<p>
[quote]
Nothing, I am done with this atrocious thead.
[/quote]
</p>
<p>Perfect. Please be a man of your word and leave.</p>
<p>Good riddance.</p>
<p>Now place nice kiddies...</p>
<p>Don't forget that most of the profits are invested into further research.</p>
<p>
[quote]
Don't forget that most of the profits are invested into further research.
[/quote]
</p>
<p>That's what they say...How about the departing Exxon chairman's $400m golden parachute (not to mention his $50m+ salary in '05)?:</p>
<p><a href="http://abcnews.go.com/GMA/story?id=1841989%5B/url%5D">http://abcnews.go.com/GMA/story?id=1841989</a></p>
<p>...seems to me that the only tangible research seems to be in developing excessive corporate pay packages...am I the only one who thinks that this is a bit outrageous?</p>
<p>"Producers are using that cash to increase spending on exploration for new reserves and to buy back shares. </p>
<p>Exxon Mobil, for instance, plans to spend $20 billion a year through 2010 on new oil and gas fields, refinery expansions and gas-import terminals. The company today said it will spend $7 billion in the current quarter on buybacks, up 32 percent from a year earlier."</p>
<p>
[quote]
"Producers are using that cash to increase spending on exploration for new reserves and to buy back shares.</p>
<p>Exxon Mobil, for instance, plans to spend $20 billion a year through 2010 on new oil and gas fields, refinery expansions and gas-import terminals. The company today said it will spend $7 billion in the current quarter on buybacks, up 32 percent from a year earlier."
[/quote]
</p>
<p>Of course they are going to spend money on R&D (that's one of the main activities of the industry) - so no points for that.</p>
<p>As for spending money on buybacks, any corporation with a massive cash balance incorporates a buyback program (Microsoft for instance is notorious for doing this) for two simple reasons:
1) It demontrates to shareholders and the marketplace (Wall St.) that management is actually doing something with its surplus cash (that is in addition to paying themselves silly)
2) Improves financial ratios (even if it is superficial)</p>
<p>Share buybacks reduce the no. of shares outstanding. After a buyback, companies typically cancel these shares, reducing the no. of shares outstanding - this, subsequently, boosts earnings per share (EPS) - even if the overall earnings (the intrinsic value) remains constant.</p>
<p>Also, buybacks reduce the assets on the balance sheet (cash is an asset). Return on Assets (ROA) actually increases because assets are reduced - Return on Equity (ROE) increases because there is less outstanding equity.
Exxon's stock has also underperfomed:</p>
<p>Read more about share buybacks here:
<a href="http://www.cfo.com/article.cfm/4392991/c_2984408/?f=archives%5B/url%5D">http://www.cfo.com/article.cfm/4392991/c_2984408/?f=archives</a>
<a href="http://www.investopedia.com/articles/02/041702.asp%5B/url%5D">http://www.investopedia.com/articles/02/041702.asp</a></p>
<p>Finally, Exxon's shares have traded practically sideways over the last two years in a range from about $55 - $65 - not exactly stellar performance (even with the record earnings).</p>
<p>The oils companies aren't even making that much money. The total number is only big because the company is big. They have bad margins and are a bad investment. I wouldn't buy stock in Exon Mobil, they don't make that much money.</p>
<p>Look at the P/E ratio's of oil companies. Exon's for example is approximatly 10. The average S&P stock is currently at 15. Many stocks are high such as amazon.com at 37, google at 54 Alkermes at 426.</p>
<p>There is a reason for the low multiple, that reason is simply that profits a growing very slowly at oil companies. Now that oil is so high Exon is just barely starting to make the return of the average corporation, and it's still at the low end of the average range.</p>
<p>It's a just a bunch of ****ing and moaning by uneducated whining liberals.</p>
<p>I swear if they put some sort of windfall tax on oil companies I would hope to god they close up shop and send the price up to $100 a gallon in spite and show the liberals how stupid they are.</p>
<p>
[quote]
I wouldn't buy stock in Exon Mobil, they don't make that much money.
