Donald,
Most of IDTI's suprise was from a 1994 insurance claim.
Here's my question. If a company produces 50% of their products in Asia but sells 5-10% in Asia, and all the other financial factors remain the same - how would Asian Flu effect the company.
I've been thinking about this a while.
For example, almost all of national semi's fab's are in asia.
1. Their labor costs, in dollars, should shrink to match the devaluation of the currency, at least in the short run. I have no numbers, but I get the feeling that asian fabs do not have high labor costs as a percentage of expenses.
2. 5-10% slice in revenues can give margins a haircut leading to a much greater corresponding cut in earnings.
3. (I read this on SI somewhere, can't remember, but the person seemed to know their stuff.) Depreciation of capital equipment, a significant contribution to cash flow, is usually legally tied to local currency although often purchased in dollars. A negative effect.
On the other hand, companies that buy 50% of their inventory from Asia, and sell 5-10% of their products there, could see big benefits. Like PIR last quarter or the boxmakers. BWDIK
Just sharing some ramblings. Thanks for the index updates.
Take care. |
