Apple Sees a Strong US Dollar as a Competitive Disadvantage

In Apple’s (NASDAQ: APPL) fiscal year end filing with the US Securities and Exchange Commission, the company noted that it considers a relatively strong US dollar to be a threat to its business overseas.

While multinational companies always consider changes in global and regional economic conditions a risk factor for their business, Apple did not note this in the risk factors section of last year’s yearly filing. Between 2013 and 2014 the US dollar rose 7.74% on average compared to other major currencies, according to the US dollar index. Many analysts see a 1% rise of the US dollar against a benchmark of other currencies as a 2% loss in profits for major multinationals.

To put things into context, Coca-Cola (NYSE: KO) reported in its latest filing with the SEC that it expects a strong US dollar will shave 6% off its operating income due to major global customers buying less because of price increases (Coke sells its products to global suppliers in US dollars). IBM (NYSE: IBM) also had a similar pessimistic outlook.

But for Apple, hot off the release of the latest iPhone, a strong US dollar is only a concern and not a problem as the company is still expecting big jumps in revenue and profits due to global appetite for its new phone.

At the same time, international vendors — such as Taiwan’s Quanta (TPE: 2382) and Compal (TPE: 2324)  — that sell to the US have all reported gains over the last quarter due to increased buying power from US-based customers.

Original Author: Sam Reynolds

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