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Americas Morning Summary

November 15, 2010

The Goldman Sachs Group, Inc.


Focus Items
This document contains comments
related to the following stocks: Americas: Energy: Oil: Trading update: Bullish oil correlations, bullish liquids
1
shale players
Advanced Energy Industries, Inc. Americas: Energy: Oil & Gas - E&P: Reiterate Buy on QEP, CL-Buy on NFX; KWK
2
(AEIS) now Neutral
Advanced Micro Devices, Inc.
(AMD) Global: Transportation: What happens when 1bn Chinese fly? 3
Aeroflot (AFLT.RTS) Americas: Healthcare Services: CROs: Continued solid clinical bookings with
Agilent Technologies (A) 4
3Q; reiterate CL-Buy on PRXL
Altera Corp. (ALTR)
Amazon.com Inc. (AMZN)
Analog Devices, Inc. (ADI) Key Data Changes
Applied Materials, Inc. (AMAT)
Aruba Networks, Inc. (ARUN) Investment List Removals
Atmel Corporation (ATML) Company Ticker Investment List Removals
Autodesk Inc. (ADSK)
Quicksilver Resources, Inc. KWK Americas Sell List
Bally Technologies, Inc. (BYI)
BE Aerospace, Inc. (BEAV)
Best Buy Company, Inc. (BBY) Initiations
Bill Barrett Corp. (BBG) Rating/
Company Ticker Price Target Current Year Next Year Fiscal y/e
Coverage view
BJ's Wholesale Club, Inc. (BJ)
BMC Software, Inc. (BMC) International Flavors & Fragrances Inc. IFF N/N $57.00 $3.43 $3.67 Dec
The Boeing Company (BA)
Boise Inc. (BZ) Rating and price target changes
BRF-Brasil Foods S.A. (BRFS3.SA) Rating/
Price Target Estimates
Coverage view
Broadcom Corporation (BRCM) Company Ticker New Old New Old % chg Current Year Next Year Fiscal y/e
Buckeye GP Holdings L.P. (BGH)
Buckeye Partners, L.P. (BPL) Agilent Technologies A N/N unch ↑ $38.00 $35.00 8.6% $2.00 $2.47 Dec
CA, Inc. (CA) Aruba Networks, Inc. ARUN B/N unch ↑ $24.00 $22.00 9.1% $0.14 $0.32 Jul
Cardinal Health, Inc. (CAH)
Enterprise GP Holdings L.P. EPE N/N unch ↑ $65.00 $62.00 4.8% $1.74 $2.04 Dec
Cathay Pacific (0293.HK)
Cemig (CMIG4.SA) Forest Oil Corp. FST N/N unch ↑ $35.00 $34.00 2.9% $1.78 $2.19 Dec
CESP (CESP6.SA) International Flavors & Fragrances Inc. IFF N/N -- $57.00 -- -- $3.43 $3.67 Dec
Charles River Laboratories (CRL)
Chesapeake Midstream Partners, Newfield Exploration NFX B/N unch ↑ $74.00 $70.00 5.7% $4.71 $5.58 Dec
L.P. (CHKM) Quicksilver Resources, Inc. KWK ↑ N/N S/N ↑ $15.00 $13.00 15.4% $0.72 $0.42 Dec
China Eastern Airlines (H)
Research In Motion Ltd. RIMM S/N unch ↑ $50.00 $45.00 11.1% $5.74 $5.51 Feb
(0670.HK)
Citrix Systems Inc. (CTXS) SandRidge Energy, Inc. SD N/N unch ↓ $5.00 $6.00 (16.7%) $0.12 $0.12 Dec
Costco Wholesale (COST)
Covance Inc. (CVD) Estimate changes
Dollar Tree Stores, Inc. (DLTR) Current Year Next Year
Rating/ Fiscal y/e
Domtar Corp. (UFS) Company Ticker Coverage view New Old % chg New Old % chg
Eletrobras (ELET3.SA)
Agilent Technologies A N/N ↑ $2.00 $1.96 2.2% ↑ $2.47 $2.36 5.0% Dec
Enterprise GP Holdings L.P. (EPE)
EXCO Resources, Inc. (XCO) Bill Barrett Corp. BBG N/N ↓ $2.29 $2.39 (4.1%) ↑ $2.15 $1.95 10.2% Dec

For further product information,


contact:

New York Investment Research


(212) 902-1000

Analysts employed by non-US The Goldman Sachs Group, Inc. does and seeks to do business with companies covered in its research
affiliates are not registered/qualified reports. As a result, investors should be aware that the firm may have a conflict of interest that could
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the U.S. their investment decision. For Reg AC certification, see the end of the text. Other important disclosures
follow the Reg AC certification, or go to www.gs.com/research/hedge.html.
Global Investment Research
Forest Oil Corp. (FST) Buckeye GP Holdings L.P. BGH N/N $1.70 unch -- ↑ $2.08 $2.07 0.7% Dec
FormFactor, Inc. (FORM)
General Mills, Inc. (GIS) Buckeye Partners, L.P. BPL N/N ↓ $3.51 $3.55 (1.1%) $3.80 unch -- Dec
ICON plc (ADR) (ICLR) Chesapeake Midstream Partners, L.P. CHKM N/N ↓ $1.36 $1.40 (2.9%) $1.45 unch -- Dec
Intel Corp. (INTC)
Enterprise GP Holdings L.P. EPE N/N ↓ $1.74 $1.88 (7.5%) ↓ $2.04 $2.25 (9.2%) Dec
International Flavors & Fragrances
Inc. (IFF) EXCO Resources, Inc. XCO NR ↑ $0.73 $0.72 1.5% $0.97 unch -- Dec
International Game Technology International Flavors & Fragrances Inc. IFF N/N $3.43 -- -- $3.67 -- -- Dec
(IGT)
International Paper Company (IP) Northeast Utilities NU NR ↓ $2.05 $2.07 (0.6%) ↓ $2.31 $2.36 (2.0%) Dec
International Rectifier Corp. (IRF) NXP Semiconductors N.V. NXPI B/A ↑ $1.38 $1.30 5.7% $2.75 unch -- Dec
Intersil Corp. (ISIL)
QEP Resources, Inc. QEP B/N ↓ $1.46 $1.49 (2.3%) ↓ $1.91 $1.92 (0.3%) Dec
Intuit, Inc. (INTU)
Kendle International Inc. (KNDL) Quicksilver Resources, Inc. KWK N/N $0.72 unch -- ↓ $0.42 $0.43 (1.8%) Dec
KLA-Tencor (KLAC) Research In Motion Ltd. RIMM S/N ↑ $5.74 $5.72 0.2% ↑ $5.51 $5.38 2.5% Feb
Lam Research Corp. (LRCX)
The Estee Lauder Companies Inc. SandRidge Energy, Inc. SD N/N ↓ $0.12 $0.36 (65.2%) ↓ $0.12 $0.19 (36.4%) Dec
(EL) Suburban Propane Partners, L.P. SPH N/N ↓ $3.95 $4.05 (2.5%) $4.15 unch -- Sep
Linear Technology Corp. (LLTC)
Ultra Petroleum UPL N/N ↑ $2.32 $2.30 0.6% ↓ $3.21 $3.31 (2.9%) Dec
LSI Corp. (LSI)
Marvell Technology Group Ltd. Wisconsin Energy Corp. WEC B/N ↓ $3.87 $3.94 (1.7%) ↑ $4.18 $4.16 0.6% Dec
(MRVL)
Maxim Integrated Products (MXIM)
McKesson Corp. (MCK) Other Headlines
Microchip Technology Inc. (MCHP)
Micron Technology Inc. (MU) Basic Materials
MKS Instruments, Inc. (MKSI) Americas: Paper & Forest Products: Printing Paper: Preliminary data show volumes turn negative
National Semiconductor Corp. 5
in Oct.
(NSM)
Newfield Exploration (NFX)
Nordstrom, Inc. (JWN)
Consumer Cyclicals
Northeast Utilities (NU) Americas: Retail: Amazon widens leads in Toys and CE, but Wal-Mart makes its move 6
Novellus Systems Inc. (NVLS)
Nvidia Corp. (NVDA) Americas: Gaming: Takeaways from Bally and IGT pre-G2E analyst events 7
NXP Semiconductors N.V. (NXPI) Americas: Retail: Broadlines: With even fewer beat & raises likely in week 2, see limited upside 8
ON Semiconductor Corp. (ONNN)
Oracle Corp. (ORCL) Consumer Staples
Owens & Minor, Inc. (OMI)
Parexel International Corp. (PRXL) BRF-Brasil Foods S.A. (BRFS3.SA): 3Q2010 in line, but not firing from all cylinders yet; stay
9
Patterson Companies, Inc. (PDCO) neutral
Pharmaceutical Product Dev. United States: Food: Actions are louder than words; the promo heat's still on 10
(PPDI)
PMC-Sierra, Inc. (PMCS) International Flavors & Fragrances Inc. (IFF): Initiate on IFF at Neutral - 2010 was zesty, but
11
Precision Castparts Corp. (PCP) 2011 could be milder
PSS World Medical, Inc. (PSSI) Americas: Consumer Products: Cosmetics: US Prestige cosmetics: Industry sales up 7%; EL up
QEP Resources, Inc. (QEP) 12
4% in October
Quicksilver Resources, Inc. (KWK)
Research In Motion Ltd. (RIMM)
Rolls-Royce (RR.L)
Healthcare
Ross Stores, Inc. (ROST) Americas: Managed Care: A frontline perspective on 2011 pricing and product trends 13
Saks Inc. (SKS)
salesforce.com, Inc. (CRM) Agilent Technologies (A): Beats 4Q2010 on stronger electronic measurement sales 14
SanDisk Corporation (SNDK) Americas: Healthcare Services: Distributors: Upcoming Distributor Events in November and
SandRidge Energy, Inc. (SD) 15
December 2010
Sappi Ltd. (ADR) (SPP)
Sears Holdings Corp. (SHLD) Technology
Semtech Corporation (SMTC)
Shanghai Int'l Airport (600009.SS) salesforce.com, Inc. (CRM): Bookings growth likely to remain strong; Social proliferating; Buy 16
SIA Engineering (SIAE.SI) Americas: Communications Technology: GS CommTech Weekly: Previews for QCOM, FFIV, and
Spirit AeroSystems Holdings, Inc. 17
ARUN; raising RIMM EPS and PT
(SPR)
STEC, Inc. (STEC) Americas: Technology: Semiconductors: GS US Semi Weekly: Inventory database; AMAT,
18
Suburban Propane Partners, L.P. MRVL previews
(SPH)
Americas: Technology: Software: The Weekly Catalyst: CRM, ADSK, INTU; Techtonics and CIO
SuccessFactors, Inc. (SFSF) 19
Taleo Corporation (TLEO)
wrap
Target Corporation (TGT)
Teradyne, Inc. (TER) Utilities
Texas Instruments Inc. (TXN)
The TJX Companies, Inc. (TJX)
Northeast Utilities (NU): Data Update: Updating estimates after 3Q2010 reporting 20
Ultra Petroleum (UPL) CESP (CESP6.SA): First Take: Adjusted EBITDA grows 17% yoy and beats consensus 21
Varian Semi Equipment Assoc.
(VSEA) Cemig (CMIG4.SA): First Take: Adjusted EBITDA in line with consensus, 3Q neutral 22
Verigy Ltd. (VRGY) Eletrobras (ELET3.SA): First Take: Neutral 3Q; good operating performance but on one-offs 23
VMware, Inc. (VMW)
Wal-Mart Stores, Inc. (WMT) Americas: Utilities: Diversified: Pipeline & MLP Essentials: Plethora of data points over next 8
24
Wisconsin Energy Corp. (WEC) days
XILINX Corp. (XLNX) Wisconsin Energy Corp. (WEC): Updating estimates for WEC post 3Q, maintaining CL Buy 25