[/quote]
</p>
<p>Well let's not confuse two different things here.</p>
<p>Whether ExxonMobile is a good stock investment or not is one question. Whether they make "that much money" is quite another.</p>
<p>FACTS:
- ExxonMobile's 4th Quarter ('05) profits were THE LARGEST for any company IN US HISTORY — $10.71 billion for the 4th quarter and $36.13 billion for the year
- Exxon’s profit for the year ('05) was also the largest annual reported net income for any company IN US HISTORY</p>
<p>Now, whether or not the profit MARGINS were relatively small (compared to say, Microsoft) is not the point. Whether the stock reflects this or not is a separate point. So you can talk all you want about the P/E ratio, profit margin, etc. etc. doesn't change the fact that Exxon made more money in last year than any company in US history.</p>
<p>It also doesn't change the fact that Exxon paid its departing chairman a salary over $50 million last year and also gifted him a golden handshake retirement package worth over $400 million. That's a lot of handshakes.</p>
<p>Now I won't dispute you on your opinion that XOM has been an underperformer (I happen to think its a dog) - but that is a completely separate argument.</p>
<p>Don't bother bringing up with the mentioning of retirement packages and such - to those that have attained that rank in a company have worked much sweat and tears to get as to where they are. Perhaps, you know, we should take Bill Gates stock too. We should make him sell it all! That would be very fair. Yes, steal from the rich and give it to the undeserving lazy. </p>
<p>The point is - it doesn't matter what they set the gas prices at since in the end, you are the one buying the gas. Congress should not be held accountable for our ridiculous decisions and indifference to the addiction to oil. It's not up to Congress to fix this solution, it's up to us.</p>
<p>In all, since Congress ALREADY subsudizes the price of oil, I wish they would stop. Raise those prices. Then, you would see capitialism work it's best.</p>
<p>
[quote]
Don't bother bringing up with the mentioning of retirement packages and such - to those that have attained that rank in a company have worked much sweat and tears to get as to where they are.
[/quote]
</p>
<p>You're saying that he's put up more blood, sweat and tears than the oil drillers out at sea actually putting up their own lives on the line for ExxonMobile? Sweat and tears my arse.</p>
<p>OK, so let's put aside the over the top $400 million pay package for a second and focus on just the annual salary, let's try to put it into some perspective - just the $51.1 million salary mind you - this is equivalent to ~$140,000 a day, nearly $6,000 an hour. Further, it's almost more than five times what the CEO of Chevron made. (more on that later)</p>
<p>Next, you mentioned Bill Gates. Well, wait just a second there. Microsoft has been an outstanding stock and company over the years - and it is also one of the best managed companies out there. Further, the majority of Gates' pay comes in the form of stock (stock options) his annual salary last year was only $600K with a $400K bonus (that's a fraction of the $50 million salary by comparison - plus, give me a chairman that gets paid with stock instead of cash up front ANY DAY - that's a formula that actually gives an incentive for performance rather than paying everything upfront for nothing). Not to mention the fact that Gates heads up a generous foundation that Warren Buffett just donated his fortune to... </p>
<p>But back to Exxon. You're telling me that Exxon's chairman was worth all that pay (including nearly HALF A BILLION DOLLAR retirement package)? If so, then why hasn't the stock reflected that outstanding performance? Why is Wall St.'s consensus that Exxon's stock is a dog? If the chairman is getting paid FIVE TIMES more than Chevron, shouldn't it be performing FIVE TIMES BETTER? Instead Chevron's stock has outperformed Exxon's over the last 6 months. Pls explain that.</p>
<p>BTW, you're talking to someone who got paid handsomely over many years working on Wall Street, so you can save the lectures on "capitalism" - i'm intimately familiar with it. I can also differentiate between a chairman that has earned his pay and when he hasn't.</p>
<p>Exxon Mobile's chairman is grossly overpaid. The company isn't that well manged in my opinion either. However, since I'm not a shareholder, it's no problem for me.</p>
<p>However, I have no sympathy for people who whine and complain about gas prices while they fill up their sports cars, SUVs or pickup trucks to drive to the grocery store and back. In Europe, they adapted to $5.00 a litre gas prices by buying smaller, more fuel efficient cars and funding very well developed public transit systems. In some cities, commuters from the suburbs that go into the city are forced to pay a toll. Others have intersections that are designated car free on certain days and other's such as Montreal's Chinatown is actually inaccessible by car. There are alternatives out there, it just comes down to a matter of will. North Americans don't have much in this particular regard. We just whine and complain and expect our governments to give us handouts when gas over here is already pretty cheap.</p>
<p>ICrisis,</p>
<p>Great points and well written.</p>
<p>I'd respond with three points:</p>
<p>1) I absolutely agree that much more can be done on the "demand" side to curb our dependence on oil. Absolutely agree that more should be done (both on the consumer and corporate sides). More conservation. More R&D by auto co's into developing 100% "green" vehicles. More mass transit. all great stuff... totally on board w/you there...</p>
