Hi EKS. Is a strong dollar better than a weak dollar?
"...Most of us think strong is good and weak is bad. However, when referring to the values of currencies in foreign exchange markets, these associations can be misleading..."
gopher.great-lakes.net:2200/0/partners/ChicagoFed/genpubs/strong$.txt
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Stronger dollar hurts multinationals -- Exporters fear currency exchange will hurt profits
"It affects earnings when the foreign currencies are translated to dollars," said William Milton, technology analyst with Brown Brothers Harriman. "Last year, IBM realized more than 65 cents a share in currency gains. Now if the dollar just remains flat at current levels, I think the company will have currency losses."
Analysts predict the losses could reach as much as 45 cents a share. And IBM is hardly alone. Technology, oil, consumer products and transportation manufacturers are also vulnerable. Robert Lynch, currency analyst with MMS International, said any company that relies heavily on exports will be hurt.
cnnfn.com
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This appears to be a complex subject at best. How the strong dollar will impact Novell's earnings will depend on several factors, in my opinion.
If the strong dollar has not reduced the number of sales to the foreign customers, then the impact on earnings will be positive. However, if Novell has adjusted pricing to keep the product cost constant to its foreign customers, then the impact on earnings will be negative.
Elmo |
