Year Revenue Growth Rate (%)Revenues ($millions)
3 80 2,025
4 60 3,239
5 40 4,535
6 25 5,669
7 20 6,803
8 15 7,823
9 10 8,605
10 5 9,035Webasedourestimatesofgrowthforthefirmintheinitial
years on the growth in revenues over the most recent
year—Siriusreportedrevenuegrowthof250%in2004–2005.
As the revenues increased, we tempered our estimates of
revenue growth (in percent) to reflect the size of the company.
Asacheck,wealsoexaminedhowmuchtherevenuesatthe
firmwouldbein 10 yearsrelativetomorematurecompanies
in the sector now. Clear Channel, which is the largest
competitorintheradiobusiness,isamaturecompanywith
revenuesof$9.34billionin2004.Basedonourprojections,
SiriuswillrivalClearChannelintermsofsizeandrevenues
10 years from now.
Operating Margin Forecasts
Before considering how best to estimate the operating
margins, let us begin with an assessment of where many
high-growthfirms, earlyinthelifecycle, standatthetime
theyarevalued.Theyusuallyhavelowrevenuesandnegative
operatingmargins.Ifrevenuegrowthconvertslowrevenues
intohighrevenuesandoperatingmarginsstaynegative,these