Dollar’s Fall Added $615 Million To IBM Profit Last Year
NEW YORK (AP) _ International Business Machines Corp.’s profit would have fallen in 1987 for an unprecedented third consecutive year if not for gains from translation of foreign currencies, according to figures released Tuesday.
However, IBM said, it would be simplistic to focus on the gains from translating foreign currencies into dollars, noting that a cheaper dollar had some negative effects on the computer giant as well.
IBM said the cheaper dollar improved its bottom line by $615 million last year in comparison with what would have happened if the dollar had remained at its level of 1986. Profit overall increased by just $469 million.
The dollar’s fall since early 1985 has increased the dollar value of profits and revenues that IBM makes in foreign currencies. The increase is known as the translation effect.
The cheaper dollar can also hurt IBM, however, such as by increasing the cost of goods imported into the United States. Those effects should not be ignored, the company says.
″IBM has become skeptical about the usefulness of trying to adjust for the very complex factor of currency in such a limited way,″ spokesman John Mihalec said.
Figures on the currency-translation gain were included in portions of the company’s annual report that were distributed Tuesday to reporters and financial analysts. The complete report will be published in a few weeks.
IBM reported last month that its 1987 profit rose 9.8 percent to $5.26 billion, or $8.72 a share, up from $4.79 billion, or $7.81 a share, a year earlier. Revenue rose 5.8 percent to $54.2 billion from $51.3 billion.