• The Los Angeles Times, Tuesday, August 26, 2008 11:15 AM

The U.S. dollar is strengthening, and that's a particularly bad sign for a few major Internet companies, Sanford C. Bernstein analyst Jeffrey Lindsay said in a research note on Monday. "Currency rates have had a significant positive impact on reported revenues for U.S. Internet companies over the last few quarters," Lindsay said, pointing out that a weak dollar was partly responsible.

A strengthening U.S. dollar puts any company with significant international exposure at risk. As Lindsay's colleague Toni Sacconaghi pointed out in a research note earlier this month, a weaker dollar provided a "material boost" to U.S. tech giants like HP, IBM and Sun -- more than 60% of their revenue comes from outside the U.S. -- over the last two years.

Likewise, Web giants Google, Yahoo and eBay have also benefited from a weak dollar, mostly because Web companies have a higher proportion of their costs in dollars and more of their revenue in foreign currencies. Lindsay says that if the dollar gains another 10% against the euro, then valuations at eBay and Yahoo would slip by 8% and 13% respectively.

Read the whole story at The Los Angeles Times »