From yesterday's SF Chronicle
sfgate.com
"One company that goofed in its efforts to hedge was Seagate Technology, the Scotts Valley disk-drive maker, notes Mark Specker, an analyst with SoundView Financial Group in San Francisco.
In the first fiscal quarter ended in September, the company reported that it had to take a $63 million charge against earnings because it bet wrong in hedging the currencies of Thailand and Malaysia, where it has plants. Seagate was, in effect, betting that those currencies would rise relative to the dollar. Instead, they plummeted."
The way Chronicle reported it sounded like SEG was playing double-or-nothing gambling with the currency option hedging. And yes, SEG said they have stop doing this gambling stuff until further announcement in the PR. But I still don't see how SEG can say something like "the benefits of the revaluation would exceed the writeoff" if they only hold some out-of-money option as was implied in the SF Chronicle article... My feeling is that SEG probably had offseting option position and decided to write off the losing position first (maybe they're required to do so...). So, they'll realize the profit of the opposite position in the future.
Of course, everything is plain speculation at the moment since SEG didn't elaborate on their hedging strategy. |
