Software

							MORGAN NORTH

STANLEY

RESEARCH

AMERICA

Morgan Stanley & Co. Incorporated

Adam Holt
Adam.Holt@morganstanley.com +1 (1)415 576 2320

Keith Weiss, CFA
Keith.Weiss@morganstanley.com

Jennifer Swanson, CFA
Jennifer.Swanson@morganstanley.com

July 20, 2009

Munish Jain
Munish.Jain@morganstanley.com

Industry View Attractive

Software
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Kelvin Wu
Kelvin.K.Wu@morganstanley.com

Topic of the Week: Q2 Earnings Set Up. As we enter the second-quarter earnings season, we look to trends in 1) sell-side sentiment, 2) consensus estimate revision, 3) short interest, and 4) price performance and multiple expansion to identify where Q2 expectations have become most inflated vs. where expectations and valuation appear more reasonable. Over all, our analysis suggests that sentiment is high heading into Q2, which could lead to greater risk for some of our names. ADSK, CRM and SFSF stand out as the three names where sell-side sentiment has become more positive and/or consensus estimates and short interest have trended higher, while at the same time multiples for these names remain above group averages. In contrast, sentiment and expectations remain low for VMW. Key Events in Software This Week July 22 CTXS Q209 Earnings July 22 OMTR Q209 Earnings July 22 VMW Q209 Earnings July 23 SWI Q209 Earnings July 23 MSFT Q209 Earnings

Title

Date

VMware Inc: The Tide is Turning; Near Term Risk/Reward Better
Adam Holt / Keith Weiss, CFA / Munish Jain

Jul 13, 2009

Oracle Corporation: Quick Comment: JAVA Accretion Remains on Target
Adam Holt / Keith Weiss, CFA

Jul 14, 2009

Software: SMB Data Weakens
Adam Holt / Jennifer Swanson, CFA / Keith Weiss, CFA / Munish Jain / Kelvin Wu

Jul 14, 2009

Microsoft: Solid PC Data and Bing Continues to Gain Share
Adam Holt / Jennifer Swanson, CFA / Keith Weiss, CFA / Munish Jain / Kelvin Wu

Jul 16, 2009

Salesforce.com: Signs of Improvement, But Model Still in Transition
Adam Holt / Keith Weiss, CFA / Jennifer Swanson, CFA

Jul 16, 2009

Citrix Systems Inc: Q2 Checks Solid, But Largely in the Stock
Adam Holt / Keith Weiss, CFA / Munish Jain

Jul 16, 2009

4:45pm EST 5:00pm EST 5:00pm EST 5:00pm EST 5:30pm EST

In This Issue:
Topic of the Week: Q2 Earnings Set Up Industry News Flow Software Calendar & Latest Research Published - Pg. 2-4 - Pg. 5 - Pg. 6-8 - Pg. 9-11 - Pg. 12-16

Weekly Performance: Our software group was up 8.4% last week—and now trades at an avg. CY09E P/E of 27.1x, vs. the Nasdaq up 7.4% at a P/E of 23.4x, and the S&P 500 up 7.0% at a P/E of 16.1x. Outperformers were ARST (+24.5%) and RNOW (+19.0%), while SWI (-3.8%) and TLEO (-1.4%) underperformed.
Average Price Performance: MS Software Group vs. Indices
2008 Return SW Group: Coverage Return SW Group: Large-Cap Return SW Group: Small-Cap Return S&P 500 Info Tech Index Comm equipment Com hardware Semiconductor NASDAQ S&P 500 -45.1% -37.6% -55.1% -43.1% -40.6% -40.5% -46.9% -40.5% -38.5% YTD Return 44.8% 27.8% 67.5% 30.7% 31.7% 39.3% 34.2% 19.6% 4.1% 1-Week Return 8.4% 7.6% 9.4% 8.5% 10.1% 9.7% 14.5% 7.4% 7.0% Return Since 8/15/2008 10/14/2008 -11.0% -17.2% -2.8% -18.7% -19.8% -15.4% -19.7% -23.1% -27.6% 33.2% 19.8% 51.2% 13.3% 14.3% 20.1% 18.8% 6.0% -5.8%

Weekly Performance and Valuation Charts Comparable Company Analysis and Metrics Tables

Source: Company data, FactSet, Morgan Stanley Research

Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. Customers of Morgan Stanley in the US can receive independent, third-party research on companies covered in Morgan Stanley Research, at no cost to them, where such research is available. Customers can access this independent research at www.morganstanley.com/equityresearch or can call 1-800-624-2063 to request a copy of this research.

For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.

MORGAN July 20, 2009 Software

STANLEY

RESEARCH

Topic of the Week: Q2 Earnings Set Up
In the first quarter, a number of companies in our software coverage posted better-than-expected results, with 47% beating consensus revenue estimates and 82% beating consensus EPS estimates (versus 39% and 79% for the broader software universe). This outperformance relative to low expectations was generally positive for software stocks, with shares rising 4.2% on average the day after earnings were reported. As we enter the second-quarter earnings season, we look to trends in 1) sell-side sentiment, 2) consensus estimate revision, 3) short interest, and 4) price performance and multiple expansion to identify where expectations and multiples have become most inflated since Q1 results were reported. Overall, sell-side sentiment has turned more positive and the once steady flow of negative estimate revisions has reached an inflection. Short interest remains high for many names in our group, however, and multiples have expanded an average of 17% since mid-May. While some of the upward trends may indicate that a return to growth in software is underway, excessive optimism could pose greater risk to some names heading into Q2 results. ADSK, CRM and SFSF stand out as the three names where sentiment has become more positive and/or consensus estimates and short interest have trended higher, while at the same time multiples remain above group averages; here there may be greater risk of disappointment if actual results do not exceed expectations. In contrast, sentiment and expectations remain low for VMW. Sell-side Sentiment Increasingly Positive into Q2 In order to measure the changes in sentiment behind sell-side expectations for our group, we tracked all adjustments made to ratings, estimates and price targets since mid-May. To date, positive sell-side changes outnumber negative changes by more than 2:1, or 31 positive adjustments vs. only 13 negative. The average company in our coverage group has seen two upward revisions since Q1 results were reported – either through a rating upgrade, raised numbers, or an increased PT – and 76% received at least one positive adjustment. In contrast, only 35% of our group received a negative change in sentiment. With 9 upward adjustments, sentiment has clearly turned most positive for MSFT. SAP and VMW on the other hand, received the largest number of downward adjustments; here sell-side sentiment appears most negative.
Exhibit 1

Changes in Sell-Side Sentiment Since May 15th
Changes to Ratings, Ests. and PTs Since May Positive MSFT INTU SAP SYMC SFSF VMW RNOW ADSK CTXS MFE N OMTR TLEO CRM ARST GUID FIRE Mean Median 9 3 3 3 3 2 2 1 1 1 1 1 1 0 0 0 0 2 1 Neutral 0 0 0 3 1 0 0 1 2 0 0 1 0 0 1 0 0 1 0 Negative 2 0 4 0 0 3 1 0 2 0 0 0 0 1 0 0 0 1 0

Source: Company data, Morgan Stanley Research

Estimate Revisions Have Reversed Course We have monitored revisions to CY and CQ consensus estimates for our group on a bi-weekly basis since August 2008. Until recently, we watched as revenue and EPS estimates continually tracked lower for the majority of our companies (with the exception of ARST, MFE and FIRE), with the average est. declining 12% for revenue and 19% for EPS since Aug-08. Over the past two months, however, the downward revisions to revenue estimates have begun to slow and EPS revisions have inflected. Consensus EPS for our large-cap names in particular has rebounded, with estimates for ADSK, and CRM up 29% and 15% respectively. Conversely, for SFSF, despite receiving several upward changes to sell-side sentiment (Exhibit 1), consensus estimates revisions continue to trend lower – down 20% from mid-May – mitigating the increasingly positive sentiment, in our view. MSFT numbers have also come down, but this is most likely due to the accounting treatment of technology guarantees preceding the Windows

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7 launch rather than a more negative outlook on the company’s fundamentals.
Exhibit 2

Exhibit 3

Short Interest Remains High For N, OMTR, CRM SFSF and VMW
Days to Cover Ticker N OMTR CRM SFSF VMW SAP CTXS MFE RNOW ADSK TLEO SYMC INTU FIRE ARST GUID MSFT Average Median 30-Jun 9.6 8.7 8.5 7.2 5.5 4.0 3.2 3.1 2.7 2.4 2.3 2.3 2.2 2.2 1.6 1.5 1.2 4.0 2.7 15-May 8.4 5.6 7.1 6.8 5.2 4.3 3.4 3.0 3.6 3.0 2.5 1.3 2.8 0.9 2.3 3.3 0.9 3.8 3.3 % Change 14% 57% 20% 6% 6% -7% -8% 2% -24% -21% -8% 81% -19% 134% -33% -54% 31% % of Float 30-Jun 16.7% 14.5% 12.9% 8.3% 16.0% 0.8% 6.3% 4.0% 3.9% 3.3% 4.5% 3.7% 2.5% 3.1% 7.7% 3.5% 1.1% 6.6% 4.0% 15-May 17.9% 14.0% 12.3% 7.0% 16.9% 1.4% 5.6% 4.9% 2.8% 4.1% 4.2% 3.3% 3.2% 2.3% 7.4% 2.6% 0.7% 6.5% 4.2% % Change -7% 3% 4% 19% -5% -38% 13% -19% 40% -18% 7% 14% -21% 32% 4% 32% 54%

Q2 Ests Revisions Have Diverged: EPS has Trended Upward While Revenue Ests Continue to Decline
CY2Q09 Cons. Revenue Ests. CY2Q09 Cons. EPS Ests. 7/15/09 5/15/09 % Change 7/15/09 5/15/09 % Change Large Cap Microsoft VMware Citrix Systems Symantec McAfee SAP Salesforce.com Autodesk Intuit Large Cap Avg SMid Cap SuccessFactors ArcSight Taleo Omniture RightNow Guidance SourceFire NetSuite Small Cap Avg Group Average Group Median
Source: Company data, Morgan Stanley Research

MSFT VMW CTXS SYMC MFE SAP CRM ADSK INTU

$14,379 $452 $387 $1,487 $467 € 2,718 $313 $409 $469

$14,741 $453 $387 $1,483 $468 € 2,772 $319 $414 $475

-2% 0% 0% 0% 0% -2% -2% -1% -1% -1% 0% 0% -1% 0% 0% 0% 0% 0% 0% -1% 0%

$0.36 $0.19 $0.38 $0.35 $0.57 € 0.40 $0.15 $0.18 ($0.12)

$0.38 $0.19 $0.38 $0.35 $0.56 € 0.39 $0.13 $0.14 ($0.06)

-5% 0% 0% 0% 2% 3% 15% 29% NM 5% -20% -11% 0% 0% 0% 0% 0% NM -4% 1% 0%

SFSF ARST TLEO OMTR RNOW GUID FIRE N

$36 $34 $49 $89 $36 $20 $20 $40

$36 $34 $50 $89 $36 $20 $20 $40

($0.06) $0.08 $0.16 $0.12 $0.04 ($0.04) $0.02 $0.00

($0.05) $0.09 $0.16 $0.12 $0.04 ($0.04) $0.02 $0.00

Source: Company data, Morgan Stanley Research

Price Performance and Valuation Heading Into Q2 A majority of the companies in our group have outperformed the Nasdaq since the Q1 earnings season ended in mid-May. Likely a result of the relatively strong Q1 combined with an improving economic outlook, multiples have expanded for our group as well, with NTM P/Es up an average of 16% over the same time period from 25.6x to 29.7x. Small-cap names have led the way on both price performance and multiple expansion, with ARST, FIRE, RNOW, and TLEO outperforming the Nasdaq and generating NTM P/E expansion of ~33% on average, by both measures. For our large-cap names, INTU, MSFT, SAP and SYMC continue to trade below the large-cap median NTM P/E of 18.1x, while ADSK, CTXS, CRM, MFE and VMW all trade above. For our small-cap names, OMTR and TLEO currently trade below the small-cap median NTM P/E of 37.8x, while ARST, FIRE, and RNOW trade above.

Short Interest a Mixed Bag Since May 15, short interest days-to-cover and % of float have increased 10% and 7% respectively for our group. Despite this recent uptick, short interest is still 25% below the 2-year group average for days-to-cover, and 13% below the average % of float. A handful of names continue to have higher levels of short interest, however, which has skewed the group averages well above the group medians. N, OMTR, CRM, SFSF and VMW have the highest levels of short interest for our group, and levels for all of these names have increased since mid-May. These higher levels indicate a greater degree of investor pessimism heading into Q2, which is corroborated by the (mostly) less positive sell-side sentiment ratings. However, low expectations might make it more difficult for these companies to disappoint, while short covering after a weak quarter might limit downward stock reactions. SFSF is in the interesting position of having increasingly positive sell-side sentiment combined with higher levels of short interest, which could create additional volatility around the quarterly report.

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Exhibit 4

The Majority of our Names Have Outperformed the Nasdaq since Mid-May
RNOW TLEO ARST FIRE CTXS SFSF MSFT GUID INTU OMTR MFE SYMC Nasdaq VMW N SAP CRM -1.7% ADSK -2.3%
1.3% 19.2% 18.3% 17.1% 16.8% 13.8% 10.9% 10.7% 9.1% 7.5% 23.0% 22.6% 29.9% 27.0% 35.4% 41.2%

Where We Stand vs. Consensus Several indicators have pointed towards mild improvements in the broader economic environment. However, overall IT spending projections, while improving, remain weak and companies continue to report a negative impact on close rates and deal sizes. As a result, we have intentionally kept our estimates conservative and will look for signs of stabilization in the IT spending environment before revising our position. Heading into Q2 earnings, our estimates fall either below or in-line with consensus for a majority of our names (~76%).

