promotions last year. However, investors may worry whether consumers are opting for
                                            cheaper OTT alternatives such as Netflix.
                                            Domestic ad growth in 3Q decelerated to 6% yoy, versus our estimate of 10% and 8% in 2Q, as persistent
                                            and large ratings declines are catching up to CNN, driving advertising down yoy and offsetting high-single-
                                            digit growth at TNT/TBS. Ad growth is expected to accelerate in 4Q, we estimate to 8.5% yoy, driven by the
                                            new Upfront contacts with higher pricing, strong scatter and the debut of Conan on TBS.
                                            The return of cash to shareholders continues. TWX repurchased $500 mn of stock in 3Q, in line with prior
                                            quarters. Year to date, TWX has returned 90% of its free cash ($2 bn) to shareholders in the form of $1.5 bn
                                            in stock repurchases and $0.7 bn of dividends.
                                            Valuation
                                            Our 12-month, $37 target price (previously $39) is based on 14X (previously 15X) 2011E EPS of $2.63
                                            (previously $2.62). The reduction to our target multiple reflects increased risk of (1) slower ad growth and
                                            (2) HBO sub declines from OTT near-substitutes.
                                            Key risks
                                            Risks include CNN ratings declines, HBO subscriber losses.



WMS Industries, Inc. (WMS): Maintaining EPS forecasts but raising price target                                                                            18

WMS, $43.27                                 Steven Kent, CFA (New York): steven.kent@gs.com, (212) 902-6752
Market cap                   $2,133 mn
                                            Goldman Sachs & Co.
                                            Eli Hackel (New York): eli.hackel@gs.com, (212) 902-9672
Target price                      $46.00
                                            Goldman Sachs & Co.
Fiscal y/e Jun            2011E   2012E     Neil Portus, CFA (New York): neil.portus@gs.com, (212) 902-2077
EPS ($)                    2.10     2.50    Goldman Sachs & Co.
P/E                       20.6X    17.3X

EPS Quarter/Interim*       0.44     0.44
                                            What's changed
                                            We are maintaining our estimates after the company reported 1Q2011 results. Our 2011, 2012 and 2013
Investment Lists                            EPS estimates are $2.10, $2.50, and $2.92. While the first quarter was $0.01 below our expectations we
                      Americas Buy List     think some of this relates to the timing of the release of participations games and will be made up later in the
Coverage view                 Cautious      year. Our new 2011 quarterly estimates are $0.46, $0.61, and $0.66.
*Current and a year ago
                                            Implications
                                            We believe that WMS remains ahead of its competition in terms of technology and gaming experience. We
                                            also remain excited about the company’s movement into software and its portal applications which should
                                            begin to generate revenue in the early part of calendar 2011.
                                            WMS did comment that they, like Bally, are cautiously optimistic about an uptick in the replacement cycle in
                                            calendar 2011. We continue to remain guarded on this view and while we do expect some increase we are
                                            not looking for anything substantial.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   November 4, 2010



                                           Valuation
                                           We are raising our 12-month price target as we move out our base EPS year to 2012. Our new price target is
                                           $46, up from $45.
                                           Key risks
                                           Risks to our price target include lack of acceptance of new products.



OfficeMax Inc. (OMX): Management meeting details margin drivers; hike estimates; Buy                                                                    19

OMX, $17.56                                Matthew J. Fassler (New York): matt.fassler@gs.com, (212) 902-6740
Market cap                  $1,493 mn
                                           Goldman Sachs & Co.
                                           Jonathan Baucom (New York): jonathan.baucom@gs.com, (212) 934-4213
Target price                     $19.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Mark-Andre Saucier-Nadeau (New York): mark-andre.saucier-nadeau@gs.com, (212) 902-3668
EPS ($)                   0.82     0.95    Goldman Sachs & Co.
                                           Ryan Brinkman (New York): ryan.brinkman@gs.com, (917) 343-9516
P/E                    21.5X      18.6X
                                           Goldman Sachs & Co.
EPS Quarter/Interim*      0.08    (0.03)

Investment Lists
                                           What's changed
                   Americas Buy List       Our meeting with OfficeMax’s senior management put “meat on the bones” of its margin story, as the
Coverage view                    Neutral   company shared more details of the intrinsic margin drivers that propelled operating leverage in 2010, and
                                           should add more in 2011. Most notably, the company discussed specifics surrounding price optimization,
*Current and a year ago
                                           contract account acquisition / retention disciplines, private label and sourcing progress, retail tech selling
                                           efforts, and ancillary sales efforts (managed print services).
                                           * OMX cited pricing discipline – specifically elasticity work at retail, implemented in 1Q – as perhaps a major
                                           gross margin driver in 2010.
                                           * On account acquisition and retention, OMX is exercising more discipline in specifying the minimum spend
                                           necessary for customers to earn rebates, This effort is 18 months old, and will continue to cycle through
                                           another 18 months, adding visibility to 2011 contract margins. The pace of new account acquisitions picked
                                           up in 2H10 even with solid pricing discipline.
                                           * Private label and direct sourcing are adding an estimated 30 bps to gross margin per annum; we expect a
                                           similar magnitude in 2011.
                                           Implications
                                           We are maintaining our 4Q2010 estimate, but raising 2011 by $0.05 to $0.95, and hiking 2012 by $0.07 to
                                           $1.15. These changes reflect a 20 bp increase in gross margin for 2011, and an incremental 10 bp in 2012,
                                           rolling forward ongoing progress from the initiatives discussed above. These improvements are offset in part
                                           by nominally lower revenue assumptions, in deference to the lack of sales recovery in recent quarters.
                                           Valuation
                                           Our $19 12-month target is based on a combination of EV/EBITDA assumptions across our risk/reward
                                           profile, and an M&A component.
                                           Key risks
                                           Key risks revolve around the upcoming CEO transition, and ongoing revenue weakness, tied to employment
                                           challenges.
                                           Impact on related securities



Mexico: Retail: More of the same in 3Q10, with slow sales and higher expenses                                                                           20

                                           Irma Sgarz (Sao Paulo): irma.sgarz@gs.com, +55(11)3371-0728
                                           Goldman Sachs Brasil Bco Múlt S.A.
                                           Rachel Rodrigues (Sao Paulo): rachel.a.rodrigues@gs.com, +55(11)3371-0798
                                           Goldman Sachs Brasil Bco Múlt S.A.

                                           More of the same: Sluggish sales and intense competition
                                           Mexican retailers continued to aggressively compete for share of pocket of a still fairly cautious consumer,
                                           who focused spending on basic staples and one-off promotions. The trend on most macro indicators has now




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                          November 4, 2010



                                 turned positive and October sales feedback points to incremental improvement, but we believe a slow upward
                                 grind rather than a sharp rebound is the more likely scenario at this point. With valuations lightly above
                                 historic averages, we remain on the sidelines (Walmex Neutral, Soriana Sell).
                                 Put in context, Walmex sales performing well
                                 Walmex’s 3Q sales performance (+2.8%) lagged Chedraui and Oxxo (both +4.4%), but also suffered a
                                 tougher comp (+4.4% vs. on average +2.7%). Comerci and Soriana meanwhile fell short of expectations,
                                 despite an easy basis of comparison (average -6% in 3Q09). The North continues to be the soft flank, while
                                 Central and Southern Mexico are showing better results.
                                 Margins squeezed by preopening expenses and higher utilities bills
                                 The intensely promotional environment not only muted average ticket and thus sales growth, but also
                                 potential margin gains, as slow sales hampered the dilution of store opening expenses. This was further
                                 exacerbated by pronounced hikes in Mexico’s electricity tariffs.
                                 Expect Walmex to report October SSS of +4% SSS (November 8)
                                 We expect Walmex to report nominal same-store sales growth of +4% for October, as the month benefited
                                 from a small positive calendar effect (one more Sunday) and a modest improvement in the underlying growth
                                 rate.
                                 Incorporating 3Q estimates
                                 We update our estimates for Walmex and Soriana to incorporate 3Q10 results. Our 2010-12E EPS are
                                 respectively on average 2% and 5% lower. Our 12-month DCF/multiple-based price target is marginally lower
                                 for Soriana (on lower estimates). Walmex’s price target increases by 2%, as the roll-over more than offsets
                                 the slightly lower estimates.
                                 We retain our Neutral rating on Walmex and relative Sell on Soriana. Although Walmex trades at a slightly
                                 higher premium to its 5-year trading average, our estimates for Soriana imply downside risks to Soriana
                                 company guidance on sales and margins, as well as consensus estimates.



Americas: Automobiles: October SAAR of 12.3mn shows continued momentum in retail                                                               21

                                 Patrick Archambault, CFA (New York): patrick.archambault@gs.com, (212) 902-2817
                                 Goldman Sachs & Co.
                                 Aditya Oberoi (New York): aditya.oberoi@gs.com, (212) 357-7617
                                 Goldman Sachs & Co.

                                 Industry context
                                 Oct light SAAR came in at 12.3mn, ahead of our forecast of 12.0mn and Street expectations of 11.9mn.
                                 Outside of Aug 2009, which was aided by cash for clunkers, this is the first month since Sept 2008 that light
                                 SAAR has moved above 12.0mn. According to Ford, retail SAAR for the month stood at 10mn, materially up
                                 from 9.5mn in September thus implying that the complete sequential uptick in total sales was attributable to
                                 higher retail sales. We see this data point as encouraging and believe that sales will build on these levels
                                 aided by an uptick in consumer confidence and ultimately some improvement in employment levels and
                                 housing. We would also highlight that October’s improvement came in spite of a mom and yoy decline
                                 incentives to $2,556 in Oct from $2,743 in Sept and $2,658 in Oct of last year (based on Autodata). With the
                                 upward momentum of the last two months, we believe sales are on track to exceed our 11.4mn forecast for
                                 2010 and a cyclical recovery in auto sales remains a key driver of our Attractive coverage view. We continue
                                 to favor Ford as the preferred ways to play this theme and reiterate our CL Buy rating.
                                 Ford sales ahead of expectations; partially helped by fleet
                                 Ford reported Oct sales up 24% yoy vs. our expectation of up 19% yoy and Street estimates of up 14% yoy.
                                 Cars were up 25% yoy and trucks were up 23% yoy vs. our expectations of up 20% and up 19%,
                                 respectively. Fleet mix of 29% also helped once again aided by strong demand from the commercial side as
                                 evidenced in strong performances by F-Series and Transit Connect. We believe that at the current run-rate of
                                 fleet sales in the total mix, the company will surpass its stated goal of 30% fleet mix. But with strong traction
                                 in products like the Fusion, Fiesta, Edge and F-Series we think the company stands to see continued
                                 strength on the retail side as well. The company reiterated their 4Q production guidance of 590K units.
                                 Chrysler sales and share below expectations
                                 Chrysler sales came in up 42% yoy vs. our expectations of up 53% yoy. Chrysler’s market share for October
                                 was 9.5% below the above 10% levels that they posted in the last couple of months. We think lack of new
                                 model year products coupled with lower incentives both month-on-month and year-on-year contributed to
                                 some of the sequential share loss.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                November 4, 2010




DreamWorks Animation SKG, Inc. (DWA): "Mega" opening: Tracking to $50 - $55 mn, in-line with                                                         22
consensus

DWA, $36.62                                 Ingrid Chung (New York): ingrid.chung@gs.com, (212) 902-2360
Market cap                   $3,131 mn
                                            Goldman Sachs & Co.
                                            James Mitchell, CFA (New York): james.mitchell@gs.com, (212) 357-1849
Target price                      $36.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Fred Krom (New York): fred.krom@gs.com, (212) 902-8618
EPS ($)                    1.71     2.20    Goldman Sachs & Co.
P/E                       21.4X    16.7X

EPS Quarter/Interim
                      *
                           0.74     0.50
                                            What's changed
                                            According to our channel checks, we expect DreamWorks Animation’s “Megamind” to open in-line with our
Investment Lists                            and consensus estimates of between $50-$55 mn. We model $55 mn in opening weekend DBO for
                                  Neutral   “Megamind” and $185 mn in total DBO (vs consensus at $190 mn), implying a domestic open/ultimate DBO
Coverage view                     Neutral   multiple of 3.4X (in-line with the past 10 DWA films).
                                            We expect “Megamind” to open on at least 2,500 3D screens in the US and based on channel checks, the
*Current and a year ago
                                            3D premium should average around $3.50. We model “Megamind” generating $235 mn in IBO (in-line with
                                            consensus), representing a 1.3X multiple of our DBO, on the low side for DWA, as we believe that franchise
                                            films and cute animals play better overseas. Our estimates and price target are unchanged.
                                            Implications
                                            We are comfortable with our opening DBO estimate given channel checks: (1) tracking data based on NRG
                                            awareness data is implying an open around $50 mn; (2) HSX is implying an open around $52 mn; and (3)
                                            “Megamind” opened to $7.6 mn in Russia, which is just slightly less than “How to Train Your Dragon’s” open,
                                            which went on to generate $218 mn in DOB and $276 mn in IBO. We expect a shorter tail for “Megamind” vs.
                                            “Dragon” due to more competition with the release of “Harry Potter 7.1” on November 19, “Megamind’s” 3rd
                                            weekend. We believe that the next couple of months will be a “noisy” period for DWA due to “Megamind” and
                                            home video and expect to be more constructive early next year as we look to a strong slate in 2011: “Kung
                                            Fu Panda 2” and “Puss in Boots”.
                                            Valuation
                                            We leave our 6-month target price (DCF and normalized EPS) unchanged at $36. At $36, DWA would trade
                                            at 15X our normalized EPS of $2.42.
                                            Key risks
                                            CGI & 3D competition, home video challenges, pace of 3D rollout, and FX.



