@kowenicki: Sony doesn't have this factored in.
They're basing their profit forecast on 90 Yen per $, it's about 4% lower right now.
When the dollar carry trade starts unwinding it could go back up, but that's probably a long way from now...
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NJ5 said:
Yen gaining strength means other currencies are worth less yen. Japanese companies have a lot of their expenses in Yen, and they report fiscal results in Yen, so this hurts profitability. Basically when you're an importer, it's good to have a strong currency. When you're an exporter, it's the opposite, you want a weak currency. Japan's currency has strengthened immensely in this recession.
|
So in other words even more downsizing for Sony?
perpride said:
So in other words even more downsizing for Sony? |
Maybe... it certainly doesn't help when revenue from the US is 4% lower than expected after converting it to Yen.
It's not like a disaster or anything (a disaster was when it went like 20+% down last year), it's just one more problem.
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Whoa, I stopped tracking the exchange rates a while ago. I didn't know it had fallen this low. Crazy stuff. Well, I suppose Microsoft is lucky at least.
| kowenicki said: @nj5 I think I am right in saying Sony operate on an overall 2% profit margin... Im just trying to work out how that is affected here. |
Something like that used to be the case, but now it's more like minus 2%, as they're losing money.
There's some mitigation in that they also buy stuff in dollars, but it should have a visible impact. If it falls to say 80 Yen per dollar it's big trouble.
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Yeah it's very difficult to run a business like that.
On a personal equivalent, it's similar to living paycheck to paycheck with no savings whatsoever and having to refinance your debt every few years.
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| NJ5 said: Yeah it's very difficult to run a business like that. On a personal equivalent, it's similar to living paycheck to paycheck with no savings whatsoever and having to refinance your debt every few years. |
Yet a decent number of companies do that don't they?
Ah well... I wonder if this will eventually lead to Sony saying "screw it" swallowing their pride and conceding the NA TV market to Samsung, raise their prices for a few years and try and make a comeback later.
Kasz216 said:
Yet a decent number of companies do that don't they? Ah well... I wonder if this will eventually lead to Sony saying "screw it" swallowing their pride and conceding the NA TV market to Samsung, raise their prices for a few years and try and make a comeback later. |
Yeah lots of companies do that. It works well with an expanding market where it's easy to convince investors to lend you money. Not so well when there's lack of confidence in the economy and borrowing costs go up, especially in a cut-throat business environment like electronics or retail.
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I have already suggested that Sony's larger than expected price reduction on the PS3 was a gamble that was only going to come off with strong software sales and better currency conditions. I think the former is probably on the cards but the revenue earned is now reduced and the cost of the PS3 in the US increased not a good combination.
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Japan's doing pretty horribly, why is their currency so strong?
I need an economics lesson.
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