April 8, 2010

TODAY'S HIGHLIGHTS

U.S. Initiating Coverage Rating Upgrades Rating Downgrades Estimates/Targets Raised EOG Resources

Canadian / Int'l Killam Properties Centerra Gold Pacific Northern Gas Matrikon Gennum

Estimates/Targets Lowered

Talisman Energy

Featured Reports Killam Properties: Initiating Coverage at Outperform; Greater Size...

FINANCIALS CDN REITs ENERGY & UTILITIES North American E&P North American E&P U.S. Canada EOG Resources Talisman Energy Pacific Northern Gas Eagle Ford Taking Flight; Upgraded to Market Perform Non-Core Asset Sales Continue Hydro Acquisition Announced; Market Perform Rating... Canada Killam Properties Initiating Coverage at Outperform; Greater Size...

Electric Util. & Ind. Power Canada MATERIALS Precious Metals Fertilizers TECH/TELECOM/MEDIA Software Semiconductors Specialty Hardware Canada U.S. Canada Canada Canada

Centerra Gold Potash One

Downgraded to Market Perform, Target Lowered; Kyrgyz... Protecting the Schedule

Matrikon NVIDIA Gennum

Q2/10: Strong Execution, Continued Visibility Analyst Day - Vision Is Compelling Revenue Above Forecast

Real Estate & REITs
Killam Properties
(KMP – TSX)
Stock Rating: Industry Rating: Outperform Market Perform
April 7, 2010 Toronto, Ontario Garreth MacRae (416) 359-6769 garreth.macrae@bmo.com Karine MacIndoe (416) 359-4269 karine.macindoe@bmo.com

Initiating Coverage at Outperform; Greater Size, Diversification, & Growth Should Continue to Drive Superior Returns
Highlights
• Killam Properties Inc. is a TSX-listed corporation which owns 118 multi-residential properties (8,977 units) concentrated in Atlantic Canada, and 55 manufactured home communities (MHCs; 9,290 sites) in Ontario, Atlantic Canada and Western Canada. By property type, 75% of net operating income (NOI) is derived from Apartments and 25% from MHCs. By geography, 45% of NOI comes from Nova Scotia, 30% from New Brunswick, 10% from Ontario, 6% from Prince Edward Island, 6% from Newfoundland and 3% from Western Canada. • We are forecasting fully-diluted Adjusted Funds From Operations (AFFO) per share of $0.57 and $0.61 in 2010E and 2011E, respectively, reflecting 6% growth (CAGR 2009-2011E). Our forecasts assume acquisitions of $150 million of apartments in each of 2010 and 2011 (6.25% average cap. rate), same-property NOI growth of 2-3% in 2010-2011, and financing/ refinancing rates of 4.0-4.5% for apartments/5.5-6.25% for MHCs. We assume $50 million in equity will be raised in 2011 to fund acquisitions. • Killam trades at a 2010E AFFO multiple of 14.4x (7.2% implied cap. rate), which compares with a weighted-average of 14.5x for all Canadian REITs and an average 17.2x for Canadian Multi-Residential REITs. • Killam offers investors the opportunity to own part of a midsizeand-growing portfolio of multi-residential and MHC properties located primarily in Atlantic Canada and Ontario. Killam’s strong/ entrepreneurial management team, greater-than-average internal/ external growth potential (enhanced with a just-announced joint venture with Kuwait Finance House for up to $450mm) and leading market share in Atlantic Canada provide a compelling investment opportunity. We are initiating coverage of Killam Properties Inc. with an Outperform rating and a $9.25 target price based on 15x our 2011E AFFO.

Price (1 – Apr) Target Price (FY – Dec) FFO P/FFO AFFO P/AFFO

$8.27 $9.25 2009A $0.72 $0.54

52-Week High 52-Week Low 2010E $0.74 11.2x $0.57 14.4x $0.56 97.6% 7.9% 14.8x

$9.50 $4.84 2011E $0.77 10.7x $0.61 13.6x $0.56 92.2% 7.8% 14.8x

Dividends $0.56 AFFO Payout Ratio 103.8% NOI/Gross Inv. In Prop. 7.8% EV/EBITDA na Dividend NAV Shares O/S (mm) Float O/S (mm) Notes: All values in C$ $0.56 $9.28 44.8 44.8

Yield 6.8% Prem/(Disc) to NAV -10.9% Mkt. Cap ($mm) Float Cap ($mm) $370 $370

Price: High,Low,Close
14 12 10 8 6 4 2 4 2 0 120 100 80 60 40 2005 2006

Killam Properties Inc. (KMP)
14 12 10 8 6 4 2

Volume (mln)

4 2 0

KMP Relative to S&P/TSX Comp

120 100 80 60

2007

2008

2009

40

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst’s Certification, please refer to pages 48 to 51.