Consumer Staples

Molson Coors Brewing Co. (TAP): Profit outlook healthy; waiting for sustained volume improvement                                                     23

TAP, $49.08                                 Judy E. Hong (New York): judy.hong@gs.com, (212) 902-0490
Market cap                   $9,085 mn
                                            Goldman Sachs & Co.
                                            Tyler Walling (New York): tyler.walling@gs.com, (212) 934-0495
Target price                      $51.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E

EPS ($)                    3.59     3.85    What's changed
P/E                       13.7X    12.7X    TAP reported 3Q10 EPS of $1.28, $0.15-$0.16 ahead of our estimate and the consensus. The beat was
                                            primarily driven by favorable cost performance in all regions. We are revising our 2010 EPS up $0.11 to
EPS Quarter/Interim*       0.69     1.02
                                            $3.59 to reflect the 3Q10 beat offset by lower EPS in 4Q10 on higher corporate MG&A partially offset by
Investment Lists                            better pricing in Canada and US volumes. We revise our 2011 and 2012 EPS to $3.85 and $4.11 from $3.69
                                  Neutral   and $3.94 to reflect the higher 2010 base and more favorable costs in the US in 2011.
Coverage view                 Attractive    Implications
                                            We retain our Neutral rating on TAP shares as we continue to see better upside in other beverage names
*Current and a year ago
                                            (KO, PEP, HANS). That said, fundamentals are gradually improving and the TAP story is reverting back to a
                                            company with steady top-line growth supported by cost savings that should drive solid earnings growth and




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                 November 4, 2010



                                           sizable free cash flow over the next few years. (1) Management commentary around positive US volume
                                           growth quarter to date in 4Q is encouraging, though it is only a 4-week trend. We believe US volume trends
                                           could show improvement over the next several quarters as comps ease and macros slowly improve.
                                           (2) Cost saves are tracking ahead of our expectation and indications of a flat COGS/BBL outlook for 2011 are
                                           also comforting.
                                           (3) Free cash flow generation has been favorable, but it appears management is more likely to shore up the
                                           company’s underfunded pension plans rather than significantly increase cash returns to shareholders in the
                                           near term.
                                           Valuation
                                           We raise our 12-month P/E-derived price target by $3 to $51 on higher EPS and higher P/E to reflect the
                                           increase in the broader market P/E.
                                           Key risks
                                           Upside: better than expected volumes; Downside: lower realized pricing.



Energy

Devon Energy Corp. (DVN): Collection of liquids plays becoming material; Buy                                                                          24

DVN, $68.22                                Brian Singer, CFA (New York): brian.singer@gs.com, (212) 902-8259
Market cap                 $29,744 mn
                                           Goldman Sachs & Co.
                                           Pavan Hoskote (New York): pavan.hoskote@gs.com, (917) 343-9044
Target price                     $82.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Andre Benjamin (New York): andre.benjamin@gs.com, (212) 855-0470
EPS ($)                   6.40     6.65    Goldman Sachs & Co.
P/E                    10.7X      10.3X

EPS Quarter/Interim*      1.57     1.60
                                           What's changed
                                           DVN reported adj EPS of $1.44 vs. our $1.45/$1.29. Production was 636K BOE/d, in line with our 637K
Investment Lists                           BOE/d est. Operating cash flow was $1.7 mn vs. our $1.4 mn est. We update ests for greater production and
                   Americas Buy List       lower NGL realizations. 2010-12 ests are $6.40/$6.65/$8.77 from $6.51/$6.78/$8.69.
Coverage view                    Neutral   Implications
*Current and a year ago
                                           Devon shares in the past have been penalized for: (1) lack of exposure to emerging plays (1H 2008); (2)
                                           unattractive spending/growth (1H 2009, DW project capex); (3) concerns over potential large acquisitions and
                                           capital allocation (2010); and (4) not being aggressive enough in developing key plays (2004-05, Barnett
                                           Shale). Heading into 2011, we see momentum rising as largely these concerns have been addressed: (1)
                                           DVN is now exposed to key liquids plays the Street favors – Cana Woodford Shale, Permian Basin, Granite
                                           Wash and Canadian oil sands; (2) these appear to be able to reach a threshold of materiality even for Devon,
                                           with mgmt expectations for 20% growth or about 23K bpd in 2011 (largely US growth); (3) 2011 N. America
                                           onshore growth indication of 6%-8% was above our 5% estimate, while capex of about $5.7 bn was in line
                                           with our estimate and we believe lower versus Street expectations; and (4) management continues to vocally
                                           stress it is unlikely to do any large-scale corporate M&A. While Devon is likely to spend above cash flow at
                                           strip commodity prices in 2011, we believe shares reflect Street skepticism regarding capital allocation and
                                           liquids growth potential, both of which may continue to surprise expectations to the positive. We maintain our
                                           Buy rating.
                                           Valuation
                                           Devon trades at 4.5x 2011 EV/EBITDA vs. 4.6x for peers. We raise our 6-month DCF- and multiples-based
                                           target price to $82 from $80 to reflect credit for longer-term resource potential in the Granite Wash and
                                           Permian.
                                           Key risks
                                           Commodity price volatility, drilling results, costs, gov’t pronouncements.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                 November 4, 2010



Financial Services

Bancolombia (CIB): First Take: 3Q2010 above GSe on lower provisions                                                                                   25

CIB, $67.73                                 Jason B. Mollin (Sao Paulo): jason.mollin@gs.com, +55(11)3371-0871
Market cap                  $13,340 mn
                                            Goldman Sachs Brasil Bco Múlt S.A.
                                            Carlos G. Macedo (Sao Paulo): carlos.macedo@gs.com, +55(11)3371-0887
Target price                       $62.70
                                            Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec            2010E    2011E    Wesley Okada (Sao Paulo): wesley.okada@gs.com, +55(11)3371-0875
EPS ($)                    3.41      4.44   Goldman Sachs Brasil Bco Múlt S.A.
P/E                       19.9X     15.3X

EPS Quarter/Interim
                      *
                           0.92      0.77
                                            News
                                            Bancolombia reported 3Q2010 net income of Co$376 bn, 12.6% above GSe (US$1.04 per ADR, 28.3%
Investment Lists                            above consensus). Management will host conference call on Thursday (November 4) at 8:00AM ET (+1 866
                      Americas Sell List    730 5765 or 1 857 350 1589, Code: 71541471).
Coverage view                 Attractive    Analysis
*Current and a year ago
                                            Loan growth keeps recovering. Total loans increased 3.4% qoq, driven by solid growth in loans to individuals
                                            (+7.6% qoq). In this segment, personal loans (+10.7% qoq) and automobile (+5.1% qoq) were the main
                                            highlights. Mortgage loans slightly increased 0.9% qoq, but considering Co$315 bn in securitizations, the
                                            growth rate reached 3% qoq. For companies, corporate loans were the driver with 4.5% growth qoq, while
                                            SME fell 6.6% qoq.
                                            Margins compressed, but trading was higher. Net interest income decreased 0.9% qoq, leading NIM to drop
                                            21 bp qoq to 5.8%, mainly driven by the lower lending spreads. Trading income increased significantly to
                                            Co$53 bn, from Co$17 bn in the 2Q10.
                                            Asset quality continues to improve and provisions well below GSe. NPL ratio was down 26 bp qoq to 3.4%,
                                            on the back of improvement in commercial and consumer loans. Provision expenses fell 26.2% qoq due to a
                                            low level of charge-offs and were only 1.2% of avg loans.
                                            Expenses in line, but fee income disappoints. Total admin expenses were up 2.1% qoq, driven by higher
                                            rental and tech expenses, yet close to GSe. Fee income, however, decreased 1.4% qoq, lead by lower
                                            commissions from banking services, pension plan administration and fiduciary activities.
                                            Implications
                                            The EPS came above GSe mainly due to lower loan provision expenses related to an atypically low charge-
                                            off level, which we do not consider sustainable. On the other hand, the bank has been able to benefit from
                                            the improving economic activity in Colombia as shown by the solid loan growth as well as in improved asset
                                            quality. Our estimates and target price are under review. We reiterate our Sell rating on valuation.



BR Malls (BRML3.SA): First Take: 3Q2010 strong and in line with our high expectations                                                                 26

BRML3.SA, R$16.20                           Leonardo Zambolin (Sao Paulo): leonardo.zambolin@gs.com, +55(11)3371-0727
Market cap                  R$6,533 mn
                                            Goldman Sachs Brasil Bco Múlt S.A.
                                            Bianca C.M. Cassarino (Sao Paulo): bianca.cassarino@gs.com, +55(11)3371-0721
Target price                      R$17.50
                                            Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec            2010E    2011E

EPS (R$)                   0.71      0.78   News
P/E                       23.0X     20.9X   BR Malls, Brazil’s largest shopping-mall group, released solid and in-line 3Q10 results on November 3 after
                      *                     market close. Net income adjusted to FX variation of R$72 mn (+29% yoy, R$0.18/sh) was only 3% below
EPS Quarter/Interim        0.18      0.18
                                            our R$74 mn estimate, but 3% higher than street consensus of R$70 mn (R$0.17/sh).
Investment Lists
                                            Analysis
                      Americas Buy List     Strong tenant sales and lease performance. BR Malls’ shopping malls posted record low vacancy (1.5%) and
Coverage view                 Attractive    delinquency (2.7%) rates. SSS and SSR increased 17% and 10%, respectively. The combination of high
                                            sales growth, low occupancy cost, and high occupancy rate resulted in strong renewal leasing spreads of
*Current and a year ago
                                            22.5%, significantly ahead of inflation.
                                            Margin decrease reflects portfolio expansion. Costs came in higher yoy, mostly on concession payments to
                                            São Paulo’s subway, where one of the company’s malls is located, and structural changes in some of its
                                            parking operations. SG&A was also higher yoy and vs. GSe, due to BR Malls’ accelerating pace of ongoing
                                            projects and space commercialization, with the latter resulting in more commissions to be paid to the sales




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                 November 4, 2010



                                           team. Still, BR Malls continues to deliver the highest profitability among listed peers.
                                           2010 acquisition target achieved. BR Malls disbursed R$492 mn in asset purchases in 9M10. The average
                                           IRR real/unlevered and cap-rate were 13% and 12%, respectively, which we find attractive for the mall
                                           industry.
                                           More leverage power to fuel growth. BR Malls has changed the covenant structure of its debentures, now
                                           allowing net debt/EBITDA of 3.8x vs. 2.75x before. Also, its perpetual bond will no longer be part of net debt
                                           figures.
                                           Implications
                                           BR Malls’ 3Q2010 numbers came in strong, driven by its efficient portfolio-management skills, and solid retail
                                           performance. We expect 4Q to be even stronger, as Christmas sales season approaches, the two new
                                           projects delivered in 4Q are already operating, and the concluded expansions are running at full speed. We
                                           maintain our Buy rating and estimates.



