29th November 2012, 7:12 AM
Quote:I've also heard that "a strong yen is hurting them", but I've got no idea what that means. How does currency having MORE value HURT a company using that currency? I'm sure the answer is obvious, but it escapes me. I've heard that for Nintendo, Sony, Sharp, and a number of other companies though.
It works like this: a Wii U that sells in America nets Nintendo $300. For simplicity's sake, we'll ignore the more expensive model and retailer's fees. If the Yen is comparatively weak, that $300 translates to a higher yield in Yen when its converted. Conversely, if the Yen is strong, then that translates into a lower yield in Yen when its converted. This matters because Nintendo's profits are reported from the home base in Japan, where it's all tallied up in Yen for accounting and tax purposes. A Wii U that sells in Japan will also translate to the same amount of Yen [25,250 yen, to be exact, for the cheaper model] regardless of currency fluctuations.
Stronger Yen hurts companies selling their products overseas, because it results in a lower Yen yield. Weaker Yen helps hurts companies that import products from overseas, because it takes more Yen to purchase those products.
Sometimes you get the scorpion.