EOG Resources
(EOG-NYSE)
Stock Rating: Market Perform  Industry Rating: Market Perform

April 8, 2010 Research Comment Calgary, Alberta

Jim Byrne, P.Eng., CFA
BMO Nesbitt Burns Inc. (403) 515-1557 Jim.Byrne@bmo.com Assoc: Graham Cooke, CFA
Price (7-Apr) Target Price $103.74 $100.00 52-Week High 52-Week Low $103.74 $54.86

Eagle Ford Taking Flight; Upgraded to Market Perform
Event
EOG highlighted its 580,000 net acre position in the Eagle Ford shale, which may contain as much as 900 million boe (87% liquids). Driven by this position and other oil-weighted plays, the company raised its production growth targets for 2011 and 2012 to 19% and 21%, respectively. The company announced a 2010 capital budget of $5.1 billion, in line with our estimate but 35% above 2009 spending and roughly $1.8 billion above our 2010 estimated cash flow. To fund this shortfall, the company will divest roughly $1.0 to $1.5 billion of noncore North American assets in late 2010 or early 2011.

EOG Resources Inc. (EOG)
Price: High,Low,Close(US$)

140 120 100 80 60 40 200 100 0 400 200 0
EOG Relative to S&P 500 Volume (mln)

140 120 100 80 60 40 200 100 0 400 200 0

Impact
Positive.

2005

2006

2007

2008

2009

Last Data Point: April 5, 2010

Forecasts
Our 2010 financial estimates are unchanged but our 2011 CFPS and EPS estimates have been raised significantly to reflect the company’s higher-thananticipated growth targets.

(FY-Dec.) CFPS P/CFPS EPS P/E NAV EV/EBITDA ROCE (%) D/CF Quarterly CFPS 2008A 2009A 2010E

2008A $17.33

2009A $11.62

2010E $12.45 8.3x $2.72 38.1x $100.47 9.4x 6% 1.3x Q3 $4.53 $3.04 $3.06

2011E $18.07 5.7x $5.54 18.7x $106.01 6.3x 12% 0.9x Q4 $3.42 $2.92 $4.35

$7.50

$3.00

$52.01 3.5x 21% 0.3x Q1 $4.22 $2.70 $2.65

$90.76 10.6x 7% 0.8x Q2 $5.24 $2.96 $2.39

Valuation
EOG’s trades at 8.3x 2010 estimated cash flow and an EV/EBITDA of 9.4x, a premium to the Senior E&P median. In light of guidance for higher growth rates, its premium valuation appears justified. However, we believe capital constraints will limit any further upside and that the company is reasonably valued at current levels. Our target price of $100 is supported by our 2010 estimated NAV of $100.47.

Dividend $0.62 Book Value $39.59 Shares O/S (mm) 252.5 Float O/S (mm) 195.3 Wkly Vol (000s) 14,334 Net Debt ($mm) $2,266.0

Yield 0.6% Price/Book 2.6x Mkt. Cap (US$mm) $26,194 Float Cap (US$mm) $20,261 Wkly $ Vol (USmm) $1,148.0 Next Rep. Date May (E)

Recommendation
We are upgrading EOG to Market Perform from Underperform.
Changes
Annual EPS 2011E $4.34 to $5.54 Annual CFPS 2011E $15.56 to $18.07

Notes: All values in US$; EPS (diluted), CFPS (diluted discretionary) Major Shareholders: Davis Selected (8.3%), AXA (7.6%), Wellington Mgmt (6.7%) First Call Mean Estimates: EOG RESOURCES INC (US$) 2010E: $3.10; 2011E: $5.99

Target $83.00 to $100.00 Rating Und to Mkt

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 7 to 10.