Cielo (CIEL3.SA): First take: 3Q2010 above GS as prepayment offset higher expenses                                                                    27

CIEL3.SA, R$14.44                          Carlos G. Macedo (Sao Paulo): carlos.macedo@gs.com, +55(11)3371-0887
Market cap                R$19,642 mn
                                           Goldman Sachs Brasil Bco Múlt S.A.
                                           Jason B. Mollin (Sao Paulo): jason.mollin@gs.com, +55(11)3371-0871
Target price                     R$18.50
                                           Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec         2010E      2011E    Wesley Okada (Sao Paulo): wesley.okada@gs.com, +55(11)3371-0875
EPS (R$)                  1.34      1.31   Goldman Sachs Brasil Bco Múlt S.A.
P/E                    10.8X       11.0X

EPS Quarter/Interim*      0.34      0.29
                                           News
                                           Cielo reported recurring 3Q2010 net income of R$488 mn (R$0.36/sh), 5.9% above GS), EBITDA of R$761
Investment Lists                           mn (4.7% above GS). Cielo pre-reported 3Q2010 results on October 28. Cielo will host a conference call
                   Americas Buy List       tomorrow, November 4, at 8:30 a.m. ET (in Portuguese, +55 11 3301 3000, pw: Cielo) and at 10:00 a.m. ET
Coverage view                Attractive    (in English, +1 412 317 6776, pw: Cielo).
*Current and a year ago
                                           Analysis
                                           Net MDRs expand qoq. Net MDRs increased 2 bp qoq for credit and were flat qoq for debit. Adjusting for the
                                           decline in net MDRs in 2Q2010 related to pre-payment of commissions to partner banks, net MDRs would
                                           have declined 3 bp and 5 bp qoq for credit and debit, respectively.
                                           Transaction value accelerates on debit and credit. Transaction value for credit accelerated 50 bp qoq to
                                           21.5% for credit, and 530 bp qoq to 28.6% for debit. Based on theses figures and ABECS data, Cielo gained
                                           20 bp in credit card market share in 3Q2010, and 190 bp in debit card share.
                                           Rental revenues decline 2.8% qoq. A 3.2% decline in average rent offset a 3.2% qoq increase in the number
                                           of terminals.
                                           Receivables discounting continues to grow, increasing 35% qoq. A 3.3% increase in average term (72 days)
                                           was compounded by a 400 bp increase in average spread (21.9%).
                                           Competition drives costs and expenses higher. Cost and expenses increased with higher call center
                                           volumes, implementing multi-brand acquiring and the scheduled increase in the franchise fee paid to Visa.
                                           Excluding the franchise fee, costs per transaction were up 43% qoq. Expenses were below expectations, but
                                           still increased 6.1% qoq. The EBITDA margin ex-receivables discounting was down 420 bp qoq to 63.5%.
                                           Implications
                                           Today’s release provided more detail than Cielo’s pre-release. The resiliency in MDRs was impressive, as
                                           was the expansion in receivables discounting revenues, which should provide a cushion to competitive
                                           pressures. We maintain our estimates, target price, and Buy rating.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                    November 4, 2010




Banco Santander Brasil (SANB11.SA): Fundamentals improve, but Neutral on relative risk                                                                   28

SANB11.SA, R$25.00                           Jason B. Mollin (Sao Paulo): jason.mollin@gs.com, +55(11)3371-0871
Market cap                 R$95,011 mn
                                             Goldman Sachs Brasil Bco Múlt S.A.
                                             Carlos G. Macedo (Sao Paulo): carlos.macedo@gs.com, +55(11)3371-0887
Target price                      R$28.40
                                             Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec            2010E    2011E     Wesley Okada (Sao Paulo): wesley.okada@gs.com, +55(11)3371-0875
EPS (R$)                   1.90      2.51    Goldman Sachs Brasil Bco Múlt S.A.
P/E                       13.2X     10.0X

EPS Quarter/Interim
                      *
                           0.52      0.31
                                             What's changed
                                             3Q results reported on October 28 were slightly below expectations. 3Q adjusted BR GAAP EPU was R$0.48
Investment Lists                             (US$0.27/ADR), 2.8% below our estimate, with lower provision expenses (-9.0% qoq) offsetting weaker
                                   Neutral   adjusted NIM (-60 bp qoq), and lower reversal of operational provisions damaging profitability. Loan growth
Coverage view                 Attractive     expanded a healthy 5.0% (adjusting for loan purchases), and synergies continued to materialize.
*Current and a year ago
                                             Implications
                                             Adjusting forecasts following results. The bank continues to shift its loan mix into lower-margin products,
                                             taking advantage of opportunities in the market. While this strategy has been positive for post-provision NIM,
BSBR, $14.86                                 we expect future loan growth to be more focused on higher-margin products. Expense control and synergy
Market cap                  $56,474 mn       should still be a focus, but with the end of the merger integration and significant branch openings planned for
                                             4Q2010, we are looking for organic growth to become more of a driver for results going forward.
Target price                       $15.60    Fine-tuning EPU. We decrease 2010-2011E EPU by 1.2% and 0.3%, respectively, to R$1.90 (US$1.08/ADR)
Fiscal y/e Dec            2010E    2011E     and R$2.51 (US$1.40/ADR), and raise 2012E EPU by 0.5% to R$3.13 (US$1.63/ADR).
EPS ($)                    1.08      1.40    Valuation
                                             We raise our DDM-driven 12-month target price by 0.4% to R$28.40 per unit (US$15.60/ADR) to reflect the
P/E                       13.8X     10.6X
                                             changes to our forecasts. Even though the bank trades at a discount to peers at 10X 2011E EPU P/E and
EPS Quarter/Interim*       0.30      0.18    2.1X 2010E P/BV, we still find the investment cases more attractive for other large-cap Brazilian banks,
Investment Lists                             driven by valuation (Banco do Brasil) or fundamentals (Itaú Unibanco, Bradesco). We maintain our Neutral
                                             rating.
                                   Neutral
                                             Key risks
Coverage view                 Attractive
                                             Regulation (including higher reserve requirements), execution risk of merger, competition and slower than
*Current and a year ago                      expected economic growth.



BGC Partners, Inc. (BGCP): Hiring and product positioning drives industry outperformance                                                                 29

BGCP, $7.21                                  Daniel Harris, CFA (New York): daniel.harris@gs.com, (212) 357-7512
Market cap                   $1,802 mn
                                             Goldman Sachs & Co.
                                             Jason Harbes, CFA (New York): jason.harbes@gs.com, (212) 357-4319
Target price                        $7.25
                                             Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E

EPS ($)                    0.65      0.73    What's changed
P/E                       11.1X      9.9X    BGCP reported 3Q10 pro forma operating EPS of $0.17, ahead of our $0.15 estimate and consensus of
                      *                      $0.14. The upside owed to better than expected brokerage revenue of $292 mn (vs. our $284 mn estimate),
EPS Quarter/Interim        0.14      0.07
                                             which included $3 mn from recently acquired Mint brokerage, and a record low comp rate of 54%, which
Investment Lists                             could move higher in 4Q10. We raise our 2010E-2012E EPS to $0.65/0.73/0.80 from $0.62/0.66/0.73 to
                                   Neutral   reflect recent upside and accretive hiring/acquiring and increase our price target to $7.25 from $6.50.
Coverage view                      Neutral   Implications
                                             The mid-point of the 4Q10 outlook statement indicates $35 mn of earnings and implies 4Q10 EPS of $0.15;
*Current and a year ago
                                             our $0.14 estimate assumes slightly higher expenses based on recent non-comp trends. Adjusted for trading
                                             day count, October revenue increased 10% yoy, but the 4Q10 outlook implies a 2% decline to a 5% increase;
                                             we estimate revenue growth will decelerate for the third straight quarter in 4Q10 (to roughly 2% yoy) despite
                                             an 11% increase in brokerage/sales headcount. In 3Q10, the migration of voice brokerage to electronic
                                             trading boosted brokerage revenue growth, which rose 10% yoy (9% ex-Mint), and drove the comp rate down
                                             to 54%, although we note that the comp rate would have been 56% excluding a $12 mn FINRA arbitration
                                             award (which is under appeal). Fully electronic volume of $13 bn was up 23% yoy and hybrid volume
                                             increased 46% yoy, as a higher number of voice brokers and clients utilize BGCP’s e-Broking platform. While




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  November 4, 2010



                                           the tax rate is expected to remain at 15% for 2010, we note that an increase to prior levels could reduce our
                                           EPS estimates by about 15%.
                                           Valuation
                                           BGCP trades at 11X our 2010 estimate. Our new price target of $7.25 implies BGCP will trade at 10X our
                                           2011 estimate in 12 months.
                                           Key risks
                                           Upside: higher activity, higher broker production, lower expenses; Downside: increasing compensation rate,
                                           lower global trading activity.



Healthcare

Par Pharmaceutical Cos., Inc. (PRX): 3Q2010 upside on solid revenues and gross margin                                                                  30

PRX, $37.05                                Randall Stanicky, CFA (New York): randall.stanicky@gs.com, (212) 357-3292
Market cap                  $1,236 mn
                                           Goldman Sachs & Co.
                                           Gregory Waterman, CFA (New York): gregory.waterman@gs.com, (212) 855-7725
Target price                     $34.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Stephan Stewart (New York): stephan.stewart@gs.com, (212) 934-4218
EPS ($)                   3.06     3.25    Goldman Sachs & Co.
P/E                    12.1X      11.4X

EPS Quarter/Interim*      0.72     0.65
                                           What's changed
                                           Par’s shares were solid today after the company reported 3Q2010 EPS of $0.88, exceeding our estimate of
Investment Lists                           $0.46 and the consensus estimate of $0.54. Revenues of $234 million were above the consensus estimate of
                                 Neutral   $225 million, helped by better-than- expected metoprolol ER sales. EPS upside was driven largely by better-
Coverage view                    Neutral   than-expected gross margins, adding $0.20 versus our estimates. This reflected the launch of omeprazole
                                           product and better “other generic” gross margin.
*Current and a year ago
                                           Implications
                                           We raise our EPS estimates and price target to reflect strength on the quarter, but we maintain our Neutral
                                           rating. Bottom line, the outlook continues to depend on competitive dynamics for key generic drivers and the
                                           performance of the Zuplenz and Oravig launches, but execution towards building sustainability in the
                                           branded business is on track.
                                           Key changes to our model include: (1) Higher estimates for metoprolol, omeprazole, and “other” generics; (2)
                                           Lower clonidine estimates; (3) A more gradual ramp for Oravig/Zuplenz, but no change to peak sales; and (4)
                                           Higher generic gross margin assumptions. Our new 2010 to 2013 EPS estimates are $3.06, $3.25, $3.55,
                                           and $3.76, respectively (from $2.47, $2.58, $3.11, $3.05).
                                           Valuation
                                           Our 12-month price target rises to $34 from $30 to reflect higher EPS estimates. Our price target is based on
                                           a combination of P/E (42.5%), EV/EBITDA (42.5%), and M&A weighting (15%).
                                           Key risks
                                           Upside risks include slower-than-expected generics business competition; downside risks include launch
                                           uptake of recent branded launches.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  November 4, 2010




Becton Dickinson & Co. (BDX): FY2011 guidance highlights dependence on financial leverage                                                              31

BDX, $75.54                                 David H. Roman (New York): david.roman@gs.com, (212) 902-7839
Market cap                  $18,560 mn
                                            Goldman Sachs & Co.
                                            Topher Orr (New York): topher.orr@gs.com, (212) 902-1017
Target price                      $77.00
                                            Goldman Sachs & Co.
Fiscal y/e Sep            2010E   2011E     Nikhil Hanmantgad (New York): nikhil.hanmantgad@gs.com, (212) 357-4031
EPS ($)                    4.91     5.48    Goldman Sachs & Co.
                                            Kunal Singh, CFA (Bangalore): kunal.singh@gs.com, (212) 934-6546
P/E                       15.4X    13.8X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        1.24     1.25

Investment Lists
                                            News
                                  Neutral   Becton Dickinson reported 4QFY10 EPS of $1.24, which was in line with our estimate and $0.01 below
Coverage view                     Neutral   consensus. Sales in the quarter came in $8 mn ahead of our expectations and $12 mn above the Street,
                                            driven by Medical (+$16 mn) and Diagnostics (+$1 mn), partially offset by Biosciences (-$9 mn). For FY2011,
*Current and a year ago
                                            management issued reported revenue guidance of +4%, equating to sales of approximately $7.667 bn vs.
                                            our estimate heading into the quarter of $7.799 bn and consensus of $7.742 bn. FY2011 EPS is expected to
                                            be $5.45-5.55 or increase 11%-13%, which compares to our estimate of $5.48 and consensus at $5.42.
                                            Analysis
                                            While FY2011 EPS guidance of $5.45-5.55 came in ahead of Street expectations, we note that the majority
                                            of EPS growth will be driven by share repurchases and believe operating leverage will be minimal. Looking at
                                            management’s expectations for 4% reported growth in FY2011, underlying constant currency revenue growth
                                            appears to be about 4%, with flu and FX offsetting each other at 1%-2% each. Similarly, we estimate the
                                            positive impact from FX adds $0.10 to FY2011 EPS, leaving underlying EPS growth at +9%-11% vs.
                                            management guidance of 11%-13% reported. The $1.5 bn in share repurchases in FY2011 represent an
                                            incremental reduction of 10 mn shares vs. our previous estimates and is worth an additional $0.20 to EPS,
                                            bringing the impact of repurchases to $0.40. Assuming 4% revenue growth and the impact of the lower share
                                            count, we estimate the midpoint of EPS guidance assumes operating margins of 22.2% in FY2011 (vs.
                                            22.7% in FY2010) and annual EBIT growth of 2.1% or about flat on a constant currency basis. Of the 11%-
                                            13% EPS growth expected in FY2011, we estimate 75% to be driven by share buybacks. We view projected
                                            revenue in FY2011 to be indicative of our view that management expectations of 6% revenue growth may be
                                            too high.
                                            Implications
                                            We maintain our Neutral rating and price target.