Other
Latin America Weekly Kickstart: Picking sectors by inflation exposure 26

Reports Published
Americas Morning Summary November 15, 2010

Focus Items

Americas: Energy: Oil: Trading update: Bullish oil correlations, bullish liquids shale players 1

Arjun N. Murti (New York): arjun.murti@gs.com, (212) 357-0931


Goldman Sachs & Co.
Joe Citarrella (New York): joe.citarrella@gs.com, (212) 902-6787
Goldman Sachs & Co.
Siddharth Ramtri (New York): siddharth.ramtri@gs.com, (917) 343-5385
Goldman Sachs & Co.
Will Su (New York): will.su@gs.com, (212) 357-9301
Goldman Sachs & Co.

Bullish oil macro data consistent with our “grind higher” call
Oil macro data this past week remained constructive—via US inventory draws and a bullish IEA report—and
consistent with our view that WTI spot crude oil prices will trade in a higher $85-$95/bbl band in the coming
six months. A “risk-off” day on November 12 knocked nearly $3/bbl off the spot WTI crude oil price, sending it
a hair below $85/bbl. Given the sharp $16/bbl increase from September 1 lows of just under $72/bbl to the
November 11 high of nearly $88/bbl, we are not surprised to see a pullback. In our view, investors should
take advantage of inevitable oil price volatility to add to positions, as our core expectation is for a continued
“grind higher” over the coming year.
Top 10 oils: CNQ, ESV, HAL, MUR, NBR, NFX, OXY, PBR, SLB, SU
We have updated our analysis of energy sector share price correlations to two-year WTI strip oil (using
weekly returns since 2004) and are highlighting our Top 10 Buy-rated equities across the Energy sector
favorably leveraged to our constructive crude oil view. Our Top 10 Buy-rated favorites include CNQ, ESV,
HAL, MUR, NBR, NFX, OXY, PBR, SLB, and SU.
Five SMID-cap oils: FST, HP, OIS, PXP, RDC
For investors focused on SMID-cap equities (under $7.5 billion market cap.), we highlight five equities that
have a high correlation with crude oil prices, though all are Neutral rated, including FST, HP, OIS, PXP, and
RDC.
Integrated/domestic oils at key inflection point on shale strategies
One of our key themes for integrated and domestic oil companies in 2010 has been the potential for
companies to get credit for North America unconventional resource expansion strategies. We believe the
second half of 2010 is shaping up to be a pivotal inflection point in terms of integrated oils making solid
progress with unconventional resource strategies, following a long stretch where the business was dominated
by E&Ps. We continue to see Buy-rated Murphy Oil as best positioned on this theme, though Neutral-rated
Hess also appears well positioned. While Conviction Buy Occidental Petroleum has interesting California
“shale” acreage, it is a smaller driver of our recommendation and hence we do not associate Oxy as much
with this theme. Chevron entered the fray with the announcement of its Atlas Energy acquisition last week.
The jury is still out on whether Exxon/XTO and Conoco/Burlington make sense.

Americas: Energy: Oil & Gas - E&P: Reiterate Buy on QEP, CL-Buy on NFX; KWK now Neutral 2

Brian Singer, CFA (New York): brian.singer@gs.com, (212) 902-8259


Goldman Sachs & Co.
Andre Benjamin (New York): andre.benjamin@gs.com, (212) 855-0470
Goldman Sachs & Co.
Pavan Hoskote (New York): pavan.hoskote@gs.com, (917) 343-9044
Goldman Sachs & Co.

Denver trip: Non-Rockies production, Rockies exploration in focus


We met in Denver with Forest Oil, Bill Barrett and QEP Resources. We came away more positive on the
Granite Wash (TX/OK) and on potential Rockies liquids exploration catalysts. We reiterate our Buy ratings on
QEP, CL-Buy on Newfield Exploration and Neutral ratings on FST and BBG.
QEP: Not well known and undervalued, with liquids upside in 2012

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

We have increased confidence in 2012 liquids upside from: (1) processing NGLs; and (2) production in the
Granite Wash/Bakken/Cana Woodford that could approach critical mass in 2012. We believe QEP is not well
known to E&P investors and would use weakness during the continued shareholder transition since QEP's
spinoff from Questar as a long-term opportunity. We expect 2011 capex/production guidance to be released
this week to be positive.
FST: Granite Wash guidance appears conservative; prefer NFX
We have continued confidence in the Granite Wash and FST's leading position in the play. Recent well
results above company type curves appear more the norm, and we raise our 6-month DCF- and multiples-
based price target to $35 from $34. While we prefer NFX among Granite Wash players (and raise our price
target to $74 from $70 on Granite Wash upside), FST is well positioned to benefit from both from the Granite
Wash and emerging plays in Canada.
BBG: Production growth flexibility, but exploration key
We believe BBG has ample flexibility for growth following the BLM's permitting of drilling acceleration in the
West Tavaputs (UT) field. We do not believe this will be appreciated, in our view, as long as gas sentiment
remains poor, and as such, see exploration as a more important catalyst. Beyond the Niobrara (first well
drilling now) the Mancos play remains a key catalyst.
Upgrade KWK to Neutral, update ests. for QEP, BBG, UPL, SD, XCO
We upgrade KWK to Neutral from Sell and raise our 6-month target price to $15 from $13 to add an M&A
component to our new price target methodology with a potential M&A ranking of 1 (high probability, 30%-
50%) within our M&A framework. We also update estimates for QEP, BBG, Ultra Petroleum, SandRidge
Energy, Quicksilver Resources and EXCO Resources to reflect 3Q results/other adjustments. We lower our
6-month DCF- and multiples-based price target for SD to $5 from $6 to reflect lower EBITDA and LT FCF.
Key risks: commodity prices, well results, costs, gov’t pronouncements.

