summary10IT Software37US Tech valuation11Vizrt38US Hardware Sales12Opera39US Hardware Earnings 13Funcom40US Comm. Equipment Sales 14Mamut41US Comm. Equipment Earnings 15Birdstep42US Software Sales 16Blom43US Software Earnings 17Powel44OSE IT valuation19IT Services45Telecom services20EDB Business Partner46Vimpelcom21Ementor48Telenor22Bouvet50MTS24Itera Consulting Group51Telia Sonera25PSI52Tele226Elisa27IT Hardware and Equipment28Appendix53Ericsson29Estimate changes TEL, VIP, MTS54Tandberg 30Aggregate calculation notes57Eltek 32OSEBX ICT Peers used 58Nordic Semiconductor34Q-Free36Disclaimer 59

􀂃US valuation sets a all time low record at trailing P/E 12.4x with forward earnings having dropped 30%
􀃎Outlook downgrades widely expected
􀃎Since our last update ICT Outlook in September, downward revisions in US IT have been significant with US Q4 hardware earnings (ex Titans) having beenslashed 50% and communication equipment by 40%.
􀃎The dramatic credit crunch is stifling new projects and delayingexpansion, and as we stated in our September Outlook we remain certain that profit warnings are still to come
􀂃OSE Telecom/IT is cheap, despite last three month's outperformance
􀃎Negative earnings momentum, Forward EPS is down 22% since September
􀃎The key risks we have been pointing out in earlier Outlooks may be folding out: Hard landing US, outlook for painful recovery, recession throughout Europe, slowdown in Asia
􀃎As usual, we have done our best to sanity check our bottom-up view with a realistic view on the global business cycle, and found room to lower our NordicIT Services estimates, cut the hardware estimates, non-recurring services estimates, and lower telecom estimates –affected by negative currency dev'tin Eastern Europe and India
􀃎Even so, IT is cheap -Oslo is no exception, and has become cheaper at P/E 8.3x
􀃎Telecom is partially cheaper, with Telenor at P/E 7x despite India entry and FX, and the MTS being the most attractive Russian player followed by VIP
􀃎Avoid small caps if possible, except low-beta and yield plays such as Q Free, Bouvet, ITE
􀂃OSE: Extremely attractive valuations on top picks
􀃎Generally the services industries offer better visibility and cash flows
􀃎Telecom: FX risk aside, the sector is attractive and less cyclical than most
􀃎IT Services: Atearemains a risk for Q1, while Iteraand Bouvetmore than factor this risk into their deep-diving valuations
􀃎Software: Vizrtand Opera, remaining the names of choice
􀃎Hardware: Tandberg doing well, Eltekstill expensive on 2010 EV/EBIT, Q Free is in play but still attractive stand alone
􀃎We find valuations extremely attractive now, but recommend caution as we 1) see risk for several profit warnings both inside and outside our universein the coming quarters and 2) the credit crisis may deepenICT