Information Technology Sector Stocks June 1st, 2010 Greg Price Greg Shaskus Min Shen Matt Sims Chris Stuart

S & P 500 Sector Weights (as of 4/30/2010) SectorCurrent Index Weight Current SIM Weight Consumer Discretionary10.55%10.44% Consumer Staples10.91%11.71% Energy11.18%9.76% Financials16.47%11.41% Health Care11.55%14.63% Industrials10.76%13.10% Information Technology Information Technology18.91%20.18% Materials3.45%1.64% Telecommunication Services2.73%3.70% Utilities3.48%2.10%

IT Recap Currently 127bps overweight Class voted to increase our position by 100bps –Result is that the IT Sector will be 227bps overweight

Sector Holdings Hewlett Packard Co.4.98% Intel Corp.4.30% NCR Corp.2.65% Oracle Corp.4.88% Research In Motion3.38% Total Weight20.18% Current Holdings Hewlett Packard Co.4.98% Intel Corp.4.80% NCR Corp.2.65% Oracle Corp.4.88% Research In Motion0.00% Lecroy4.38% Total Weight21.18% Recommended Holdings

Intel—Buy Intel is the world’s largest semiconductor chip maker Offers products for personal computers, servers, and mobile devices Two major growth opportunities: –Asia –“Smart” market Buy 50 bps –430 bps  480 bps

Global Internet Traffic

Financial Analysis Revenue EPS

Financial Analysis—Margins & ROE y-o-y Chg.

Valuation—Multiples

Valuation—Comparable Companies

Valuation—DCF

Recommendation—Buy Valuation SummaryBuy 50 bps Equal weight for all three valuation methods yields a target share price of $28.00 (rounded) 34% upside potential (incl. 3.0% div.) Catalysts: –Growth of the Internet –Growth opportunities in Asia –Expansion into “smart” market Risks: –Prolonged economic downturn –Unsmooth shift into “smart” market

Research In Motion Designs, manufacturers, and markets innovative wireless solutions for a global mobile communication market (aka Blackberry) –Its popularity was based on the convenience of its mobile system and its cost compared to competitors Debut of new 6.0 Operating System next quarter Rumors about entering the Tablet PC market Sell all BP’s of RIM

Discounted Cash Flow Model

Sensitivity Analysis Target Share Price Dicscount Rate Terminal Growth Rate 10.00%10.50%11.00%11.50% 4.00% % % % Upside/Downside Discount Rate Terminal Growth Rate 10.00%10.50%11.00%11.50% 4.00%23.60%12.50%2.90%-5.30% 4.50%31.80%19.10%8.40%-0.70% 5.00%41.60%27.00%14.80%4.50% 5.50%53.60%36.40%22.40%10.70%

Valuations Absolute Valuation HighLowMedianCurrent#Your Target Multiple *Your Target E, S, B, etc/Share Your Target Price P/Forward E P/S P/B P/EBITDA P/CF

Risks for RIM Increase in competition in Smartphone market with i-phone and android phones –Starting to lose market share as of Q compared to Q –Growing popularity of more advanced Smartphones (applications) Strategy to increase global expansion –Received 35% of Revenue last year from outside of North America –Uncertainty in Foreign Currency Limited potential for Upside with a several realistic risks

Lecroy—Buy Operates in Test and Measurement industry Products are used to design, develop, and manufacture electronic equipment Develops, manufactures, sells, and licenses high- performance oscilloscopes and global communication protocol analyzers –Oscilloscopes are tools used to measure and analyze electronic signals (volts) –Protocol analyzers are tools used to analyze communication between two electronic devices –Lecroy’s products are used in the computer, semiconductor, data storage, communications, consumer electronics, automotive/industrial, and defense industries Buy 438 bps

Buy Rationale Growth in the Test and Measurement market –Improvements in electronic systems performance Driven by advances in semiconductor technology –Growth in electronics market –Emerging technologies and standards Lecroy offers essential analysis tools for electronic equipment designers and engineers Potential acquisition target Trading at a discount

Financial Analysis Revenue EPS

Financial Analysis—Margins & ROE

Valuation

Recommendation—Buy Valuation SummaryBuy438 bps Target Price of $7.00 derived from absolute valuation 40% upside from current price of $5.00 Catalysts: –Growth in electronics markets –Improvements in technology –New technological standards Risks –Prolonged economic downturn –Competition Lecroy is much smaller than its competitors

Questions

Hewlett Packard Fundamental Drivers: Focus on offering a complete solution for all of a company’s IT needs Transforming from a purely infrastructure company to a services and infrastructure company Aggressive approach to winning business from rivals Sales in the Brazil, Russia, India, and China regions

Hewlett Packard Co. Absolute Valuation HighLowMedianCurrent Target Multiple Target E, S, B,etc/Share Target Price (E x F) A.B.C.D.E.F.G. P/Forward E P/S P/B P/EBITDA P/CF Current stock price of $45.58 Target price of $60 which is a 32% upside

Hewlett Packard DCF Target = $65.97

Hewlett Packard Sum-of-the-Parts Target = $58.83