Talisman Energy
(TLM-TSX; TLM-NYSE)
Stock Rating: Outperform Industry Rating: Market Perform Member of: Top 15 Value Stock Selections

April 7, 2010 Research Comment Calgary, Alberta

Randy Ollenberger
BMO Nesbitt Burns Inc. (403) 515-1502 Randy.Ollenberger@bmo.com Assoc: Matthew Brink
Price (7-Apr) Target Price
Price: High,Low,Close

Non-Core Asset Sales Continue
Event
Talisman announced it has entered into five separate transactions to sell a number of non-core assets in Canada for $1.9 billion. The sale includes roughly one million net acres of land in the greater Peace River Arch, central Alberta Foothills and greater Hinton area in Alberta with current production of roughly 42,500 boe/d (90% natural gas) and net proved reserves of 120 MMboe.

$17.40 $21.00 

52-Week High 52-Week Low

$20.86 $13.12

Talisman Energy (TLM)

25 20 15 10 5 200
Volume (mln)

25 20 15 10 5 200 100 0
TLM Relative to S&P/TSX Comp

Impact
Mixed.

100 0 150 100 50

150 100 50

Forecasts
We are revising our financial and operating estimates to reflect the asset sales. We are lowering our cash flow per share estimates to $3.65 from $3.75 in 2010 and to $4.25 from $4.53 in 2011, primarily reflecting the resultant lower production levels. Our outlook now assumes that production averages 400,977 boe/d in 2010 and rises to 418,626 boe/d in 2011 with additions from North American unconventional gas, the North Sea and Southeast Asia.

2005

2006

2007

2008

2009

Last Data Point: April 5, 2010

(FY-Dec.) CFPS P/CFPS EPS P/E NAV EV/EBITDA ROCE (%) D/CF Quarterly CFPS 2008A 2009A 2010E

2008A $5.70

2009A $3.78

2010E $3.65 4.8x $0.32 54.4x $29.76 4.5x 3% 0.9x Q3 $1.58 $0.79 $0.92

2011E $4.25 4.1x $0.93 18.7x $34.03 3.8x 7% 0.8x Q4 $1.48 $0.91 $0.91 1.3% 1.6x $17,658 $17,651 $584.5 Apr (E)

$2.64

$0.63

Valuation
We believe Talisman shares are very attractively valued reflecting a 42% discount to our 2010 net asset value estimate of $29.76 and modest 2010E EV/EBITDA multiple of 4.4x. In our opinion, the ongoing restructuring of the company should generate additional shareholder value that would support a positive revaluation of the shares; however, the company likely needs to make a meaningful acquisition to fully deliver on its strategy. Our $21 target price incorporates a 2010E EBITDA multiple of 5.2x and a 29% discount to our 2010 NAV estimate.

$27.54 2.2x 26% 0.7x Q1 $1.15 $1.27 $0.89

$28.08 4.8x 5% 1.0x Q2 $1.57 $0.84 $0.94

Dividend $0.23 Book Value $10.95 Shares O/S (mm) 1,014.8 Float O/S (mm) 1,014.4 Wkly Vol (000s) 34,445 Net Debt ($mm) $3,217.0

Yield Price/Book Mkt. Cap ($mm) Float Cap ($mm) Wkly $ Vol (mm) Next Rep. Date

Recommendation
We continue to rate Talisman shares Outperform.
Changes
Annual EPS 2010E $0.27 to $0.32 2011E $0.89 to $0.93 Annual CFPS 2010E $3.75 to $3.65 2011E $4.53 to $4.25

Notes: All values in C$; EPS (diluted), CFPS (diluted discretionary) Major Shareholders: Jarislowsky Fraser (6.41%) First Call Mean Estimates: TALISMAN ENERGY INC (C$/CF) 2010E: na; 2011E: na

Quarterly CFPS Q1/10E $0.88 to $0.89 Q2/10E $0.93 to $0.94 Q3/10E $1.07 to $0.92 Q4/10E $0.87 to $0.91

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 6 to 8.

