sony cuts profit forecast

[Ail]

loy310 said:

Ail said:

kitler53 said:
...sony makes what i would consider "luxury" products which is a hard sale in a poor economy like this. the fact that they are making any profit (i'm assuming that since this is a forecast not a report) is probably good enough for them atm.

 

They are getting hit real hard by the exchange rate too.

So far they were holding steady thanks to the euro market as the yen and the euro while raisin against the dollar had kept on par with each others.

But for the last few months the yen has remained strong while the euro and the dollar dropped in value.

This can have a very very bad effect on profit ( less on sales).

If you make 20% profit on a item sold in Europe and suddenly the euro/yen conversion rate changes by 10%, half your profit is gone without you doing anything.....

 

 

 

So expect every other company to gain less than they predicted, Sony wont be the only one getting hit by the dollar and euro value drop.

 

 

This will mainly affect companies based in countries whose currency becames stronger compared to the Dollar/Euro or companies having their product manufactured in those type of countries.

In practice, mainly Japanese companies...

 

American companies with a huge part of their sales in Europe will be affected a little too though as the dollar has regained some ground compared to the euro since this summer.

It used to trade at $1.57 per Euro and now is up to something like $1.29 per Euro.

 

Japanese companies are affected a lot more due to the majority of their sales taking place in Euroland or US, that's less the case for US companies...( part of the sales done in US isn't affected by the change in dollar value).