Exhibit 6

We Are Intentionally Conservative Heading into Q2 and will Wait for Signs of IT Spending Stabilization
CY2Q09 EPS Cons GUID ($0.04) $0.38 $0.19 $0.35 $0.16 $0.15 € 0.40 $0.57 $0.38 $0.00 $0.12 ($0.06) ($0.12) $0.18 $0.02 $0.08 $0.04 MSFT VMW SYMC MS ($0.05) $0.32 $0.17 $0.34 $0.16 $0.15 € 0.39 $0.56 $0.38 $0.00 $0.12 ($0.06) ($0.12) $0.19 $0.02 $0.09 $0.05 Variance ($0.01) ($0.06) ($0.02) ($0.01) ($0.00) ($0.00) -€ 0.01 ($0.01) $0.00 $0.00 $0.00 $0.00 $0.00 $0.01 $0.00 $0.01 $0.01 % Var. -25% -15% -11% -3% -3% -3% -3% -2% 0% 0% 0% 0% 0% 4% 11% 17% 30%

Source: Company data, Morgan Stanley Research

Exhibit 5

TLEO CRM SAP MFE CTXS N OMTR SFSF INTU ADSK FIRE ARST RNOW

Multiples Have Expand an Avg. of 16% Since May; ARST, FIRE, RNOW & TLEO Increased the Most
70.0x

NTM P/E on May 15
60.0x

NTM P/E on July 16
50.0x

40.0x

30.0x

20.0x

Source: Company data, Morgan Stanley Research
10.0x

0.0x
O M TR TX S AD M SF T AR ST M FE O W VM SA R TL IN FI SY C N C M C M EO SK R E TU W P

Source: Company data, Morgan Stanley Research

R

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Industry News Flow:
• July 13 – Adobe released the public betas of Adobe ColdFusion 9 and ColdFusion Builder software. ColdFusion is a development tool for building dynamic Web sites and Internet applications and ColdFusion Builder is a new Eclipse based integrated development environment (IDE) used for rapidly developing ColdFusion applications. Users of the ColdFusion 9 beta can utilize greater integration with the Adobe Flash Platform to run consistently across operating systems and devices. The ColdFusion 9 and ColdFusion Builder public betas are currently available for download through the Adobe website. (Adobe Press Release, 07/12/09) • July 13 – VMware announced the general availability of two new virtualization management products: VMware vCenter AppSpeed and VMware vCenter Chargeback. VMware also announced the latest release of VMware vCenter Lab Manager 4, which provides IT with the ability to create and manage an internal cloud for dev/test. The new products work to automate key IT processes such as application performance monitoring, chargeback, and management of dev/test environments to increase IT productivity in the datacenter. VMware vCenter AppSpeed is available for $1250 per processor, VMware vCenter Chargeback is available for $750 per processor, and VMware vCenter Lab Manager is available for $1495 per processor. (VMware Press Release, 07/13/09) • July 13 – Microsoft announced that Office 2010, SharePoint Server 2010, Visio 2010 and Project 2010 have reached the technical preview engineering milestone. With the announcement of the release, Microsoft invited tens of thousands of people to test Office and Visio as part of the company’s Technical Preview program. Some new features included in the Office 2010 preview are: Office Web applications that allow users access to documents from virtually anywhere, co-authoring tools in Word, PowerPoint and OneNote, and advanced e-mail management and calendaring capabilities. Microsoft plans to release Office 2010 and related products in the first half of 2010. (Microsoft Press release, 07/13/09) • July 13 – CNET News.com reported that, according to NPD subsidiary DisplaySearch, the demand for netbooks will remain strong throughout the remainder

of 2009. Netbooks are projected to end 2009 with 20% of the worldwide market share, and consumers are expected to purchase almost 33M netbooks this year. This will generate total sales growth of ~100%, up from $16M in 2008. Sales for notebooks, on the other hand, are expected to be flat in 2009 with 129M units shipping, which would be the first year that the notebook market showed no sales growth. (CNET News.com, 07/13/09) • July 13 – Citrix and Microsoft announced plans to extend their desktop virtualization partnership. The two companies will work together to unify management of physical and virtual desktops and applications through one management platform, Microsoft System Center, while providing consistent access to users from any device or location using one universal client, Citrix Receiver. Citrix XenApp will also extend Microsoft Application Virtualization (App-V) to enable self-service delivery of applications on any device using Citrix Receiver and Citrix Dazzle. In addition, Citrix announced plans to extend integration of Citrix XenDesktop with the new Microsoft VDI Suite licenses to enhance the companies’ joint virtual desktop infrastructure (VDI) solution. (Citrix Press Release, 07/13/09) • July 13 – Check Point Software released a new version of its single agent endpoint security product, Check Point Endpoint Security R72. The new release includes Check Point WebCheck browser security, which protects PCs against Web-based threats. The latest security solution also includes OneCheck authentication and VPN Auto-Connect that unlocks all endpoint security subsystems for enhanced remote access capabilities. Check Point Endpoint Security R72 is available immediately; pricing details were not provided. (Check Point Press Release, 07/13/09) • July 14 – Microsoft announced pricing for its Windows Azure cloud computing service that is expected to be released in final form this fall. Azure pricing will include a variety of plans ranging from one that charges purely on consumption to another that offers discounted rates for those who sign up for a six-month commitment. On a pure consumption basis, Microsoft said that it will charge 12 cents per hour for computing, 15 cents per gigabyte for storage, and 10 cents per 10,000 storage transactions. For network bandwidth, the company is charging between 10-15 cents per gigabyte. (CNET News, 07/14/09)

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Software Event Calendar:
Exhibit 7
Software Calendar
Corporate Earnings Date Ticker 7/21/2009 7/21/2009 7/21/2009 7/22/2009 7/22/2009 7/22/2009 7/22/2009 7/23/2009 7/23/2009 7/23/2009 7/23/2009 7/23/2009 7/23/2009 7/23/2009 7/23/2009 7/23/2009 7/27/2009 7/27/2009 7/27/2009 7/28/2009 7/28/2009 7/28/2009 7/28/2009 7/28/2009 7/28/2009 7/29/2009 7/29/2009 7/29/2009 7/29/2009 7/29/2009 7/29/2009 7/30/2009 7/30/2009 7/30/2009 7/30/2009 7/30/2009 7/30/2009 7/30/2009 8/4/2009 8/4/2009 8/4/2009 8/5/2009 8/6/2009 8/6/2009 8/6/2009 8/6/2009 8/6/2009 8/6/2009 8/10/2009 8/20/2009 SY Event Sybase Q2 2009 Earnings Call Time 10:30am ET tba 4:30pm ET 5:00pm ET 4:30pm ET 4:45pm ET 5:00pm ET 5:00pm ET 8:30am ET 4:45pm ET 4:30pm ET 5:00pm ET 5:00pm ET 5:00pm ET 5:00pm ET 5:30pm ET 5:30pm ET 5:00pm ET 8:45am ET 5:00pm ET 8:30am ET 4:30pm ET 5:00pm ET 5:00pm ET 5:00pm ET 5:00pm ET 8:30am ET tba 4:30pm ET 4:30pm ET 5:00pm ET 5:00pm ET tba 9:00am ET 4:30pm ET 5:00pm ET 5:00pm ET 5:00pm ET 5:00pm ET 5:00pm ET 5:00pm ET tba 5:00pm ET 8:30am ET 4:30pm ET 4:30pm ET 5:00pm ET 5:00pm ET 5:00pm ET 5:00pm ET 5:00pm ET tba tba ph: 800-857-3834 / pwd: F5 Networks ph: 888-799-0519 / pwd: Citrix ph: 866-730-5764 / pwd: 62479935 ph: 913-312-1238 / pwd: 7678746 ph: 210-795-0624 / pwd: EMC ph: 877-407-8033 ph: 888-510-1786 tba ph: 866-314-5050 / pwd: 75877591 ph: 877-419-6596 tba tba ph: 888-459-9165 / pwd: MSFT ph: 800-706-7745 / pwd: 57780301 ph: 800-230-1093 ph: 866-923-9739 ph: 201-689-8261 ph: 877-440-5791 / pwd: 3369014 ph: 888-812-3873 / pwd: 20349749 ph: 877-397-0235 ph: 888-204-4426 / pwd: 2847556 ph: 877-741-4244 ph: 888-566-8560 / pwd: PTC tba ph: 866-383-7989 / pwd: 66912108 ph: 888-218-6314 / pwd: 18014101 888-312-9852 ph: 888-218-8088 / pwd: 6204822 tba ph: 800-706-7741 / pwd: 88240816 ph: 800-809-7467 / pwd: 13041839 ph: 877-407-8031 ph: 888-278-8469 tba ph: 877-381-6419 ph: 877-874-1570 ph: 888-710-4022 tba tba tba ph: 877-941-2927 ph: 800-798-2801 / pwd: 60185019 ph: 800-901-5218 / pwd: 43857055 tba ph: 888-676-8776 tba ph: 800-733-7571 Dial-in / Password

units. Our view has changed and we now believe the risk to Q3 is well known, and our end of Q2 checks were more constructive – with vSphere already having had a positive impact, particularly on ASPs. We still believe cannibalization is a medium-term risk, but with sentiment very negative, we now believe the risk/reward is more favorable heading into results. What’s new: We have gathered data from more than 150 of VMW’s resellers, spoken with several of the largest partners and talked to a number of our better contacts. We believe that ELA activity was slow in Q2, but not worse than Q1, while the transactional business appears to have improved and we don’t sense VMW pressed at the end of the Q. 78% of the resellers in our data met or exceeded expectations in the Q, while the direct business appeared to be better vs. lower quotas. 1/3rd of our resellers saw vSphere ahead of plan in Q2. Where we differ: Our unit based model reflects a 26% decline in x86 servers for Q2, a deceleration from 24% in Q1, and likely captures the weakness in this segment. We believe x86 growth will inflect upward over the next several Qs, but have kept expectations low at (21%) YoY in Q3. We also model ELA licenses down 38% YoY in Q2, a material deceleration from the (7%) seen in Q1, and likely worse than the checks would suggest. Our checks also suggest expenses are under control. What is next: VMW will likely meet cons. lic./rev/eps or $226M/ $452M/ $0.19 for Q2 – with some potential for EPS upside. While Q3 cons. of $471M / $0.20 may hold modest risk, we believe this is largely expected. July 14 – Oracle Corporation: JAVA Accretion Remains on Target. Weaker revenues in JAVA’s 4Q are well within the assumptions of our merger model: Preliminary revenue expectations 13% short of consensus in JAVA’s recently closed 4Q are both to be expected given the pending acquisition and well within the assumptions of our merger model, which estimates $0.15 accretion from JAVA in FY10. Oracle also issued a brief statement reaffirming their targets for the proposed acquisition -- $1.5B in operating income and $0.15 accretion in the first year post close. Consensus EPS at $1.53, up from $.149 a month ago, has just begun to incorporate a more favorable Fx environment and the accretion from JAVA. Both are incorporated in our above consensus $1.69 estimate, and we expect consensus to trend upwards once the transaction closes. At just 11x our CY10 EPS estimate, versus the NASDAQ multiple at 16x, ORCL continues to represent a compelling value in our view. What’s new: JAVA released preliminary estimates for their FY4Q which ended in June, with total revenues expected

MANH Manhattan Assoc. Q2 2009 Earnings Call YHOO Yahoo! Q2 2009 Earnings Call FFIV F5 Networks Q3 2009 Earnings Call CTXS Citrix Q2 2009 Earnings Call OMTR Omniture Q2 2009 Earnings Call VMW VMware Q2 2009 Earnings Call EMC CA EMC Q2 2009 Earnings Call CA Q1 2010 Earnings Call JNPR Juniper Q2 2009 Earnings Call CPWR Compuware Q1 2010 Earnings Call INFA Informatica Q2 2009 Earnings Call SWI SolarWinds Q2 2009 Earnings Call SNWL SonicWALL Q2 2009 Earnings Call RVBD Riverbed Q2 2009 Earnings Call MSFT Microsoft Q4 2009 Earnings Call ACTU Actuate Q2 2009 Earnings Call RDWR Radware Q2 2009 Earnings Call SFSF SuccessFactors Q2 2009 Earnings Call CHKP Check Point Software Q2 2009 Earnings Call DBTK Double-take Software Q2 2009 Earnings Call ADVS Advent Software Q2 2009 Earnings Call EPIC Epicor Q2 2009 Earnings Call ULTI Ultimate Software Q2 2009 Earnings Call WBSN Websense Q2 2009 Earnings Call PMTC Parametric Tech. Q3 2009 Earnings Call SAP SAP Q2 2009 Earnings Call AKAM Akamai Q2 2009 Earnings Call DRIV Digital River Q2 2009 Earnings Call RNOW RightNow Q2 2009 Earnings Call SYMC Symantec Q1 2010 Earnings Call DASTY Dassault Systems Q2 2009 Earnings Call FIRE Sourcefire Q2 2009 Earnings Call MFE McAfee Q2 2009 Earnings Call ARBA Ariba Q3 2009 Earnings Call BLKB Blackbaud Q2 2009 Earnings Call N NetSuite Q2 2009 Earnings Call PROJ Deltek Q2 2009 Earnings Call GUID Guidance Software Q2 2009 Earnings Call KNXA Kenexa Q2 2009 Earnings Call SPSS SPSS Q2 2009 Earnings Call CNQR Concur Q3 2009 Earnings Call TDC PRO SGI Teradata Q2 2009 Earnings Call PROS Holdings Q2 2009 Earnings Call Silicon Graphics Q2 2009 Earnings Call MVSN Macrovision Q2 2009 Earnings Call IPAS iPass Q2 2009 Earnings Call VRSN VeriSign Q2 2009 Earnings Call QSFT Quest Software Q2 2009 Earnings Call OTEX Open Text Q4 2009 Earnings Call

