On what do you base your conclusion that Cyrix has a distinct possibility of going out of business in 2-3 years? Is it your analysis of the b/s, p&l?
To the extent that Cyrix has the possibility of going out of business in 2-3 years, so did Intel in 1980 when AMD was producing lots of microprocessors and Intel barely had an 8008 and 8088/8086 market. The 6504 by AMD (with, I believe, INTC as a second source) had a much bigger market in the Apple II plus then the non-existent market for the x86 architecture. I don't have historical charts that go back that far but my guess is that the equivalent Intel price would have been $1 or $2 per share.
Going forward I would much rather own a stock with the appreciation potential of a 1980 Intel, than the appreciation potential of a 1997 Intel. If Intel went up 80 times more in value to duplicate its feat of the last 17 years it would be at market capitalization of 80 * 150 * 880mm = 10,500,000,000,000. That is more than the GNP.
On the other hand cyrix going up 80 in value would mean:
80 * 25 * 20mm = 40,000,000,000. That is less than 1/3 of Intel's current capitalization.
But in 18 years maybe INTC value will be greater than the GNP. :-) |
