« on: May 18, 2013, 11:21:37 PM »
The Japanese Yen has fallen considerably in value in recent months. Japanese exports should therefore be much cheaper now for buyers, so why are Canon prices remaining so high? I'd love a new Canon 5D mk III but current MAP limitations are keeping prices high and stopping me from buying.
The falling yen does not benefit all Japanese companies equally. In Canon's case, every dollar move in dollar/yen costs Canon $80 million dollars in earnings because of their reliance on imported parts. For example, in the last week, the dollar/yen went from about 101.87 on Monday May 13th to 103.16 on Friday. That move costs Canon about 103.2 million dollars in earnings. Canon's stock price reflects the effects of quantitative easing by the BOJ (Bank of Japan), as it is down over 5% for the year in a Japanese market that is up over 41% for the year. Canon can mitigate the effects of dollar/yen moves by hedging strategies, e.g. stock piling on imported parts when the value of the yen is higher on the currency markets, but that can be tricky if they buy too many parts that they cannot use. Similarly, airline companies trade oil futures to mitigate their fuel costs, i.e. buying when prices are low.
Pure Japanese exporters benefit the most, i.e. companies with the least amount of reliance on imported parts and capex spending.
dont know where ur getting ur info but its completely wrong dude...
Canon's share price is up about 12% so far in 2013 and nearly 20% for the last 12 months they're doin' fine
I'm using Canon's ADR's on the NYSE (so in USD terms). Symbol CAJ:
So closing price on 2012/12/31=$39.21; and closing price on 2013/05/17=$37.10, of course both in USD.
Also, the $80 million (USD) earnings loss per each dollar/yen move up comes from CNBC (about 1:17 into the video):
I'm a CAJ stock holder, so I feel the pain of the 5% loss while the market indices are generally up for the year and in the case of the Dow and S&P 500, at all-time highs.
So if you extrapolate, the weakening yen is causing Canon's margins to get squeezed (higher import parts costs). In that environment, Canon would be hard pressed to decrease prices. I'm guessing Canon has already accounted for fluctuations in the exchange rate, which is why MAP prices are so high and why they will remain high as they release new products.