BengaBenga said:
Lale said:
BengaBenga said:
That doesn't really matter, that was always the case. Sony's figures are in Yen and most of the revenue is in dollars. Hence a higher Yen means that the same amount of income in dollars will be a lower amount of income in Yen.
For example the most expensive part of running a business are the employees. Most of those are paid in Yen.
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But if the hardware components are bought with the revenue Dollars, and the labor people at the factories in China are paid in yuan (or whatever the currency is there) or Dollars, then not only the revenue shrinks due to high yen but also the expenses do.
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You're seeing it wrong. The expenses in dollar countries stay the same, since most revenue is from dollars. The expenses in Yuan might be a little smaller, but that's peanuts compared to the real issue.
It's like this: Revenue-Expenses=Profit
Expenses stay more or less the same, sure maybe some Chinese labour is cheaper, but all Japanese people (much more) are relative to the main currecy of income more expensive.
The real issue (again) is the revenue in dollars. Let's say a $400 PS3 was worth Y1000 and now Y800 (completely fictional values, but the difference is more or less 20%), you can see that for millions of dollars the amount of difference becomes pretty big. Add to that that Sony is (in)Famous for its low margins and a high Yen can mean the difference between profit and loss.
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It is not obvious to me (from the information I've seen) that manufacturing costs are the most significant cause of forex loses.
Manufacturing in the semiconductor industry is ruinously capital intensive. This why IBM formed it's formed it's coalition of everyone-except-intel super friends, no one of them alone could afford to keep up. Actual "assembly line" labor costs are relatively small.
On the other hand all of their Japanese studios, firmware developers, etc will have had an instantaneous hit to ROI. Also, lets say they have a standard rate of capital depreciation for intellectual property. Since capital was valued in yen and most of their revenue was not valued in yen it would have a deleterious afffect on operating profit.