Analyst Events Date Ticker 7/30/2009

Event

Time tba

Location Redmond

MSFT Microsoft Analyst Meeting

Source: Company data, FactSet, Morgan Stanley Research

Latest Research Published:
July 13 – VMware Inc: The Tide is Turning; Near Term Risk/Reward Better. We’ve had a more cautious view on VMW recently on three tenants: 1) we thought Q3 cons. was too high, 2) early Q2 checks suggested a slow uptake of vSphere, and 3) customer conversations suggested that vSphere’s improved performance could potentially cannibalize

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between $2.58 to $2.68B, versus consensus of $3.03B, and non-GAAP EPS of ($0.16) to ($0.06) vs. consensus of ($0.01). The 13% revenue shortfall at the mid-point is still within the 19% reduction to consensus expectations we assume in our merger model. Our model assumes a higher revenue attrition upfront (24% in the first quarter) trending down as customers become more comfortable with the product roadmap and initial revenue synergies are realized. There is $0.02 to $0.03 in dilution from the debt deal that is not in our model, but our contacts suggest the company is more comfortable with the soft cost synergies than they were three months ago, which could offset that incremental dilution. What’s next: At least one historically reliable contact we’ve spoken with stated JAVA removed sales accelerators in 4Q, which likely attributed to the weakness and should better sustain the JAVA pipeline for ORCL post-close. July 14 – Software: SMB Data Weakens. The June survey of small and medium businesses (SMB) by the National Federation of Independent Business (NFIB) showed a slight reversal in business conditions after posting two months of meaningful improvements. The SMB “optimism index”, which tracks 10 metrics including employment, capex, and sales, fell 1.0 point MoM (vs. +2.1 points in May), with 6 of the 10 metrics posting a decline, although the index remains 6.9 points higher than its low in March. We expect the bottom to be bumpy, but cos. with heavy exposure to SMBs like ADBE, ADSK, INTU, N and CRM will ultimately benefit from improvement in the SMB space. Near term, we still have concerns about N and CRM as their models are in transition. Expectations remain low. 25% of SMBs expect business conditions to worsen over the next 6 months – up from 20% in May. Sales expectations declined to a net -10% from -5% in May (the March low was -31%), with 31% of SMBs expecting sales to decline in the next 3 months vs. 28% in May. Actual sales declined to a net -34% from -33% last month, while actual earnings improved by one point to -42%. Pricing improved slightly but remains under pressure as SMBs continue to liquidate inventories through price cuts. Investment thesis. The weak macro and lower pricing power will continue to weigh on SMBs near term, which has impacted software vendors with mid-market exposure (INTU, N, ADSK, CRM, ADBE). We have recently met or spoken with mgmt. of several of the above vendors, and have been performing our end of Q checks. We do not believe actual SMB spend has yet improved, and we do not believe it will until CY10.

Capex spending intentions decline. Capex intentions declined 3 points MoM to seasonally adjusted 17% in June, 1 point above the low in March. Actual capital outlays were flat at 46% or SMBs surveys, 6 points below the year-ago period. As SMBs tend to be optimists, actual capex is likely to fall below the expected spending intentions. July 16 – Microsoft: Solid PC Data and Bind Continues to Gain Share. We are increasingly comfortable that MSFT will hit cons. rev. targets for FQ409, and continue to believe EPS holds upside on cost controls. The macro remains tough, but the enterprise market is bottoming at low levels while consumers are showing faints signs of life. Consumers are driving better than expected PC units (at lower ASPs) – which should help the top line at MSFT. We continue to be buyers of the stock as MSFT should benefit from (1) a corporate PC and server refresh cycle in 2010, (2) a strong Windows 7 cycle, (3) increased stock buybacks or better returns on cash balances and (4) sustainable cost controls. PC shipments looking up: IDC’s preliminary PC unit data suggests that shipments fell -3.1% YoY in Q2 (better than expectation of -6.3%), and were +4.2% QoQ. Similarly, Gartner reported that Q2 PC units declined -5% YoY, above their prior forecast of -9.8%. IDC’s numbers are comparable to our model and stronger than the -6% YoY/ +0.4% QoQ assumed for PC shipments in our FQ409 forecast. MSFT has a touch comp. vs. an inventory rebuild in Q408, and we model -14% paid units for MSFT on -6% total units, resulting in Client rev. of $3.17B, versus cons. of $3.28B. ASPs could still see pressure. Asia Pac and the U.S. outperformed EMEA, notebooks outperformed desktops on the strength of netbook sales, and consumer showed some recovery while business spending lagged. Given that MSFT gets lower ASPs in Asia, netbooks and consumer markets, this suggests that ASP pressure continued in Q2 – and we model ASPs down 15% YoY in FYQ4. However, stronger unit sales should more than offset the weaker ASPs – and stabilization in the U.S. bodes well for ASPs medium term. Still some risk to Sept. Q. We remain somewhat cautious on the Sept. Q as PC buying may slow in advance of the Win 7 launch on Oct. 22, and we model below normal PC seasonality (+5% QoQ) in Sept. July 16 – Salesforce.com: Signs of Improvement, Bust Model Still in Transition. We recently met with CRM’s CFO Graham Smith and completed some detailed industry and primary work on CRM. The company has gotten more cost discipline, is sitting on some underutilized sales capacity,

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transaction data has stabilized, and assumptions under its FY10 rev. guidance are likely conservative. At the same time, consensus billings targets still look aggressive for Q2 and Q3 and the FY11 rebound expected in cons. revenue growth (+15%) is ahead of our FY10 billings target of +9%, and we are lowering our FY11 rev. from +16% to +12%. Even model headcount additions in 2Q drive high-teems expense growth which could pressure cashflow given our +1-% Q2 billings target. While we are seeing signs of improvement in CRM, we’d like to see billings and rev. stabilize before turning more constructive. Billings and CF Still Stabilizing: CRM has tough billings comps through Q3, and we sense that pricing and renewals remain under pressure. The co. noted that attrition rates are still below what underpins the rev. guide for FY10, but we believe it is unlikely billings re-accelerate from Q1 (+10%) in Q2 as consensus at +12-13% reflects. Further, CRM faces the toughest OCF in Q2, and likely sees OCF down 30-40% YoY. Transaction Data Rebounding – May Be Sites Driven: The downward trend we’ve seen in transaction data (customer usage) for Salesforce.com broke in late May, and we’ve seen significant uptrend thru June and July. There is high correlation with billings, and an inflection here would be a key leading indicator of billings re-accelerating. Entering the quarter at mid-20’s growth rates, YoY transaction growth is looking to end the quarter at 50%+ levels, with overall transaction levels inline with FY1Q. However, management noted the newly released Sites offering on their force.com platform may be driving transaction growth and there is a material free portion in this offering. While we are not able to quantify this impact directly, visitor metrics to the force.com site also saw a sharp increase. July 16 – Citrix Systems: Q2 Checks Solid, But Largely in the Stock. We expect CTXS to meet cons. for Q2 with potential for EPS upside driven by cost control initiatives. The stock has moved +18% vs. +9% for the Nasdaq since Q1. At 20x CY10 EPS, CTXS may be pricing in a solid Q2, and consensus for Q3 is slightly above normal seasonality. CTXS has the potential to be one of the better margin stories in our universe next year, and is a secular call option on desktop virtualization. However, with the stock ~2% ahead of our base case of $32, further upside is not likely without material positive EPS revisions and we prefer names with better risk/rewards like MSFT and ADBE. What’s New: We’ve gathered survey and channel data from over 240 resellers, which suggests that Citrix will likely meet consensus revenue/EPS estimates of $387M/$0.38, roughly in line with our estimates. Strength in online and increased

traction in ANG and XenDesktop likely offset any weakness from XenApp. XenApp Remains Weaker. We believe XenApp will likely meet our low expectations of license rev. of $79M, down 30% YoY and AVG revenue of $245M, down 8% YoY on easy comps. Channel work points to weak new customer growth offset by platinum upgrades and the positive impact from XenApp 5.0. ANG Growing Stronger. ANG is likely to be inline or ahead of our estimates of $57M (up 5% YoY). 55% of resellers expect to meet or beat their targets here, which is in line with Q1 but better than 2H08. The Enterprise strategy gained traction and Federal segment was strong. Q2 also got a boost from large deals – including a WANScaler deal of ~$8-10M, by our est. XenDesktop Gaining Traction. XenDesktop saw increased interest, continued momentum with pilot deployments, and slow migration to production. We are comfortable with our estimate of $9M revenue for XenSource for the quarter.

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Sector Performance:
Exhibit 8

Exhibit 11

Sector Price Performance: 1-Week
1-Week Price Performance Diversified Apps Large-Cap Tech 10% 9% 8% 7% 7% 7% 7% 7% 7% 7% 6% 6% 4% 0% 2% 4% 6% 8% 10% 12% 11%

Average EV/Sales by Sector: CY09E vs. CY10E
3.5x 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x
3.2x 2.9x 3.0x 2.7x 2.7x 2.5x 2.6x 2.7x 2.4x 3.2x

CY09E EV/Sales
2.5x 2.3x 2.5x

CY10E EV/Sales

MS Software Grp Processors Nasdaq

2.2x

2.2x 2.0x 2.0x 1.9x 1.8x 1.7x 1.7x

Large-Cap SW Hosted Software
1.6x 1.4x 1.3x

Productivity Apps S&P 500 Security Fin. Tech. Infrastructure Analytics

Infrastructure

Analytics

Security

M S Software G rp

Fin. Tech.

Productivity Apps

Processors

Large-Cap SW

Hosted Software

Large-Cap Tech

Diversified Apps

Enterprise Apps

Enterprise Apps

Source: FactSet, Company data, Morgan Stanley Research

Source: FactSet, Company data, Morgan Stanley Research

Exhibit 12 Exhibit 9

Sector Price Performance: 1-Month
1-Month Price Performance Large-Cap Tech Enterprise Apps Fin. Tech. 5% 5% 5% 4% 4% 4% 3% 3% 2% 1% 1% -6% -6% -4% -2% 0% 2% 4% 6% 8% 6% 7%

Average P/E by Sector: CY09E vs. CY10E
40.0x 35.0x 33.3x 30.0x 25.0x 20.0x 15.0x 10.0x 5.0x 0.0x M S Software Grp Infrastructure Analytics Security Fin. Tech. Hosted Software S&P 500 Large-Cap Tech Productivity Apps Large-Cap SW Processors Diversified Apps Enterprise Apps Nasdaq
27.2x 27.1x 22.6x 21.8x 18.2x 23.1x 21.3x 18.0x 17.5x 20.6x 17.1x 17.0x 23.4x 19.2x 17.1x 16.4x 17.1x 16.1x 15.5x 15.1x 15.1x 14.7x 14.1x 13.8x 13.4x 12.7x 12.3x

Avg CY09E PE

Avg CY10E PE

Security Infrastructure MS Software Grp Nasdaq Diversified Apps Large-Cap SW S&P 500 Analytics Hosted Software Processors Productivity Apps -8%

Source: FactSet, Company data, Morgan Stanley Research

Source: FactSet, Company data, Morgan Stanley Research

Exhibit 13 Exhibit 10

Average PEG by Sector: CY09E
CY09E PE to Growth
3.5x 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x 1.9x 1.9x 1.8x 1.7x 1.7x 2.9x (08-10 % EPS CAGR)

Sector Price Performance: Year-to-Date
2009 YTD Price Performance MS Software Grp Hosted Software Security Analytics Productivity Apps 33% 32% 29% 26% 26% 26% 23% 20% 18% 11% 4% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 38% 44% 43%

1.6x

Infrastructure

1.4x

1.4x

1.4x

1.2x

Processors Diversified Apps Large-Cap Tech Large-Cap SW Nasdaq

Infrastructure

M S S oftw are G rp

S ecurity

A nalytics

Fin. Tech.