Global: Transportation: What happens when 1bn Chinese fly? 3

Tom Kim (Hong Kong): tom.kim@gs.com, +852-2978-0856


Goldman Sachs (Asia) L.L.C.
Noah Poponak, CFA (New York): noah.poponak@gs.com, (212) 357-0954
Goldman Sachs & Co.
David H. Perry (London): david.perry@gs.com, +44(20)7552-2958
Goldman Sachs International
Hugo Scott-Gall (London): hugo.scott-gall@gs.com, +44(20)7774-1917
Goldman Sachs International
Ricky Tsang (Hong Kong): ricky.tsang@gs.com, +852-2978-6631
Goldman Sachs (Asia) L.L.C.
Chun-Yai Wang (New York): chun-yai.wang@gs.com, (212) 902-9610
Goldman Sachs & Co.
Hino Lam (Hong Kong): hino.lam@gs.com, +852-2978-0526
Goldman Sachs (Asia) L.L.C.
Ronald Keung (Beijing): ronald.keung@ghsl.cn, +86(10)6627-3483
Beijing Gao Hua Securities Company Limited

1bn in 12 yrs
We expect China to become the largest aviation market globally by 2020 and achieve 1bn air passenger
(pax) traffic by 2022E, up 3.5 times from an estimated 284mn pax in 2010E. Secular growth should stem from
the multiplier effect of faster-than-avg. GDP growth coupled with an increasing air travel penetration rate. By
our estimation, BRICs will represent 35% of the global aviation market by 2020E, vs. c.15% currently.
Another angle on China consumption
In our view, rising consumption in China could drive domestic and outbound int’l air travel. Not only will China
become a key demand generator for overseas tourism, we see it developing into an important destination
market, which bodes particularly well for domestic carriers. However, there is no room for complacency, as
low-cost carriers are expanding, even in China, and could continue to take market share from incumbents.
Airports are well positioned to benefit
China’s plan to add 90 airports by 2020 implies sufficient capacity to handle 1bn pax/yr, but air traffic control
is a potential impediment.
China fleet to double by 2022E

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

To carry 1bn air pax/yr, we estimate China’s current aircraft fleet would need to double to 3,500 by 2022E,
presenting ample opportunity for current large-jet OEMs, Boeing, and Airbus. China’s demographics and fleet
mix may result in even greater opportunity for the regional jet OEMs, Embraer and Bombardier. China is
focused on its indigenous manufacturing capability, and while it will take share, it will require many years.
Top 10 long-term winners
We have identified 10 stocks in our global aviation coverage universe with at least 15% exposure to BRICs
and leveraged to the secular growth prospects we forecast, screened against our global investment profile
(IP) metrics including: (1) Director’s Cut valuation , (2) cash returns on cash invested (CROCI), and (3)
CROCI growth. Our top 10 long-term picks are Aeroflot, BE Aerospace, Boeing, Cathay Pacific, China
Eastern Airlines, Precision Castparts, Rolls Royce, Shanghai Int’l Airport, SIA Engineering, and Spirit
Aerosystems. These 10 stocks have outperformed the MSCI World Industrials Index cumulatively by c.500%
over the past 10 years.

Americas: Healthcare Services: CROs: Continued solid clinical bookings with 3Q; reiterate CL-Buy on 4
PRXL

Robert P. Jones (New York): robert.p.jones@gs.com, (212) 357-3336


Goldman Sachs & Co.
Randall Stanicky, CFA (New York): randall.stanicky@gs.com, (212) 357-3292
Goldman Sachs & Co.
Verdell Walker (New York): verdell.walker@gs.com, (212) 902-8446
Goldman Sachs & Co.
Baneesh Banwait (Bangalore): baneesh.banwait@gs.com, (212) 934-6193
Goldman Sachs India SPL

Backlog growth seen with 3Q; stay CL-Buy on PRXL & Buy on PPDI
Our positive view of an attractive clinical late-stage environment was strengthened again this quarter as we
saw book-to-bills ratios of 1.0 or better across the group. Importantly, the quarter also provided further clarity
around backlog conversion, an issue that has been top of mind for investors, given the increasing prevalence
of long-term strategic deals. Conversely, 3Q’s disappointing preclinical results demonstrated that the early-
stage environment remains challenged as still weak demand and excess capacity sparked further cost
actions and buyback announcements.
Strategic deals help bookings with clarity on backlog conversion
We saw further growth in aggregate backlogs which were helped by new business related to recent strategic
deals. On the issue of backlog conversion, we received updates from managements and we continue to feel
comfortable that the bolus of strategic wins will lead to accelerated top-line growth. Specifically, ICLR expects
to see an uptick in the amount of revenue converted out of its backlog in the next 12 months despite its on-
going central lab issues. PPDI also mentioned that its backlog duration had actually decreased slightly. On
CVD’s late-stage business, management said it was seeing longer revenue conversions, given an overall
lengthening in the duration of clinical trials and a higher level of project scope. While slower conversion
related to the large number of projects in the start-up phase from recent strategic wins led PRXL to lower its
near-term outlook, we maintain our CL-Buy, given (1) industry leading TTM book-to-bill ratio of 1.67, (2) re-
set FY2011 outlook, and (3) best EPS growth in the space (21% three-year forward EPS CAGR).
CVD & CRL take further actions to offset still poor fundamentals
In contrast to the late-stage, the preclinical industry continues to face challenges and low visibility into future
business. Both companies with preclinical exposure (CRL and CVD) reduced capacity, undertook significant
cost-cutting initiatives, and are pursuing share repurchases as excess capacity and prolonged lack of
demand continues to pressure fundamentals. In our view, longer-term share performance remains linked to
an improving preclinical environment. Until we see signs of a more meaningful improvement, we believe
preclinical exposure will be an overhang for CRL and CVD and stay Neutral on both names.

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

Other Headlines
Basic Materials

Americas: Paper & Forest Products: Printing Paper: Preliminary data show volumes turn negative in Oct. 5

Richard Skidmore, CFA (New York): richard.skidmore@gs.com, (212) 357-5509


Goldman Sachs & Co.
Alex Ovshey (New York): alex.ovshey@gs.com, (212) 902-6751
Goldman Sachs & Co.
Usha Chundru (Bangalore): usha.chundru@gs.com, (212) 934-5057
Goldman Sachs India SPL

Uncoated freesheet volumes disappoint in October


According to preliminary statistics reported by the American Forest & Paper Association (AF&PA), US
printing and writing paper shipments declined 4.0% yoy. Uncoated freesheet volumes declined 7.8% yoy –
the largest drop thus far in 2010 and below our estimate of minus 4%-5%. Coated paper volumes fell 1.5%
yoy in October, the first decline in 11 months and driven by weakness in coated groundwood. Total printing
and writing paper shipments are up 6.6% yoy ytd in 2010.
Uncoated freesheet markets steady, but weaker volumes pose risk
Uncoated freesheet (UCFS) shipments are down 6.8% and 7.8% yoy in September and October,
respectively, significantly weaker than the 2.0% yoy ytd decline. We attribute weaker UCFS volume to high
unemployment levels and negative secular trends. Last week, RISI’s Paper Trader reported UCFS prices
slipped $20/ton in October. Conversations with the large UCFS producers suggest their prices are
unchanged and that the weakness is coming from discounted imports and competitive activity in private label.
We forecast UCFS prices will average $1,120/ton in 2011 vs. $1098/ton in 2010 as we expect prices to
remain steady from current levels. We expect UCFS volumes to fall 4% in 2011. We expect producers will
close 4% of capacity to keep operating rates near 90% and prices steady.
Coated paper volumes are slowing, but market remains tight
Coated paper shipments fell 1.5% yoy in October, but are up 16.5% ytd. We attribute slower coated paper
demand to tougher yoy comparisons and the inventory restocking cycle coming to an end. The coated paper
market remains tight with operating rates in the mid-90s, inventories below average levels, and pricing rising.
In October, the International Trade Commission affirmed tariffs on Chinese and Indonesian coated freesheet
imports – a positive for US coated freesheet producers.
Domtar is Buy rated owing to robust FCF generation
Although Domtar is the largest UCFS producer and we acknowledge UCFS volumes are likely to continue to
decline, we remain Buy rated on Domtar, given (1) expectations for UCFS markets to stay balanced, (2)
robust free cash flow (+20% FCF yield), and (3) our forecast that Domtar will increase its return of cash to
shareholders in 2011 by repurchasing $400 mn of its stock. Key risks: greater secular UCFS volume
declines, lower paper prices.

Consumer Cyclicals

Americas: Retail: Amazon widens leads in Toys and CE, but Wal-Mart makes its move 6

Adrianne Shapira (New York): adrianne.shapira@gs.com, (212) 357-4174


Goldman Sachs & Co.
Scott Kaufman-Ross (New York): scott.kaufman-ross@gs.com, (212) 934-4206
Goldman Sachs & Co.
Stephen Grambling, CFA (New York): stephen.grambling@gs.com, (212) 902-7832
Goldman Sachs & Co.
Morry Brown, CFA (New York): morry.brown@gs.com, (212) 357-0648
Goldman Sachs & Co.

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

Toy Tally: Wal-Mart makes its move, but Amazon still tops in Toys
Week 3 saw Wal-Mart fire back against rival Target, lowering prices by 2.2% to move 2.7% below Target.
However, Amazon was just as aggressive, cutting prices by 2.9% to take the top Toy Title with prices 1.3%
below Wal-Mart. Kmart remained out of contention, 10.1% higher than Wal-Mart. Overall, prices fell 1.3%
during week 3, as Wal-Mart and Amazon lowered while Kmart and Target were flat. Last year, Amazon had a
wider 4.0% pricing gap, while Target was a narrower 1.3% above Wal-Mart.
Consumer Electronics Count: Amazon widens lead; Costco retreats
Week 3 of our CE Count was uneventful, with all retailers maintaining their positions and Amazon widening
its lead. Amazon prices were 10.3% below the average, followed by Wal-Mart at 3.9% below. Costco moved
from 1.6% below to 0.8% above, followed by Best Buy, Kmart and Target, Kmart at 3.3%, 6.5%, and 6.8%
above respectively. Overall, price cuts of 2.2% were in line with last week at 2.1%, with Wal-Mart, Amazon
and Kmart most aggressive. Last year, we saw similar positioning after week 3, though Best Buy was in line
with the average and Costco improved its position.

