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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Richard Nehrboss who wrote (78388)	3/23/2000 12:10:00 PM
From: Michael Bakunin	Respond to of 132070

11% in perpetuity? I assume your long-term GDP expectation is significantly higher than the Fed's 5%. Otherwise, Intel eventually is GDP, and you have a bit of a contradiction. My simplistic model of high optimism: 25% growth until Intel's revenues make up five times as much as they currently do of slower(5%)-growing GDP. That's in a little over a decade; GDP should rise from $9.5 trillion to over $16 trillion. Intel's revenues, meanwhile, grow from nearly $30 billion to well over $300 billion -- no mean feat for such a big company, but they could pull it off. At this point, I require growth to slow to GDP rates (5%), but I up dividend payout from 5% to 50%. The discount implied by current prices in this scenario is under 9%. Even if you extend the high-growth period to, say, the time it takes for rev's to exceed ten times their current share of GDP, the discount barely bumps over 10%. Of course, if you think GDP grows by 6%, 8%, or more (11%?) over the very long term, this all changes. I don't. -mb