For those of you on this board for the last three months, i.e. investors who really know ceragon.
Recall that Ceragon stock was in the dumps when $=NIS 3.25.
Today the rate is 3.47 and the Central Bank continues to buy dollars at the rate of 100 million per business day.
On the CC and the press release, mngt spoke about FX hedging. Specifically, Tali Idan the CFO said that if NIS stays at the strongest level, then earnings and GM are squeezed bec. many expenses for personnel are in NIS in ISrael.
A strong NIS (like 3.2 per $) would adversely affect earnings per quarter. Surprisingly to me, not a single ANAList followed up with a good question on this topic.
But what we can surmise is that on an annual basis, this strong NIS could cut earnings by between 1 and 2 million US$.
Now the good news !!! The NIS exchange rate today is 3.47, or 8% weaker than just a month ago. Translation: earnings in US$ might be 4% higher <assume that 50% of expenses are in NIS>
And there is possibility that as NIS continues to Depreciate, the numbers get even better.
From the Q2 CC transcript ...
"Foreign currency negatively impacted in Q2...... ................. In each of Q3 and Q4 we are working on ways to mitigate more of this impact than we were able to do in Q2. However if we see no improvement in the dollar, it will be quite challenging to reach our goal of 10% operating margin by the end of the year"
We might be able to see 10% OM in Q4 with the current trend in currency exchange.
Here is the YTD chart. You'll like it if you are long CRNT!!
Foreign exchange is always a mystery to me. I don't know why 1 Euro was way way under a USD not too long ago and now it's way way over 1 USD.
I was in San Francisco the other day and there were tons of foreign tourists everywhere, most apparently from Europe.
To those who earn Euros it's a very good time, sort of in a mood of euphoric? or exuberant?
Are we in one extreme end of the spectrum now?
Just a thought.