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Jackson Securities, LLC Equity Update

Research for the Prudent Investor September14th, 200

Google (GOOG: NASD; $406.57) – Partnership with Intuit

Quick First Look Brian Bolan, Research Analyst

(312) 253-0578; [email protected]

Quick Discussion

Yesterday, Google and Intuit announced a partnership that brings together the online search leader and thesmall business accounting software leader. The implications are far reaching for this partnership and webelieve that this deal will be a major driver of revenue for years to come.

Among the highlights of the partnership:

∗ QuickBook users have access to Google AdWords. For a $5 setup fee, a new customer to GoogleAdWords will receive a $50 credit to foster further use of the advertising medium.

∗ Even if the QuickBooks business does not have a website, it can create and manage an online

business listing through Google Maps.

∗ Businesses can make their merchandise searchable on Google through Google Base by enablingusers to transfer inventory information to Google Base.

∗ Google Desktop will also be available in QuickBooks 2007.

Important Disclosures

Jackson Securities, LLC seeks to do business with companies covered in its researchreports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decisions. Please also referto the important disclosures found on pages 3 and 4. Analyst Certification is found onpage 3.



Deal Analysis

This deal is likely to be the one that brings many small businesses into the fold for Google,as Quickbooks is the dominant small business software tool. There is a high probabilitythat a Quickbooks user, even one with an existing homepage, will see the opportunity to

have an integrated accounting system / advertising and customer generation page all in oneeasy to use format.

In turn, this will boost the amount of content available to advertising via Google AdSenseplatform in a meaningful way. The best example would be of a very small business(generally a service related field) that has five or less employees that does not currentlyhave a website but does use Quickbooks. The advantages of this deal will allow thatbusiness to create a profile page (think Google Page Creator) list its products / services forsale (think Google Base) and be located easily (think Google Maps). This new content

will allow for a myriad of related content or complementary services to be sold as wellthrough the ads on that profile page.

The integration of Google Desktop may not be the most important of features, but it showswhere Google is heading next. Working within software programs has been a push forGoogle, as first witnessed by the deal with Adobe, but this deal has a more small-to-medium size business effect. We expect that Google will continue to seek more non-Microsoft software business partnerships.

We liken this deal to those during the days of Web 1.0 that carried a headline similar to

that of “B-2-B Deal Brings Web Services to Current Software Customers” – easily enoughfor a 20% move in a stock back in the day. Today, we view this as a significant deal thatshows that the full complement of Google services (Ad Words, Base, Page Creator, Maps)can be easily integrated into existing systems to help amplify adoption.

As we begin our review of the third quarter and look forward to future quarters, we believethat this deal will result in higher revenues for Google even as the TAC rate is likely to bepushed higher. The revenue sharing portion of this deal is one that should not beoverlooked, and while the top line gains will likely be meaningful, the bottom line effect

may be less than expected. We will not really be able to gauge the full effect of this dealfor several quarters to come, but we believe it is a significant one that will affect the stock over the next several trading sessions.



Disclosures:

Analyst CertificationI Brian Bolan hereby certifies that the views expressed in this research note accurately reflectmy personal views about the subject securities and issuers. I also certify that no part of mycompensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this research report. I may be compensated in part based on the overall

profitability of Jackson Securities, LLC, which includes earnings from investment banking and allother aspects of the firm’s business.

Conflicts of interest:Neither Jackson Securities nor any of its publishing analysts or their immediate family membershas a position in the securities described herein.

Compensation:

• The research analyst has not received compensation based upon investment bankingrevenues or from the subject company/companies in the last 12 months.

•

Jackson Securities has not in the last 12 months managed or co-managed a publicoffering of securities, received compensation for investment banking services from thesubject company/companies or any compensation for products or services other theninvestment banking

• Jackson Securities does not expect to receive or intend to seek investment bankingcompensation from the subject company/companies in the next 3 months.

Position as Officer or Director:Neither the research analysts nor members of their immediate households occupy positions as

an officer or director with the company/companies mentioned in this report.

Market Making:Jackson Securities does not make a market in the stock(s) mentioned in this report.

Explanation of Ratings:Buy - Expected 12-month absolute performance of +10% or higher than the market price at which time

the rating was issued.Hold - Expected 12-month absolute performance of +5% to –5% from the price at the time the rating was

issued.Sell - Expected 12-month absolute performance of –10% or lower than the market price at which time the

rating was issued.

Distribution of Ratings:Jackson Securities, LLC has a distribution of ratings among its coverage universe as follows:

Buys – 65.5% (38 of 58 active recommendations)Holds – 31.0% (18 of 58 active recommendations)Sells – 3.5% (2 of 58 active recommendations)

Jackson Securities has provided investment banking services within the previous 12 months with thefollowing percentage of the companies they have rated:



Buys – 2.64% (1 of 38 active recommendations)Holds – 0% (0 of 18 active recommendations)Sells – 0% (0 of 2 active recommendations)

Risks: General economic conditions, economic slowdown/recession, adverse industry news.

Other Important Disclosures and Disclaimers

Disclaimer: This communication is neither an offer to sell nor a solicitation of an offer to buy anysecurities mentioned herein. This material should not be construed as an offer to sell or the solicitation of an offer to buy any securities mentioned herein in any jurisdiction where such an offer or solicitationwould be illegal. We are not soliciting any action based on this material. This document is for generalinformation only, and it does not constitute a personal recommendation or take into consideration theparticular investment objectives, financial condition or financial needs of any clients. Before acting on anyadvise or recommendation in this research report, clients should consider seek professional advice. Pastperformance is not a guide to future performance. Future returns are not guaranteed, and a loss of originalcapital may occur.

The information contained herein has been obtained from sources that we believe to be reliable, but we donot guarantee its accuracy or completeness. Any opinions expressed herein are statements of our judgment on the date appearing on this material only and are subject to change without notice. Weendeavor to provide updates on a reasonable basis of the information discussed in research reports, butthere may be reasons which prevent us from doing so.

Additional Information: Any additional information, if applicable, supporting this recommendation maybe furnished upon request. This report is not directed to, or intended for distribution to or use by, anyperson or entity who is a citizen or resident of or located in any locality, state, country or other jurisdictionwhere such distribution, publication, availability or use would be contrary to law or regulation or whichwould subject Jackson Securities or its affiliates to any registration or licensing requirement within such

jurisdiction. This report is prepared for the use of Jackson Securities clients and may not be redistributed,retransmitted or disclosed, in whole or in part, or in any form or manner, without the express writtenconsent of Jackson Securities.

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