Charles River Laboratories (CRL): First Take: Continued preclinical weakness brings more cost cutting                                                  32

CRL, $32.92                                 Robert P. Jones (New York): robert.p.jones@gs.com, (212) 357-3336
Market cap                   $2,173 mn
                                            Goldman Sachs & Co.
                                            Randall Stanicky, CFA (New York): randall.stanicky@gs.com, (212) 357-3292
Target price                      $33.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Verdell Walker (New York): verdell.walker@gs.com, (212) 902-8446
EPS ($)                    1.95     2.51    Goldman Sachs & Co.
                                            Baneesh Banwait (Bangalore): baneesh.banwait@gs.com, (212) 934-6193
P/E                       16.9X    13.1X
                                            Goldman Sachs India SPL
EPS Quarter/Interim*       0.50     0.65

Investment Lists
                                            News
                                  Neutral   CRL reported 3Q EPS of $0.45, vs.GS/consensus at $0.50/$0.49, despite lower tax and share count (against
Coverage view                     Neutral   our model). Also, the company reduced 2010 guidance; it now expects sales to decline about 5% and EPS of
                                            $1.85-$1.90 (previously a 2%-3% decline and EPS of $1.90-$2.00), which implies 4Q EPS of $0.47-$0.52
*Current and a year ago
                                            (vs. GS/Street of $0.51/$0.52). During 4Q, CRL will take decisive measures to cut costs in the face of
                                            continued challenges in the preclinical environment, including 4% headcount reduction, discretionary
                                            spending reductions, closure of a Quebec facility, and consolidating operations in a MI facility with a larger
                                            NC facility. In addition to these cost actions, CRL increased its share repurchase plan by $250mn (above
                                            $500mn ASR) and repatriated $292mn of its overseas cash, which will be used to help fund the buyback and




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                    November 4, 2010



                                           pay the $30mn break-up fee associated with the termination of the WuXi deal. While these actions will help
                                           offset the still declining preclinical fundamentals, we believe share performance is still linked to improvement
                                           in the core business. No change to our Neutral rating, price target, and estimates ahead of the conference
                                           call tomorrow at 9AM ET.
                                           Analysis
                                           Additional takeaways: (1) Preclinical services – revenue was 6.4% below our forecast and declined 12.9%
                                           year-over-year primarily due to lower demand and pricing pressure. Operating margins of 11.3% declined
                                           75bp sequentially and was below our 12.1% estimate. (2) Research models – revenue was 3.9%, below our
                                           forecast and declined 2.5% year-over-year. Operating margins declined 100bp sequentially to 28.1%. (3)
                                           Looking ahead – 4Q cost saving actions are expected to create $40mn of annual savings beginning in 2011,
                                           which will result in a one-time charge of $15mn.
                                           Implications
                                           Key areas of focus for the call: (1) demand and pricing trends in preclinical and visibility into demand; (2)
                                           timing of additional buyback; and (3) timing and magnitude of savings from cost actions.



Covance Inc. (CVD): Significant cost initiatives but still challenged fundamentals; Neutral                                                              33

CVD, $47.26                                Robert P. Jones (New York): robert.p.jones@gs.com, (212) 357-3336
Market cap                  $3,022 mn
                                           Goldman Sachs & Co.
                                           Randall Stanicky, CFA (New York): randall.stanicky@gs.com, (212) 357-3292
Target price                     $46.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Verdell Walker (New York): verdell.walker@gs.com, (212) 902-8446
EPS ($)                   2.12     3.04    Goldman Sachs & Co.
                                           Baneesh Banwait (Bangalore): baneesh.banwait@gs.com, (212) 934-6193
P/E                    22.3X      15.5X
                                           Goldman Sachs India SPL
EPS Quarter/Interim*      0.50     0.67

Investment Lists
                                           What's changed
                                 Neutral   CVD reported adjusted 3Q EPS of $0.50 (which excluded ~$0.01-$0.02 from 2Q cost actions), versus
Coverage view                    Neutral   GS/consensus at $0.50. As was widely anticipated, CVD announced several cost-cutting initiatives including
                                           the reduction of toxicology capacity by closing the facility in Vienna, VA. The company anticipates a
*Current and a year ago
                                           contribution of at least $25 million to operating income in 2011 (net of costs of $35-$40 million) from this
                                           closure and other cost reduction measures. In addition, CVD provided more detail around the recently
                                           announced 10-yr exclusive deal with Sanofi and now expects earnings contribution from the deal in 2011 of
                                           $0.20+. Not to be overlooked, the core businesses struggled this quarter where we saw further margin
                                           erosion in both segments on a year-over-year and sequentially basis. While the cost actions are substantial
                                           and will no doubt help to offset weakness in underlying business, we still think long-term sustainable share
                                           performance remains connected to improving fundamentals particularly within early-development. We
                                           maintain our Neutral rating. CC at 9:00 AM EST. Dial-in 888-569-5033; passcode: 4350056.
                                           Implications
                                           We have adjusted our model to reflect: (1) $40 mn in gross cost savings (~$0.46); (2) Share buyback (~$0.12
                                           on $200 mn within next 2 quarters); and (3) Impact from Sanofi deal (~$0.22). Our revised 2011/2012 EPS
                                           are $3.04/$3.47 (from $2.80/$3.23). Also, management sees 4Q EPS of $0.50-$0.55 (vs. consensus of
                                           $0.58). The book-to-bill in the quarter was 1.15-to-1 (excluding dedicated capacity deals) with the late-stage
                                           1.2-to-1.
                                           Valuation
                                           Our six-month price target goes to $46 (from $44) on revised estimates and model roll-forward and remains
                                           based equally on P/E and EV/EBITDA.
                                           Key risks
                                           Pricing pressure, execution on cost actions and demand in preclinical.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                     November 4, 2010




Universal American Corp. (UAM): Solid 3Q. Raise 2010-12 EPS but maintain Sell on MA risks                                                                 34

UAM, $16.38                                Matthew Borsch, CFA (New York): matthew.borsch@gs.com, (212) 902-6784
Market cap                   $1,286 mn
                                           Goldman Sachs & Co.
                                           Sebastian Paquette, CFA (New York): sebastian.paquette@gs.com, (212) 902-5306
Target price                      $14.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E    Sam Wass (New York): sam.wass@gs.com, (212) 357-0617
EPS ($)                    2.15     1.80   Goldman Sachs & Co.
P/E                        7.6X    9.1X

EPS Quarter/Interim
                      *
                           0.63     0.72
                                           What's changed
                                           Following 3Q earnings, we increase our 2010 EPS to $2.15 from $1.89 reflecting favorable trends in the
Investment Lists                           quarter and expected seasonally strong 4Q profits on the Medicare drug plan (PDP) product. We also
                      Americas Sell List   increase our 2011-2012 EPS to $1.80 for both years from $1.66 and $1.60, respectively.
Coverage view                 Attractive   Implications
*Current and a year ago
                                           UAM 3Q benefited from sector-wide favorable trends, as expected. Like other managed care companies,
                                           UAM is not yet offering 2011 guidance. For UAM, the biggest uncertainty in 2011 is MA enrollment, rather
                                           than reimbursement (that risk kicks in after next year). For next year, the headwind is the network
                                           requirement for non-rural MA PFFS that we estimate will drive an MA member decline of about 30%.
                                           However, UAM has the opportunity to gain new lives from the about 100k MA PFFS lives exited by other
                                           carriers. Our expectation of enrollment drives our view of declining EPS for next year, while the health reform
                                           MA funding drives our view of flat EPS for 2012 relative to 2011. On the flip side, its worth noting UAM is in a
                                           secure position to maintain its 1.5 mn dual-eligible PDP enrollment (duals are about 80% of UAM’s total 1.9
                                           mn PDP enrollment). UAM won’t be eligible for new auto-assigned lives, owing to a still-in-place CMS
                                           restriction on UAM, but the impact is not expected to be material.
                                           Valuation
                                           We have raised our 6-month price target by $1 to $14 to reflect our now-higher view of forward earnings. Our
                                           target is based on 8x our 2011 EPS (multiple unchanged) from our SOP for managed care. However, our
                                           target still implies 15% downside risk as we maintain our Sell rating in light of the risks associated with the
                                           transition to network products coupled with member loss and MA program funding cuts.
                                           Key risks
                                           Risks to our Sell rating include that MA fundamentals may stay positive for longer than we expect while
                                           funding cuts may be rolled back by Congress.



Industrials

Americas: Aerospace & Defense: A&D takeaways from Day 1 of the 2010 GS Industrials Conference                                                             35

                                           Noah Poponak, CFA (New York): noah.poponak@gs.com, (212) 357-0954
                                           Goldman Sachs & Co.
                                           Chun-Yai Wang (New York): chun-yai.wang@gs.com, (212) 902-9610
                                           Goldman Sachs & Co.
                                           Alexandria Carroll (New York): alexandria.carroll@gs.com, (212) 902-7894
                                           Goldman Sachs & Co.

                                           A&D themes emerging from the conference
                                           In our view, comments we heard from presenters at the conference today support our sector views –
                                           specifically, our preference for OE over aftermarket in Aerospace and our Cautious Defense sector view.
                                           OE over aftermarket: Certain companies with exposure to both express a view that the pace of aftermarket
                                           growth is likely to be muted in this cycle vs. past largely due to persistently higher OE rates and the resultant
                                           lower number of older out-of-warranty aircraft in the fleet.
                                           Cautious Defense: Small/mid-cap Defense suppliers see an opportunity to take share from the large-cap
                                           primes as the Government increasingly looks to buy from more cost-competitive contractors, which in many
                                           cases means commercial and hybrid companies. These companies also believe they are more ready to
                                           adapt to the changes the Pentagon is implementing.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  November 4, 2010



                                           Key takeaways from presenting companies
                                           Rockwell Collins (COL; Neutral): (1) Collins expects FY11 Gov’t growth to be a low water mark and for the
                                           rate of growth to reaccelerate in FY12 and beyond. (2) Management believes if the business jet market grows
                                           at a 7% yoy CAGR through 2014 it can double it at 14%, given share gains. (3) FY11 guidance embeds
                                           roughly 100 bp of segment margin improvement, with +200 bp in Commercial Systems and Government flat).
                                           (4) Commercial operating margin can be back to 21% in two years, and reach 24% in three or four years, and
                                           has the potential to surpass previous peak margin, given the lower cost structure and a stronger and
                                           sustainable Aerospace recovery. (5) the F1Q11 tax rate will be 34%, given timing of R&D tax credit.
                                           Hexcel (HXL; Neutral): (1) HXL believes the historical 5% growth gap in its Aeospace business vs. build rates
                                           can jump to 10% as composite rich aircraft come on line. (2) that plus announced build rate increases implies
                                           the 12%-16% Aerospace growth target may prove conservative. (3) HXL firmly believes Space & Defense will
                                           continue to grow with composite penetration of helicopter blades a large driver
                                           FLIR Systems (FLIR; Neutral): (1) RayMarine is already finding revenue synergies as it creates a one-stop
                                           shop, while ICX is focused squarely on improving profitability. (2) FLIR expects organic growth in Gov’t ex-
                                           RAID next year and believes its Gov’t business can remain decoupled from the broader direction of Defense
                                           budgets, given secular penetration.