Pacific Northern Gas
(PNG-TSX)
Stock Rating: Market Perform Industry Rating: Market Perform

April 7, 2010 Research Comment Toronto, Ontario

Michael McGowan, CA, CFA
BMO Nesbitt Burns Inc. (416) 359-5807 Michael.McGowan@bmo.com Assoc: Mark Laing, CA
Price (7-Apr) Target Price
Price: High,Low,Close

Hydro Acquisition Announced; Market Perform Rating Maintained
Event
Pacific Northern Gas announced that it has acquired a 97% interest in the 9.8 MW McNair Creek run of river hydro facility for $17 million ($1,735/kW). The acquisition will be financed through the assumption of existing debt (approximately $9.4 million) and utilization of the company’s existing credit facility. After the acquisition is complete, PNG’s debt-to-capitalization ratio is expected to increase to approximately 51%, up from approximately 46.5% at the end of Q4/09. The McNair Creek project was awarded a 20-year PPA with BC Hydro in 2001 and the facility was commissioned on November 3, 2004. Expected annual electricity production from the plant is 30–32 GWh.

$22.70 $20.00

52-Week High 52-Week Low

$23.96 $11.93

Pacific Nthn. Gas A (PNG)
Earnings/Share

2.0 1.8

25 1.6 1.4 15 1.2 1.0 10 0.4 0.2 0.0 150 100
PNG Relative to S&P/TSX Comp Volume (mln)

20

0.8 0.4 0.2 0.0 150 100 50

Impact
Mixed. We believe this project is a first step in an attempt to diversify PNG’s earnings away from its core regulated natural gas distribution system, which has experienced declining volumes. Although McNair Creek is expected to be accretive to earnings and cash flow, we believe it could reduce the company’s attractiveness as a pure-play pipeline company, should the KSL project proceed.

50

2005

2006

2007

2008

2009

Last Data Point: April 5, 2010

(FY-Dec.) EPS P/E CFPS P/CFPS Div. EV ($mm) EBITDA ($mm) EV/EBITDA Quarterly EPS 2008A 2009A 2010E Dividend Book Value Shares O/S (mm) Float O/S (mm) Wkly Vol (000s) Net Debt ($mm)

2008A $1.52

2009A $1.71

2010E $1.89 12.0x $4.99 4.5x $1.12 $164 $24.9 6.6x Q3 -$0.44 -$0.49 -$0.51

2011E $1.90 11.9x $5.05 4.5x $1.12 $160 $24.7 6.5x Q4 $0.84 $0.95 $0.96 4.9% 0.9x $80 $80 $0.4 30-Apr (E)

$4.59

$5.25

Forecasts
We have updated our model to reflect the acquisition. Our diluted EPS estimates increase to $1.89 from $1.88 in 2010E and to $1.90 from $1.86 in 2011E.

$0.88 $147 $23.6 6.2x Q1 $1.21 $1.38 $1.48 $1.12 $24.03 3.5 3.5 23 $74.6

$0.96 $141 $22.8 6.2x Q2 -$0.08 -$0.13 -$0.03

Valuation
We are increasing our target price slightly to $20 from $19.50. Our $20 price target is based on a weighted valuation approach: 13x 2011E diluted EPS of $1.90 (12.5%); 1.0x 2011E BVPS of $25.62 (12.5%); and a 6.25% dividend yield applied to 2011E DPS of $1.12 (75%).

Yield Price/Book Mkt. Cap ($mm) Float Cap ($mm) Wkly $ Vol (mm) Next Rep. Date

Recommendation
At current levels, we believe shares are reasonably valued. Our rating is Market Perform.
Changes
Annual EPS 2010E $1.88 to $1.89 2011E $1.86 to $1.90 Annual CFPS 2010E $4.90 to $4.99 2011E $4.89 to $5.05

Notes: All values in C$; Estimates are weather normal Major Shareholders: Widely held First Call Mean Estimates: PACIFIC NORTHERN GAS LTD 'A' (C$) 2010E: $1.88; 2011E: $1.86

Quarterly EPS Q2/10E -$0.07 to -$0.03 Q3/10E -$0.47 to -$0.51

Target $19.50 to $20.00

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 4 to 6.

Centerra Gold
(CG-TSX)
Stock Rating: Market Perform  Industry Rating: Outperform

April 8, 2010 Research Comment Toronto, Ontario

Andrew Breichmanas
BMO Nesbitt Burns Inc. (416) 359-8387 Andrew.Breichmanas@bmo.com

David Haughton
Assoc: Jeffrey Schok / Steven Willis

Downgraded to Market Perform, Target Lowered; Kyrgyz Civil Unrest a Reminder of Political Risks
Event
Following violent conflicts between demonstrators and police in Bishkek, media outlets are reporting that the President of Kyrgyzstan has fled the capital and that the Prime Minister has resigned. Opposition parties are reportedly in the process of forming a new government. The protests were apparently sparked by increased costs and perceived corruption within the previous administration.