Americas: Gaming: Takeaways from Bally and IGT pre-G2E analyst events 7

Steven Kent, CFA (New York): steven.kent@gs.com, (212) 902-6752


Goldman Sachs & Co.
Eli Hackel (New York): eli.hackel@gs.com, (212) 902-9672
Goldman Sachs & Co.
Neil Portus, CFA (New York): neil.portus@gs.com, (212) 902-2077
Goldman Sachs & Co.

Industry context
Yesterday, IGT and Bally hosted pre-industry slot show events. The meetings were well attended and
investor interest was high. However, while the quality of products seems to improve each year, they will only
be successful if customer budgets increase.
Bally – Innovation in systems; new cabinets/platform raise bar
Bally’s event focused on systems and the new Alpha2 platform and pro series cabinets. Bally is looking to
extend its lead in systems by growing the installed base of iViews and launching floor wide value-add
applications. One example of a value-add application that showed success is Bally’s virtual racing
application. The software is currently installed at the Barona casino and company management indicated that
there was an increase in win after the installation. While this installation was successful and could attract
more customers, casinos need to have iView installed, Ethernet cable, and a dedicated sales/marketing staff
to get a full return. Bally management believes there is a systems revenue opportunity of ~$1.8bn for new
products and $10 mn-$20 mn for maintenance/sales revenues over the next 5-7 years. The second focus
point at the investor event was the new games and hardware. We thought the games looked very good and
the interaction between the iDeck, iView, base game and top box was solid. Bally’s new Alpha2 and pro
series products were a marked improvement over its older offerings.
IGT sets goals for FY11 with an increased focus on on-line/mobile
IGT discussed 5 goals for FY2011 during its presentation: (1) reduce its reliance on a North American
replacement cycle by improving gaming ops yields, its systems offerings and revenues from its IP catalog; (2)
growing globally; (3) taking advantage of its cash flows; (4) improving operating efficiencies and returns
(including monetization of prior acquisitions and keeping R&D spend relatively flat but increasing efficiencies
by leveraging third party technologies and increasing cross-studio collaboration); and (5) accelerating growth
from its on-line and mobile group (which IGT views as a significant opportunity and expects to be a leading
player; IGT expects to grow this division from about 200 people currently to around 300 over the next year).
IGT also displayed several new titles including a graphically-impressive Dark Knight as well as Dirty Dancing,
The Hangover and Ghostbusters.

Americas: Retail: Broadlines: With even fewer beat & raises likely in week 2, see limited upside 8

Adrianne Shapira (New York): adrianne.shapira@gs.com, (212) 357-4174


Goldman Sachs & Co.
Stephen Grambling, CFA (New York): stephen.grambling@gs.com, (212) 902-7832
Goldman Sachs & Co.

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

Morry Brown, CFA (New York): morry.brown@gs.com, (212) 357-0648


Goldman Sachs & Co.
Scott Kaufman-Ross (New York): scott.kaufman-ross@gs.com, (212) 934-4206
Goldman Sachs & Co.

Week 1 share reactions


Ahead of week 1 of 3Q earnings, we expected unfavorable weather trends to pressure margins, and the
results largely vindicated this expectation. However, EPS broadly surpassed consensus estimates due to
better cost control and below the line items. Most emerged with heavy inventory levels that could cap future
margin expansion into the holiday season. Looking towards week 2, we see a similar theme emerging as a
continued mix shift to food and away from weaker discretionary sales may put downward pressure on off-mall
retailers’ gross margins. Consistent with the prior week, this expectation is factored into our earnings
estimates, suggesting upside will be based on cost control.
Expect guidance to remain conservative heading into the holidays
Although economic indicators have improved over the past two months (payrolls, ISM, QE2), we think
guidance will remain conservative heading into the holidays and expect executives to maintain their current
outlooks. This expectation stems from continued weakness in discretionary categories, which are the
backbone of the holiday selling season.
WMT: Negative sentiment braced for a guide down
We do not expect WMT to miss Q3 EPS nor guide down Q4; while its turnaround efforts are far from smooth,
we believe the stock could bounce given the overly negative set up in the absence of a miss and lower.
TGT: See potential for EPS miss on soft sales and negative mix shift
We see downside risk due to four factors: 1) 1,6% was at low end of 1-3% plan; 2) discretionary and margin
rich categories like apparel and home softened in Q3; 3) consensus est for 3Q remained flat at $0.68 since
2Q; and 4) comparisons become more difficult in 4Q. Our 3Q EPS est of $0.67 remains a penny below
consensus.
High end department stores lap tough comparisons well
Both JWN and SKS demonstrated their ability to lap tough year ago comparisons as they delivered above
plan comps of 5.9% and 5.7%, respectively. We would expect SKS’ beat to stem from strong margin
expansions while JWN’s expenses to likely restrain strong flow through. Nonetheless, both have strong
momentum heading into the holiday season.

Consumer Staples

BRF-Brasil Foods S.A. (BRFS3.SA): 3Q2010 in line, but not firing from all cylinders yet; stay neutral 9

BRFS3.SA, R$25.14 Gustavo Wigman (Sao Paulo): gustavo.wigman@gs.com, +55(11)3371-0839


Market cap R$21,876 mn
Goldman Sachs Brasil Bco Múlt S.A.
Claudio Lensing (Sao Paulo): claudio.lensing@gs.com, +55(11)3372-0101
Target price R$27.00
Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec 2010E 2011E

EPS (R$) 0.74 1.44 News


P/E 33.9X 17.4X Brasil Foods reported on November 12 recurring EBITDA of R$602 mn, beating our and Bloomberg
* consensus estimates by 3%. EBITDA margin stood at 10.6%, 30 bp above GSe and 50 bp above the Street.
EPS Quarter/Interim 0.23 0.24
Net income of R$190 mn was 5% below our estimates owing to a slightly higher tax rate. BRF will hold an
Investment Lists analyst day on Tuesday (Nov 16) in São Paulo, starting 6 am EST. Dial-in: Port: +55-11-2101-4848; Eng: +1-
Neutral 706-679-9291.
Coverage view Neutral Analysis
Domestic sales up 8% yoy, but no growth from processed meats. Domestic volume growth of 10% yoy was
*Current and a year ago
driven by in natura poultry/pork (+21% yoy) and other processed food categories (+21% yoy). Although in
natura prices rose 9% driven by strong pork prices (up 22% yoy), average domestic prices declined 2% yoy
driven by processed meats. Processed meats – BRF’s largest segment (49% of domestic sales) – was the
weak point of the quarter with only 1% volume growth and prices down 2% yoy.
Poultry exports trended below overall Brazilian exports in 3Q2010. BRF’s in natura poultry exports grew 8%
yoy, underperforming Brazilian exports (which grew 17% yoy in the quarter, according to Secex). Overall
export volumes increased 10% vs. 3Q2009, with average BRL prices down 3% impacted by FX appreciation.

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

Total export revenues increased 7% yoy.


Another quarter of double-digit EBITDA mg; no impact from grains yet. Although local prices of corn and
soybeans grew 7.5% and 16.8% qoq respectively, gross margin was up 40 bp qoq thanks to physical
inventory carryover. SG&A was 5% (or 90 bp, as % of sales) ahead of our estimates on higher marketing, IT
and consulting expenses. Recurring EBITDA margin expanded 70 bp qoq driven by lower employee profit
sharing.
Implications
Although from a margin perspective results were good, the lack of consistent volumes & pricing across
categories deterred BRF from having a clean quarter, in our view. Our rating, estimates and PT remain
unchanged.

United States: Food: Actions are louder than words; the promo heat's still on 10

Judy E. Hong (New York): judy.hong@gs.com, (212) 902-0490


Goldman Sachs & Co.
Jason English (New York): jason.english@gs.com, (212) 902-3293
Goldman Sachs & Co.
Tyler Walling (New York): tyler.walling@gs.com, (212) 934-0495
Goldman Sachs & Co.
Michael Luddy (New York): michael.luddy@gs.com, (212) 902-9592
Goldman Sachs & Co.

Still searching for promotional inflection points in Food


This is the second installment of our retail promotion tracking report. The report uses unique and innovative
data and calculations to provide what we believe is a more accurate portrayal of promotional intensity. This
analysis is of particular relevance today as the industry transitions from a deflationary cost environment to an
inflationary one. We believe the transition could be disruptive and expect the disruption to be most severe in
promotionally intense categories.
Despite the rhetoric, the heat’s still on
We retain our Cautious view of packaged food sector due to sluggish volume trend and high level of
competition, which along with the rapid rise in commodity costs could drive profit and margin disappointment
in the near term. Our analysis supports this caution, as packaged food remains heavily promotional and the
efficacy of promo spend is still down yoy, suggesting ROI remains relatively low. In other words, while the
industry has begun to talk of price increases, it has yet to dial back promotional intensity. Trends, however,
are not universal and we continue to see divergences at the category level.
Aggression continues to build in soup & chocolate candy
Campbell had been the chief aggressor but Mills hit back in a big way this month (GIS soup pricing down
22% yoy). Mills’ price investment was surprising but not as surprising as the +47% volume response. We look
for price investment to remain elevated in an effort to restore volume. In chocolate, Nestle continues to stir
the pot. We continue to see potential for Mars and Hershey to respond in the coming months.
No relief in cereal, coffee, yogurt & baking mixes
Mills is still aggressive in cereal and Kellogg may at last be rejoining the fray. Danone’s retaliation to Mills’
aggression is building in yogurt. Coffee is still aggressive with Kraft moving the wrong way on price. Baking
mix aggression remains high, but we no longer see the aggression building.
Cookies and crackers still relatively benign
The seemingly rational competitive activity that we reported on last month in the cookie and cracker category
continues. We see this as a likely enabler to pricing actions for K and KFT in the coming months.

