zlacker

A company makes a smart decision to pause sales in order to ensure they're not selling their products at a loss due to the drop on the value of rubies....

One shouldn't expect otherwise.

>>mikhai+(OP)
Apple could purchase FX swaps and charge customers a "FX fluctuation surcharge". That's better than shutting down the store...

>>acchow+82
Or they could charge customers in Euro and let the customers' banks handle the F/X rate.

>>mikhai+(OP)
Indeed. If anything, all online vendors should be scrambling to review their pricing right now. I would expect more complex industries (where you can't just take a zero off the price overnight) might be grinding to a halt while waiting for the situation to stabilise.

>>joezyd+e2
I would expect that to have legal implications, commerce in foreign currency is usually regulated in different ways.

>>acchow+82
That presumes they have some idea of the short-term forward volatility of the rubble, which no one does right now. Otherwise they have no idea what the surcharge ought to be.

Furthermore, setting up such things is not cost-free, and if the high-volatility situation is temporary (which is very likely) it could well be that it isn't worth the cost, complexity and risk.

>>toyg+M2
Possibly? I buy quite a bit of services from SaaS companies in foreign countries as a US citizen with my American Express, am charged in CAD and EUR without issue (converted to USD on my bill).

>>mikhai+(OP)
Certainly Apple is adjusting their prices, having said that, a company like Apple, with most of their revenues coming from non-USD currencies, I'm certain that they hedge a large portion of their non-USD revenues/gross margin. The extreme volatility in Russia calls for a revision in product prices, sales forecasting, and fx hedges.

>>toyg+M2
I saw comments that pricing in foreign currencies in retail is not allowed in Russia.

>>toomuc+Z2
In Russia specifically it is illegal to advertise a price in any currency other than the Ruble.

>>mikhai+(OP)
Putin has an annual press conference coming up soon. Many anticipate a softening of his stance on Ukraine, in a bid for loosening sanctions. I am more fearful of him introducing ham-fisted capital controls. Apple may be similarly cautious.

>>justin+j3
I think that's the case. From the UK's gov.uk site[0]:

"It is illegal to pay directly for general transactions with dollars or Euros."

[0] https://www.gov.uk/foreign-travel-advice/russia/money

>>antr+33
> most of their revenues coming from non-USD currencies

Is this true? Why are all major product releases in the US if most of their revenue is coming from overseas?

>>umsm+46
The US is probably their largest individual market.

>>umsm+46
Perhaps all non-USD currencies in total account for more than USD, but USD still makes up the largest single chunk of revenue?

>>tjradc+Q2
>Otherwise they have no idea what the surcharge ought to be.

Nonsense. The surcharge is the difference between the spot rate and the futures rate with which they hedge. They can easily predict (to a reasonable degree) the volume they need to hedge by estimating their market.

>>schwap+N6
I thought China overtook US (an article on 18 october after googling it)

>>tjradc+Q2
> That presumes they have some idea of the short-term forward volatility of the rubble, which no one does right now

The derivatives market still exists and you can null out future FX risk by paying whatever the derivatives market is charging for it now and passing that cost onto consumers.

>>shapov+j4
Good point. Thanks for clarifying that.

>>toyg+M2
Depends on the country - when I buy stuff in Dubai with a credit card, the clerk will frequently ask me if I wish to pay the bill in AED or USD.

>>tjradc+Q2
You base the surcharge on what the swap costs. The cost of the swap takes into account the market's idea of what the ruble is going to do vs. the dollar.

Basically, you make the customer buy insurance against the ruble losing value against the dollar. It's like charging a subprime borrower PMI.

>>tjradc+Q2
That presumes they have some idea of the short-term forward volatility of the rubble

My guess is that your typo isn't too far from the truth. Everything we've seen lately with regard to falling oil prices is geared towards attacking the Putin regime. Eventually the Russian people will find themselves living in a North Korean-style pariah state... or else they'll wake up and take drastic action to keep that from happening. Either way the medium-term outlook for the ruble is pretty much toast.