Price (7-Apr) Target Price
Price: High,Low,Close

$11.99 $12.50

52-Week High 52-Week Low

$15.10 $4.25

Centerra Gold Inc. (CG)

15

15

10

10

5

5

0 50
Volume (mln)

0 50

Impact
Negative. The company had made good progress improving relations with the government and is poised to make significant investments at Kumtor in order to optimize the asset. However, the current political situation highlights the uncertainty of the operating environment and reintroduces considerable risk.

0 200 100 0
CG Relative to S&P/TSX Comp

0 200 100 0

2005

2006

2007

2008

2009

Last Data Point: April 5, 2010

Forecasts
BMO Research forecasts are unchanged and the company indicates that Kumtor operations have been unaffected by the civil unrest in the country thus far.

(FY-Dec.) EPS P/E CFPS P/CFPS

2008A $0.45

2009A $0.48

2010E $0.77 15.5x $1.31 9.1x $1,150 689.9 $460 $666 Q3 $0.08 $0.09 $0.06

2011E $0.70 17.1x $1.26 9.5x $1,150 712.9 $494 $701 Q4 $0.20 $0.60 $0.45 0.0% 3.2x $2,816 $1,888 $26.6 May (E)

$0.81

$0.93

Valuation
The BMO Research valuation is unaffected, but the lower target price of C$12.50 reflects the greater near-term risk and represents a P/NPV of 1.2x using spot prices and a 10% discount rate compared to the peer average of 1.5x.

Real'd Price ($/oz) $853 Prod'n (000 oz.) 748.9 Ttl. Cash Cost ($/oz) $483 Ttl. Prod. Cost $592 Quarterly EPS 2008A 2009A 2010E Dividend Book Value Shares O/S (mm) Float O/S (mm) Wkly Vol (000s) Net Debt ($mm) Q1 $0.11 -$0.09 $0.24 $0.00 $3.60 234.9 157.5 2,604 -$322.9

$1,013 675.6 $459 $611 Q2 $0.06 -$0.14 $0.02

Recommendation
BMO Research is downgrading Centerra to Market Perform due to the uncertain political environment in Kyrgyzstan. Given the mine’s importance to the country’s economy, the state’s ownership stake in Centerra, and the significant investments planned by the company, the likelihood of the asset being affected appears low. The stock had rerated on improved relations with the Kyrgyz government, but stability must be maintained through the transition.
Changes

Yield Price/Book Mkt. Cap ($mm) Float Cap ($mm) Wkly $ Vol (mm) Next Rep. Date

Notes: Share price and capitalization in C$, all other values in US$ Major Shareholders: Kyrgyzaltyn JSC (33%) First Call Mean Estimates: CENTERRA GOLD INC (US$) 2010E: $0.69; 2011E: $0.71

Target $16.50 to $12.50 Rating OP to Mkt

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 6 to 9.

Potash One
(KCL-TSX)
Stock Rating: Outperform(S) Industry Rating: Outperform

April 8, 2010 Research Comment Toronto, Ontario

Joel Jackson, P.Eng.
BMO Nesbitt Burns Inc. (416) 359-4250 Joel.Jackson@bmo.com

Protecting the Schedule
Event
Potash One announced it placed the first order for long-delivery alloyed materials required to fabricate key evaporator/crystallizer equipment for KCL’s prospective potash mine. The order allows delivery of the equipment starting in 2012, allowing KCL to stay on schedule for a Q4/13 mine commissioning. To protect the schedule, we estimate material orders will require $25–30 million of investment in 2010 and early 2011 (assuming KCL keeps the option of a larger 2.86 million tonne initial mine, not the 1.43 million tonne mine we envision). We estimate the initial payment was $5–6 million, and additional payments are spaced out across the next 9–12 months in $3–6 million stages.

