Replies to post #157872 on 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

[qwave]

Zeev, On QCOM, are you assuming some percentage rate of growth in sales and profits over the next year to justify a $60 price target? Where would that growth come from? It appears there are some concerns on Wall St. about lack of growth in sales and profits for the next year.

Also, I must have missed where in the last couple days you have changed the plan. Is the 1640 downside target in your plan anymore? I am starting to think your compass is focused on magnetic north. I hate to think you are getting blindsided by the fed speak. I think you’re a little late to the party. The 10'o-clock two is turning into the 2'o-clock ten.

Please don't take my comments personally but I think you are wrong about the state of the economy (GDP growth) and I think we will see that by mid-Nov. Are you a betting man? If so, let me know if you are willing to put your money on the table (for charity of course) on where the market will be by the end of the year?

BTW, I have a lot of virtual respect for your intelligence and opinions.