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Tim Cook: What's Good For the US Dollar Is Bad For Apple
theodp writes: For years," Charles Erwin Wilson famously said back in the day, "I thought what was good for our country was good for General Motors, and vice versa." That was then. This is now. The Washington Post reports that a strong U.S. dollar is the biggest threat to Apple's business around the world. "The dollar has shot up about 22 percent against a trade-weighted basket of other currencies since the middle of 2014," explains Matt O'Brien. "And in Apple's case, that's meant what would have been $100 of foreign sales in September 2014 was just $85 by the end of 2015. That's not good when you get two-thirds of your revenue overseas." Apple blamed the strength of the dollar compared to other currencies for costing it $5 billion in revenue, "For perspective, that difference is the size of an average Fortune 500 company," quipped CEO Tim Cook.
Yes - a strong currency is good for the consumers buying imported goods. It's bad for companies trying to export goods to overseas. Devaluing the currency is one of the measures that a country trying to kickstart its economy might take, to increase exports and tourism, and to boost domestic consumption by making imports more expensive. This is also why you see accusations of currency manipulation when the ratio is deliberately kept low for long periods of time, since market forces will tend to push towards a stable equilibrium of currency price.
Apple is in an interesting position here since it's both an importer and exporter, but it sounds like the balance of those accounts is still negative to Apple when the dollar is strong. It's probably a little more complex than that too, since you've got both the Yuan-Dollar and Dollar-Other currency (Euro, Pound, etc) ratios to consider.
It doesn't improve margins. The existence of a margin at all means that the absolute effect on sale price is larger than the effect on build cost. The margin as a percentage remains identical, but the absolute value of that margin drops.
Somehow I don't have sympathy when the richest company in the world complains that they're not making as much money as before.
"What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
You uncover a key flaw in Cook's reasoning; if they're not bringing those foreign dollars home, then they've no reason to convert them to dollars, and this isn't money they're losing at all. It is just the imaginary "if we brought it home" ticker in his office that is showing a reduced high score.
What did the government do? Devalue the Canadian dollar against the US dollar. Bastards, all.
While there may have been some policy factors that have directly influenced the Canadian dollar value, they have been very small in comparison to the impact that resource prices (I'm looking at you, Barrel of Oil) have had. The failure to diversify the economy away from such a heavy resource weighting has been a shortcoming of every government since confederation both provincially and federally.