Price (7-Apr) Target Price
Price: High,Low,Close

$2.92 $4.00 

52-Week High 52-Week Low

$3.87 $1.51

Potash One Inc. (KCL)
Earnings/Share
0.00

6
-0.05

5 4 3 2 1 0 100 50 0
4000 2000
KCL Relative to S&P/TSX Comp Volume (mln)
-0.20 -0.25 -0.10 -0.15

100 50 0
4000 2000 0

Impact
Mixed. With C$35.3 million of cash as of January 31, 2010, KCL has sufficient funds through feasibility report dissemination (expected in 2–3 months), but it might be tight to pay the remaining 2010/early 2011 material payments. We estimate KCL might need to raise funds later this year to keep the project going if a strategic partner or acquirer does not materialize over the next 3–6 months.

0

2005

2006

2007

2008

2009

Last Data Point: April 5, 2010

Dividend Book Value Shares O/S (mm) Float O/S (mm) Wkly Vol (000s) Net Debt ($mm)

$0.00 $1.07 80.8 79.6 5,220 -$35.3

Yield Price/Book Mkt. Cap ($mm) Float Cap ($mm) Wkly $ Vol (mm) Next Rep. Date

0.0% 2.7x $236 $232 $14.5 Jun (E)

Forecasts
Our capex estimate for a 1.43mm tonne solution mine (Q4/13 start) is US$1.1B, ramping to 2.86mm by 2022 for an additional US$738mm of capex.

Notes: All values in C$; (S) in rating denotes Speculative Major Shareholders: Widely held First Call Mean Estimates: POTASH ONE INC (C$) 2010E: -$0.07; 2011E: -$0.01

Valuation
We estimate a 10% NAVPS of $5.42 at US$450/t potash (fob Vancouver).

Recommendation
For the Legacy project to stay on schedule, the procurement of considerable strategic project financing over the next 2–3 quarters is the key catalyst for KCL. We are maintaining our Outperform (Speculative) rating and $4 target price.

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 4 to 6.

Matrikon
(MTK-TSX)
Stock Rating: Outperform Industry Rating: Market Perform

April 7, 2010 Research Comment Toronto, Ontario

Thanos Moschopoulos, CFA
BMO Nesbitt Burns Inc. (416) 359-5428 Thanos.Moschopoulos@bmo.com

Q2/10: Strong Execution, Continued Visibility
Event
Matrikon reported Q2/10 results that were in line with expectations. Revenues were $22.8 million (+16% y/y) versus the consensus of $23.2 million. EPS were $0.09, or $0.07 excluding a tax recovery, in line with the consensus. The company is on track with respect to delivering on its recent large project wins, with the well monitoring projects now ramping up as the U.S. power project starts to approach completion. Management continues to see improvement in the pipeline, as the deal win with Statoil has helped raise its profile with other prospects, and as improved commodity prices are driving a recovery in key verticals.

Price (7-Apr) Target Price
Price: High,Low,Close

$3.62 $4.50 

52-Week High 52-Week Low

$3.97 $1.48

Matrikon Inc. (MTK)
Earnings/Share

6 5 4 3 2 1 4 2 0 200 100 0
MTK Relative to S&P/TSX Comp Volume (mln)

0.4 0.3 0.2 0.1 0.0

-0.1

4 2 0 200 100 0

2005

2006

2007

2008

2009

Impact
Slightly positive. The strong y/y revenue growth does not come as a surprise given the large deal wins in recent quarters, although the fact that the projects are proceeding as expected is incrementally positive.
(FY-Aug.) EPS P/E CFPS P/CFPS Rev. ($mm) EV ($mm) EBITDA ($mm) EV/EBITDA Quarterly EPS 2008A 2009A 2010E Dividend Book Value Shares O/S (mm) Float O/S (mm) Wkly Vol (000s) Net Debt ($mm) 2008A $0.29

Last Data Point: April 5, 2010

2009A $0.07

2010E $0.31 11.7x $0.34 10.6x $93.5 $104 $15.1 6.9x Q3 $0.08 -$0.10 $0.07

2011E $0.30 12.1x $0.34 10.6x $95.7 $103 $15.5 6.6x Q4 $0.08 $0.02 $0.07 3.3% 2.4x $114 $47 $0.3 08-Jul (E)

$0.45

-$0.04

Forecasts
We have made minor changes to our model.

