told analysts Wednesday that sliding European currencies could knock as much as 7 cents off its year 2000 earnings. Investors punished the stock in
Previously, the company, which garners about a quarter of its sales from Europe, had said that foreign-currency weakness would trim results by a nickel for the year. Analysts expect the company to earn about $1.52 a share for the year.
McDonald's shares have been under pressure recently, as investors have warily eyed the sliding euro. The company hedges to reduce currency risk, but hedging only goes so far. The euro has fallen over 7% just since the beginning of August, and the pound is down 6.5% and is at its lowest level in 14 years.
Several analysts apparently called the company Wednesday on concerns over the euro, possibly prompted by something the company said in Wednesday's recording for its August sales call: "While the weakening euro, pound and other currencies affect our reported results," said the company, "they don't reduce the number of Big Macs we're selling in the local markets."
Month of Sundaes
Salomon Smith Barney
trimmed estimates on the burger maker.
The company didn't issue a press release on the currency hit. Arguably, this is an example of selective disclosure, the practice of telling only certain people, such as analysts, about important information. Under new
Securities and Exchange Commission
guidelines, selective disclosure will be illegal late next month.
A McDonald's spokeswoman confirmed that the company will see a larger currency hit than anticipated.
"Given the softening of a number of currencies against the dollar, foreign currency translation could have a 7-cent impact," she said. She noted for the record that this doesn't affect the number of Big Macs the company sells.
reported in a story
earlier today, a number of companies doing business in Europe, including McDonald's, could see slower earnings as a result of the weaker euro. Moreover, the recent gasoline crises in several European countries could lower economic growth in the region this September.