Quanta Services, Inc. (PWR): In-line but low-quality 3Q10 EPS and weak outlook; stay Neutral                                                           36

PWR, $17.94                                Joe Ritchie (New York): joseph.ritchie@gs.com, (212) 357-8914
Market cap                  $3,757 mn
                                           Goldman Sachs & Co.
                                           Chaitra Purushotham (Bangalore): chaitra.purushotham@gs.com, (212) 934-6330
Target price                     $19.00
                                           Goldman Sachs India SPL
Fiscal y/e Dec         2010E     2011E     Gregory Elek (New York): gregory.elek@gs.com, (212) 357-7503
EPS ($)                   0.73     0.97    Goldman Sachs & Co.
P/E                    24.5X      18.6X

EPS Quarter/Interim*      0.17     0.21
                                           What's changed
                                           PWR reported 3Q10 EPS of $0.30 (includes $0.04 tax benefit) vs. GS/ consensus expectations of
Investment Lists                           $0.29/$0.30. Key highlights include the following.
                                 Neutral   1. 2010 guidance reduced by 17%. PWR lowered 2010 GAAP EPS guidance to $0.72-$0.74 from $0.85-
Coverage view                    Neutral   $0.90 to account for acquisition expenses and lower margins from transmission projects experiencing
                                           weather delays.
*Current and a year ago
                                           2. Award delays persist. PWR reported backlog of $5.7 bn vs. GS $5.9 bn. This implies new awards of $1.1
                                           bn or a book-to-bill of 0.91X vs. GS 1.10X.
                                           3. Revenue slightly better-than-expected. PWR reported revenues of $1.2 bn vs. GS $1.1 bn driven by better-
                                           than-expected top-line growth in the Natural Gas and Pipeline segment (+110% qoq).
                                           Implications
                                           This is a disappointing result for PWR, given the magnitude of the guidance revision and continued
                                           uncertainty surrounding the timing of future awards. In addition, this marks the third consecutive quarter that
                                           PWR has revised down FY10 guidance because of award delays. We are lowering our 2010/2011/2012 EPS
                                           estimates to $0.73/$0.97/$1.15 from $0.83/$1.05/$1.30 primarily to account for project delays and less
                                           margin improvement. We remain Neutral rated, as PWR has been one of the worst performing stocks in our
                                           coverage universe over the last 12 months (-17% vs. S&P +14%) and we continue to believe investors will
                                           pay a scarcity premium for PWR’s unique leverage to an electric transmission build-out.
                                           Valuation
                                           We lowered our 12-month price target to $19 from $21 to reflect reduced expectations. Our price target is
                                           based on 20.0X 2011 EPS.
                                           Key risks
                                           Upside: siting and permitting legislation, key project awards accelerate. Downside: solar supply chain issues,
                                           prolonged award delays, weather.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                     November 4, 2010




Cemex, S.A.B. de C.V. (ADS) (CX): Lower US cement demand; still Neutral on CX after 3Q10                                                                  37

CX, $9.20                                    Eduardo Siffert Couto, CFA (Sao Paulo): eduardo.couto@gs.com, +55(11)3371-0764
Market cap                    $9,202 mn
                                             Goldman Sachs Brasil Bco Múlt S.A.
                                             Tais Correa (Sao Paulo): tais.correa@gs.com, +55(11)3371-0833
Target price                        $8.50
                                             Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec            2010E    2011E

EPS ($)                   (0.86)    (0.26)   What's changed
P/E                           --        --   We update CX’s model after a weak 3Q2010. We keep a Neutral view, on (1) weak US construction, (2) low
                      *                      2011E cash generation, and (3) a stock rise of 12% since new debt terms were announced. EPS estimates
EPS Quarter/Interim       (0.12)    (0.21)
                                             drop, as the strong euro raises CX financial expenses in dollars (no cash impact).
Investment Lists
                                             Implications
                                   Neutral   In our view, investors should focus on three main points:
Coverage view                  Attractive    (1) Slow demand recovery. A cement demand rebound in developed markets is taking longer than expected.
                                             US construction remains weak, and Europe’s recovery is not affecting Spain, CX’s main European market.
*Current and a year ago
                                             The Portland Cement Association on November 2 cut expected US consumption by 2%/7%/11% in
                                             2010/2011/2012. It expects US cement consumption to grow just 1% yoy in 2011.
                                             (2) Capital structure and FCF. CX’s high leverage (7.6X debt to EBITDA) and low cash generation (US$728
                                             mn) in 2011E are concerns. Last week, CX outperformed, as bondholders relaxed covenants on US$10 bn
                                             debt. New terms require CX either to issue US$1 bn in equity by September 2011, or pay an extra 100 bp per
                                             year. The terms appear better than the market expected but do not resolve CX’s leverage or FCF issues.
                                             (3) Stock valuation. In the short term, CX’s 2011E EV/EBITDA of 9.8X (55% above peers) and FCF yield of
                                             8.4% (440 bp below peers) are unattractive. However, long-term valuation shows Cemex at 54% of
                                             replacement value.
                                             Valuation
                                             Our 12-month price target of US$ 8.50 is an equal blend of DCF (US$12.50), 2011 target EV/EBITDA
                                             (US$6.00) and 2011 target FCF yield (US$6.90). We tweak 2010/2011/2012 EBITDA by 0%-2% to
                                             US$2.40bn/US$2.64bn/US$3.13bn and 2010/2011 FCF to US$525mn/US$728mn.
                                             Key risks
                                             Cement consumption in CX’s main markets (USA, Mexico and Europe).



SPX Corporation (SPW): Solid 3Q, but lackluster 4Q guidance; remain Neutral                                                                               38

SPW, $64.08                                  Terry Darling (New York): terry.darling@gs.com, (212) 357-0379
Market cap                    $3,174 mn
                                             Goldman Sachs & Co.
                                             Eddie Szeto, CFA (New York): eddie.szeto@gs.com, (212) 357-3320
Target price                       $74.00
                                             Goldman Sachs & Co.
Fiscal y/e Dec            2010E    2011E     Adam Samuelson (New York): adam.samuelson@gs.com, (212) 902-6764
EPS ($)                    3.62      4.90    Goldman Sachs & Co.
                                             Ankit Rastogi, CFA (Bangalore): ankit.rastogi@gs.com, (212) 934-6798
P/E                       17.7X     13.1X
                                             Goldman Sachs India SPL
                      *
EPS Quarter/Interim        1.13      1.35

Investment Lists
                                             What's changed
                                   Neutral   SPW shares fell 7% despite sequential backlog improvement and better-than-expected 3Q operating
Coverage view                  Attractive    performance (op profit +14% vs. our above-consensus estimates) as a result of (1) a tough set-up (shares
                                             +8% over the past month vs. MI + 4.6%), (2) weak 3Q cash conversion (15%), (3) continued soft transformer
*Current and a year ago
                                             pricing and (4) 4Q2010 EPS guidance of $1.04-$1.05 at midpoint, which was below GS/ consensus of $1.14/
                                             $1.08. Stronger revenue performance at Test & Measurement was encouraging offset by softer performance
                                             at Flow. We maintain our 2010-11 EPS estimates and raise 2012 to $6.30 from $6.20 on minor adjustments,
                                             including FX. We also raise our 12-month target price to $74 (15X 2011E EPS vs. 14.2X previously) from $69
                                             as we believe a higher multiple is justified by improved visibility that 2010 would mark the trough in the cycle
                                             for SPW.
                                             Implications
                                             While we believe SPW has turned the corner and that sentiment on its later cycle exposure to a turn in the
                                             power cycle will remain positive, we expect the pace of the recovery to be uneven for several quarters, with




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                November 4, 2010



                                           company disclosure of continued weak pricing in transformer orders/ backlog a prime example and a concern
                                           for 1H2011 margins. As a result, we maintain our Neutral rating, looking for improved valuation or better
                                           visibility on improved transformer pricing or cooling equipment orders to become more positive.
                                           Valuation
                                           SPW is trading at 17.7X/ 13.1X 2010/ 2011 PE, +7%/ -4% to peers vs. its historical range of -30% to +10%.
                                           Key risks
                                           Downside risks: Transformer pricing pressure. Upside risks: Better-than-expected improvement in
                                           commodity/ energy reinvestment outlook.



Technology

Motricity, Inc. (MOTR): 10-Q shows mix shift in top clients and contribution from new client                                                         39

MOTR, $24.25                               Julio C. Quinteros Jr. (San Francisco): julio.quinteros@gs.com, (415) 249-7464
Market cap                  $996.8 mn
                                           Goldman Sachs & Co.
                                           Vincent Lin, CFA (New York): vincent.lin@gs.com, (212) 934-0510
Target price                     $13.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Snigdha Sharma (Bangalore): snigdha.sharma@gs.com, (212) 934-5056
EPS ($)                (0.04)      0.60    Goldman Sachs India SPL
P/E                         --    40.7X

EPS Quarter/Interim*      0.09    (0.25)
                                           News
                                           On11/3/2010 MOTR filed is latest 10-Q following reported 3Q results.
Investment Lists
                                           Analysis
                                 Neutral   The incremental revenue disclosures in the 10-Q includes the following.
Coverage view                Attractive    (1) AT&T revenues made up 39% of versus 54% in 2Q and compares to 40% of revenues in 1Q. AT&T
*Current and a year ago
                                           contributed 53% of revenue in 2009. On an absolute basis, AT&T revenues finished at $14.9 mn compared
                                           to $16 mn in 2Q and $11.5 mn in 1Q. (2) Verizon contributed 17% of revenues vs. 25% in 2Q and 39% in 1Q.
                                           Verizon contributed 20% of revenues in 2009. On an absolute basis, Verizon revenues finished at $6.3 mn
                                           compared to $7.6 mn in 2Q and $11.4 mn in 1Q. (3) Other revenues ramped up to 44% of revenues including
                                           a non-recurring termination fee of $1 mn, the initial revenues associated with the XL Axiata contract, and
                                           other sources. Excluding the benefits of the termination fee and the XL contract, we estimate Other revenues
                                           at $6.7 mn in 3Q, $6.4 mn in 2Q, and $6.1 mn in 1Q. (4) US revenues for 3Q finished at 74% of revenues vs.
                                           94% in 2Q and 96% in 1Q. For 2009 the US made up 95% of revenues. On an absolute basis, US revenues
                                           totaled $27.2 mn (excluding the termination fee) vs. $28.6 mn in 2Q and compares to $27.9 mn in 1Q.
                                           Implications
                                           The percentage changes in the AT&T and Verizon revenues are associated with quarterly fluctuations in total
                                           Professional Services (PS) revenue. The ramp in 2Q (to 54%) at AT&T was associated with initial
                                           Marketplace implementation efforts that went live at the end of October 2010; with subsequent phases still
                                           expected to ramp. The fluctuation in VZ’s 3Q revenue (to 17%) are due to quarterly changes in PS revenue,
                                           but were offset by Managed Services growth. The decline from 1Q levels for Verizon resulted from a
                                           previously disclosed contract change. During 3Q MOTR ramped and booked the initial XL related revenues
                                           (set up fees, etc.), with the contract expected to contribute additional PS fees in 4Q and 1H 2011. There are
                                           no changes to our estimates or price target.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   November 4, 2010




WebMD Health Corp. (WBMD): 4Q2010 guidance implies strong ad growth despite tough comp                                                                  40