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

International Flavors & Fragrances Inc. (IFF): Initiate on IFF at Neutral - 2010 was zesty, but 2011 could be 11
milder

IFF, $52.46 Andrew Sawyer, CFA (New York): andrew.sawyer@gs.com, (212) 902-5488
Market cap $4,193 mn
Goldman Sachs & Co.
Stephanie Whited (New York): stephanie.whited@gs.com, (212) 855-9812
Target price $57.00
Goldman Sachs & Co.
Fiscal y/e Dec 2010E 2011E

EPS ($) 3.43 3.67 Investment view


P/E 15.3X 14.3X We initiate coverage on IFF with a Neutral rating and see 10% upside to our $57, 12-month price target. On
* the plus side, IFF has posted robust growth in 2010 and is making strategic changes to re-allocate more
EPS Quarter/Interim 0.73 0.63
resources to growth areas like emerging markets. We also expect the strategic review to result in a doubling
Investment Lists in cash back to shareholders in 2011. This said, we stay on the sidelines due to modest risk to consensus
Neutral sales and EPS forecasts. Sales growth could be sub-par at 1-2% in 2011 as IFF hurdles inventory re-
Coverage view Neutral
stocking from 2010. We also see limits on margin potential due to rising input costs and the fragmented
industry structure.
*Current and a year ago
Core drivers of growth
We see LT sales growth of 4% vs. a 3% historic average on increased emerging market presence (40-45% of
sales), a better R&D pipeline, and improved resource allocation. We envision long-term EPS growth of 9%.
Margin gains may be difficult to obtain in a fragmented industry with larger customers. Strong FCF is a key
plus and we see a 20-25% increase in the dividend in 2011 along with resumption in buybacks ($100 mn).
Risks to the investment case
(1) The 2010 sales base is inflated by customer inventory re-stocking, and (2) IFF had difficulty pricing to
recover input cost inflation in 2008.
Valuation
We are setting a 12-month P/E and DCF-based price target of $57. This is 14-15X our 2012 estimate, in line
with the company’s historic average.
Industry context
IFF is an unbranded supplier in a fragmented industry, which could make margin expansion difficult. This
said, flavors & fragrances are a real value-add for the CPG customers at a relatively low cost, which supports
margins. Industry consolidation should favor the big suppliers like IFF.

Americas: Consumer Products: Cosmetics: US Prestige cosmetics: Industry sales up 7%; EL up 4% in 12


October

Andrew Sawyer, CFA (New York): andrew.sawyer@gs.com, (212) 902-5488


Goldman Sachs & Co.
Stephanie Whited (New York): stephanie.whited@gs.com, (212) 855-9812
Goldman Sachs & Co.

US cosmetics industry up 7%
Total cosmetics sales in US department stores grew 7% for the month of October. We are encouraged by the
300bp of sequential improvement versus the June quarter average. On a two-year stacked basis, sales were
up 1-2%, a significant step-up versus the 4-5% year-to-date decline and the first positive number on this
basis since April 2009.
All three beauty sub-categories posted solid results. Skin care remains the strongest category with sales
climbing 11% in the month. Fragrance sales grew 7-8% as the category lapped a -15% decline in the year-
ago period. Make-up sales were up 4% for the period.
EL reported sales up 4%, core (ex-Prescriptives) grew 7%
Estee Lauder’s sales were up 4% according to NPD. EL’s underlying fundamentals remain strong with the
company’s core business (excluding the discontinuation of Prescriptives) growing inline with the industry.
Sales were positive across Estee’s top three brands. Clinique grew 6-7% and MAC was up 5-6%. The Estee
Lauder brand lagged a bit with sales only up 1-2%. Estee’s smaller brands generally posted the strongest
growth
Estee’s category performance was broadly positive. Its skin care business (+11-12%) continues to outpace

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

the industry, while make-up (+20bp) and fragrance (+1-2%) underperformed with sales up modestly.
Remain Neutral on EL shares
We view the industry and EL’s core performance as positive. We remain Neutral for two reasons:
(1) Expect better buying opportunity in subsequent quarters – Estee’s restructuring is clearly gaining traction
and sales trends are healthy. This said, there may be potential for a better entry point in coming quarters.
Sept 1Q results benefited from sell-in that exceeded sell-through in Europe and the US. For example,
reported sell-in to US department stores grew DD while sell-through in the NPD data was up 4%. Subsequent
results could be choppier if this dynamic reverses and sell-in lags sell-through.
(2) Shares reflect solid turnaround dynamics – The stock is trading at 20X our CY2011 EPS, 25% above the
large-cap multi-national average of 16X. A premium multiple is warranted by strong sales and margin trends,
but the potential for a further in the P/E premium is limited.

Healthcare

Americas: Managed Care: A frontline perspective on 2011 pricing and product trends 13

Matthew Borsch, CFA (New York): matthew.borsch@gs.com, (212) 902-6784


Goldman Sachs & Co.
Sebastian Paquette, CFA (New York): sebastian.paquette@gs.com, (212) 902-5306
Goldman Sachs & Co.
Sam Wass (New York): sam.wass@gs.com, (212) 357-0617
Goldman Sachs & Co.

A national perspective on the middle-market


On Nov. 10, 2010 we hosted our 8th annual conference call with middle-market employee benefit consultant
Ken Ambos, featuring his frontline view of 2011 pricing and product trends. As background, Ken is a national
employee benefit practice leader for Equity Risk Partners, a San Francisco-headquartered risk management
and employee benefits consulting firm with a national scope of practice and a focus on the high-end of small
group and middle-market employer segments, which we continue to see as the key bellwether for health
insurance industry trends.
A transcript of the conference call is provided in the body of this report.
Strong price discipline following the 2006-2009 industry downcycle
Over the years, Ken and his colleagues have provided a quite valuable perspective to us in terms of spotting
key inflection points, including major carrier service disruptions as well as turning points in the health
insurance industry underwriting cycle (in particular, the shift from multi-year periods of intense price
competition and margin erosion to recovery of price discipline and margin expansion).
With that backdrop, our call this year highlighted a strong bias to price discipline across most carriers and
markets, consistent with what we expect given our view that 2010 marks the first year of recovery from the 4-
year industry down-cycle (2006-9), with – for example – the Blue Cross plan margins hitting a 20-year low in
2009.
Higher pricing for 2011 partly reflects new health reform mandates
Conservatism in underwriting moving into 2011 is widespread. On average, carriers appear to be
incorporating an additional 100-300 bp in pricing to reflect the expected impact from health reform mandates
(e.g., preventive care, adult dependent coverage). With regard to the pending minimum medical loss ratio
(MLR) thresholds, most carriers appear to be positioned for rebating surpluses as opposed to pricing lower to
proactively achieve compliance with MLR floors. In this context, it appears that Coventry’s recent public
comments about pricing proactively below trend for books below the MLR threshold is an outlier. However,
carriers are citing the MLR rules as a rationale to compress producer / broker commissions.

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

Agilent Technologies (A): Beats 4Q2010 on stronger electronic measurement sales 14

A, $36.36 Isaac Ro (New York): isaac.ro@gs.com, (212) 902-6393


Market cap $12,799 mn
Goldman Sachs & Co.
Jeff Ares (New York): jeff.ares@gs.com, (212) 902-5166
Target price $38.00
Goldman Sachs & Co.
Fiscal y/e Dec 2010E 2011E

EPS ($) 2.00 2.47 What's changed


P/E 18.2X 14.7X Agilent reported better-than-expected 4Q2010 revenue/EPS driven by higher-than-expected revenue growth
* and incremental margins in its Electronics Measurement Group. The company continues to benefit from
EPS Quarter/Interim 0.65 0.32
growth in emerging markets (China: +37%, India +31%), network spending on 3G manufacturing and R&D,
Investment Lists as well as growth in R&D related to the LTE rollout. On the Life Science and Chemical Analysis side of the
Neutral business, Agilent raised expected cost synergies from VARI to $100 mn from $75 mn and noted it remains on
Coverage view Neutral
track in the integration and is in the process of consolidating facilities and leveraging its scale in procurement
and logistics. Management provided FY2011 guidance of $6.1 bn-$6.3 bn in revenue and $2.30-$2.50 EPS.
*Current and a year ago For F1Q11, Agilent expects revenue/EPS of $1.52 bn-$1.55 bn/$0.55-$0.57.
Implications
We are raising our 2011E-2013E EPS by 5.0%, 5.0%, and 1.1% to $2.47, $2.80, and $3.06, respectively, to
reflect stronger revenue growth and better incremental margins in EMG, slightly lower contributions from
Varian vs. our previous estimates, and lower incremental margins from both the Life Science and Chemical
Analysis divisions.
Valuation
We are raising our 12-month price target to $38 from $35 based on higher estimates and target multiples. We
are raising our P/E and EV/EBITDA multiples slightly (15X to 16X and 9X to 9.5X, respectively) to reflect
increased guidance visibility. Our price target is based on an equal weight of P/E (50%) and EV/EBITDA
(50%) and implies 15.4X our FY2011 EPS estimate of $2.47.
Key risks
Upside risks to our price target include a broader economic recovery, higher acquisition synergies, and
sustainability of demand for EM products; downside risks include acquisition integration challenges, cyclical
demand for EM products, and failure to recapture market share in the VARI franchise.

