Executive Briefings

Is Strengthening Dollar Good or Bad for You?

Not every CFO is happy about the dollar's rapid rebound, as many American companies with significant overseas sales found themselves in trouble this fall. After a 4 percent revenue boost from a relatively weak dollar in the second quarter, Oracle co-president (and former CFO) Safra Catz expected currency fluctuations to create a 3 percent drop in revenue in the third quarter. The fourth quarter doesn't look much better. PepsiCo CFO Richard Goodman lowered 2008 core earnings estimates by up to five cents a share, based entirely on the dollar's surge, despite benefits from currency fluctuations in previous quarters. Analysts for other companies, including Amazon.com, Eaton, and Tupperware, also lowered earnings estimates based on currency movements. However, companies like Wal-Mart that extensively rely on imported goods should benefit from a stronger dollar as their buying power increases.
Source: CFO

Not every CFO is happy about the dollar's rapid rebound, as many American companies with significant overseas sales found themselves in trouble this fall. After a 4 percent revenue boost from a relatively weak dollar in the second quarter, Oracle co-president (and former CFO) Safra Catz expected currency fluctuations to create a 3 percent drop in revenue in the third quarter. The fourth quarter doesn't look much better. PepsiCo CFO Richard Goodman lowered 2008 core earnings estimates by up to five cents a share, based entirely on the dollar's surge, despite benefits from currency fluctuations in previous quarters. Analysts for other companies, including Amazon.com, Eaton, and Tupperware, also lowered earnings estimates based on currency movements. However, companies like Wal-Mart that extensively rely on imported goods should benefit from a stronger dollar as their buying power increases.
Source: CFO