WBMD, $52.40                                Ingrid Chung (New York): ingrid.chung@gs.com, (212) 902-2360
Market cap                   $3,219 mn
                                            Goldman Sachs & Co.
                                            James Mitchell, CFA (New York): james.mitchell@gs.com, (212) 357-1849
Target price                      $58.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Jordan Monahan (New York): jordan.monahan@gs.com, (212) 902-1879
EPS ($)                    1.58     1.89    Goldman Sachs & Co.
                                            Fred Krom (New York): fred.krom@gs.com, (212) 902-8618
P/E                       33.1X    27.7X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        0.63     0.46

Investment Lists
                                            What's changed
                                  Neutral   WebMD reported 3Q2010 revenue and EBITDA slightly below our estimates but in-line with to above
Coverage view                     Neutral   consensus, while 4Q2010 guidance was above our and consensus estimates. Revenue, EBITDA, and
                                            adjusted EPS of $135 mn (+21% yoy), $45 mn (+46% yoy), $0.42 (+28% yoy) compared to our $138 mn, $46
*Current and a year ago
                                            mn, and $0.39, respectively. Ad revenue increased 27% yoy to $113 mn (3% below our estimate), while
                                            Licensing revenue was flat yoy at $22 mn (2% above our estimate). S&M increased 11% yoy, while G&A
                                            grew 9% yoy. 4Q revenue guidance of greater than $165 mn was slightly above our prior estimate, while
                                            EBITDA margin guidance “in excess” of 40% was above our prior 38% estimate. We raise our 2010E-2012E
                                            EPS on positive management commentary to $1.58/$1.89/$2.36.
                                            Implications
                                            (1) Management indicated 4Q ad revenue growth yoy would be at least (a very healthy) 25%, despite a 1,240
                                            bp tougher comp; reasons include an expected 4Q budget flush and a shift to more effective ad channels
                                            near year-end. (2) Private portal revenue was flat yoy on an 8% yoy decline in customers, offset by 9%
                                            growth in revenue per account, which was driven by the loss of several lower-yielding customers and service
                                            up-selling to existing customers. (3) We see potential for further upside revisions to consensus estimates
                                            since WebMD is well-positioned to benefit from a continued offline-to-online ad shift, as the online pharma
                                            vertical is underpenetrated at just 5% of total spend. We see multiple expansion as limited, with shares
                                            trading at a 1.3X PEG vs. Internet peers at a 1.2X PEG.
                                            Valuation
                                            We increase our 6-month target price (DCF and PEG) to $58 (from $55), implying 31X our 2011E EPS, a
                                            1.4X PEG, and 16X 2011E EBITDA.
                                            Key risks
                                            Downside: advertising environment; privacy concerns. Upside: better traffic growth, faster campaign and
                                            client adds.



Americas: Technology: Software: CDNs ready to ride wave of web video (AKAM, LLNW)                                                                       41

                                            Derek R. Bingham (San Francisco): derek.bingham@gs.com, (415) 249-7435
                                            Goldman Sachs & Co.
                                            Geo John (Bangalore): geo.john@gs.com, (212) 934-6386
                                            Goldman Sachs India SPL

                                            Web video is coming to your living room…
                                            We attended the Streaming Media West conference in Los Angeles this week. Perhaps the biggest area of
                                            focus at the conference was the coming proliferation of internet-enabled devices – such as Roku, Google TV,
                                            Boxee, Apple TV, and more – that aim to bring streaming video to the big screen. However, the consensus
                                            seemed to be that, in the coming years, web content is much more likely to enhance and supplement cable-
                                            based linear programming than replace it outright.
                                            Large media customers highlight Akamai’s differentiation
                                            Large media customers we spoke with highlighted Akamai’s differentiation on a number of fronts. One
                                            remarked that Akamai is still “head and shoulders” above competitors in analytics, consulting, and proactive
                                            problem resolution. Another customer referenced Akamai’s adaptive bitrate HD network as a top
                                            differentiator. Customers also highlighted geographic reach as a differentiator, though perhaps not as critical
                                            as some other factors. Customers we spoke with did not seem to have an issue with the prices they were




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   November 4, 2010



                                           currently paying, consistent with our view of relative price stability at present. Large content owners we spoke
                                           with were also adamant that they would likely never in-house their content delivery.
                                           Hi-end pricing backdrop appears unchanged from earlier this year
                                           Dan Rayburn’s bi-annual pricing update was consistent with his view earlier in the year that pricing pressure
                                           for video this year would be in the range of about 20-25%. Rayburn noted the most notable change this year
                                           has been larger price reductions at the lower end of the market, consistent with our market feedback over the
                                           past year or more, post Limelight and Level 3 developing small-file offerings. There still does not seem to be
                                           any new serious threat from service providers or telcos.
                                           Investor interest in Limelight increasing; lifting price target
                                           We increase our 12-month price target for Limelight to $5.50 from $5.00 prior to reflect a higher target
                                           multiple (11X unchanged CY12 EBITDA vs. 10X prior) given strong ongoing indications of video traffic
                                           growth, where Limelight is heavily exposed. Investor interest seems to have inflected positively for Limelight
                                           now that the market cap is in excess of $500 mn. Key risks to our price target include aggressive competition
                                           and pricing pressure on the downside and strong internet traffic growth on the upside.



Garmin Ltd. (GRMN): Challenging fundamentals though valuation keeps us Neutral                                                                          42

GRMN, $33.01                               Thomas D. Lee (New York): thomas.d.lee@gs.com, (212) 902-2066
Market cap                  $6,605 mn
                                           Goldman Sachs & Co.
                                           Simona Jankowski, CFA (San Francisco): simona.jankowski@gs.com, (415) 249-7437
Target price                     $30.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Mukul Garg (Bangalore): mukul.garg@gs.com, (212) 934-9960
EPS ($)                   2.47     2.40    Goldman Sachs India SPL
P/E                    13.3X      13.8X

EPS Quarter/Interim*      0.78     1.37
                                           What's changed
                                           Garmin reported weak 3Q revenue/pro forma EPS of $692 mn/$0.70, with revenue below GSe/Street at $722
Investment Lists                           mn/$730 mn and EPS largely in line with our $0.71 but below the Street’s $0.75. The company lowered CY10
                                 Neutral   revenue guidance to $2.65-2.75 bn vs. GSe/Street $2.79 bn/$2.88 bn and also lowered CY10 EPS guidance
Coverage view                    Neutral   to $2.70-2.90, in line with our estimate of $2.77 but well below the Street’s $2.98. We are adjusting our
                                           estimates on lower non-PND revenues but higher margins, which has a net positive impact to EPS. Our
*Current and a year ago
                                           2011-12 EPS estimates move to $2.40/$2.35 from $2.36/$2.19.
                                           Implications
                                           Garmin’s weak results and guidance support our cautious view on the personal navigation device (PND)
                                           market, in particular weakening US trends, as evidenced by the steep 18% yoy revenue decline in North
                                           America from +7% growth in 2Q (note: US drives more than 50% of Garmin’s auto/mobile revenues). Also
                                           worrisome was top-line weakness in Marine and Outdoor/Fitness, which missed GS/Consensus estimates by
                                           8% and 5%, respectively. Despite this, there were a few positive takeaways, most notably better than
                                           expected margins in the three non-PND businesses, which helped drive very solid free cash flow generation
                                           of $195 mn leading to cash/share of $9.72. Garmin (along with Tellabs) has the highest free cash flow yield in
                                           our group at 10% our CY11 estimates. We maintain our Neutral rating given solid valuation support.
                                           Valuation
                                           We are modestly adjusting our 12-month SOTP based price target to $30 from $29, to account for the higher
                                           cash generation in the quarter.
                                           Key risks
                                           Upside risks include strategic alternatives & faster diversification away from PNDs; Downside risks include
                                           faster-than-expected ASP/margin. compression in PNDs or deterioration in the non-PND segments.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   November 4, 2010




ExlService Holdings, Inc. (EXLS): First Take: 3Q tops, 2010 revenue and margin outlook raised                                                           43

EXLS, $19.07                                Vincent Lin, CFA (New York): vincent.lin@gs.com, (212) 934-0510
Market cap                   $575.9 mn
                                            Goldman Sachs & Co.
                                            Julio C. Quinteros Jr. (San Francisco): julio.quinteros@gs.com, (415) 249-7464
Target price                      $20.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Snigdha Sharma (Bangalore): snigdha.sharma@gs.com, (212) 934-5056
EPS ($)                    0.66     0.73    Goldman Sachs India SPL
P/E                       29.1X    26.0X

EPS Quarter/Interim
                      *
                           0.16     0.14
                                            News
                                            3Q tops on revenue and EPS – EXLS reported 3Q2010 gross revenue of $67.6 mn (+40% yoy, +26%
Investment Lists                            organic; +11% qoq), 9% above our estimate. The GAAP operating margin finished at 10.3%, 120 bp above
                                  Neutral   our 9.1% estimate, driven by lower G&A and depreciation expenses. On an adjusted basis excluding stock
Coverage view                 Attractive    comp and amortization, the operating margin finished at 14.5%, 60 bp above our 13.9% estimate. Using a
                                            normalized tax rate of 25%, we calculate adjusted EPS of $0.27, $0.04 above our estimate.
*Current and a year ago
                                            2010 revenue and margin guidance raised. Management now expects
                                            (1) gross revenue of $247 mn (+33% yoy) vs. prior guidance of $240 mn and our estimate of $240 mn and
                                            (2) adjusted operating margin of 14.0%- 14.5% vs. prior guidance of 14%, and our estimate of 14.0%.
                                            Analysis
                                            Solid revenue momentum across segments – Outsourcing revenue finished at $50.5 mn (+34% yoy; +8%
                                            qoq), while Transformation revenue finished at $17.1 mn (+63% yoy; +21% qoq). On a sequential basis,
                                            Transformation revenue growth was the second highest in EXLS’ history, though management expects
                                            revenue to decline in 4Q due to seasonality.
                                            Headcount/utilization stable, employee attrition improved qoq. Total headcount finished at 12,205 (+16% yoy;
                                            flat qoq). Seat utilization finished at 1.30 vs. 1.32 in 2Q10. Billable employee attrition remained elevated at
                                            32.8% but improved modestly from 34.6% in 2Q10.
                                            Cash flow better – DSOs finished at 56 days vs. our 59 days estimate. Operating cash flow of $16.7 mn was
                                            well above our $3.5 mn estimate, driven by lower DSO and higher accrued expenses.
                                            Implications
                                            We expect EXLS shares to find support from solid results and outlook, particularly in light of relatively
                                            lackluster 3Q results from other offshore BPO companies. We will have more details post management’s
                                            conference call at 8:00 a.m. ET on 11/4. Our estimates and price target are unchanged.



ON Semiconductor Corp. (ONNN): Near-term revenue headwinds; long-term earnings power still solid                                                        44

ONNN, $7.86                                 James Schneider, Ph.D. (New York): james.schneider@gs.com, (917) 343-3149
Market cap                   $3,455 mn
                                            Goldman Sachs & Co.
                                            James Covello (New York): james.covello@gs.com, (212) 902-1918
Target price                      $10.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Gabriela Borges (New York): gabriela.borges@gs.com, (212) 357-2692
EPS ($)                    0.90     1.00    Goldman Sachs & Co.
P/E                        8.8X     7.9X

EPS Quarter/Interim*       0.22     0.19
                                            What's changed
                                            ON reported 3Q10 revenues of $601 mn (+3% qoq), in line with guidance of flat to +5% qoq but below our
Investment Lists                            estimate of $611 mn. We estimate that operating EPS (excluding one-time items but including ESO) was
                      Americas Buy List     $0.25, just below our estimate of $0.26 on lower revenue, lower GM and higher R&D, partly offset by lower
Coverage view                 Attractive    SG&A and lower other expense. The GM was negatively impacted by 130 bp due to currency and commodity
                                            effects. Guidance for 4Q10 is for revenue of $565 mn-$585 mn (down 3% to 6% qoq), below the Street at
*Current and a year ago
                                            $593 mn and our prior estimate of $615 mn. Pro forma GM is expected to be 40%-41%, with pro forma opex
                                            of $127 mn-$131 mn. ON also announced that its acquisition of Sanyo is now expected to close in 1Q11
                                            (previously slated for 4Q10); management stated that it does not plan to access the capital markets or issue
                                            shares in order to close the transaction.
                                            Implications
                                            While revenue and particularly gross margin guidance were somewhat disappointing, we continue to
                                            recommend the stock as we believe that ON will drive significant long-term accretion from its market share




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                 November 4, 2010



                                          gains (such as in PC power), as well as from its ongoing consolidation of the analog industry. We think the
                                          late-cycle recovery for the industrial, auto, and mil/aero markets (as evidenced by analog peers) will continue
                                          to drive revenues, given ON’s 40% exposure to these markets. However, we recognize that, given the current
                                          inventory corrections, PCs and consumer electronics are likely to remain headwinds over the next quarter.
                                          We are trimming our estimates on lower revenue and gross margin: 2010 to $0.90 from $0.95, 2011 to $1.00
                                          from $1.10, and 2012 to $1.15 from $1.20.
                                          Valuation
                                          Our six-month price target of $10 is unchanged, which is based on a 12X multiple applied to our normalized
                                          EPS estimate of $0.85.
                                          Key risks
                                          Risks include excess inventory and execution on cost reduction programs.



