Zeev's Turnips Patch-No Politics (ZEEV)

[langostino]

Zeev - INTC / MSFT

You describe these as "gathering strength" and buyable for the longer term at these levels. Looking at INTC's valuation and fundamentals, I'm wondering where the appreciation potential is? How much upside and how much downside do you see in this one? At the peak of the next semi cycle in 2005-2006, what maximum revenues and earnings potential do you calculate for INTC, and what P/S and p/e should it command near the peak of the cycle?

I look at both of these companies and I see lumbering, mature giants that are being given premium multiples based on growth from yesteryear, and see no potential for multiple expansion, yet much potential for multiple contraction. I see no chance for INTC to earn more than $2/shr at the top of the cycle, and frankly would be surprised to see it earn north of $1.50 in 2005. So again, either my assumptions are off (about earning capacity, and/or about multiples the market would pay), or INTC at this quote has very little upside potential, and plenty of downside potential -- not exactly the sort of ratio you would want in something to buy for the longer term.

Where have I got this wrong?

TIA