Americas: Healthcare Services: Distributors: Upcoming Distributor Events in November and December 15
2010

Robert P. Jones (New York): robert.p.jones@gs.com, (212) 357-3336


Goldman Sachs & Co.
Randall Stanicky, CFA (New York): randall.stanicky@gs.com, (212) 357-3292
Goldman Sachs & Co.
Verdell Walker (New York): verdell.walker@gs.com, (212) 902-8446
Goldman Sachs & Co.
Baneesh Banwait (Bangalore): baneesh.banwait@gs.com, (212) 934-6193
Goldman Sachs India SPL

Distributor events for November and December 2010


Even though we are through the majority of 3QCY2010 for our Healthcare Distributor coverage, there are
several important events upcoming for the group before year-end
MCK (NR) – Investor meetings with President of McKesson Canada
On 11/16, we will be hosting investor meetings in Toronto with the President of McKesson Canada, Domenic
Pilla. Investor focus will likely center around the impact from government-imposed price reductions on generic
drugs across certain provinces, as well as key customer contract negotiations in Canada.
PDCO (Neutral) – 2QFY2011 Earnings on November 23
Patterson Companies will report 2QFY2011 results before the market open on 11/23 and hold a conference
call at 10:00am. Competitor Henry Schein (HSIC, Neutral) reported internal sales growth of 1.5% yoy for
consumables and 1.3% for equipment. Schein mentioned that it is seeing stability in the number of dental
visits and it believes that a ‘‘plateau’’ has been reached. We expect similar results from PDCO, with the

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

possible exception that its equipment sales might fare better given its exclusive rights to distribute the
CEREC CAD/CAM system in the US. We are at $0.46 for the quarter vs. the Street at $0.45. Dial-in: 1-877-
941-8609 / ID: 4384954.
PSSI (Neutral) – Hosting investor meetings with management
We will be hosting investor meetings with PSS in Milwaukee and Toronto on 12/1 and 12/2. We look for
further commentary on margin expansion initiatives, including private label growth and cost cutting efforts.
OMI (Sell) – 2010 Analyst Day; expect FY2011 guidance
O&M will host an Analyst Day on 12/2 and give first time FY2011 guidance (GS/Street at $2.05/$2.08). With
continued utilization headwinds, we believe Street 2011 revenue estimates, which imply 4% growth, are too
high.
CAH (Neutral) – 2010 Analyst Day on 12/7; updates on key initiatives
We expect CAH to provide more insight into its specialty distribution strategy, as well as updates on utilization
trends, generic penetration, margin expansion efforts, and nuclear pharmacy ramp-up.

Technology

salesforce.com, Inc. (CRM): Bookings growth likely to remain strong; Social proliferating; Buy 16

CRM, $116.73 Sarah Friar (San Francisco): sarah.friar@gs.com, (415) 249-7436


Market cap $16,013 mn
Goldman Sachs & Co.
Stephanie Withers, CFA (San Francisco): stephanie.withers@gs.com, (415) 249-7470
Target price $128.00
Goldman Sachs & Co.
Fiscal y/e Jan 2011E 2012E Ventsi Stoichev (San Francisco): ventsi.stoichev@gs.com, (415) 249-7440
EPS ($) 0.66 1.01 Goldman Sachs & Co.
P/E -- 115.2X

EPS Quarter/Interim* 0.18 0.16


What's changed
We are buyers of salesforce.com and expect the company to post bookings growth of 26% for the quarter,
Investment Lists resulting in total bookings of $412 mn. Our positive view is based on: (1) Our checks, industry conversations
Americas Buy List and surveys suggest that the company is increasingly gaining traction beyond its core salesforce automation
Coverage view Attractive offering, especially Service Cloud and now Chatter. Our surveys show increasing appetite for social software
among both large enterprises and SMBs as organizations aim to improve intra-company collaboration, but
*Current and a year ago also customer outreach and marketing. User feedback on Chatter remains very positive and, while there is
still uncertainty about salesforce.com’s ability to successfully monetize it, we believe that, at the very least,
Chatter penetration will significantly improve the company’s stickiness within the organization and pave the
way for further up-sell and wider adoption of Force.com and Service Cloud. (2) Transactions on the
company’s platform grew 14% qoq and 54% yoy, both of which were an acceleration from last quarter’s 12%
and 49%, respectively. (3) Finally, recent SMB data points have suggested a level of cautious optimism, as
the NFIB index has improved for two consecutive months. Expectations are elevated with the stock up 22%
since last quarter, compared to a 13% rise in the S&P 500.
Implications
We maintain our above-consensus estimates for FY2012 and FY2013 and we believe that Street estimates
will increase as salesforce.com continues to gain market share from legacy vendors and drives top-line
growth and margin expansion through up-sell. We are 2% and 6% above consensus.
Valuation
12-month PT of $128 (10% upside) is based on EV/rev., EV/adj. FCF/growth, and DCF. CRM is at a CY12E
EV/adj. FCF of 28X, vs. SaaS peers at 28X.
Key risks
A derailing of the enterprise spending recovery, increased competition.

Americas: Communications Technology: GS CommTech Weekly: Previews for QCOM, FFIV, and ARUN; 17
raising RIMM EPS and PT

Simona Jankowski, CFA (San Francisco): simona.jankowski@gs.com, (415) 249-7437


Goldman Sachs & Co.

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

Thomas D. Lee (New York): thomas.d.lee@gs.com, (212) 902-2066


Goldman Sachs & Co.
Kent Schofield (San Francisco): kent.schofield@gs.com, (415) 249-7489
Goldman Sachs & Co.
Amanda O'Brien (San Francisco): amanda.obrien@gs.com, (415) 249-7467
Goldman Sachs & Co.
Erin Riley (San Francisco): erin.riley@gs.com, (415) 249-7453
Goldman Sachs & Co.
Mukul Garg (Bangalore): mukul.garg@gs.com, (212) 934-9960
Goldman Sachs India SPL

Weekly stock performance


Our median stock was down 2% last week, flat with the S&P 500 and the Nasdaq. Our strongest performer
was BSFT, up 82% on strong earnings, while our weakest was CSCO, down 17%.
Qualcomm (QCOM, CL-Buy): Expect upbeat tone at Analyst Day
We expect an upbeat tone at Qualcomm’s Analyst Day in NY next Wednesday. We expect the company to
address: 1) handset/smartphone market trends, which we view as very positive, 2) potentially, the size of the
tablet market, and 3) its entry in the CE display market with Mirasol.
F5 (FFIV, Sell): Expect strong focus on TAM and new products; not a negative catalyst
While we rate FFIV shares Sell on concerns about Street estimates in the context of a slowing server cycle in
2011, we don’t expect the Analyst Day to be a negative catalyst for the stock. We expect F5 to detail its target
addressable market, outline opportunities for secular growth in its telco vertical, and address its virtual
product portfolio.
Aruba (ARUN, Buy): Expect another solid quarter, raising our price target to $24
We expect inline or better F1Q results with our/ Street’s sales/non-GAAP EPS est. of $80.7 mn/ $0.11. Our
PT moves to $24 from $22 on higher EV/sales of 5.3X (prior 4.7X) as a result of higher multiples for its comps
and accelerating demand.
RIM (RIMM, Sell): Raising estimates and price target as we incorporate tablets
We raise our FY12/13 estimates to $5.51/$5.38 from $5.38/$5.26 as we are incorporating 2.0/2.4 mn tablet
units in our FY12/13 estimates. As a result, our PT moves higher to $50 from $45.
Short interest declined in 2H October
Short interest for CommTech fell 4.3% on an absolute basis in 2H Oct compared to 1H Oct.
Valuation
The median CommTech forward P/E was 16.9X last week, suggesting an 8% discount to its 1-yr average of
18.4X. This compares to the S&P 500’s 13.2X. Relative valuation was flat at 1.3X the S&P.

Americas: Technology: Semiconductors: GS US Semi Weekly: Inventory database; AMAT, MRVL previews 18

James Covello (New York): james.covello@gs.com, (212) 902-1918


Goldman Sachs & Co.
James Schneider, Ph.D. (New York): james.schneider@gs.com, (917) 343-3149
Goldman Sachs & Co.
Kate Kotlarsky (New York): kate.kotlarsky@gs.com, (212) 357-7956
Goldman Sachs & Co.
Mark Delaney (New York): mark.delaney@gs.com, (212) 357-0535
Goldman Sachs & Co.
Gabriela Borges (New York): gabriela.borges@gs.com, (212) 357-2692
Goldman Sachs & Co.