>>ghshep+y8
I thought the option to pay in your credit card's native currency abroad was basically just a scam where the shop makes up a ridiculous exchange rate on the spot to overcharge you.

>>mikhai+(OP)
The mind boggles wondering how a company could lose money selling _digital copies_ of media and software.

>>NicoJu+38
For phones, yes. It's not clear if China is Apple's largest market overall though.

>>0x0+e9
It's a complete scam. It's called "Direct Currency Conversion" and it's a essentially the payment processor and merchant hoping the consumer doesn't know what's going on.

Amex disallows on their network but Visa and Mastercard do not. Unfortunately, Amex also has forex fees on most of their cards.

>>mikhai+(OP)
Except that AAPL and others will almost certainly have rolling hedges and be essentially unaffacted by this move until they purchase new stock for payment after hedge horizon and/or larger than the hedge size (unlikely since demand will have contracted). This is therefore most likely simply a decision by AAPL not to want to sell product "off market" even if their margins would be safe, or a pure treasury profit directive (benefiting from their hedges directly and not using them to subsidise Russian purchasers).

>>shrtrn+O6
The Eurozone is a massive economic engine. Often depending on rounding, and who did the study will show a larger GDP for EU vs US.

>>NicoJu+38
Those articles all say that the pre-orders will surpass the US market's equivalent pre-orders. I can't find anything making it official that on an annualized basis China has officially passed the US for iPhone sales. Last year Tim Cook was stating that it would occur soon.

Apple's US unit volume is close to 50 million per year. For 2014, Chinese consumers are expected to buy close to 300 million smart phones, and Apple has close to 15% of that market. So I'd say it's a pretty tight race currently. Apple has a big problem in China however, they're getting squeezed substantially by the domestics (Xiaomi etc). In the US that's not happening, and Apple has held on to their strong ~45% market share.

http://www.ibtimes.com/iphone-6-preorders-china-set-surpass-...

"China could soon surpass the U.S. as the biggest market for Apple Inc.'s iPhone. A report on China's Tencent Monday said Chinese consumers preordered 20 million iPhone 6 and 6 Plus smartphones in the first weekend they were available for preorder.

"If those numbers turn into sales when the iPhone is released Oct. 17, China will have doubled the 10 million phones sold in the first weekend in the U.S., setting it on the path to be the world's biggest market for iPhones."

>>JumpCr+m4
I wonder if Putin will soften anything after Obama signs new sanctions this week and we start giving millions to Ukraine...

>>joezyd+e2
This would cover the currency rate the day of transaction but would not protect them against losses during the time that it would take the transaction to clear.

>>valara+va
There's little question the Eurozone is a massive economy, however it hasn't grown since 2007:

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/08/20/w...

In that time the US has added $3 trillion to its GDP, going from $14.5 trillion in 2007, to a present $17.65 trillion or so. It's likely the US has reclaimed its title as the largest economic zone. Given the US is set to expand at close to 3% for 2015, and is growing much faster than Europe, that gap is likely to expand in the next few years.

>>vegabo+8a
Counterparty risk might be a tad too high at this point. Ruble is not that prevalent for any major players to sell options against, and a local player might have liquidity issues.

>>Camper+69
Or maybe Putin is popular enough to survive changing course in Ukraine before the economy is completely trashed. Also do you have a source that oil prices are being manipulated to punish Putin? Seems likely but I haven't seen anything.

>>umsm+46
Because Apple is a US company?

>>JumpCr+m4
Shouldn't we all be afraid of the opposite, namely war, like with Japan 1941? After all, one of the major reasons for trying to retain control of Ukraine was for the energy resources and pipelines; the rout in oil has shown how important energy is to the Russian economy and I would expect that losing control of Ukrainian energy assets would permanently impair the Russian economy.

>>schwap+N6
By far

>>saryan+B9
It may be a scam for most cards, but I work for a company that does multi-currency cards that settle in the currency of your choice and our exchange rates are better than anything offered by anyone else in the card space. Just a bit more than interbank ForEX rates.

