| I accept this notion for matters relevant in the near term--like what our next year's dividend will be in dollar terms, but I don't believe that in a longer term context (which mine is) that currency translation is all that meaningful. In the early half of the '90's I remember years when Ericsson's revenues and order bookings would increase at about a 50% rate on a year over year basis, and around earnings time some analysts would express concern over the weak kronor. Ericsson's net would be up around 45-50% but on a dollar basis it might have gained only 30%. However, a year or two later, the kronor would be strong, the dollar strong and the USD share price would benefit from the currency translation. (My dividend would increase likewise.) Over a span of years, however, variations in exchange rates seem to balance out and not really matter all that much. In recent years I can't remember any analyst worrying publicly about the strong Euro or weak Euro or whatever in regards to corporate earnings, and I understand that the underlying profitability trend has become the point of emphasis, not variable currency impact. If next year the Euro has re-gained all the ground it has so far lost, which would require it to gain nearly 50%, but NOK's net profit is flat in Euro denominated terms, am I to be glad that in dollar terms their profit has increased 50%? |
