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10 June 2008 |
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Valuation Details
| Member: | TheCrunchBlog |
| On: | 09 Jul 2008 |
| Views: | 171 |
| Comments: | 1 |
| Updated: | 5 hours ago |
| Ticker: | MSFT |
| Market: | NASD |
This valuation is part of this blog post:
http://blog.valuecruncher.com/2008/07/as-microsoft-assesses-their-options-what-about-the-core/
Microsoft grew revenues from US$36.8 billion in 2004 to US$51.1 billion in 2007 – an 11.5% compound annual growth rate. Our assumptions of revenues for the next three years are US$60.0 billion in 2008 growing to US$74.0 billion in 2010 – a 13.1% compound annual growth rate. We have projected EBITDA margins to be flat at 40%. We have used a terminal growth rate of 4.5%. We calculated this terminal growth rate based on year three growth of 10.4% dropping to a 4% stable growth rate by year 10. We used a terminal capital expenditure number of US$3.0 billion. We have used a WACC (discount rate) of 10.5%. Both the terminal growth rate and WACC have a material impact on the valuation.