3Q inventory grew seasonally +5% qoq; supply/demand balanced


Our quarterly inventory compilation of approximately 75 companies across the tech supply chain showed that
total 3Q10 inventory increased 5% qoq, in line with seasonality of +3 to 5% qoq, and slightly below revenue
growth of 6%. Since 1Q08, revenues have grown 10% while inventory dollars are up just 1%. Although most
segments are balanced, inventory in the Comm segment grew 7% qoq compared to revenue growth of 1%.
The balanced view the inventory database suggests matches our trendline analysis. Semi revenue guidance
is for a slightly below seasonal 4Q, which would leave units in line with long-term demand. Given the

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

balanced supply side, 2011 unit growth could be seasonal, in our view, implying 11% yoy growth.
AMAT: 4QCY10 guidance should drive upward estimate revisions
We expect 3QCY10 results to be in line with guidance for sales of $2.5 bn-$2.6 bn (flat to +5% qoq) and EPS
of $0.28 to $0.32. We expect 4QCY10 sales to be guided up in the low-/mid-single-digit percentage range (at
the mid-point) consistent with SPE reports thus far during earnings season. If management provides 4QCY10
order guidance (Applied has not guided orders for several quarters), we would expect the mid-point to be for
orders to be down qoq, driven by weakness in DRAM and FPD. However, there is no change to our view that
the SPE cycle is intact and we expect orders to reaccelerate in 1HCY11 ahead of new NAND capacity ramps.
MRVL: Buy the stock, as 4Q guidance is likely to beat expectations
We would Buy Marvell ahead of the report, as we believe the stock is likely to trade higher on stronger 4Q
guidance, given relatively bearish market expectations for the PC supply chain. Relative to 3Q results, we
believe that management’s relatively conservative guidance has positioned the company for modest upside
around the quarter. We think 4Q revenue guidance is likely to be above the Street (but in line with our
estimate), as we expect stronger HDD results driven by the ongoing recovery in the PC market. We continue
to like the stock, as valuation remains reasonable (in line with the group on 2011 P/E) and we believe
Marvell’s growth prospects remain significantly higher than the broader semi industry.
NXPI: Erratum – Adjusting 4Q10 estimate on minority interest
We are adjusting our 4Q10 estimate on management’s clarification of guidance for 4Q minority interest:
2010E EPS to $1.38 from $1.30.

Americas: Technology: Software: The Weekly Catalyst: CRM, ADSK, INTU; Techtonics and CIO wrap 19

Sarah Friar (San Francisco): sarah.friar@gs.com, (415) 249-7436


Goldman Sachs & Co.
Derek R. Bingham (San Francisco): derek.bingham@gs.com, (415) 249-7435
Goldman Sachs & Co.
Stephanie Withers, CFA (San Francisco): stephanie.withers@gs.com, (415) 249-7470
Goldman Sachs & Co.
Gonzalo Cavenaghi (San Francisco): gonzalo.cavenaghi@gs.com, (415) 249-7438
Goldman Sachs & Co.

salesforce.com (Buy): Bookings growth likely to remain strong


We remain buyers of salesforce.com shares as we expect the company to continue posting solid bookings
growth (we model 26% for the quarter, in line with Street) based on (1) our industry checks and survey work,
which suggest the company is successfully gaining traction beyond its core sales automation tool, (2)
continued growth in transactions, which were up 14% qoq and 54% yoy, both of which accelerated from last
quarter, and
(3) Finally, recent SMB data points have suggested a level of cautious optimism, as the NFIB index has
improved for two consecutive months.
Autodesk (Neutral): We expect upside on the quarter; elevated expectations could temper stock
reaction
Key macro indicators (e.g., ABI index, PMI, GS GLI) have showed improvement, FX movements have moved
in Autodesk’s favor, and select micro data points from European CAD vendors and domestic commercial
construction have been positive. We expect above-consensus results, though perhaps not as substantial
upside as the beats we have been seeing in the last three quarters (each $0.06-$0.08 cents above the high
end of the guided EPS range), as some of our checks have suggested that some of the downturn’s pent-up
demand has been soaked up.
Intuit (Neutral): October quarter typically less important
Intuit’s October quarter is a seasonally smaller contributor to full-year results. This year, we expect the
quarter to account for just 14% of 2011E revenue and contribute negatively to earnings. We expect an in-line
to slightly better quarter that will be driven by continued strength in the QuickBooks segment and a stabilizing
SMB backdrop.
Takeaways from our In-Your-Office call with 3 Fortune 500 CIOs
Our panel expects normal 4Q seasonality and plans to increase their adoption of server virtualization, VDI,
and SaaS. For example, CIOs expect 10%-15% of their apps deployed via SaaS today to double in the next 3
years.
Software takeaways from the GS Techtonics conference

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

Three main highlights from our panelists: the shift to SaaS is accelerating, even in large enterprise, VDI
adoption is shifting from hype to reality, and private Clouds are getting more traction than public for now.

Utilities

Northeast Utilities (NU): Data Update: Updating estimates after 3Q2010 reporting 20

NU, $31.29 Michael Lapides (New York): michael.lapides@gs.com, (212) 357-6307


Market cap $5,507 mn
Goldman Sachs & Co.
Jaideep Malik (New York): jaideep.malik@gs.com, (917) 343-0717
Fiscal y/e Dec 2010E 2011E
Goldman Sachs & Co.
EPS ($) 2.05 2.31 Neil Mehta (New York): neil.mehta@gs.com, (212) 357-4042
P/E 15.2X 13.6X Goldman Sachs & Co.
*
EPS Quarter/Interim 0.59 0.48

Investment Lists
Changes and Implications
We update 2010-2014 EPS estimates by up to 2% for Northeast Utilities (NU) after 3Q2010 reporting and the
Not Rated
fall 2010 EEI conference.
We do not view these changes as material – as NU made modest changes to long-term capital spending and
*Current and a year ago therefore rate base growth projections.

Valuation
We remain Not Rated on Northeast Utilities (NU).

CESP (CESP6.SA): First Take: Adjusted EBITDA grows 17% yoy and beats consensus 21

CESP6.SA, R$27.67 Francisco Navarrete (Sao Paulo): francisco.navarrete@gs.com, +55(11)3372-0103


Market cap R$9,062 mn
Goldman Sachs Brasil Bco Múlt S.A.
Andre Gaeta (Sao Paulo): andre.gaeta@gs.com, +55(11)3371-0825
Target price R$32.20
Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec 2010E 2011E

EPS (R$) 1.63 1.82 News


P/E 17.0X 15.2X Brazilian power generator CESP reported adjusted 3Q2010 EBITDA of R$517 mn, up 17% yoy, 14% above
our estimate and 18% ahead of Street consensus (Broadcast).
EPS Quarter/Interim* 0.46 0.78
Results beat our forecast mainly on higher revenue that we attribute to better-than-expected volume sales on
Investment Lists the seasonality of sales contracts to distributors. This does not affect our full year estimates, as we expect
Americas Buy List that 4Q will show lower volumes (a wash for the full year). CESP did not show any apparent loss from
Coverage view Neutral
exposure to the spot market, which was a concern for some investors.
Net income was R$164 mn (GSe R$150 mn), down from R$255 mn last year with the yoy drop explained by
*Current and a year ago (1) lower noncash monetary gains on CESP dollar-denominated debt (as the Brazilian FX rate appreciated
7% vs. 11% last year) and (2) a higher effective income tax rate of 35% (26% in 3Q2009).
Analysis
Net revenues came at R$757 mn, up 17% yoy and ahead of our R$688 mn estimate. However, we think the
better-than-expected top line was mainly on above-normal volumes delivered in 3Q2010 to distribution
companies. Electricity sales are mostly fixed for the full year, thus, any higher/lower volume delivered in any
given quarter is compensated at the next. Therefore, we would expect 4Q volumes to be lower than 3Q,
implying a wash in earnings.
Controllable opex (payroll, services, material) were 6% below our estimate at R$79 mn, and showed
reasonable cost control.
CESP booked R$81 mn of net nonrecurring expense, mainly reflecting higher provisions on potential labor
and environmental liabilities.
Implications
Our rating, estimates and price target are unchanged.

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

Cemig (CMIG4.SA): First Take: Adjusted EBITDA in line with consensus, 3Q neutral 22

CMIG4.SA, R$28.85 Francisco Navarrete (Sao Paulo): francisco.navarrete@gs.com, +55(11)3372-0103


Market cap R$19,688 mn
Goldman Sachs Brasil Bco Múlt S.A.
Andre Gaeta (Sao Paulo): andre.gaeta@gs.com, +55(11)3371-0825
Target price R$31.60
Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec 2010E 2011E

EPS (R$) 2.28 2.97 News


P/E 12.6X 9.7X Brazilian integrated utility Cemig reported 3Q2010 EBITDA of R$1,188 mn, up 11% yoy and 10% ahead of
* GS and 6% above consensus (Bloomberg). However, we estimate 3Q results were positively impacted by
EPS Quarter/Interim 0.68 0.83
around R$80 mn of one-off provision reversal (no details, apparently at the holding company), which if
Investment Lists excluded would leave EBITDA in line with our estimates and consensus. Net income was R$553 mn vs. GS
Neutral of R$463 mn and 12% ahead of consensus.
Coverage view Neutral Analysis
Generation & Transmission (56% of total EBITDA): EBITDA of R$666 mn was slightly higher than GS of
*Current and a year ago
R$624 mn, on slightly better-than-expected revenues (we think on higher seasonal allocation of contracts)
and lower service costs. Service expenses declined 30% yoy to R$28mn (GS R$44 mn), but we do not think
this is likely a trend, as costs tend to seasonally increase in 2H. Transmission company Taesa (former Terna)
continues to improve EBITDA margins, which reached 89.8% in 3Q2010 (GS 88%), up from 88.5% in
2Q2010. This is a significant improvement from 80% EBITDA margins, when Cemig took control of
operations, and is about management’s target of a 90% margin.
Power distribution (24%). EBITDA was R$283 mn, in line with our estimates. Service expenses were the
main negative highlight, 22% ahead our estimate and 49% up yoy (offset by lower payroll but mostly on a
provision reversal). According to Cemig, this increase is mainly explained by higher maintenance expenses.
We think this higher cost level could repeat in 4Q reflecting increasing demand on the approach of the
summer. The potential reduction in opex could be a key theme for Cemig in 2011. In the last two years, the
company has expend around R$200 mn in higher service/maintenance to refurbish its power distribution
network, and management has indicated this extra cost could drop next year.
Implications
Our Neutral rating, estimates, and price target are unchanged.

