When are foreign currency headwinds OK and when are they not? How about when you are supposed to have horrendous ones and you don't, like Coca-Cola (KO), which was hedged against the euro and the yen? How about when your earnings are supposed to be such a runaway freight train that it doesn't matter? That's how it was supposed to be with Facebook (FB) tonight, and suddenly the headwinds matter. They don't matter if you vastly exceed what people are looking for.
Whatever, I can tell you things have gotten far too mercurial out there. IBM (IBM) had such ridiculous currency headwinds that we just dismissed them out of hand. I can only imagine what the car companies are going to have -- we have a note about GM (GM) and its currency issues for ActionAlertsPlus.com.
It's been a while, but the best example this entire quarterly report season is still Red Hat (RHT), which blew the numbers away even as it had monster currency headwinds.
But we have to accept by now that Red Hat is the exception to the rule for certain. Almost every other company in its cohort just hasn't been able to do enough except for companies where we expected very little -- eBay (EBAY) comes to mind tonight.
So, discounting currency headwinds has become an art that has eluded most, and I am at wits' end trying to figure out who can really get away with the excuse and who can't.
Random musings: Not one but two almost entirely domestic stocks on tonight, Six Flags (SIX) and Ryder (R). Oh boy, are they easy, and they are a reminder, like Cheesecake Factory (CAKE), that if you stray too far from home, you have an awful lot of explaining to do.
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