>>happys+1c
I've also seen it suggested that the oil price drop is a "stealth" sanction against Russia, but I don't follow the logic. Why do the Saudis want to sanction Russia? Unless one presumes some unspecified quid-pro-quo conspiracy between the US and the Saudis, I don't see it. I thrink driving the volatility up like this slows the investment rate in US shale oil significantly, and that's what the Saudis are doing.

>>wavefu+ng
I wondered why this didn't exist but I guess it turns out it does. Where can I get one?

>>wavefu+ng
What does that have to do with DCC though? Maybe I'm missing something but that doesn't sound like it has anything to do with DCC. Any card with no forex fee is offering you a rate at just above the interbank rate if you avoid DCC.

>>Kadin+C8
But you still need to find someone willing to sell you (enough of) the swaps in question. And that may not be easy.

>>semi-e+vg
Russia supports Bachar's regime. Bachar blocks Qatar's & Saudi oil/gas pipe from passing through Syria towards European market. Europe remains dependent on Russian gas(30%) and oil for another round. Saudis get angry and want to topple Bachar. Russia says no way. Saudis kick Russia in the groin economically by raising the oil production. Now it makes sense ? (lower oil price combined with other EU & US sanctions bring Russia on the brink of collapse: EU, US & Saudis high five furiously)

>>foobar+pf
War is the worst case scenario for everyone. I don't think even Putin would leap straight there, though if you think it's a possibility then yes it's a bigger thing to fear than capital controls.

If the Russian economy is already overdependent on oil money, they should be looking to diversify, not to acquire more energy assets.

>>colech+o9
That's a small(ish) percentage of Apple's overall sales, even in the US where they have the most digital products to sell.

Hardware (iPhone, iPad, Mac, in that order) make up the vast majority of Apple's sales revenue.

>>wavefu+ng
I'm Australian. Can I get one?

>>colech+o9
A company loses money when its costs exceed its revenues. If Apple has to pay Warner Brothers a sum contractually specified in dollars for each copy of "Pump Up the Volume" that it sells, it could easily lose money if the rouble falls more quickly than they can adjust prices.

>>leavey+Ml
Nothing you said makes sense because the Saudis didn't increase production and at 12% of global supply do not have the capacity to change the price on the scale we're seeing without it being glad you obvious. The price is dropping because the Chinese and European economies are soft and becuase of increased supply from Libya in the short term along with the long term increases from the US, Russia, Canada, etc.

>>advent+Ea
A large number of phones sold in the US (and presumably other early release countries) are grey marketed to China though. I dont see any reliable estimates on the size of the market today though.

>>lmm+Cn
https://en.wikipedia.org/wiki/Russo-Georgian_War

>>Steko+Bu
these sources indicate otherwise. Saudi Arabia started the current trend: businessweek.com/articles/2014-10-23/oil-saudi-arabias-risky-price-play

bloomberg.com/news/2014-10-16/saudi-arabia-oil-stance-seen-targeting-opec-output-discipline.html

wsj.com/articles/saudi-oil-price-cut-upends-market-1415063053

>>leavey+1w
Your citations directly contradict your fantasy that this revolves around Bashar or punishing Russia. Bloomberg says the Saudis raised production only half a percent to defend their market share from the U.S., Russia and Canada's continued increases, basically what I said above. The price doesn't drop 20% because one supplier who has 12% market share increased their supply 0.5%.

>>Steko+Bu
you are just trolling. the articles talk about cutting prices and increasing production by Saudi Arabia. you said there wasn't an increase of production and that SA is not able to move the price. false. move along. thanks.

>>leavey+Xx
You had an entire fantasy about punishing Russia and it all revolving around Syria which isn't even supported by your own citations. Good day.

>>Steko+aB
you didn't ask for citations and I'm not your researcher here (youtube syria yourself). I gave you the sources that I wanted for the points you questioned initially. I should have ignored your entire comment when you called everything I said as fantasy without giving any citations or proof for your opinions. now go and argue to the next table.