<p>I suppose this depends on the demand elasticity of foreign purchasers. BUT, assuming Microsoft doesn't change prices, I assume it means less rev for Microsoft because, if Microsoft sold its software for 10 euros before -- this would mean $12 in USD (for example).</p>
<p>If the dollar becomes stronger vis-a-vis the Euro, 10 euro now only converts to $11 USD. Thus, in this simple example, Microsoft's sales go down because the dollar is stronger (i.e. its foreign sales convert into less USD)</p>

CC BY-SA 4.0
2022-06-03T17:48:00.867Z
2022-06-03T17:48:00.867Z
David
<p>A recent headline stated:</p>
<blockquote>
<p>&quot;Microsoft Corp. cut sales and earnings guidance for the fourth
quarter, citing unfavorable foreign exchange rates as the stronger
U.S. dollar takes a toll.&quot;</p>
</blockquote>
<p><em>Source: Wall Street Journal</em></p>
<p>Why does a stronger U.S. dollar mean potentially <em>lower</em> sales and earning for a company like Microsoft?</p>

CC BY-SA 4.0
2022-06-02T16:32:25.300Z
Because Microsoft sells a lot of its products abroad (outside of the US), in all sorts of currencies.
Alex
CC BY-SA 4.0
2022-06-03T00:21:12.277Z
Hi downvoter.  As you can see, this was my first post on this SE.  Would you care to be helpful and explain how this question can be improved before just casting a downvote?  Downvoting without any feedback leads to the deterioration of this site, as it makes people less likely to participate.  Thank you for your understanding.
Amazon Dies In Darkness
CC BY-SA 4.0
2022-06-03T08:38:26.307Z
This question does not show any research effort. If you google "Why does a stronger U.S. dollar mean potentially lower sales" you will get your answer. e.g. [Investopedia 1](https://www.investopedia.com/articles/economics/09/how-us-benefits-when-dollar-falls.asp) - although there are usually plenty of  inaccuracies in investopedia articles (although Nestle & Unilever are European, they are not from countries where the EUR is used for example) it still explains the underlying mechanics.
AKdemy
CC BY-SA 4.0
2022-06-03T08:40:06.593Z
[Yahoo finance](https://finance.yahoo.com/news/strong-vs-weak-dollar-impacts-160000310.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAAEdW_gKBCxzJv5IQ7U5wEUxZ1wYb9iQIOmDFJ6cE5_xL_hdHb6yyHSP42ytn3xJa5ubKCSRJIHtekIM_YVHVQJqqjYs-Yhvqv7-cHRjt4sYgOTQcbHOU8lHolkxJaU53l7mp_kPDFMxJcA8Ik_BVVibJC42C1BHl0JDFBWfzK7N) should also help. Essentially (almost) every search result should work. If it explains it with a weak dollar, the case of a strong dollar is in essence just the opposite.
AKdemy
CC BY-SA 4.0
2022-06-04T00:45:36.750Z
@AKdemy Thank you for your feedback.  That is all useful information.
Amazon Dies In Darkness
<microeconomics><currency><international-economics><exchange-rates><software>
Why does a stronger US dollar translate to potentially lower sales and earning for Microsoft?
Amazon Dies In Darkness
# Why does a stronger US dollar translate to potentially lower sales and earning for Microsoft?

(Asked by: username_0 on 2022-06-02)

A recent headline stated:

> "Microsoft Corp. cut sales and earnings guidance for the fourth
> quarter, citing unfavorable foreign exchange rates as the stronger
> U.S. dollar takes a toll."

*Source: Wall Street Journal*

Why does a stronger U.S. dollar mean potentially *lower* sales and earning for a company like Microsoft?

**Tags:** microeconomics, currency, international-economics, exchange-rates, software
> **Comments:**
> **username_1**: Because Microsoft sells a lot of its products abroad (outside of the US), in all sorts of currencies.  
> **username_0**: Hi downvoter.  As you can see, this was my first post on this SE.  Would you care to be helpful and explain how this question can be improved before just casting a downvote?  Downvoting without any feedback leads to the deterioration of this site, as it makes people less likely to participate.  Thank you for your understanding.  
> **username_2**: This question does not show any research effort. If you google "Why does a stronger U.S. dollar mean potentially lower sales" you will get your answer. e.g. [Investopedia 1](https://www.investopedia.com/articles/economics/09/how-us-benefits-when-dollar-falls.asp) - although there are usually plenty of  inaccuracies in investopedia articles (although Nestle & Unilever are European, they are not from countries where the EUR is used for example) it still explains the underlying mechanics.  
> **username_2**: [Yahoo finance](https://finance.yahoo.com/news/strong-vs-weak-dollar-impacts-160000310.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAAEdW_gKBCxzJv5IQ7U5wEUxZ1wYb9iQIOmDFJ6cE5_xL_hdHb6yyHSP42ytn3xJa5ubKCSRJIHtekIM_YVHVQJqqjYs-Yhvqv7-cHRjt4sYgOTQcbHOU8lHolkxJaU53l7mp_kPDFMxJcA8Ik_BVVibJC42C1BHl0JDFBWfzK7N) should also help. Essentially (almost) every search result should work. If it explains it with a weak dollar, the case of a strong dollar is in essence just the opposite.  
> **username_0**: @AKdemy Thank you for your feedback.  That is all useful information.  

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## 1 answers

### Answer by username_3 on 2022-06-03. Score: 1 | Accepted answer

I suppose this depends on the demand elasticity of foreign purchasers. BUT, assuming Microsoft doesn't change prices, I assume it means less rev for Microsoft because, if Microsoft sold its software for 10 euros before -- this would mean $12 in USD (for example).

If the dollar becomes stronger vis-a-vis the Euro, 10 euro now only converts to $11 USD. Thus, in this simple example, Microsoft's sales go down because the dollar is stronger (i.e. its foreign sales convert into less USD)


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