Yaacov - I think that sg means that based on todays shares (pre-split) selling around 145, and today earning about $8.00 a share, and thinks that in 3 to 5 years the equivalent earnings/share would be about $25 -$35. In that scenario, conservatively, Intel would be selling (todays shares) at around $500 - $700. In other words, sg believes that in three to five years, your investment would triple, quadruple, or quintuple.
Not a completely crazy notion. Semiconductor sales are incredibly leveraged. If you can get demand high, your incremental cost for the last chip you sell is nearly zero, the profit on the last chip is enormous. I would recast sg's thought as saying that if INTEL can double their gross revenues in the next 3 to 5 years (20% - 33% per year) their profits will triple. It would be relatively difficult but by no means impossible for Intel to continue to grow its revenues at 20% per year. At this point I think that they handled the PII introduction-Pentium pricing transition a bit oddly, but I don't know all the internal information, competitive data and strategy considerations they had to deal with.
Overall, Intel is still among the best managed companies on the planet and I am LONG INTEL for the 15th consecutive year. They have not disappointed me so far. I don't think that they will disappoint me in the next few years.
Shalom,
Burt |