Eletrobras (ELET3.SA): First Take: Neutral 3Q; good operating performance but on one-offs 23

ELET3.SA, R$22.47 Francisco Navarrete (Sao Paulo): francisco.navarrete@gs.com, +55(11)3372-0103


Market cap R$25,444 mn
Goldman Sachs Brasil Bco Múlt S.A.
Andre Gaeta (Sao Paulo): andre.gaeta@gs.com, +55(11)3371-0825
Target price R$25.30
Goldman Sachs Brasil Bco Múlt S.A.
Fiscal y/e Dec 2010E 2011E

EPS (R$) 2.99 3.13 News


P/E 7.5X 7.2X Brazil’s federally controlled utility Eletrobras reported 3Q2010 net income of R$800 mn, above GS of R$642
* mn and compared to R$454 mn last year. However, this yoy improvement was driven by (1) half the non-
EPS Quarter/Interim 0.57 0.40
cash FX losses of last year on lower 3Q2010 currency appreciation, which impacts Eletrobras’s US$4.8
Investment Lists billion net dollar-assets, and (2) better aggregate results at the main power generation subsidiaries, but
Neutral mainly on one-offs which, after adjusted, leave underlying EBITDA flat yoy for these companies. The bottom
Coverage view Neutral
line was ahead of our estimate on (1) higher equity income driven by higher spot revenues at subsidiary
Chesf and (2) a nonrecurring gain of R$181 mn at thermal generator CGTEE (regulatory recovery of past
*Current and a year ago costs from the delay in start-up of a generation unit). A net financial loss at the holding co of R$145 mn was
below our expectation, but on higher non-cash monetary losses of R$528 mn driven by the strengthening of
the currency.
Analysis
Chesf (44% of aggregate EBITDA): EBITDA of R$869 mn was above GS of R$665 mn, but driven by higher-
than-expected spot revenues, which are volatile and not a core earnings driver. Operating expenses
(adjusted for one-offs in 3Q2009) grew only around 6% yoy compared to 5% inflation.
Eletronorte (18%): EBITDA of R$349 mn was 5% up yoy but short of our R$431 mn estimate explained by (1)
noncontrollable: lower spot revenues and; (2) controllable: slightly lower revenues from noncore operations
(no details). As in the case of Chesf, opex seems also under control, in line with our estimate, and showing a

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

slight yoy decline (we think unlikely a trend).


Furnas (21%): EBITDA of R$418 mn was up only 4% yoy and in line with our forecast. However, better-than
expected revenue (on slightly higher average tariffs and volume sales) was offset by an increase in core opex
(payroll, services and material), which grew 11% yoy or double inflation.
Implications
Our Neutral rating, estimates, and price target are unchanged.

Americas: Utilities: Diversified: Pipeline & MLP Essentials: Plethora of data points over next 8 days 24

Theodore Durbin (New York): ted.durbin@gs.com, (212) 902-2312


Goldman Sachs & Co.
Michael Cerasoli, CFA (New York): michael.cerasoli@gs.com, (212) 357-1914
Goldman Sachs & Co.

Industry context
Last week largely wrapped up an earnings season we rate as in line, given nine matches, eight beats, and
eight misses. Although the Street analyzed a vast amount of information over the past three weeks, we
expect a plethora of data points over the next eight days. These events include the following.
TransCanada Analyst Day. Our largest company under coverage will host analyst days in Toronto on 11/17
and NYC on 11/18. What to watch for: (1) updates on capital growth program, including Keystone, Bison,
Horn River, Bruce Power, and wind power; (2) strategy for financing the remainder of its multi-year, C$21bn
program; (3) cash flow recovery plans for its core Mainline natural gas pipeline system.
Energy Transfer Analyst Day. The fourth-largest MLP by market cap will host an analyst day in Dallas, TX on
11/17. What to watch for: (1) timetable for distribution increases; (2) expectations for natural basis
differentials, (3) asset acquisition outlook, and (4) “GP burden” commentary.
Atmos Energy Analyst Day. This $2.7 bn market cap natural gas utility will host an analyst day in NYC on
11/18. What to watch for: (1) updates on various rate cases, especially Texas Pipeline; (2) utility customer
growth trends; (3) outlook for marketing, given depressed gas price volatility.
El Paso Altamont Update. We expect a deluge of operational data from El Paso regarding this oil field on its
11/18 conf call. We will primarily focus on wellhead economics (returns) and production growth expectations.
Spectra Energy Analyst Update. Spectra will meet investors on 11/17 in NYC and Boston to further discuss
3Q results. Although SE provided a framework for 2011, we do not expect a detailed discussion of guidance
until its traditional January meeting.
Buckeye/Enterprise Special Meetings. Buckeye (on 11/16) and Enterprise (on 11/22) will host special
meetings where its unitholders will vote on proposals to eliminate their general partners (EPE for EPD, BGH
for BPL).
We update estimates/target prices for BPL/BGH, CHKM, EPE, and SPH.
Risks
Weaker infrastructure growth or energy prices; capital market volatility.

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

Wisconsin Energy Corp. (WEC): Updating estimates for WEC post 3Q, maintaining CL Buy 25

WEC, $59.10 Michael Lapides (New York): michael.lapides@gs.com, (212) 357-6307


Market cap $6,997 mn
Goldman Sachs & Co.
Jaideep Malik (New York): jaideep.malik@gs.com, (917) 343-0717
Target price $67.00
Goldman Sachs & Co.
Fiscal y/e Dec 2010E 2011E Neil Mehta (New York): neil.mehta@gs.com, (212) 357-4042
EPS ($) 3.87 4.18 Goldman Sachs & Co.
P/E 15.3X 14.1X

EPS Quarter/Interim
*
1.08 1.01
What's changed
After 3Q2010 reporting, we reiterate Conviction Buy on Wisconsin Energy (WEC) and update our 2010-2014
Investment Lists estimates to reflect: (1) 3Q2010 earnings and 10-Q data, (2) slightly revised rate base estimates for the
Americas Buy List utilities, and (3) updated financing assumptions. We modestly lower our 2010 estimate from $3.94 to $3.87
Americas Conviction Buy List and update our 2011-2013 estimates from $4.16/$4.77/$4.97 to $4.18/$4.75/$4.96 and maintain our 12-
Coverage view Neutral month target of $67 per share.
*Current and a year ago Implications
We remain Conviction Buy on WEC as we believe the stock warrants a premium to peers given (1) significant
dividend increases for 2011/2012, (2) above average earnings growth and (3) above average realized returns
on capital going forward. We expect a 17% dividend increase by WEC in the coming months – with upside
potential to this estimate – and further double-digit dividend increases for 2012-2013, given WEC’s payout
ratio remains below peer levels.
Valuation
We maintain our P/E- based 12-month target price of $67, implying a total return potential of 16% versus
average upside for small/mid regulated utilities of 9%. WEC trades at 12.4x/11.9x on our 2012/2013
estimates versus peers at 12.2x/11.2x.
Key risks
Key risks for WEC include: (1) delays in the in-service dates for Oak Creek unit 2, (2) rate case and general
regulatory risks, and (3) weakness in electricity demand.

Other

Latin America Weekly Kickstart: Picking sectors by inflation exposure 26

Stephen Graham (Sao Paulo): stephen.graham@gs.com, +55(11)3371-0831


Goldman Sachs Brasil Bco Múlt S.A.

Our equity view


The pickup of inflation datapoints in China is refocusing investor attention on emerging-markets inflation
pressure in general, while price indices in Brazil and Mexico are also showing new pressure. Many
businesses are inflation-neutral, and prospects for others will change as policy and competition respond.
Nevertheless, we can gauge winners and losers from a first round of any inflation surge.
Beneficiaries:
Basic commodity producers.
Brazilian companies with IGPM-linked revenues.
Inflation-exposed firms with quick pass-through.
Asset-sensitive financials, if i-rates respond fast.
Powerful retail players in fragmented markets.
Vulnerable:
Commodity price takers.
Businesses under discretionary price controls.
Large investment projects w/delayed revenues.
Stock exchanges, if rates rise.
Stocks that match are discussed inside.

Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

Equity performance
Last week, the MSCI Latin America lost 4.2% and the MSCI Emerging Markets 3.0%, both in dollars. Locally,
Brazil was down 3.1% and Mexico 0.7%. Our Latin America research coverage is listed on page 10.
Rates and currency
The Brazilian Real fell 2.4% to 1.72/$ and the Mexican peso 1.2% to 12.35/$.
Valuation
MSCI Brazil is trading at 10.6X next-12-month consensus earnings, with Mexico at 16.5X.
LatAm Focus List
Over the week (to Thursday), our Focus List lost 0.1% vs. MSCI LatAm while gained 0.7% vs. our Latin
American coverage universe.

Reports Published

Europe this week 
GS US Economics Analyst: Awaiting Tidings of the Holiday Spending Season  
S&P 500 Beige Book: Five themes from the 3Q 2010 earnings conference calls 

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Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

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Americas Morning Summary November 15, 2010

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Goldman Sachs Global Investment Research


Americas Morning Summary November 15, 2010

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