$80.0 $49 $13.5 3.6x Q1 $0.07 $0.09 $0.09a $0.12 $1.48 31.5 13.1 129 -$9.4

$73.2 $77 $5.2 14.8x Q2 $0.06 $0.06 $0.09a

Valuation
We are maintaining our $4.50 target price; representing 15x P/E and 8.5x EV/EBITDA based on our FY2011 estimates.

Recommendation
We are maintaining our Outperform recommendation. We believe the stock’s valuation remains attractive, at 12x P/E currently relative to 30% FY2010E growth. Growth in 2011 may prove to be more challenging—however, the improving macro climate and the prospect for follow-on business on some of the large projects may help on this front.
Changes
Annual EPS 2010E $0.30 to $0.31 2011E $0.29 to $0.30 Annual CFPS 2010E $0.25 to $0.34 2011E $0.38 to $0.34

Yield Price/Book Mkt. Cap ($mm) Float Cap ($mm) Wkly $ Vol (mm) Next Rep. Date

Notes: All values in C$ Major Shareholders: Nizar J. Somji (32%); Crescendo (16%); other management, directors & employees (4%) First Call Mean Estimates: MATRIKON, INC. (C$) 2010E: $0.30; 2011E: $0.35

Quarterly EPS Q4/10E $0.08 to $0.07

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 5 to 7.

April 8, 2010

NVIDIA
(NVDA-NASDAQ)
Stock Rating: Market Perform Industry Rating: Market Perform

Semiconductors
Ambrish Srivastava, PhD
BMO Capital Markets Corp. 415-591-2116 ambrish.srivastava@bmo.com

Emily Scudder
415-591-2130 emily.scudder@bmo.com

Analyst Day – Vision Is Compelling
Event
NVIDIA presented a pretty compelling vision of its ‘2x2’ approach. The company is looking for growth from both its core and newer segments - the GeForce discrete graphics business and the Quadro professional business, and its newer Tegra and Tesla businesses. Operating margin targets laid out by the company are also roughly 200 bps above what we are currently modeling for the near and medium term.

Securities Info
Price (7-Apr) 52-Wk High/Low Mkt Cap (mm) Shs O/S (mm, BASIC) Options O/S (mm) $17.16 $19/$8 $9,721 566.5 na Target Price $18 Dividend -Yield -Float O/S (mm) 539.4 ADVol (30-day, 000s) 12,388

Price Performance
NVIDIA CORP (NVDA)
Price: High,Low,Close(US$) Rel ative to S&P 500

400 40 350 35 30 25 20 15 300 250 200 150 10 5 0 600 400 200 0 2005 2006 2007 2008 2009
Last Da ta Point: April 6, 2 010 Volum e (m ln)

Impact
Incrementally positive. We do believe that the company is positioned uniquely to benefit from the 3-D wave, a growth driver highlighted by the company, which could potentially turn into something bigger as NVIDIA does provide an end-to-end solution from enabling content creation to enabling delivery. While there might be some disappointment regarding the company’s new Tegra targets, the market has likely anticipated that by now. The company appears to be seeing strong fundamentals in all its businesses, especially on the higher-margin Quadro.

100 50 600 400 200 0

Valuation/Financial Data
(FY-Jan.) EPS Pro Forma P/E First Call Cons. EPS GAAP FCF P/FCF EBITDA ($mm) EV/EBITDA Rev. ($mm) EV/Rev Quarterly EPS 2010A 2011E 2009A $0.26 -$0.08 -$0.28 $309 $3,425 1Q -$0.15 $0.20 2010A $0.24 -$0.15 $0.73 $98 $3,326 2Q $0.02 $0.20 2011E $0.88 19.5x $0.94 $0.88 $1.14 15.1x $807 9.9x $4,172 1.9x 3Q $0.13 $0.24 2012E $1.00 17.2x $1.06 $1.00 $1.22 14.1x $912 8.8x $4,433 1.8x 4Q $0.23 $0.25

Forecasts
The company also laid out its near-term and medium-term financial targets. Our numbers are currently at the lower end of the targets for gross margins and revenues and about 200 bps below the lower end for operating margins.

Valuation
Our price target of $18 is based a P/E multiple of 18x our FY2012 (CY2011) EPS estimate of $1.00.

Recommendation
We rate NVDA shares MARKET PERFORM.