P roductivity A pps

P rocessors

Large-C ap Tech

E nterprise A pps

Large-C ap SW

D iversified A pps

Fin. Tech. Enterprise Apps S&P 500

Source: FactSet, Company data, Morgan Stanley Research

Source: FactSet, Company data, Morgan Stanley Research

9

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Software Group Performance:
Exhibit 14

MS Software Group: CY09E vs. CY10E EV/Sales
12.0x
10.6x

MS Software Group: CY09E vs. CY10E EV/Sales

Exhibit 17

10.0x
8.5x

MS Software Group Price Performance: 1-Week
MS Software Group: 1-Week Price Performance ARST RNOW 19% 15% 15% 12% 12% 11% 10% 9% 8% 8% 7% 6% 6% 6% 6% 6% 5% 5% 2% -1% -4% -5% 0% 5% 10% 15% 20% 25% 30%
5.7x 4.7x 4.8x 4.5x 4.5x 4.1x 3.9x 3.9x 3.9x 3.7x 3.3x 3.3x 3.5x 3.2x 3.1x 3.2x 3.1x 3.2x 3.0x 2.9x 3.0x 2.8x 3.0x 2.8x

8.0x

25%

6.0x

N VMW ADBE OMTR
2.7x 2.6x 2.5x 2.3x 2.3x 2.2x 2.4x 2.1x 2.3x 2.0x 2.2x 2.0x 2.0x 2.0x 1.9x 1.9x 0.6x 0.5x

4.0x

SFSF CRM CTXS MSFT DMAN RHT ORCL GUID SAP MFE ADSK SYMC FIRE INTU TLEO SWI

2.0x

0.0x

ORCL

SW I

M FE

SYMC

DMAN

F IR E

MSFT

C TX S

SFSF

ADBE

OMTR

Source: FactSet, Company data, Morgan Stanley Research

Exhibit 15

RNOW

ADSK

ARST

TLE O

G U ID

N

VMW

IN T U

RHT

CRM

SAP

MS Software Group: CY09E P/E vs. CY10E P/E
70.0x
59.2x 53.0x

-10%

Source: FactSet, Company data, Morgan Stanley Research
MS Software Group: CY09E PE vs. CY10E PE

60.0x

50.0x
40.4x 39.8x 34.8x 36.6x 30.6x 30.5x 29.0x 34.6x 31.1x 28.6x 26.2x 23.6x 20.1x 21.2x 19.9x 25.6x 23.1x 19.8x 18.5x 20.4x 18.0x 18.8x 16.9x 14.3x 13.8x 15.9x 14.5x 13.7x 14.8x 12.5x 11.6x

40.0x

38.1x

30.0x

20.0x

Exhibit 18

MS Software Group Price Performance: 1-Month
MS Software Group: 1-Month Price Performance N ARST RNOW SWI ORCL ADBE FIRE MFE OMTR SAP SFSF CTXS SYMC MSFT RHT VMW CRM GUID TLEO INTU DMAN ADSK -15% 18% 18% 17% 13% 9% 8% 8% 8% 5% 5% 4% 4% 3% 3% 2% 2% 1% 0% -1% -1% -10% -10% -10% -5% 0% 5% 10% 15% 20%

10.0x

0.0x

FIRE

MFE

OMTR

Source: FactSet, Company data, Morgan Stanley Research

Exhibit 16

MS Software Group: CAGR CY08-CY10
50%
43%

RNOW

MS Software Group: CAGR CY08-CY10E

40% 30% 20% 10% 0%
0% -2% -9% -9% 28% 26%

24% 16% 15%

13%

13% 8% 4% 2%

ORCL

CTXS

CRM

ADSK

ADBE

SAP

MSFT

SWI

ARST

TLEO

VMW

INTU

RHT

Source: FactSet, Company data, Morgan Stanley Research

-10% -20% -30% -40%

-25%

-28%

ORCL

CTXS

OMTR

MSFT

MFE

DMAN

SYMC

ARST

RHT

Source: FactSet, Company data, Morgan Stanley Research

ADBE

ADSK

TLEO

INTU

CRM

SAP

SWI

VMW

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MORGAN July 20, 2009 Software

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Exhibit 19

MS Software Group Price Performance: Year-to-Date
MS Software Group: 2009 YTD Price Performance ARST FIRE TLEO SFSF RNOW RHT CTXS N ADBE VMW CRM MSFT MFE ORCL SYMC OMTR SAP INTU DMAN ADSK GUID -4% -7% 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 9% 30% 28% 25% 24% 23% 21% 21% 20% 17% 47% 46% 56% 48% 68% 65% 119% 134% 152%

-20%

Source: FactSet, Company data, Morgan Stanley Research

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Comparable Company Analysis and Metrics Tables
Morgan Stanley Software Group
Company Ticker Rating Price 17-Jul-09 Price Target YTD Perf. % of 52 Shares Wk High Out. Market Cap. Ent. Value 2008A CY Revenue 2009E 2010E EV/Sales '08-'10 % CAGR 2008A 2009E 2010E 2008A CY EPS 2009E 2010E '08-'10 % CAGR 2008A CY P/E 2009E 2010E PE to G 2009E PE to G 2010E

Large Cap Adobe Systems Autodesk Citrix Systems Intuit McAfee Microsoft Oracle Red Hat Salesforce.com SAP Symantec VMware Large Cap Mean SMid Cap ArcSight DemandTec Guidance Lawson Manhattan Assoc NetSuite Omniture RightNow SolarWinds SourceFire SuccessFactors Taleo SMId Cap Mean % YoY Growth Mean Median NASDAQ

ADBE ADSK CTXS INTU MFE MSFT ORCL RHT CRM SAP SYMC VMW

OW EW EW EW OW OW OW EW UW OW EW EW

$31.02 $18.77 $34.99 $27.95 $42.99 $24.29 $21.74 $20.60 $40.84 € 30.24 $16.41 $30.81

$34 NA $28 $26.5 $43 $28 $26 NA $28 € 34 $19 NA

46% -4% 48% 17% 24% 25% 23% 56% 28% 20% 21% 30% 28%

67% 48% 101% 87% 99% 85% 92% 88% 57% 75% 72% 74% 79%

528 227 182 329 156 8,904 5,043 194 125 1,187 819 391

$16,379 $4,263 $6,381 $9,198 $6,714 $216,278 $109,635 $4,004 $5,119 € 35,889 $13,445 $12,050

$14,065 $3,298 $5,477 $8,456 $6,012 $188,825 $107,249 $3,158 $4,150 € 33,086 $13,544 $10,469

$3,580 $2,932 $3,107 $2,315 $1,692 $1,766 $1,583 $1,584 $1,712 $3,064 $3,308 $3,430 $1,600 $1,854 $2,002 $61,981 $58,670 $61,688 $23,761 $26,310 $34,159 $628 $704 $811 $1,077 $1,262 $1,414 € 11,733 € 11,141 € 11,732 $6,265 $5,934 $6,062 $1,881 $1,850 $2,213

-7% -13% 4% 6% 12% 0% 20% 14% 15% 0% -2% 8% 5%

3.9x 1.4x 3.5x 2.8x 3.8x 3.0x 4.5x 5.0x 3.9x 2.8x 2.2x 5.6x 3.5x

4.8x 1.9x 3.5x 2.6x 3.2x 3.2x 4.1x 4.5x 3.3x 3.0x 2.3x 5.7x 3.5x

4.5x 1.9x 3.2x 2.5x 3.0x 3.1x 3.1x 3.9x 2.9x 2.8x 2.2x 4.7x 3.2x

$2.07 $1.94 $1.63 $1.59 $2.01 $1.87 $1.40 $0.86 $0.74 € 1.90 $1.55 $1.05

$1.52 $0.81 $1.65 $1.95 $2.29 $1.64 $1.50 $0.68 $1.03 € 1.90 $1.46 $0.84

$1.72 $1.01 $1.76 $2.02 $2.55 $1.95 $1.88 $0.71 $1.17 € 2.21 $1.55 $1.01

-9% -28% 4% 13% 13% 2% 16% -9% 26% 8% 0% -2% 3%

15.0x 9.7x 21.5x 17.5x 21.4x 13.0x 15.5x 23.9x 55.3x 15.9x 10.6x 29.3x 20.7x

20.4x 23.1x 21.2x 14.3x 18.8x 14.8x 14.5x 30.5x 39.8x 15.9x 11.2x 36.6x 21.8x

18.0x 18.5x 19.9x 13.8x 16.9x 12.5x 11.6x 29.0x 34.8x 13.7x 10.6x 30.6x 19.2x

NM NM NM 1.1x 1.5x NM 0.9x NM 1.5x 2.1x NM NM 1.4x

NM NM NM 1.1x 1.3x NM 0.7x NM 1.3x 1.8x NM NM 1.3x

ARST DMAN GUID LWSN MANH N OMTR RNOW SWI FIRE SFSF TLEO

OW EW UW NC NC UW OW EW OW OW EW EW

$20.20 $8.81 $3.79 $5.64 $16.09 $12.37 $12.89 $12.75 $16.35 $13.13 $9.62 $17.11

$19 NA $4.5 NA NA $8 $18 NA $20 $13 NA NA

152% 9% -7% 19% 2% 47% 21% 65% NA 134% 68% 119% 67%

100% 80% 33% 65% 61% 60% 56% 73% 92% 97% 64% 65% 72%

34 28 23 165 23 61 75 32 70 26 56 30

$695 $248 $88 $929 $371 $758 $967 $411 $1,137 $341 $542 $518

$612 $160 $51 $753 $285 $638 $858 $318 $1,183 $235 $436 $459

$126 $73 $91 $798 $337 $152 $309 $140 $93 $76 $112 $174

$157 $78 $86 $724 $248 $165 $361 $146 $111 $88 $144 $203

$187 $82 $97 $724 $262 $173 $415 $159 $139 $103 $155 $225

22% 6% 3% -5% -12% 7% 16% 6% 22% 17% 18% 14% 13%

4.8x 2.2x 0.6x 0.9x 0.8x 4.2x 2.8x 2.3x 12.7x 3.1x 3.9x 2.6x 3.9x

3.9x 2.0x 0.6x 1.0x 1.1x 3.9x 2.4x 2.2x 10.6x 2.7x 3.0x 2.3x 3.4x

3.3x 2.0x 0.5x 1.0x 1.1x 3.7x 2.1x 2.0x 8.5x 2.3x 2.8x 2.0x 2.9x

$0.34 $0.16 ($0.05) $0.33 $1.38 ($0.04) $0.42 ($0.04) $0.47 ($0.03) ($1.11) $0.52

$0.58 $0.08 ($0.06) $0.38 $0.81 $0.05 $0.50 $0.24 $0.53 $0.22 ($0.22) $0.72

$0.71 $0.09 $0.14 $0.39 $0.99 $0.09 $0.65 $0.32 $0.63 $0.34 ($0.01) $0.85

43% -25% NM 9% -15% NM 24% NM 15% NM NM 28% 11%

58.6x 55.1x NA 17.1x 11.7x NA 30.4x NA 34.6x NA NA 33.0x 42.3x

34.6x NM NA 14.8x 19.9x NM 25.6x 53.0x 31.1x 59.2x NA 23.6x 37.9x

28.6x NM 27.1x 14.5x 16.3x NM 19.8x 40.4x 26.2x 38.1x NA 20.1x 28.6x

0.8x NM NM 1.7x NM NM 1.1x NM 2.1x NM NM 0.8x 1.2x

0.7x NM NM 1.7x NM NM 0.8x NM 1.7x NM NM 0.7x 1.0x

11% 45% 28% 20% 76% 74% 76%

-2%

11% 8% 8% 3.7x 3.3x 3.4x 3.1x 3.0x 2.9x

29%

3%

17% 7% 8% -8% 27.1x 21.5x 23.3x 27.1x 23.4x 23.4x 22.6x 19.9x 17.0x 1.3x 1.1x NM 1.1x 1.1x NM

Source: FactSet, First Call, Company data, Morgan Stanley Research

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Software Group – Cash Flow Metrics
Company Ticker Rating Price 17-Jul-09 Market Cap. Ent. Value CY08A EV/EBITDA CY09E CY10E EV/Recurring Revs CY08A CY09E CY10E Recurring Revs/Sales CY08A CY09E CY10E CY08A EV/FCF CY09E CY10E CY08A FCF Yield CY09E CY10E CY08A EV/CFFO CY09E CY10E

Large Cap Adobe Systems Autodesk Citrix Systems Intuit McAfee Microsoft Oracle Red Hat Salesforce.com SAP Symantec VMware Large Cap Mean SMid Cap ArcSight DemandTec Guidance Lawson Manhattan Assoc NetSuite Omniture RightNow SolarWinds SourceFire SuccessFactors Taleo SMid Cap Mean Mean

ADBE ADSK CTXS INTU MFE MSFT ORCL RHT CRM SAP SYMC VMW

OW EW EW EW OW OW OW EW UW OW EW EW

$31.02 $18.77 $34.99 $27.95 $42.99 $24.29 $21.74 $20.60 $40.84 € 30.24 $16.41 $30.81

$16,379 $4,263 $6,381 $9,198 $6,714 $216,278 $109,635 $4,004 $5,119 € 35,889 $13,445 $12,050

$14,065 $3,298 $5,477 $8,456 $6,012 $188,825 $107,249 $3,158 $4,150 € 33,086 $13,544 $10,469

