Impact of the weak dollar
What do Nike, Intel, Google and IBM have in common?
Answer: they all attribute much of their growth to the weak dollar. And not to greater sales because of a weak dollar but to the benefits of turning the Euros, yuan and yen into dollars.
Look at $/Euro exchange rates
1/1/07 0.757
4/1/07 0.748
7/1/07 0.734
10/1/07 0.70
1/1/08 0.685
4/1/08 0.64
From Q1 2007 to Q1 2008, the dollar has fallen almost 20%.
Since each of the baove companies does at least 50% of business overseas, the weak dollar automatically adds 10%+ to revenue and even more to earnings (because the extra bit goes directly to bottom line profitability).
The dollar isn't going up anytime soon, so this trend will continue 2 more quarters at least. By Q4, however, unless the dollar continues to crash, the benefits will fade away.
But the impact and endurance is making me question the NKE put. I'm conunting on a broad market pullback to get us breakeven on those. If possible.
Answer: they all attribute much of their growth to the weak dollar. And not to greater sales because of a weak dollar but to the benefits of turning the Euros, yuan and yen into dollars.
Look at $/Euro exchange rates
1/1/07 0.757
4/1/07 0.748
7/1/07 0.734
10/1/07 0.70
1/1/08 0.685
4/1/08 0.64
From Q1 2007 to Q1 2008, the dollar has fallen almost 20%.
Since each of the baove companies does at least 50% of business overseas, the weak dollar automatically adds 10%+ to revenue and even more to earnings (because the extra bit goes directly to bottom line profitability).
The dollar isn't going up anytime soon, so this trend will continue 2 more quarters at least. By Q4, however, unless the dollar continues to crash, the benefits will fade away.
But the impact and endurance is making me question the NKE put. I'm conunting on a broad market pullback to get us breakeven on those. If possible.
posted by Andrew at
6:49 PM
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