Amdocs Limited (DOX): New CEO weighs in and resets margins, LT prospects intact; Buy                                                                  45

DOX, $30.00                               Julio C. Quinteros Jr. (San Francisco): julio.quinteros@gs.com, (415) 249-7464
Market cap                  $6,233 mn
                                          Goldman Sachs & Co.
                                          Vincent Lin, CFA (New York): vincent.lin@gs.com, (212) 934-0510
Target price                     $32.00
                                          Goldman Sachs & Co.
Fiscal y/e Sep         2010E     2011E    Snigdha Sharma (Bangalore): snigdha.sharma@gs.com, (212) 934-5056
EPS ($)                   2.11     2.22   Goldman Sachs India SPL
P/E                    14.2X     13.5X

EPS Quarter/Interim*      0.56     0.49
                                          What's changed
                                          Following 4Q results and reflecting management’s reduced margin profile for FY11, we have trimmed our
Investment Lists                          estimates by an average of 4% FY11 and FY12; reflecting intact revenues, lower margins, but offset by share
                   Americas Buy List      repurchases. Our revised FY11 EPS estimate (including stock comp) is now set at $2.22 (from $2.31) on 8%
Coverage view                Attractive   revenue growth and an adjusted operating margin of 16.9%. Our revised FY12 EPS estimate is now set at
                                          $2.45 (from $2.49) on revenue growth of 7% and an operating margin of 16.9%. We also introduce an initial
*Current and a year ago
                                          LT EPS estimate of $2.70 on 7% revenue growth. Reflecting our reduced estimates we trimmed our 12-
                                          month price target to $32 (from $35) suggesting 12% from the after-hour price of $28.50.
                                          Implications
                                          Admittedly, we are disappointed with the margin reset into FY11, but view the announced initiatives by new
                                          CEO Eli Gelman as reasonable to drive LT growth. Although we expect DOX shares to come under near-
                                          term pressure, our investment thesis remains intact with DOX well-positioned for longer-term global
                                          opportunities in telephony and poised for near-term growth as reflected in its key leading indicators including
                                          headcount adds and intact backlog. As such we retain our Buy-rating and would use a likely reset in the
                                          shares as an opportunity given intact long-term EPS growth.
                                          Valuation
                                          Our 12-month price target of $32 is based on a weighted average model incorporating our sector relative
                                          Framework, CY11 P/E, EV/EBITDA multiples, and an M&A value, implying a FTM P/E of 15.5X.
                                          Key risks
                                          Contract execution, lower revenues, project spending, margins and/or FCF.
                                          Impact on related securities
                                          The read across is relatively benign for our broader Consulting and Outsourcing coverage group as it
                                          appears company specific.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                     November 4, 2010




SolarWinds, Inc. (SWI): Street surprised to learn SolarWinds story same as it ever was                                                                    46

SWI, $18.33                                 Derek R. Bingham (San Francisco): derek.bingham@gs.com, (415) 249-7435
Market cap                   $1,329 mn
                                            Goldman Sachs & Co.
                                            Gonzalo Cavenaghi (San Francisco): gonzalo.cavenaghi@gs.com, (415) 249-7438
Target price                      $22.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Geo John (Bangalore): geo.john@gs.com, (212) 934-6386
EPS ($)                    0.61     0.75    Goldman Sachs India SPL
P/E                       29.9X    24.4X

EPS Quarter/Interim
                      *
                           0.17     0.16
                                            What's changed
                                            SolarWinds hosted its first analyst day, telling pretty much the same strategic and financial story since its IPO
Investment Lists                            18 months ago, though there continues to be a healthy dose of fear around company messaging events. Our
                                  Neutral   key takeaways follow: (1) Introduction of 2011 guidance helping to ease some investor concerns. We view
Coverage view                 Attractive    2011 guidance as prudent after disappointing results in the 1H of the year. The company guided to 2011
                                            organic revenue growth of 21%-25%, the midpoint of which is in line with our estimate and a little above the
*Current and a year ago
                                            Street’s 22% estimate. 2011 Non-GAAP operating margin guidance of approximately 50% is in line with
                                            Street. Consistent with 4Q guidance, the 2011outlook does not include large federal deals which could drive
                                            upside, but nor does it include potential impact from a greater acquisition pace, which could result in
                                            temporary dilution. (2) The company reiterated its commitment to its current sales model as it continues to
                                            expand products and geographies; management emphasized no plans to hire an outside sales force. (3) We
                                            expect future M&A sizes to remain consistent with past acquisitions, which could result in near-term dilution,
                                            but will not alter the operating model longer-term. Near-term focus areas are likely to be incremental
                                            functionality in application and storage management, with potential longer term focus in areas such as log
                                            management, security management, virtualization management, and service management.
                                            Implications
                                            Our estimates and price target are unchanged.
                                            Valuation
                                            SWI trades at 21X CY11 non-GAAP EPS, in line with the group. Our 12-month price target of $22.00 is
                                            based on 22X our CY12 EPS of $1.00.
                                            Key risks
                                            Upside risks: Improved execution and traction from newer products. Downside risks: Weak macro economy
                                            and high margins.



Solera Holdings, Inc. (SLH): Strong start into FY11, momentum strengthening; raising estimates                                                            47

SLH, $47.74                                 Vincent Lin, CFA (New York): vincent.lin@gs.com, (212) 934-0510
Market cap                   $3,198 mn
                                            Goldman Sachs & Co.
                                            Julio C. Quinteros Jr. (San Francisco): julio.quinteros@gs.com, (415) 249-7464
Target price                      $51.00
                                            Goldman Sachs & Co.
Fiscal y/e Jun            2011E   2012E     Snigdha Sharma (Bangalore): snigdha.sharma@gs.com, (212) 934-5056
EPS ($)                    1.73     1.96    Goldman Sachs India SPL
P/E                       27.5X    24.4X

EPS Quarter/Interim*       0.42     0.36
                                            What's changed
                                            SLH reported 1QFY11 revenues of $158.9 mn (+5% yoy), 2% above our estimate. On an organic basis, we
Investment Lists                            calculate revenue growth of 5.3% vs. our 3.6% estimate. Adjusted EPS (ex. stock comp and amortization) of
                                  Neutral   $0.58 was $0.06 above our estimate on higher revenue and margin – adjusted EBITDA margin of 43.9% was
Coverage view                     Neutral   230 bp above our estimate. We raise our FY11-FY13 EPS by 8% on average to $1.73/$1.96/$2.27 on faster
                                            organic revenue growth in FY11 (6.5% vs. 4.5% prior) and higher margins. Our FY11-FY13 adjusted EPS
*Current and a year ago
                                            now stand at $2.42/$2.66/$2.89. Reflecting our revised estimates, we raise our 12-month price target to $51
                                            (from $46), suggesting 7% upside.
                                            Implications
                                            While SLH remains Neutral rated, our posture on the shares is incrementally more positive. Specifically, 1Q
                                            results illustrate SLH’s high margin leverage (93% incremental margin yoy) and solid execution, as the
                                            company delivered upside on revenue, EBITDA, EPS and FCF. In addition, we believe organic growth is
                                            poised for further acceleration into CY11 driven by an improved global macro backdrop, strong seasonality,




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                November 4, 2010



                                           and the secular adoption of automated services driving further increase in revenue per claim. Longer term,
                                           we remain positive on SLH’s global positioning and high margin leverage and believe the model is capable of
                                           delivering sustained double-digits profit and FCF growth driven by 7%-9% organic growth, EBITDA margin
                                           expansion, and targeted M&A.
                                           Valuation
                                           Our 12-month price target of $51 is based on a weighted average model that incorporates a sector relative
                                           Investment Framework, CY11 P/E, and CY11 EV/EBITDA; it implies a CY11 P/E of 20X our adjusted EPS of
                                           $2.52.
                                           Key risks
                                           Downside: Lower volume growth, slower service adoption, and FX volatility. Upside: Higher revenue growth
                                           and/or margins.



Heartland Payment Systems, Inc. (HPY): Weak margins still the story, though we expect CY11                                                           48
improvement

HPY, $13.92                                John T. Williams (New York): john.t.williams@gs.com, (212) 357-3948
Market cap                  $549.1 mn
                                           Goldman Sachs & Co.
                                           Julio C. Quinteros Jr. (San Francisco): julio.quinteros@gs.com, (415) 249-7464
Target price                     $13.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E     Roman Leal (San Francisco): roman.leal@gs.com, (415) 249-7468
EPS ($)                   0.67     0.81    Goldman Sachs & Co.
                                           Dennis Sevilla (San Francisco): dennis.sevilla@gs.com, (415) 249-7434
P/E                    20.8X      17.2X
                                           Goldman Sachs & Co.
EPS Quarter/Interim*      0.19     0.16

Investment Lists
                                           What's changed
                                 Neutral   Post-3Q10 earnings, we are refreshing estimates to reflect the quarterly miss and lower revenue
Coverage view                    Neutral   expectations. Our CY10/CY11/CY12 adjusted EPS estimates (which include stock comp and incremental
                                           interest) move to $0.67 (-$0.15, -13% yoy)/ $0.81 (-$0.15, +21% yoy)/$0.99 (-$0.11, +20% yoy), respectively.
*Current and a year ago
                                           As a result, our 12-month price target is now $13 (7% downside) from $15 prior, but our target multiple (16X
                                           our CY11 EPS) is intact.
                                           Implications
                                           3Q10 results were a disappointment, as EPS missed by a wide margin ($0.12 below our estimate and $0.10
                                           below consensus) despite net revenue generally in line with our estimate. Transactions and dollar volumes
                                           again turned in respectable yoy growth (9% and 6%, respectively) against a still-challenged SME backdrop,
                                           but higher-than-forecast processing/servicing costs weighed heavily on margins. That said, we do expect
                                           CY11 expense improvement, as several contract renegotiations are complete and commission buy-out
                                           quarterly savings should begin to materialize, driving much of our forecasted CY11 op. margin expansion of
                                           165 bps. Our biggest medium-term concern is execution—while we give management credit for quickly
                                           adjusting its sales force restructuring plan, implementing more changes could push the completion timetable
                                           out a bit further. While CY11 revenue guidance is reasonable, in our view, we see a 15% year-end operating
                                           margin target as ambitious, so our CY11/CY12 modeling assumptions reflect a cautious approach.
                                           Valuation
                                           Our 12-month price target of $13 is derived using a weighted average model incorporating our sector-relative
                                           Investment Framework, CY2011 P/E, and EV/EBITDA multiples, implying a CY2011E multiple of 16X.
                                           Key risks
                                           Upside: Higher transaction volumes and lower legal liability. Downside: margin compression, lower same
                                           store sales growth, higher legal liability.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                   November 4, 2010



Telecom Services

CenturyLink Inc. (CTL): Conservative guidance, attractive yield support further upside                                                                  49

CTL, $42.24                                 Scott Goldman (New York): scott.goldman@gs.com, (212) 357-4640
Market cap                  $12,702 mn
                                            Goldman Sachs & Co.
                                            Jason Armstrong, CFA (New York): jason.armstrong@gs.com, (212) 902-8156
Target price                      $44.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Lakshmi Venkateshwaran (Bangalore): lakshmi.venkateshwaran@gs.com, (212) 934-6022
EPS ($)                    3.44     3.39    Goldman Sachs India SPL
                                            Dan Pellegrinelli (New York): dan.pellegrinelli@gs.com, (212) 902-7516
P/E                       12.3X    12.5X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        0.79     0.96

