[qi:053] James Surowiecki, reknown author, speaker and the financial correspondent for The New Yorker, in a recent article explains why no one in the US is feeling the pinch by the sharp decline in the dollar, unless of course they are off on an European shopping trip searching for rare Hermes bags, or bespoke Saville Row suits. “Americans are able to buy far more stuff with their flimsy currency than one would expect,” he writes.
The flimsy currency, dismissed as the new peso by some Wall Street types, is actually helping the technology companies post better than expected results. (Which also means, don’t believe the hype!)
Amazon (AMZN), for instance reported third quarter 2007 revenues that got a $75 million lift because of a weak dollar. Or Google (GOOG) for that matter. Had the currency rates remained stable, the search giants says its 3rd quarter 2007 revenues would have been lower by about $121 million when compared to the 3Q 2006.
Derek Brown, analyst at Cantor Fitzgerald, pointed out that eBay recently posted an upside that was “fueled almost exclusively by FX (currency) gains, acquisitions, and a much lower-than-expected tax burden.” He estimated that eBay’s revenue was boosted by $54 million and operating income by $24 million because of a weak dollar.