Balance Sheet Data (01/29/10) Net Debt ($mm) -$1,703 TotalDebt/EBITDA 0.0x Total Debt ($mm) $26 EBITDA/IntExp na Net Debt/Cap. nm Price/Book 3.6x Notes: Quarters may not total due to rounding. All values in US$. Source: BMO Capital Markets estimates, Bloomberg, FactSet, Global Insight, Reuters, and Thomson Financial.

Please refer to pages 8 to 11 for Important Disclosures, including the Analyst's Certification.

Gennum
(GND-TSX)
Stock Rating: Underperform Industry Rating: Market Perform

April 7, 2010 Research Comment Toronto, Ontario

Brian Piccioni, CFA
BMO Nesbitt Burns Inc. (416) 359-5761 Brian.Piccioni@bmo.com Assoc: Rami Nasser
Price (7-Apr) Target Price
Price: High,Low,Close

Revenue Above Forecast
Event
Q1/10 revenue was $29.5 million, up 52% y/y and 18% sequentially, above our estimate of $27.6 million and the First Call Mean of $27.6 million.

$6.68 $4.80

52-Week High 52-Week Low

$6.70 $3.72

Gennum Corp. (GND)
Earnings/Share(US$)

0.6 0.5

15 0.4 10 5 0.1 0.3 0.2

Impact
Slightly Positive.

0 4 2 0
Volume (mln)

0.0 4 2 0
GND Relative to S&P/TSX Comp

Forecasts
We have increased our Q2/10 revenue forecast from $23.3 million to $26.2 million and our EPS forecast from $0.05 to $0.08.

200 100 0

200 100 0

2005

2006

2007

2008

2009

Valuation
A price/earnings of 20x our F2010 EPS forecast adjusted for expensing R&D yields a target price of $4.80.

Last Data Point: April 5, 2010

(FY-Nov.) EPS P/E CFPS P/CFPS

2008A $0.53

2009A $0.06

2010E $0.32 20.2x $0.43 15.1x $106 72% 26% 15% Q3 $0.13 $0.01 $0.06

2011E $0.28 23.1x $0.39 16.6x $113 71% 26% 13% Q4 $0.10 $0.07 $0.06 2.2% 1.5x $237 $234 $1.4 July (E)

$0.51

-$0.29

Recommendation
Gennum reported Q1/10 results that were well above our expectations. We remain cautious with respect to the sustainability of the recovery given the health of the broadcast equipment manufacturing sector. The ongoing, and apparently increasing, deferral of R&D expense – as permitted by GAAP but unusual in the semiconductor sector – has the effect of making Gennum’s income measures look somewhat more attractive than comparable firms unless adjusted. In additional, though having no impact on EBT Margin, IP revenue distorts gross margin as related costs are billed to R&D, not costs of goods sold. Gennum reported better than forecast results, and their outlook, in particular for Q2/10 is better than our forecasts. We retain our Underperform rating, but are increasing our target price to $4.80 from $4.40.

Rev. ($mm) Gross Margin R&D % of Sales EBT Margin Quarterly EPS 2008A 2009A 2010E Dividend Book Value Shares O/S (mm) Float O/S (mm) Wkly Vol (000s) Net Debt ($mm)

$127 76% 24% 23% Q1 $0.13 $0.00 $0.13a $0.14 $4.34 35.4 35.1 303 -$37.1

$85 71% 31% 3% Q2 $0.17 -$0.02 $0.08

Yield Price/Book Mkt. Cap ($mm) Float Cap ($mm) Wkly $ Vol (mm) Next Rep. Date

Notes: Share price, target price & cap. in C$, all other values in US$; Rev. & operating earnings presented on continuing operations basis Major Shareholders: Douglas Barber (6.1%), Wally Pieczonka (4.7%) First Call Mean Estimates: GENNUM CORP (US$) 2010E: $0.38; 2011E: $0.50

Changes

Annual EPS 2010E $0.22 to $0.32 2011E $0.23 to $0.28

Annual CFPS 2010E $0.29 to $0.43 2011E $0.35 to $0.39

Quarterly EPS Q2/10E $0.05 to $0.08 Q3/10E $0.05 to $0.06 Q4/10E $0.05 to $0.06

Target $4.40 to $4.80

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 6 to 8.

Important Disclosures
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February 17, 2010

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