Investment Lists
                                            What's changed
                      Americas Buy List     Following 3Q10 results, we update our 2010/2011 revenue estimates to $7.03 bn/$6.72 bn (flat/-0.2%) while
Coverage view                     Neutral   our adj. EBITDA estimates are $3.62 bn/$3.50 bn/$3.39 bn (-0.4%/-0.4%/-0.4%). Our 12-month price target
                                            goes to $44 from $42 on a more constructive view of cash flow generation.
*Current and a year ago
                                            Implications
                                            Financial outperformance amid mixed operating metrics. Third quarter results reflected strong financial
                                            performance, with both revenue and EBITDA exceeding expectations. However, broadband adds were down
                                            1K sequentially, to 29K, in a seasonally stronger quarter. By contrast, AT&T, Qwest, and Verizon all reported
                                            qoq improvements.
                                            Guidance impacted by one-time items, but likely conservative. Guidance for 4Q revenue and EPS came in
                                            below GS and consensus estimates. A favorable $5 mn revenue impact in 3Q as well as increasing IPTV
                                            launch costs are expected to suppress 4Q trends. Nevertheless, we believe management is being
                                            conservative and forecast upside to both figures, including further improvements in the rate of revenue
                                            declines.
                                            Catalysts support continued investment. Though shares have risen sharply in recent weeks, we believe
                                            several catalysts support further upside to CTL, including (1) moderation of top-line pressures in 2011, (2)
                                            flow of funds into income and yield investments, (3) the anticipated closing of the Qwest deal in 1H11, and (4)
                                            expectations for near-term outperformance as 4Q guidance appears conservative.
                                            Valuation
                                            Our 12- month price target of $44 (from $42) is an average of DCF, multiple (5.5X 2012E EBITDA) and
                                            dividend yield analysis.
                                            Key risks
                                            (1) Qwest deal approval and timing, (2) dividend tax policy, (3) regulatory changes to USF and ICC.



Qwest Communications Intl. (Q): Further revenue moderation sets stage for 4Q EBITDA beat                                                                50

Q, $6.75                                    Scott Goldman (New York): scott.goldman@gs.com, (212) 357-4640
Market cap                  $11,656 mn
                                            Goldman Sachs & Co.
                                            Jason Armstrong, CFA (New York): jason.armstrong@gs.com, (212) 902-8156
Target price                       $7.25
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E     Lakshmi Venkateshwaran (Bangalore): lakshmi.venkateshwaran@gs.com, (212) 934-6022
EPS ($)                    0.39     0.42    Goldman Sachs India SPL
                                            Dan Pellegrinelli (New York): dan.pellegrinelli@gs.com, (212) 902-7516
P/E                       17.4X    16.2X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        0.10     0.06

Investment Lists
                                            What's changed
                      Americas Buy List     Following 3Q10 results, we are adjusting estimates to reflect better Mass Market revenue trends partially
Coverage view                     Neutral   offset by a slower recovery in Wholesale than previously forecast. Our revised 2010/2011/2012 revenue
                                            estimates are $11.7 bn/$11.3 bn/$11.0 bn (+0.2%/-0.1%/-0.4%) while our EBITDA estimates move to $4.43
*Current and a year ago
                                            bn/$4.28 bn/$4.11 bn (+1.3%/+1.7%/+1.2%). We raise our price target, given our increased price target for
                                            CTL.
                                            Implications




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                 November 4, 2010



                                           Revenue moderation continues. Revenue declines moderated to 3.9% (3.3% ex-wireless), the lowest rate in
                                           nearly two years. Notably, Business Markets rose 0.4% yoy and we believe low growth can be maintained
                                           despite economic challenges (high unemployment, low GDP growth). Wholesale results rose 0.3% qoq, an
                                           encouraging sign despite on-going headwinds.
                                           Further cost cuts contribute to record margins. Qwest continued its aggressive cost cutting, driving segment
                                           margins higher in Business (+190 bp) and Wholesale (+30 bp), while Mass Markets dipped by 50 bp.
                                           Consolidated margins hit a record 38.2%.
                                           Conservative guidance sets stage for another beat. Management raised EBITDA guidance to the high end of
                                           the prior range ($4.4 bn). The revision implies a 5% qoq drop with pressures attributed to seasonality. Given
                                           expectations for further moderation in revenue declines in 4Q, we believe management is being overly
                                           conservative and expect EBITDA to top guidance, providing another catalyst for Qwest shares.
                                           Valuation
                                           Our 12- month price target of $7.25 (from $7.00 previously) is based on CTL valuation and a deal ratio
                                           (0.1664 CTL shares per Q share)
                                           Key risks
                                           (1) CenturyLink deal approval and timing; (2) dividend tax rates revision;
                                           (3) regulatory changes and (4) cable competition pressures.




Transportation

Con-way Inc. (CNW): Near-term positive, longer term guarded, maintain Neutral                                                                         51

CNW, $35.31                                Scott Malat, CFA (New York): scott.malat@gs.com, (212) 902-6708
Market cap                  $1,929 mn
                                           Goldman Sachs & Co.
                                           Varun Gokarn (New York): varun.gokarn@gs.com, (212) 934-4212
Target price                     $34.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E

EPS ($)                   0.90     2.09    What's changed
P/E                    39.4X      16.9X    CNW reported 3Q 2010 adjusted EPS of $0.22 vs GS $0.24 and consensus $0.26. The miss was driven by
                                           lower revenues in all three operating segments, offset by improved LTL pricing and margins. As a result of
EPS Quarter/Interim*      0.39    (0.00)
                                           continued sequential pricing growth and continued cost reductions our 2010E/2011E/2012E EPS move to
Investment Lists                           $0.90/$2.09/$2.59 from $0.86/$1.97/$2.48. Given higher estimates and rolling forward our valuation, our 12-
                                 Neutral   month price target moves to $34 from $31.
Coverage view                    Neutral   Implications
                                           We remain Neutral rated on CNW given our cautious secular outlook on pricing/margins offset by what we
*Current and a year ago
                                           see as an attractive short-term cyclical setup. CNW shares reacted positively today (+6.82% vs. S&P
                                           +0.37%) as results beat low expectations and LTL yields (excl fuel) improved 2.5% qoq, the largest
                                           sequential pricing improvement since 2Q2006. This was the first evidence of the company turning away
                                           unprofitable business as tonnage fell 5% qoq, while variable cost reductions were encouraging. We note that
                                           1% in LTL price is equal to roughly $0.30/sh.
                                           Cautious longer term view: We believe there are too many LTL carriers with national networks competing for
                                           freight, which should pressure long-term margins. We also expect aggressive competition from FedEx and
                                           UPS will make it difficult for Con-way to command its historical pricing premium. In addition, we expect cost
                                           increases in 2011 due largely to reinstated wage reductions and labor inflation.
                                           Valuation
                                           Our $34, 12-mth price target is based on DCF and best/worst-case scenarios.
                                           Key risks
                                           Downside: Potential for big swings in volumes/margins as company tests higher price points, FDX
                                           competition. Upside: Continued near-term pricing improvement, competitor bankruptcies.



Americas: Transportation: Transportation highlights from GS Industrials Conference                                                                    52

                                           Scott Malat, CFA (New York): scott.malat@gs.com, (212) 902-6708
                                           Goldman Sachs & Co.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  November 4, 2010



                                          Varun Gokarn (New York): varun.gokarn@gs.com, (212) 934-4212
                                          Goldman Sachs & Co.

                                          Norfolk Southern (Neutral): Cautionary margin outlook
                                          We remain Neutral on NSC, given high rail expectations and our negative view of East Coast coal. While
                                          management’s demand outlook remained relatively positive, we noted a more cautious margin outlook,
                                          underpinned by (1) increased spending to improve service levels, (2) expectation for increased employee
                                          entitlements, and (3) pricing increases that may be limited by regulatory concerns. Management noted costs
                                          could come back in stair-steps.
                                          Canadian Pacific (CL-Buy): Underappreciated energy opportunity
                                          We reiterate our CL-Buy rating on CP given an attractive bulk commodity exposure and margin catch-up
                                          opportunity. We remain positive on metallurgical coal and potash opportunities, which management did
                                          highlight. However, our incremental takeaways centered on the company’s significant energy opportunities
                                          (Marcellus shale, Bakken Formation, oil sands, ethanol). In addition, management noted expectations for
                                          pricing growth improvement into 2011.
                                          FedEx (Neutral): Cautiously optimistic, focused on pricing
                                          We continue to have a favorable view of FedEx and reiterate our attractive Air Freight view, largely due to a
                                          newly rational duopoly in the US package market and attractive international growth opportunities.
                                          Management highlighted a clear focus on domestic pricing improvement, attempting to increase its capture
                                          ratio on rate hikes and holding customers to minimum volume levels to qualify for discounts. The company’s
                                          volume outlook was cautiously optimistic, with tight inventories in high tech and specialty retail providing an
                                          opportunity if holiday demand surprises to the upside.
                                          LTL Panel: Early signs of price, FedEx consolidation not a big hit
                                          We continue to have a cautious less-than-truckload long-term secular outlook on pricing/margins, offset by
                                          what we view as an attractive short-term setup (we rate Con-Way Neutral). Our panel (two national shippers,
                                          a regional LTL carrier, and an industry consultant) highlighted an improving but still oversupplied industry,
                                          with very early signs of a pricing recovery. Shippers were skeptical of benefits from the FedEx network
                                          consolidation, with worries over costs and compatibility with existing processes. Our panelists also worried
                                          about operational missteps and service issues faced by others that have implemented similar consolidations.



Utilities

Spectra Energy Corp. (SE) Buy: Best combination of growth & returns at lower risk; reiterate CL-Buy                                                    53

SE, $23.99                                Theodore Durbin (New York): ted.durbin@gs.com, (212) 902-2312
Market cap                 $15,594 mn
                                          Goldman Sachs & Co.
                                          Michael Cerasoli, CFA (New York): michael.cerasoli@gs.com, (212) 357-1914
Target price                     $27.00
                                          Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E

EPS ($)                   1.45     1.70   Source of opportunity
P/E                    16.5X     14.1X    We reiterate our Conviction Buy rating on Spectra (SE) after 3Q10 EPS of $0.31 that matched our estimate
                                          and consensus. Our investment thesis remains intact: SE represents the best combination of high growth,
EPS Quarter/Interim*      0.38     0.33
                                          strong returns, and lower risk at a reasonable valuation in the midstream space. Spectra also has the most
Investment Lists                          leverage to our bullish outlook for natural gas liquids (NGL) prices and volumes among Diversified Pipelines.
                    Americas Buy List     We maintain our 2010-2013 estimates, and bump our 2014 estimate by $0.05 due to additional growth
          Americas Conviction Buy List    projects in western Canada. We see 17% upside to our unchanged $27 target price, which includes a 4.2%
Coverage view                Attractive   dividend yield.
*Current and a year ago                   Catalyst
                                          We believe investor recognition of SE’s leading growth and returns will drive shares higher. We forecast the
                                          company will grow EPS 18% in 2011 and another 12% in 2012, even after posting 23% growth in 2010,
                                          driven by (1) our bullish outlook for NGLs, (2) organic growth from its fee-based gas infrastructure assets.
                                          Trends in the quarter confirmed our outlook, with SE’s NGL production up 5% sequentially, NGL prices
                                          bouncing, and solid growth from its stable utility and pipeline segments. Spectra is on track to generate mid-
                                          teens returns on capital in its well-positioned western Canadian assets over the next three years as
                                          producers ramp up drilling in the Horn River and Montney shales. Finally, we see Spectra as a lower-risk
                                          growth story, given its high proportion of fee-based earnings and strong balance sheet. Other catalysts
                                          include 2011 guidance (expected in January), new project announcements, and a potential dividend




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                       November 4, 2010



                                    increase.
                                    Valuation
                                    Our 12-month $27 target price assumes Spectra trades to 8.5x on our 2012 EV/EBITDA estimate, in-line with
                                    its five-year average.
                                    Key risks
                                    Lower commodity prices and volumes, cost overruns, dilutive acquisitions.



Reports Published

                                  US Daily: QE2: Slightly Slower Pace, But Long Time Frame (Hatzius) 

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Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                           November 4, 2010




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Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                              November 4, 2010



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Goldman Sachs Global Investment Research
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