9.6x 5.5x 13.3x 8.8x 11.8x 7.3x 9.9x 17.7x 17.6x 9.3x 6.4x 16.7x 11.2x

13.5x 10.6x 11.0x 7.4x 9.7x 8.4x 9.3x 15.1x 11.9x 10.1x 6.9x 18.4x 11.0x

12.1x 8.5x 9.8x 7.0x 9.5x 8.3x 7.6x 12.6x 9.7x 8.2x 6.6x 15.7x 9.6x

NM 4.6x 6.7x NA 4.4x NA 8.8x 6.0x 4.2x 6.6x 2.8x 18.8x 7.0x

NM 4.6x 6.1x NA 3.7x NA 7.6x 5.3x 3.6x 6.0x 2.9x 13.8x 5.9x

NM 4.6x 5.6x NA 3.5x NA 6.3x 4.6x 3.2x 5.4x 2.9x 10.4x 5.1x

5% 31% 52% NA 85% NA 51% 83% 91% 43% 78% 30% 55%

6% 42% 57% NA 87% NA 54% 85% 92% 50% 79% 41% 59%

5% 41% 57% NA 86% NA 50% 85% 93% 53% 78% 46% 59%

12.4x 6.5x 21.1x 20.4x 27.1x 15.8x 14.5x 19.3x 26.7x 17.4x 9.3x 17.4x 17.3x

16.1x 18.4x 16.3x 15.3x 14.4x 16.4x 15.3x 16.1x 23.9x 16.4x 9.8x 19.2x 16.5x

13.4x 10.7x 12.1x 13.4x 13.3x 10.0x 9.7x 15.5x 21.7x 13.4x 9.2x 16.9x 13.3x

8.1% 15.4% 4.7% 4.9% 3.7% 6.3% 6.9% 5.2% 3.8% 5.8% 10.8% 5.8% 6.8%

6.2% 5.4% 6.1% 6.5% 6.9% 6.1% 6.5% 6.2% 4.2% 6.1% 10.2% 5.2% 6.3%

7.5% 9.3% 8.3% 7.5% 7.5% 10.0% 10.3% 6.5% 4.6% 7.5% 10.8% 5.9% 8.0%

11.3x 5.6x 12.4x 11.8x 22.2x 9.6x 13.6x 17.3x 19.2x 14.7x 7.9x 13.2x 13.2x

15.1x 13.2x 12.3x 11.1x 12.9x 10.6x 14.3x 14.4x 17.5x 14.1x 8.2x 14.8x 13.2x

12.5x 8.5x 9.5x 9.5x 11.9x 9.1x 9.0x 13.6x 15.8x 11.7x 7.9x 13.0x 11.0x

ARST DMAN GUID LWSN MANH N OMTR RNOW SWI FIRE SFSF TLEO

OW EW UW NC NC UW OW EW OW OW EW EW

$20.20 $8.81 $3.79 $5.64 $16.09 $12.37 $12.89 $12.75 $16.35 $13.13 $9.62 $17.11

$695 $248 $88 $929 $371 $758 $967 $411 $1,137 $341 $542 $518

$612 $160 $51 $753 $285 $638 $858 $318 $1,183 $235 $436 $459

38.9x 28.4x 13.7x 7.3x 5.3x NA 14.4x NM 24.5x NA NA 14.1x 22.3x 14.9x

21.9x 34.3x 13.5x 7.2x 10.3x NM 11.3x 19.4x 21.5x 27.9x NA 9.6x 19.9x 14.6x

15.5x 24.8x 5.5x 6.5x 8.7x NM 8.3x 14.9x 17.6x 18.5x NM 8.6x 14.2x 11.5x

17.0x 2.9x 1.6x NA NA 5.2x 3.1x 3.1x NM 8.7x 4.8x 3.2x 5.5x 6.3x

13.8x 2.7x 1.3x NA NA 4.8x 2.7x 3.0x 22.4x 6.8x 3.7x 2.6x 6.4x 6.2x

11.6x 2.6x 1.2x NA NA 4.6x 2.3x 2.7x 17.0x 5.5x 3.3x 2.4x 5.3x 5.2x

29% 75% 35% NA NA 80% 90% 73% 40% 36% 82% 83% 62% 59%

28% 75% 44% NA NA 80% 89% 74% 48% 39% 83% 86% 65% 62%

28% 75% 46% NA NA 80% 89% 75% 50% 42% 85% 86% 66% 62%

NM 22.1x NA 12.9x 5.1x NA NM NM NM NA NA NM 22.1x 17.7x

NM NA NA 11.9x 7.0x NA 19.7x NM 27.2x NM NM 15.3x 20.7x 17.3x

24.1x NM 7.3x 10.9x 6.4x NM 12.7x 25.1x 22.1x NM 22.9x 17.5x 18.8x 15.3x

1.8% 4.5% NA 7.8% 19.7% NA 2.5% 2.1% 2.7% NA NA 1.1% 2.4% 5.3%

2.6% NA NA 8.4% 14.4% NA 5.1% 3.1% 3.7% 1.3% 0.8% 6.5% 3.3% 5.2%

4.1% 2.2% 13.8% 9.2% 15.6% 0.6% 7.9% 4.0% 4.5% 1.8% 4.4% 5.7% 4.9% 6.6%

NM 13.9x 14.7x 10.1x NA NA 12.9x 25.6x NM NA NA 28.1x 19.1x 14.9x

NM NA 25.8x 10.0x NA NM 10.1x 20.1x 25.6x 26.1x NM 12.5x 20.0x 15.5x

19.1x 19.0x 4.0x 8.2x 5.9x NM 7.4x 15.4x 20.9x 19.0x 17.4x 13.2x 15.0x 12.7x

Source: FactSet, First Call, Company data, Morgan Stanley Research

13

MORGAN July 20, 2009 Software

STANLEY

RESEARCH

Software Universe
Company Large Cap Tech. (Non-Software) Apple Automatic Data Processing Applied Materials Advanced Micro Devices Cisco Systems, Inc. Dell Inc. EMC Corporation Hewlett-Packard International Business Machines Intel Corporation Juniper Networks Texas Instruments Enterprise Applications Deltek Epicor JDA Software Lawson Software Manhattan Associates QAD SAP Hosted Software Concur Technologies DemandTec, Inc Kenexa Corp NetSuite RightNow Tech. Salary.com Salesforce.com SuccessFactors Taleo Analytics Actuate Fair Isaac Informatica MicroStrategy PROS Holdings SPSS Infrastructure BMC Software CA CommVault Systems Compuware Double-Take Software Microsoft Novell Oracle Quest Software Red Hat Software Riverbed Technology SolarWinds Sybase TIBCO VMware Ticker AAPL ADP AMAT AMD CSCO DELL EMC HPQ IBM INTC JNPR TXN Average PROJ EPIC JDAS LWSN MANH QADI SAP Average CNQR DMAN KNXA N RNOW SLRY CRM SFSF TLEO Average ACTU FIC INFA MSTR PRO SPSS Average BMC CA CVLT CPWR DBTK MSFT NOVL ORCL QSFT RHT RVBD SWI SY TIBX VMW Average Price 17-Jul-09 $151.75 $35.31 $12.67 $4.00 $20.51 $12.67 $13.92 $39.98 $115.42 $18.79 $25.19 $23.01 YTD Perf. 78% -10% 25% 85% 26% 24% 33% 10% 37% 28% 44% 48% 36% 13% 21% 22% 19% 2% -16% 20% 11% -1% 9% 36% 47% 65% 21% 28% 68% 119% 43% 63% -11% 34% 45% 40% 24% 33% 23% -3% 30% 6% -7% 25% 14% 23% 14% 56% 111% NA 30% 51% 30% 29% Market Cap. $137,029 $17,740 $16,873 $2,504 $119,327 $24,732 $28,133 $97,471 $154,305 $105,130 $13,210 $29,384 Ent. Value $112,016 $16,387 $15,011 $5,348 $96,093 $17,104 $23,900 $103,235 $171,151 $94,704 $10,993 $26,958 2008A $33,009 $8,847 $7,375 $5,792 $38,146 $61,101 $14,876 $118,696 $103,630 $37,586 $3,572 $12,502 CY Sales 2009E $37,136 $8,939 $4,273 $4,777 $35,893 $50,518 $13,547 $113,181 $93,329 $33,104 $3,142 $9,428 2010E $44,838 $9,185 $6,399 $5,067 $37,193 $51,539 $14,374 $115,516 $94,036 $35,532 $3,473 $9,937 '08-'10 % CAGR 17% 2% -7% -6% -1% -8% -2% -1% -5% -3% -1% -11% -2% -1% -5% -4% -5% -12% -9% 0% -5% 17% 6% -10% 7% 6% 20% 15% 18% 14% 10% 0% -3% 8% 1% -1% -1% 1% 4% 1% 8% -7% -1% 0% -3% 20% 1% 14% 16% 22% 4% -1% 8% 6% 2008A 3.4x 1.9x 2.0x 0.9x 2.5x 0.3x 1.6x 0.9x 1.7x 2.5x 3.1x 2.2x 1.9x 1.2x 1.1x 1.3x 0.9x 0.8x 0.3x 2.8x 1.2x 6.4x 2.2x 1.0x 4.2x 2.3x 0.4x 3.9x 3.9x 2.6x 3.0x 1.6x 1.4x 3.6x 1.4x 2.1x 1.5x 1.9x 2.9x 2.1x 2.9x 1.3x 1.1x 3.0x 0.6x 4.5x 1.5x 5.0x 2.3x 12.7x 2.2x 1.7x 5.6x 3.3x EV/Sales 2009E 3.0x 1.8x 3.5x 1.1x 2.7x 0.3x 1.8x 0.9x 1.8x 2.9x 3.5x 2.9x 2.2x 1.3x 1.3x 1.4x 1.0x 1.1x 0.4x 3.0x 1.4x 5.6x 2.0x 1.4x 3.9x 2.2x 0.4x 3.3x 3.0x 2.3x 2.7x 1.7x 1.6x 3.4x 1.4x 2.2x 1.6x 2.0x 2.8x 2.1x 2.7x 1.5x 1.2x 3.2x 0.7x 4.1x 1.6x 4.5x 3.5x 10.6x 2.2x 1.8x 5.7x 3.2x 2010E 2.5x 1.8x 2.3x 1.1x 2.6x 0.3x 1.7x 0.9x 1.8x 2.7x 3.2x 2.7x 2.0x 1.2x 1.2x 1.4x 1.0x 1.1x 0.4x 2.8x 1.3x 4.7x 2.0x 1.3x 3.7x 2.0x 0.3x 2.9x 2.8x 2.0x 2.4x 1.6x 1.5x 3.0x 1.3x 2.1x 1.6x 1.9x 2.7x 2.1x 2.5x 1.5x 1.1x 3.1x 0.7x 3.1x 1.5x 3.9x 1.7x 8.5x 2.0x 1.7x 4.7x 2.7x 2008A $5.38 $2.32 $0.44 ($1.67) $1.52 $1.39 $0.77 $3.77 $8.93 $1.04 $1.18 $1.51 CY EPS 2009E $5.61 $2.39 ($0.15) ($1.80) $1.17 $0.96 $0.78 $3.74 $9.80 $0.88 $0.76 $0.92 2010E $7.66 $2.59 $0.49 ($1.34) $1.37 $1.15 $0.95 $4.19 $11.00 $1.21 $0.95 $1.28 '08-'10 % CAGR 19% 6% NM NM -5% -9% 11% 5% 11% 8% -10% -8% 3% -7% -10% -2% 9% -15% NM 8% -3% NM -25% -23% NM NM NM 26% NM 28% 2% 23% 4% 11% -4% -6% 2% 5% 7% 8% 5% NM -24% 2% 48% 16% 8% -9% 18% 15% 6% 7% -2% 8% 2008A 28.2x 15.2x 28.8x NA 13.5x 9.1x 18.0x 10.6x 12.9x 18.0x 21.3x 15.2x 17.4x 6.3x 8.8x 10.9x 17.1x 11.7x NM 15.9x 11.8x NM NM 8.0x NA NA NA NM NA 33.0x NM 17.9x 9.9x 24.2x 15.9x 15.7x 17.8x 16.9x 14.6x 12.3x 27.7x 12.0x 8.9x 13.0x 17.8x 15.5x 14.4x 23.9x NM 34.6x 14.4x 16.7x 29.3x 18.2x CY P/E 2009E 27.1x 14.8x NA NA 17.5x 13.2x 17.8x 10.7x 11.8x 21.3x 33.1x 24.9x 19.2x 8.3x 13.2x 12.7x 14.8x 19.9x NA 15.9x 14.1x NM NM 16.9x NM 53.0x NA 39.8x NA 23.6x 33.3x 13.4x 10.1x 22.2x 18.2x 20.1x 18.5x 17.1x 13.9x 12.3x 35.6x 11.0x 20.8x 14.8x 14.4x 14.5x 13.8x 30.5x 39.4x 31.1x 14.4x 16.0x 36.6x 21.3x 2010E 19.8x 13.6x 25.8x NA 15.0x 11.0x 14.7x 9.5x 10.5x 15.6x 26.5x 18.0x 16.4x 7.3x 11.0x 11.4x 14.5x 16.3x NM 13.7x 12.3x NA NM 13.5x NM 40.4x NA 34.8x NA 20.1x 27.2x 11.8x 9.1x 19.6x 17.3x 17.8x 17.1x 15.5x 12.7x 10.6x 24.9x NA 15.4x 12.5x 8.1x 11.6x 12.3x 29.0x 30.5x 26.2x 12.8x 14.5x 30.6x 18.0x PE to G 2009E 1.4x 2.6x NM NM NM NM 1.6x 2.0x 1.1x 2.8x NM NM 1.9x NM NM NM 1.7x NM NM 2.1x 1.9x NM NM NM NM NM NM 1.5x NM 0.8x 1.2x 0.6x 2.6x 2.0x NM NM NM 1.7x 2.0x 1.6x NM NM NM NM 0.3x 0.9x 1.7x NM 2.2x 2.1x 2.5x 2.2x NM 1.7x 2008A $6,789 $2,023 $1,076 $625 $11,818 $4,357 $2,957 $15,695 $20,595 $14,024 $998 $3,750 EBITDA 2009E $7,825 $2,073 $311 $177 $10,372 $3,214 $2,673 $16,674 $18,819 $11,118 $718 $2,431 2010E $10,500 $2,112 $2,004 $431 $10,710 $3,775 $3,013 $17,563 $18,306 $13,657 $857 $2,829 2008A 16.5x 8.1x 14.0x 8.6x 8.1x 3.9x 8.1x 6.6x 8.3x 6.8x 11.0x 7.2x 8.9x 4.9x 6.6x 5.1x 4.2x 5.3x 6.8x 9.3x 6.0x 22.9x 28.4x 13.9x NM NM NA 17.6x NA 14.1x 19.4x 8.0x 5.9x 15.6x 6.4x 8.2x 6.5x 8.4x 7.5x 6.4x 19.8x NA 4.1x 7.3x 4.1x 9.9x 6.0x 17.7x 14.2x 24.5x 6.9x 6.5x 16.7x 10.8x EV/EBITDA 2009E 2010E 14.3x 7.9x 48.3x 30.3x 9.3x 5.3x 8.9x 6.2x 9.1x 8.5x 15.3x 11.1x 14.5x 5.5x 9.3x 6.2x 3.6x 10.3x 9.5x 10.1x 7.8x 18.4x 34.3x 12.0x NM 19.4x NA 11.9x NA 9.6x 17.6x 8.6x 6.5x 14.4x 8.0x 10.5x 5.7x 9.0x 6.9x 6.1x 18.1x NA 6.0x 8.4x 3.4x 9.3x 5.8x 15.1x 12.6x 21.5x 6.7x 6.9x 18.4x 10.4x 10.7x 7.8x 7.5x 12.4x 9.0x 4.5x 7.9x 5.9x 9.3x 6.9x 12.8x 9.5x 8.7x 4.8x 8.2x 5.6x 3.0x 8.7x 12.8x 8.2x 7.3x NA 24.8x 6.9x NM 14.9x NA 9.7x NM 8.6x 13.0x 7.3x NA 12.3x 7.6x 9.4x 5.5x 8.4x 6.6x 5.6x 15.5x NA 4.8x 8.3x 3.3x 7.6x 5.4x 12.6x 9.6x 17.6x 6.1x 6.4x 15.7x 8.9x EV/OCCF CY09E 12.4x 10.2x NM NA 10.0x 6.7x 8.3x NA 9.7x 11.6x 18.6x 14.8x 11.4x 12.2x 13.1x NA 10.0x NA NA 14.1x 12.4x 21.9x NA 5.3x NM 20.1x NA 17.5x NM 12.5x 15.4x 10.6x 8.0x 16.3x 7.9x 12.9x 8.0x 10.6x 8.8x 7.1x 15.4x 7.3x 5.8x 10.6x 9.1x 14.3x 8.0x 14.4x 10.1x 25.6x 9.0x 9.8x 14.8x 11.3x EV/FCF CY09E 12.6x 11.6x NA NA 11.6x 8.4x 13.6x 11.0x 13.0x 28.1x 24.7x 17.7x 15.2x 10.5x 17.8x 8.0x 11.9x 7.0x NM 16.4x 11.9x NM NA 7.8x NA NM NA 23.9x NM 15.3x 15.7x 11.7x 9.7x 17.5x 11.1x 13.8x 11.0x 12.5x 10.1x 8.4x 17.1x 8.6x 8.0x 16.4x 12.3x 15.3x 8.9x 16.1x 13.5x 27.2x 12.4x 9.6x 19.2x 13.5x FCF Yield CY09E 8.0% 8.6% NA NA 8.7% 11.9% 7.4% 9.1% 7.7% 3.6% 4.1% 5.6% 7.5% 9.5% 5.6% 12.6% 8.4% 14.4% 2.2% 6.1% 8.4% 3.2% NA 12.9% NA 3.1% NA 4.2% 0.8% 6.5% 5.1% 8.5% 10.4% 5.7% 9.0% 7.2% 9.1% 8.3% 9.9% 12.0% 5.8% 11.7% 12.6% 6.1% 8.1% 6.5% 11.2% 6.2% 7.4% 3.7% 8.0% 10.5% 5.2% 8.3%

