| dbot said: The Yen is an issue when it comes to financial reporting because Sony needs to report financials in its "home currency", but it doesn't necessarily mean they are actually exchanging dollars/euros for yen and realizing a material loss. I think it will be a $100 drop because the PS3 has a history of outselling the 360 when there is only $100 price difference, see 11/07 - 9/08 sales data. A $50 drop will improve sales, but the 360 will still outsell it. |
They're paying their manufacturers in either Yen or Taiwan dollars and getting revenue in dollars. The difference on the reporting basis represents a very real disparity. It's unlikely that they will be able to just sit on the dollars and not convert them to yen.
For this year, they probably have most of the loss on exchange rates covered by currency options or other currency derivatives. For example they could buy a yen denominated put on dollars that would give them the option to exchange $x dollars for y yen when the option expires and that would allow them to effectively lock in a certain exchange rate for the year.
However, the price of an option is dependent on the current market exchange rate and the market's perception of the volatility of the exchange rate. Given current market conditions, if they bought options to guarantee them the old exchange rate, they would have to pay almost all of the difference between the current market rate and the old exchange rate.