$4.58 $5.82 $16.01 $5.64 $16.09 $3.50 € 30.24

$201 $343 $562 $929 $371 $108 € 35,889

$340 $529 $499 $753 $285 $88 € 33,086

$289 $488 $390 $798 $337 $263 € 11,733

$263 $418 $349 $724 $248 $222 € 11,141

$284 $444 $360 $724 $262 $218 € 11,732

$0.73 $0.66 $1.47 $0.33 $1.38 $0.04 € 1.90

$0.55 $0.44 $1.26 $0.38 $0.81 ($0.03) € 1.90

$0.63 $0.53 $1.41 $0.39 $0.99 $0.04 € 2.21

$70 $81 $97 $179 $54 $13 € 3,556

$62 $57 $81 $210 $28 $9 € 3,286

$72 $64 $89 $250 $33 $7 € 4,028

$32.36 $8.81 $10.82 $12.37 $12.75 $2.66 $40.84 $9.62 $17.11

$1,656 $248 $244 $758 $411 $42 $5,119 $542 $518

$1,435 $160 $213 $638 $318 $16 $4,150 $436 $459

$224 $73 $204 $152 $140 $41 $1,077 $112 $174

$258 $78 $153 $165 $146 $47 $1,262 $144 $203

$304 $82 $164 $173 $159 $59 $1,414 $155 $225

$0.59 $0.16 $1.35 ($0.04) ($0.04) ($0.67) $0.74 ($1.11) $0.52

$0.74 $0.08 $0.64 $0.05 $0.24 ($0.56) $1.03 ($0.22) $0.72

NA $0.09 $0.80 $0.09 $0.32 ($0.14) $1.17 ($0.01) $0.85

$63 $6 $15 $0 $4 NA $235 ($57) $33

$78 $5 $18 $9 $16 NA $348 ($8) $48

NA $6 $31 $12 $21 NA $428 $4 $54

$4.83 $14.98 $18.40 $53.95 $8.03 $33.50

$230 $731 $1,848 $659 $210 $651

$213 $1,041 $1,629 $496 $158 $466

$131 $721 $456 $360 $76 $303

$126 $653 $484 $344 $71 $289

$132 $684 $536 $371 $74 $299

$0.27 $1.52 $0.76 $3.39 $0.51 $1.88

$0.36 $1.48 $0.83 $2.96 $0.40 $1.81

$0.41 $1.64 $0.94 $3.12 $0.45 $1.96

$27 $177 $104 $77 $19 $72

$25 $159 $113 $62 $15 $81

$29 NA $133 $65 $17 $84

$33.00 $18.03 $17.46 $7.18 $8.31 $24.29 $4.45 $21.74 $14.37 $20.60 $24.06 $16.35 $32.21 $7.85 $30.81

$6,174 $9,754 $758 $1,766 $183 $216,278 $1,539 $109,635 $1,376 $4,004 $1,685 $1,137 $2,720 $1,359 $12,050

$5,399 $8,978 $653 $1,488 $104 $188,825 $603 $107,249 $1,113 $3,158 $781 $1,183 $2,468 $1,073 $10,469

$1,841 $4,281 $226 $1,127 $96 $61,981 $942 $23,761 $735 $628 $333 $93 $1,132 $641 $1,881

$1,904 $4,225 $245 $987 $86 $58,670 $872 $26,310 $704 $704 $385 $111 $1,122 $599 $1,850

$1,982 $4,333 $266 $970 $95 $61,688 $885 $34,159 $754 $811 $447 $139 $1,213 $634 $2,213

$2.26 $1.46 $0.63 $0.60 $0.93 $1.87 $0.25 $1.40 $1.00 $0.86 $0.57 $0.47 $2.24 $0.47 $1.05

$2.38 $1.47 $0.49 $0.65 $0.40 $1.64 $0.31 $1.50 $1.04 $0.68 $0.61 $0.53 $2.23 $0.49 $0.84

$2.59 $1.70 $0.70 NA $0.54 $1.95 $0.55 $1.88 $1.17 $0.71 $0.79 $0.63 $2.51 $0.54 $1.01

$718 $1,407 $33 NA $25 $25,805 $146 $10,811 $185 $179 $55 $48 $355 $164 $627

$777 $1,466 $36 NA $17 $22,547 $179 $11,571 $192 $210 $62 $55 $369 $155 $570

$812 $1,590 $42 NA $22 $22,672 $185 $14,120 $205 $250 $81 $67 $404 $168 $665

Source: FactSet, First Call, Company data, Morgan Stanley Research

(continued on next page)

14

MORGAN July 20, 2009 Software

STANLEY

RESEARCH

Software Universe
Company Productivity Applications Adobe Akamai Autodesk Citrix Systems Corel Limelight Networks Vignette Security ArcSight Check Point Software Entrust Guidance McAfee SonicWALL Sourcefire Symantec Vasco Data Security Verisign Websense Diversified Applications Blackbaud Blackboard Inc Intuit Omniture Digital River Processors Automatic Data Processing Global Payments Hewitt Associates Paychex TNS Inc. Financial Tech. Advent Software Convergys DST Systems Fidelity Information Services Fiserv H&R Block Jack Henry S1 Corporation BLKB BBBB INTU OMTR DRIV Average ADP GPN HEW PAYX TNS Average ADVS CVG DST FIS FISV HRB JKHY SONE Average $33.81 $9.28 $38.13 $20.62 $47.91 $17.35 $20.92 $6.77 $15.38 $32.12 $27.95 $12.89 $38.61 14% 22% 17% 21% 56% 26% -10% 22% 5% -4% 118% 26% 69% 45% 0% 27% 32% -24% 8% -14% 18% 28% 30% 44% 26% 23% 25% 34% 20% 4% $874 $1,151 $1,903 $3,951 $7,474 $5,864 $1,746 $362 $852 $1,537 $2,981 $6,139 $11,169 $5,298 $1,784 $304 $265 $2,786 $1,676 $3,446 $4,739 $4,456 $741 $228 $289 $2,778 $1,652 $3,502 $4,239 $4,173 $752 $243 $312 $2,873 $1,686 $3,853 $4,426 $4,356 $789 $259 $662 $1,012 $9,198 $967 $1,437 $694 $1,021 $8,456 $858 $1,091 $302 $312 $3,064 $309 $394 $312 $370 $3,308 $361 $400 $331 $428 $3,430 $415 $424 5% 17% 6% 16% 4% 9% 2% 11% 0% 0% 30% 9% 8% 2% 0% 6% -3% -1% 3% 6% 3% 4% 4% 8% 1% 3% 6% 3% 2.3x 3.3x 2.8x 2.8x 2.8x 2.8x 1.9x 2.1x 1.0x 2.5x 1.9x 1.9x 3.2x 0.6x 1.8x 1.8x 2.4x 1.2x 2.4x 1.3x 1.8x 2.3x 2.5x 3.2x 2.6x 3.2x 3.2x 1.8x 2.2x 2.8x 2.6x 2.4x 2.7x 2.5x 1.8x 1.8x 1.0x 2.5x 1.4x 1.7x 2.9x 0.6x 1.8x 1.8x 2.6x 1.3x 2.4x 1.2x 1.8x 2.3x 2.4x 3.0x 2.8x 3.2x 3.0x 1.8x 2.1x 2.4x 2.5x 2.1x 2.6x 2.3x 1.8x 1.7x 1.0x 2.5x 1.1x 1.6x 2.7x 0.5x 1.8x 1.6x 2.5x 1.2x 2.3x 1.2x 1.7x 2.1x 2.2x 2.7x 2.5x 2.9x 2.6x 1.7x $0.68 $0.65 $3.80 $1.49 $3.29 $1.51 $1.18 $0.38 $1.15 $0.97 $3.63 $1.61 $3.65 $1.45 $1.21 $0.52 $1.33 $1.13 $3.95 $1.81 $4.11 NA $1.28 $0.48 $0.95 $0.81 $1.59 $0.42 $1.86 $0.85 $1.28 $1.95 $0.50 $1.94 $0.99 $1.76 $2.02 $0.65 $2.11 2% 47% 13% 24% 7% 19% 6% 4% 14% 0% 16% 8% 40% 32% 2% 10% 12% NM 4% 12% 16% 7% 6% 7% 6% 6% 13% 6% -8% -16% 16.2x 39.7x 17.5x 30.4x 20.8x 24.9x 15.2x 17.6x 14.4x 16.2x 12.9x 15.3x NM 14.3x 10.0x 13.8x 14.6x 11.5x 17.7x 17.8x 14.2x 16.9x 17.6x 22.4x 16.9x 16.6x 17.9x 17.7x 23.3x 15.7x 18.1x 25.1x 14.3x 25.6x 19.9x 20.6x 14.8x 19.1x 11.9x 17.9x 11.8x 15.1x 29.4x 9.6x 10.5x 12.8x 13.1x 12.0x 17.3x 13.0x 14.7x 20.1x 21.6x 26.7x 17.3x 17.1x 19.2x 22.5x 23.4x 16.1x 15.5x 18.3x 13.8x 19.8x 18.3x 17.1x 13.6x 16.4x 11.1x 16.3x 9.6x 13.4x 25.4x 8.2x 9.7x 11.4x 11.7x NA 16.3x 14.1x 13.8x 17.0x 18.0x 22.1x 15.2x 15.1x 17.0x 18.2x 17.0x 12.7x NM 0.5x 1.1x 1.1x 3.1x 1.4x 2.6x NM 0.9x NM 0.7x 1.4x 0.7x 0.3x NM 1.3x 1.1x NM 4.2x 1.1x 1.4x 1.7x 1.8x 1.2x 1.7x 1.6x 1.8x 1.7x NM NM $55 $290 $476 $844 $1,302 $914 $221 $41 $60 $296 $438 $891 $1,314 $991 $223 $48 $66 $326 $462 $1,031 $1,399 $1,074 $237 $54 NA $57 $961 $59 $110 $60 $88 $1,138 $76 $114 NA $117 $1,202 $103 $124 NA 18.0x 8.8x 14.4x 9.9x 12.8x 8.1x 8.9x 6.0x 5.7x 7.7x 7.3x 15.6x 5.3x 6.3x 7.3x 8.6x 5.8x 8.1x 7.4x 8.0x 10.5x 11.3x 14.1x 9.2x 9.5x 10.9x 10.9x 11.5x 11.6x 7.4x 11.3x 9.6x 10.3x 7.9x 7.8x 5.4x 6.1x 5.3x 6.5x 14.2x 5.2x 6.8x 6.9x 8.5x 5.3x 8.0x 6.3x 7.7x 10.2x 11.0x 14.2x 11.1x 9.5x 9.8x 11.4x NA 8.7x 7.0x 8.3x 8.8x 8.2x 7.8x 7.2x 5.1x 6.1x 4.3x 6.1x 12.9x 4.7x 6.5x 6.0x 8.0x 4.9x 7.5x 5.6x 7.0x 8.7x 9.3x 11.1x 8.3x 8.7x 8.1x 9.5x 11.5x 11.3x 11.1x 10.1x 9.8x 10.8x 10.2x 9.3x 7.8x 8.1x NA 8.8x 12.5x 5.8x 9.7x 9.4x 12.9x NA 11.0x 7.7x 9.9x 11.5x 12.1x 14.9x 11.3x 11.7x 11.7x 11.7x 13.5x 14.8x 15.3x 19.7x 13.5x 15.3x 11.6x 16.5x 11.5x 9.1x 12.3x 12.2x 16.3x 8.0x 14.0x 13.8x 18.6x 8.0x 15.2x 10.1x 13.0x 13.5x 13.7x 16.7x 14.5x 14.4x 13.8x 12.0x 7.4% 6.7% 6.5% 5.1% 7.4% 7.5% 8.6% 6.0% 8.7% 11.0% 8.1% 8.5% 6.1% 12.5% 7.1% 7.2% 5.4% 12.5% 6.6% 9.9% 8.4% 7.6% 7.4% 5.2% 7.5% 7.4% 7.9% 7.7% Ticker ADBE AKAM ADSK CTXS CREL LLNW VIGN Average ARST CHKP ENTU GUID MFE SNWL FIRE SYMC VDSI VRSN WBSN Average Price 17-Jul-09 $31.02 $19.64 $18.77 $34.99 $2.18 $4.42 $13.36 YTD Perf. 46% 30% -4% 48% -20% 80% 42% 32% 152% 28% 25% -7% 24% 52% 134% 21% -24% 4% 6% 38% Market Cap. $16,379 $3,696 $4,263 $6,381 $56 $380 $309 Ent. Value $14,065 $3,442 $3,298 $5,477 $164 $218 $166 2008A $3,580 $791 $2,315 $1,583 $263 $130 $170 CY Sales 2009E $2,932 $868 $1,692 $1,584 $213 $138 $145 2010E $3,107 $944 $1,766 $1,712 NA $152 $153 '08-'10 % CAGR -7% 9% -13% 4% NM 8% -5% -1% 22% 10% -1% 3% 12% -4% 17% -2% -4% 8% 11% 6% 2008A 3.9x 4.4x 1.4x 3.5x 0.6x 1.7x 1.0x 2.3x 4.8x 5.1x 0.9x 0.6x 3.8x 1.0x 3.1x 2.2x 1.8x 3.6x 2.5x 2.7x EV/Sales 2009E 4.8x 4.0x 1.9x 3.5x 0.8x 1.6x 1.1x 2.5x 3.9x 4.6x 1.0x 0.6x 3.2x 1.1x 2.7x 2.3x 2.3x 3.3x 2.2x 2.5x 2010E 4.5x 3.6x 1.9x 3.2x NA 1.4x 1.1x 2.6x 3.3x 4.3x 1.0x 0.5x 3.0x 1.1x 2.3x 2.2x 2.0x 3.1x 2.1x 2.2x 2008A $2.07 $1.66 $1.94 $1.63 $1.44 ($0.08) $0.29 CY EPS 2009E $1.52 $1.69 $0.81 $1.65 $0.92 ($0.11) $0.34 2010E $1.72 $1.79 $1.01 $1.76 $0.97 ($0.08) $0.38 '08-'10 % CAGR -9% 4% -28% 4% -18% NM 14% -5% 43% 9% 85% NM 13% 5% NM 0% -15% 25% 3% 19% 2008A 15.0x 11.8x 9.7x 21.5x 1.5x NA NM 11.9x 58.6x 13.7x 28.1x NA 21.4x 20.8x NA 10.6x 12.3x 20.1x 11.5x 21.9x CY P/E 2009E 20.4x 11.6x 23.1x 21.2x NA NA 39.3x 23.1x 34.6x 12.8x 13.1x NA 18.8x 20.8x 59.2x 11.2x 20.6x 15.3x 12.1x 21.8x 2010E 18.0x 11.0x 18.5x 19.9x 2.2x NA 35.2x 17.5x 28.6x 11.5x 8.2x 27.1x 16.9x 18.9x 38.1x 10.6x 17.0x 12.9x 10.8x 18.2x PE to G 2009E NM 3.0x NM NM NM NM 2.7x 2.9x 0.8x 1.4x 0.2x NM 1.5x 4.1x NM NM NM 0.6x 3.8x 1.8x 2008A $1,466 $368 $595 $413 $59 $13 NA EBITDA 2009E $1,038 $401 $312 $497 $39 $17 NA 2010E $1,160 $436 $387 $561 NA $20 NA 2008A 9.6x 9.3x 5.5x 13.3x 2.8x 16.5x NA 9.5x 38.9x 9.3x 15.9x 13.7x 11.8x 7.7x NA 6.4x 7.7x 8.2x 4.6x 12.4x EV/EBITDA 2009E 2010E 13.5x 8.6x 10.6x 11.0x 4.2x 13.1x NA 10.2x 21.9x 8.6x NA 13.5x 9.7x 7.3x 27.9x 6.9x 11.5x 7.7x 5.6x 12.1x 12.1x 7.9x 8.5x 9.8x NA 11.1x NA 9.9x 15.5x 8.0x NA 5.5x 9.5x 6.4x 18.5x 6.6x 8.8x 7.0x 6.7x 9.2x EV/OCCF CY09E 15.1x 8.8x 13.2x 12.3x 7.9x NA NA 11.4x NM 9.1x 10.7x 25.8x 12.9x 8.6x 26.1x 8.2x 10.0x 8.4x 8.8x 12.9x EV/FCF CY09E 16.1x 12.9x 18.4x 16.3x NA NA NA 15.9x NM 9.5x 10.0x NA 14.4x 10.0x NM 9.8x 13.6x 11.0x 10.3x 11.1x FCF Yield CY09E 6.2% 7.8% 5.4% 6.1% NA NA NA 6.4% 2.6% 10.5% 10.0% NA 6.9% 10.0% 1.3% 10.2% 7.4% 9.1% 9.8% 7.8%

$20.20 $24.31 $1.97 $3.79 $42.99 $6.04 $13.13 $16.41 $7.84 $19.86 $15.93

$695 $5,156 $121 $88 $6,714 $329 $341 $13,445 $298 $3,829 $714

$612 $4,149 $94 $51 $6,012 $213 $235 $13,544 $241 $3,456 $748

$126 $808 $100 $91 $1,600 $219 $76 $6,265 $133 $962 $296

$157 $893 $95 $86 $1,854 $193 $88 $5,934 $107 $1,036 $342

$187 $976 $97 $97 $2,002 $202 $103 $6,062 $123 $1,130 $362

$0.34 $1.78 $0.07 ($0.05) $2.01 $0.29 ($0.03) $1.55 $0.64 $0.99 $1.38

$0.58 $1.90 $0.15 ($0.06) $2.29 $0.29 $0.22 $1.46 $0.38 $1.30 $1.32

$0.71 $2.12 $0.24 $0.14 $2.55 $0.32 $0.34 $1.55 $0.46 $1.54 $1.47

$16 $448 $6 $4 $511 $28 ($1) $2,110 $31 $419 $162

$28 $480 NA $4 $620 $29 $8 $1,976 $21 $449 $133

$40 $516 NA $9 $633 $33 $13 $2,055 $27 $497 $112

$35.31 $39.92 $29.85 $25.36 $20.45

$17,740 $3,187 $2,853 $9,156 $514

$16,387 $2,994 $3,054 $5,162 $657

$8,847 $1,459 $3,123 $2,079 $344

$8,939 $1,661 $3,045 $2,051 $470

$9,185 $1,810 $3,127 $2,086 $578

$2.32 $2.27 $2.08 $1.57 $1.58

$2.39 $2.09 $2.50 $1.42 $1.73

$2.59 $2.44 $2.70 $1.56 $2.12

$2,023 $336 $506 $902 $85

$2,073 $383 $562 $842 $123

$2,112 $414 $598 $844 $154

Software and Services Enterprise Software Covered Software Large-Cap Technology Large-Cap Software Mid-Cap Software Small-Cap Software NASDAQ S&P 500

Source: FactSet, First Call, Company data, Morgan Stanley Research

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Public Company M&A Multiples
NTM Estimates Date Acquirer Target Price Before Announcement Offer price/share Premium Paid Price $M EV Type of Transaction NTM EPS NTM Revenue NTM EBITDA NTM FCF NTM OCF NTM Maint. NTM PE NTM EV/Sales NTM Ratios NTM EV/EBITDA NTM EV/FCF NTM EV/Maint NTM FCF Yield

July 14, 2009 June 4, 2009 May 6, 2009 May 6, 2009 April 20, 2009 April 13, 2009 January 22, 2009 January 12, 2009 September 22, 2008 September 4, 2008 August 29, 2008 July 31, 2008 July 28, 2008 June 25, 2008 June 19, 2008 June 17, 2008 June 9, 2008 May 29, 2008 May 13, 2008 May 1, 2008 April 21, 2008 March 28, 2008 March 17, 2008 January 16, 2008 January 8, 2008 December 19, 2007 November 12, 2007 October 26, 2007 October 7, 2007 September 5, 2007 July 23, 2007 May 18, 2007 May 15, 2007 April 27, 2007 April 26, 2007 April 5, 2007 April 2, 2007 March 26, 2007 March 15, 2007 March 1, 2007 February 14, 2007 February 12, 2007 January 29, 2007 January 16, 2007 December 1, 2006 Mean Median

Software AG Intel Micro Focus Open Text Oracle Thoma Bravo Autonomy Vector Capital McAfee Open Text Microsoft Sophos PLC IBM Progress Software TIBX Alcatel-Lucent BLKB HPQ Autodesk Blue Coat Systems Vector Capital BMC Software Oracle Microsoft Intuit IBM Omniture SAP Cognos HPQ Microsoft Oracle Websense CSC Software AG KKR Hellman & Friedman Cisco Oracle CheckFree Verint Systems Symantec Oracle Intuit

IDS Scheer Wind River Borland Software Vignette Sun Microsystems Entrust Interwoven Aladdin Knowledge Secure Computing Captaris Greenfield Online Utimaco Safeware A ILOG IONA IFUL MOTV KNTA EDS Moldflow Packeteer Corel BladeLogic BEA Systems Fast Search and Tra Electronic Clearing Cognos (COGN) Visual Sciences (VSC Business Objects Applix (APLX) Opsware Aquantive Agile SurfControl Covansys (CVNS) WebMethods First Data Kronos WebEx Hyperion Corillian Witness Altiris BEA Systems Digital Insight

€ 10.80 $8.00 $0.80 $9.01 $6.69 $1.51 $11.84 $7.02 $4.52 $3.74 $15.50 € 7.68 € 7.30 $3.52 $1.45 $1.46 $10.12 $0.68 $18.86 $19.61 $6.18 $10.68 $23.61 $15.58 $2.49 $7.90 $52.98 $16.72 $50.27 $14.37 $10.28 $35.87 $7.08 $9.79 $26.80 $7.28 $26.90 $45.14 $46.20 $42.84 $3.45 $22.27 $27.14 $15.58 $33.00

€ 15.00 $11.50 $1.00 $12.70 $9.50 $2.00 $16.20 $11.50 $5.75 $4.80 $17.50 € 14.75 € 10.00 $4.05 $1.87 $2.23 $15.60 $1.12 $25.00 $22.00 $7.10 $11.00 $28.00 $19.38 $3.54 $17.00 $58.00 $18.69 $59.64 $17.87 $14.25 $66.50 $8.10 $14.00 $34.00 $9.15 $34.00 $55.00 $57.00 $52.00 $5.15 $27.50 $33.00 $19.38 $39.00

38.9% 43.8% 25.0% 41.0% 42.0% 32.5% 36.8% 63.8% 27.2% 28.3% 12.9% 92.1% 37.0% 15.1% 29.0% 53.0% 54.2% 64.7% 32.6% 12.2% 14.9% 3.0% 18.6% 24.4% 42.2% 115.2% 9.5% 11.8% 18.6% 24.4% 38.6% 85.4% 14.4% 43.0% 26.9% 25.7% 26.4% 21.8% 23.4% 21.4% 49.3% 23.5% 21.6% 24.4% 18.2% 34.0% 26.9%

€ 480 $884 $75 $310 $7,400 $124 $775 $160 $465 $131 $486 € 217 $340 $106 $24 $68 $195 $43 $13,625 $397 $268 $280 $717 $8,052 $1,230 $133 $5,000 $297 $5,775 $339 $1,600 $6,000 $495 $411 $1,300 $546 $29,000 $1,800 $3,200 $3,300 $245 $950 $830 $8,500 $1,350

€ 402 $789 $23 $167 $5,600 $100 $612 $151 $444 $101 $421 € 184 $232 $124 $15 $51 $157 $43 $13,900 $207 $192 $409 $800 $6,782 $1,092 $143 $4,900 $283 $5,485 $306 $1,600 $5,703 $331 $370 $1,178 $418 $25,489 $1,710 $2,900 $2,814 $245 $791 $830 $7,200 $1,259

Cash Cash Cash Cash + Stock Cash Cash Cash Cash Cash Cash Cash Cash + Stock Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash + Stock Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash

€ 0.58 $0.57 NA $0.34 ($0.20) $0.15 $0.80 $1.02 $0.28 ($0.19) $0.74 € 0.56 $0.32 $0.20 NA NA $0.45 ($0.12) $1.46 NA $0.22 $1.66 $0.01 $0.78 NA $0.00 $2.18 $1.12 $2.29 $0.55 $0.14 $0.73 $0.10 NA $1.25 $0.16 $1.26 $2.05 $1.68 $1.95 $0.16 $1.01 $1.10 $0.78 $1.23

€ 376.2 $363.1 NA $145 $12,119 $96.4 $280.7 $152.2 $260.3 $142.1 $157.0 € 67.8 $182.8 $82.3 NA NA $75.4 $42.2 $23,034.6 $67.7 $171.0 $270.3 $97.0 $1,601.0 $204.8 $84.5 $1,132.1 $89.6 $1,652.1 $75.8 $154.7 $643.9 $143.2 NA $511.5 $205.2 $7,704.0 $668.2 $458.1 $925.7 $65.9 $253.8 $244.7 $1,610.5 $263.0

€ 34.0 $50.6 NA NA $600 NA NA $22.0 $33.0 NA $39.9 € 13.9 $10.9 NA NA NA $11.6 $0.7 $2,818.9 NA NA $64.5 $2.7 $404.0 NA $4.5 $218.6 $19.0 $330.4 $18.3 $14.1 $162.3 NA NA $75.8 $7.7 $1,810.0 $153.1 $151.2 $204.4 $9.2 $63.7 $56.9 $416.7 $79.9

NA NA NA NA ($307) NA NA $13.0 NA NA NA NA NA NA NA NA $6.0 NA $998.0 NA NA $49.8 $2.8 $340.4 NA NA $243.2 NA NA NA $0.6 $115.2 NM NA $36.0 $3.9 $1,303.0 $67.4 $96.0 $171.7 $2.9 $52.0 $35.9 $342.9 NA

NA NA NA NA $262 NA NA $17.0 NA NA NA NA NA NA NA NA NA NA $2,342.0 NA NA $55.4 $5.5 $367.9 NA NA $264.2 NA NA NA $2.1 $142.4 NM NA $51.3 $10.9 $1,633.0 $92.8 $116.9 $189.6 NA $59.0 $41.7 $370.9 NA

NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA $834.8 NA NA $487.5 NA $655.9 $27.4 NA NA $88.2 NA NA $88.4 NA $212.4 NA $405.8 $49.2 $152.0 $73.5 $559.2 NA

25.9x 20.2x NA NM NM 13.3x 20.3x 11.3x 20.5x NM 23.6x 26.3x 31.3x 20.3x NA NA 34.7x NM 17.1x NA 32.3x 6.6x NM 24.8x NM NM 26.6x 16.7x 26.0x 32.5x NM NM NM NM 27.2x NM 27.0x 26.8x 33.9x 26.7x 32.2x 27.2x 30.0x 24.8x 31.7x 24.8x 26.3x

1.1x 2.2x NA 1.2x 0.5x 1.0x 2.2x 1.0x 1.7x 0.7x 2.7x 2.7x 1.3x 1.5x NA NA 2.1x 1.0x 0.6x 3.1x 1.1x 1.5x 8.2x 4.2x 5.3x 1.7x 4.3x 3.2x 3.3x 4.0x 10.3x 8.9x 2.3x NM 2.3x 2.0x 3.3x 2.6x 6.3x 3.0x 3.7x 3.1x 3.4x 4.5x 4.8x 3.0x 2.6x

11.8x 15.6x NA NA 9.3x NA NA 6.9x 13.5x NA 10.6x 13.3x 21.2x NA NA NA 13.5x NM 4.9x NA NA 6.3x NM 16.8x NA 31.8x 22.4x 14.9x 16.6x 16.7x NM 35.1x NM NM 15.5x NM 14.1x 11.2x 19.2x 13.8x 26.7x 12.4x 14.6x 17.3x 15.8x 15.8x 14.7x

NA NA NA NA NM NA NA 11.7x NA NA NA NA NA NA NA NA 26.2x NA 13.9x NA NA 8.2x NM 19.9x NA NM 20.1x NM NA NM NM NM NM NM 32.8x NM 19.6x 25.4x 30.2x 16.4x NM 15.2x 23.1x 21.0x NM 20.3x 20.0x

NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NM NM NA NM NM NM 8.1x NA NM 10.1x NM 8.4x 11.2x NM NM 3.7x NM NA 4.7x NA 8.0x NA 6.9x 5.0x 5.2x 11.3x 12.9x NM 8.0x 8.1x

NA NA NA NA NM NA NA 8.6% NA NA NA NA NA NA NA NA 3.8% NA 7.2% NA NA 12.2% 0.4% 5.0% NA NM 5.0% NM NA NM NM NM NM NM 3.1% 0.9% 5.1% 3.9% 3.3% 6.1% 1.2% 6.6% 4.3% 4.8% NM 4.8% 4.8%

HireRight USIS Commercial Servic

Source: Bloomberg, FactSet, First Call, Company data, Morgan Stanley Research

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Disclosure Section
The information and opinions in Morgan Stanley Research were prepared by Morgan Stanley & Co. Incorporated, and/or Morgan Stanley C.T.V.M. S.A. and their affiliates (collectively, "Morgan Stanley"). For important disclosures, stock price charts and rating histories regarding companies that are the subject of this report, please see the Morgan Stanley Research Disclosure Website at www.morganstanley.com/researchdisclosures, or contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Equity Research Management), New York, NY, 10036 USA. The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report: Adam Holt. Unless otherwise stated, the individuals listed on the cover page of this report are research analysts. Morgan Stanley Research has been published in accordance with our conflict management policy, which is available at www.morganstanley.com/institutional/research/conflictpolicies. The following analyst, strategist, or research associate (or a household member) owns securities (or related derivatives) in a company that he or she covers or recommends in Morgan Stanley Research: Munish Jain - Symantec (common stock). Morgan Stanley policy prohibits research analysts, strategists and research associates from investing in securities in their sub industry as defined by the Global Industry Classification Standard ("GICS," which was developed by and is the exclusive property of MSCI and S&P). Analysts may nevertheless own such securities to the extent acquired under a prior policy or in a merger, fund distribution or other involuntary acquisition. As of June 30, 2009, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research: Adobe Systems, Autodesk, NetSuite, Salesforce.com, SuccessFactors, Symantec, VMware Inc. As of June 30, 2009, Morgan Stanley held a net long or short position of US$1 million or more of the debt securities of the following issuers covered in Morgan Stanley Research (including where guarantor of the securities): Adobe Systems, Autodesk, Intuit, McAfee, Microsoft, Oracle Corporation, Symantec, VMware Inc. Within the last 12 months, Morgan Stanley managed or co-managed a public offering of securities of Microsoft, Oracle Corporation, SolarWinds, Inc.. Within the last 12 months, Morgan Stanley has received compensation for investment banking services from Adobe Systems, ArcSight Inc, Autodesk, Intuit, McAfee, Microsoft, Oracle Corporation, Red Hat, Inc., SolarWinds, Inc., SuccessFactors, Symantec. In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Adobe Systems, ArcSight Inc, Autodesk, Citrix Systems Inc, DemandTec, Guidance Software Inc., Intuit, McAfee, Microsoft, NetSuite, Omniture, Oracle Corporation, Red Hat, Inc., RightNow Technologies, Inc., Salesforce.com, SolarWinds, Inc., Sourcefire, SuccessFactors, Symantec, Taleo Corporation, VMware Inc. Within the last 12 months, Morgan Stanley & Co. Incorporated has received compensation for products and services other than investment banking services from Microsoft, Oracle Corporation. Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following company: Adobe Systems, ArcSight Inc, Autodesk, Citrix Systems Inc, DemandTec, Guidance Software Inc., Intuit, McAfee, Microsoft, NetSuite, Omniture, Oracle Corporation, Red Hat, Inc., RightNow Technologies, Inc., Salesforce.com, SolarWinds, Inc., Sourcefire, SuccessFactors, Symantec, Taleo Corporation, VMware Inc. Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: Adobe Systems, Autodesk, Citrix Systems Inc, Intuit, Microsoft, Oracle Corporation, Red Hat, Inc., Symantec. Within the last 12 months, Morgan Stanley has either provided or is providing non-securities related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: RightNow Technologies, Inc.. Within the last 12 months, an affiliate of Morgan Stanley & Co. Incorporated has received compensation for products and services other than investment banking services from RightNow Technologies, Inc.. The research analysts, strategists, or research associates principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues. An employee or director of Morgan Stanley is a director of Microsoft, Oracle Corporation. Morgan Stanley & Co. Incorporated makes a market in the securities of Adobe Systems, ArcSight Inc, Autodesk, Citrix Systems Inc, DemandTec, Guidance Software Inc., Intuit, McAfee, Microsoft, Omniture, Oracle Corporation, Red Hat, Inc., RightNow Technologies, Inc., Salesforce.com, Sourcefire, SuccessFactors, Symantec, Taleo Corporation, VMware Inc. Certain disclosures listed above are also for compliance with applicable regulations in non-US jurisdictions.

Analyst Certification

Global Research Conflict Management Policy

Important US Regulatory Disclosures on Subject Companies

STOCK RATINGS
Morgan Stanley uses a relative rating system using terms such as Overweight, Equal-weight, Not-Rated or Underweight (see definitions below). Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold and sell. Investors should carefully read the definitions of all ratings used in Morgan Stanley Research. In addition, since Morgan Stanley Research contains more complete information concerning the analyst's views, investors should carefully read Morgan Stanley Research, in its entirety, and not infer the contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations.

Global Stock Ratings Distribution
(as of June 30, 2009)

For disclosure purposes only (in accordance with NASD and NYSE requirements), we include the category headings of Buy, Hold, and Sell alongside our ratings of Overweight, Equal-weight, Not-Rated and Underweight. Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold, and sell but represent recommended relative weightings (see definitions below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with a buy recommendation; we correspond Equal-weight and Not-Rated to hold and Underweight to sell recommendations, respectively.

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Stock Rating Category

Coverage Universe Investment Banking Clients (IBC) % of % of % of Rating Total Count Count Total IBC Category

Overweight/Buy Equal-weight/Hold Not-Rated/Hold Underweight/Sell Total

739 1022 31 485 2,277

32% 45% 1% 21%

235 290 7 87 619

38% 47% 1% 14%

32% 28% 23% 18%

Data include common stock and ADRs currently assigned ratings. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Investment Banking Clients are companies from whom Morgan Stanley or an affiliate received investment banking compensation in the last 12 months.

Analyst Stock Ratings
Overweight (O). The stock's total return is expected to exceed the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Equal-weight (E). The stock's total return is expected to be in line with the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Not-Rated (NR). Currently the analyst does not have adequate conviction about the stock's total return relative to the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Underweight (U). The stock's total return is expected to be below the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months.

Analyst Industry Views
Attractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the relevant broad market benchmark, as indicated below. In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant broad market benchmark, as indicated below. Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant broad market benchmark, as indicated below. Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index; Europe - MSCI Europe; Japan - TOPIX; Asia - relevant MSCI country index.
.

Important Disclosures for Morgan Stanley Smith Barney LLC Customers
Citi Investment Research & Analysis (CIRA) research reports may be available about the companies that are the subject of this Morgan Stanley research report. Ask your Financial Advisor or use Research Center to view any available CIRA research reports in addition to Morgan Stanley research reports. In addition to the disclosures on this research report and on the Morgan Stanley disclosure website (www.morganstanley.com/researchdisclosures), important disclosures regarding the relationship between the companies that are the subject of this report and Morgan Stanley Smith Barney LLC, Citigroup Global Markets Inc. or any of its affiliates, are available at https://www.citigroupgeo.com/geopublic/Disclosures/index_a.html. This Morgan Stanley research report has been reviewed and approved on behalf of Morgan Stanley Smith Barney LLC. This review and approval was conducted by the same person who reviewed this research report on behalf of Morgan Stanley. This could create a conflict of interest.

Other Important Disclosures
Morgan Stanley produces a research product called a "Tactical Idea." Views contained in a "Tactical Idea" on a particular stock may be contrary to the recommendations or views expressed in this or other research on the same stock. This may be the result of differing time horizons, methodologies, market events, or other factors. For all research available on a particular stock, please contact your sales representative or go to Client Link at www.morganstanley.com. For a discussion, if applicable, of the valuation methods used to determine the price targets included in this summary and the risks related to achieving these targets, please refer to the latest relevant published research on these stocks. Morgan Stanley Research does not provide individually tailored investment advice. Morgan Stanley Research has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The securities/instruments discussed in Morgan Stanley Research may not be suitable for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. The securities, instruments, or strategies discussed in Morgan Stanley Research may not be suitable for all investors, and certain investors may not be eligible to purchase or participate in some or all of them. Morgan Stanley Research is not an offer to buy or sell or the solicitation of an offer to buy or sell any security/instrument or to participate in any particular trading strategy. 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traded on an exchange in Hong Kong or Macau, namely SEHK's Red Chip shares, including the component company of the SEHK's China-affiliated Corp Index is distributed only to Taiwan Securities Investment Trust Enterprises ("SITE"). The reader should independently evaluate the investment risks and is solely responsible for their investment decisions. Morgan Stanley Research may not be distributed to the public media or quoted or used by the public media without the express written consent of Morgan Stanley. Information on securities/instruments that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation or a solicitation to trade in such securities/instruments. MSTL may not execute transactions for clients in these securities/instruments. To our readers in Hong Kong: Information is distributed in Hong Kong by and on behalf of, and is attributable to, Morgan Stanley Asia Limited as part of its regulated activities in Hong Kong. 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Additional information on recommended securities/instruments is available on request.

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Industry Coverage:Software
Company (Ticker) Adam Holt Adobe Systems (ADBE.O) Citrix Systems Inc (CTXS.O) Guidance Software Inc. (GUID.O) Intuit (INTU.O) McAfee (MFE.N) Microsoft (MSFT.O) NetSuite (N.N) Oracle Corporation (ORCL.O) Red Hat, Inc. (RHT.N) Salesforce.com (CRM.N) SolarWinds, Inc. (SWI.N) Sourcefire (FIRE.O) SuccessFactors (SFSF.O) Symantec (SYMC.O) Taleo Corporation (TLEO.O) VMware Inc (VMW.N) Keith Weiss, CFA ArcSight Inc (ARST.O) Autodesk (ADSK.O) DemandTec (DMAN.O) Omniture (OMTR.O) RightNow Technologies, Inc. (RNOW.O) Rating (as of) Price (07/17/2009)

O (06/23/2008) E (06/23/2008) U (10/02/2008) E (06/23/2008) O (10/02/2008) O (04/24/2009) U (10/02/2008) O (06/23/2008) E (12/19/2008) U (03/25/2009) O (06/29/2009) O (10/02/2008) E (12/16/2008) E (05/07/2009) E (10/02/2008) E (06/23/2008) O (03/26/2008) E (11/07/2006) E (12/18/2008) O (06/09/2009) E (04/06/2006)

$31.02 $34.99 $3.79 $27.95 $42.99 $24.29 $12.37 $21.74 $20.6 $40.84 $16.35 $13.13 $9.62 $16.41 $17.11 $30.81 $20.2 $18.77 $8.81 $12.89 $12.75

Stock Ratings are subject to change. Please see latest research for each company.

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