<p>2) What happens in other countries is what happens in other countries. I mean Europeans (for the most part) enjoy universal health care and they spend less PER CAPITA than the US ... compare that to the US where we spend more than anyone (twice the industrialized world average) on health care and yet our health care system is totally broken - no where near universal coverage. The point? Basically, what works in some countries doesn't necessarily work in others.</p>
<p>3) Let's not confuse my main point here. Gas prices are what they are. I totally realize that. I mean, whether it's $3 per gallon or $5 per gallon or $10 gallon ... again, they are what they are - MY MAIN GRIPE is the outrageous money that the Oil companies are making - the oil companies shouldn't be ringing in record profits during such a time (if they are really only charging lock-step with their own increases in cost) and the insult to injury is the outrageous pay, in particular, ExxonMobile's chairman - it's like a freaking Greek tragedy so sad it's borderline comical.</p>
<p>Anybody who thinks that oil companies and politicians aren't acting in concert and unethicaly is either blind or naive. Government policy has worked hard to ensure that oil companies make big money and in return, I am sure government officials have benefited greatly from all this. Hell, in some cases, oil barrons and government officials are one and the same. The top 4 oil companies in the World (Shell, BP, Total and Exxon Mobil) had combined profits over $100 billion. That's unheard of.</p>
<p>Oil producing countries are also loving it. GDP growth in oil producing countries (from Denmark and Norway to those in the Arabian Gulf) have been flirting with record highs for the last 2 years. </p>
<p>You can all bet that those involved in the oil industry have made unthinkable amounts of money and they have done it unethically.</p>
<p>Too early...</p>
<p>Oil Barrons? Are you kidding? The big oil companies are owned by millions of stock holders, including puny little old me. I kind of like the title of Oil Barron though. I may insist that I be addressed as such!</p>
<p>the prestige, just admit it you are a socialist and feel guilty for the money you have made on wall street. It's ok! There is a twelve step program for that. Start by giving your money away, you will feel very unburdened and much better about yourself.</p>
<p>"FACTS:
- ExxonMobile's 4th Quarter ('05) profits were THE LARGEST for any company IN US HISTORY $10.71 billion for the 4th quarter and $36.13 billion for the year
- Exxons profit for the year ('05) was also the largest annual reported net income for any company IN US HISTORY"</p>
<p>Yes, but they are the biggest company in the US right now. Total profit is not what matters, it never was. IT's only whats being talked about right now because that fits the whinners agenda and they know everyone isn't bright enough to understand.</p>
<p>Heres an analogy. You and your 9 friends start up a company. THere are ten owners including you. The company is making $400,000 per year. That is 40,000 for each of you owners.</p>
<p>Now your competitor is just a guy and his brother, two owners. Now this company is making $150,000 per year. That's $75,00 for each of the two owners.</p>
<p>Exon is the first company. It's juist big so the total number is big. </p>
<p>By the way do you people who want a windfall tax relize who that hurts? It hurts both you who are buying gas because they will probably just raise the prices, and it also hurts the shareholders. You kids seem to think the shareholders (owners) are some faceless fat rich white republicans, when in reality it is your parents, your teachers, anybody who owns mutual funds is probably a partial owner of one of these oil companies.</p>
<p>Your union's pension plans? guess what they probably own shares of Exon through a mutual fund. Your 401k? same thing, your highschool teachers 403b retirement plan again probably owns shares of oil companies, along with just about every other <em>EVIL</em> corporation.</p>
<p>Truly Niave children</p>
<p>
[quote]
Heres an analogy. You and your 9 friends start up a company. THere are ten owners including you. The company is making $400,000 per year. That is 40,000 for each of you owners.</p>
<p>Now your competitor is just a guy and his brother, two owners. Now this company is making $150,000 per year. That's $75,00 for each of the two owners. Exon is the first company. It's juist big so the total number is big.
[/quote]
</p>
<p>That analogy was a joke right? Did that prove something? What in the world does the above analogy prove (that company A is bigger than company B? so what?) - in particular, what does it prove with regards to Exxon's massive mismanagement and ongoing corporate malfeasance?</p>
<p>
[quote]
Yes, but they are the biggest company in the US right now.
[/quote]
</p>
<p>That we can agree on. They are big. They are TOO BIG. Consider this little footnote in history (edited from Wiki):</p>
<p>*The merger of Exxon and Mobil was unique in American history because it brought together once again the two largest companies of John D. Rockefeller's Standard Oil trust, Standard Oil Company of New Jersey/Exxon and Standard Oil Company of New York/Mobil.</p>
<p>The reputation of Standard Oil in the public eye suffered badly after publication of Ida Tarbell's classic novel "The History of Standard Oil" in 1904, leading to a growing outcry for the government to take action against the company.</p>
<p>By 1911, with public outcry at a climax,**the United States Supreme Court ruled that Standard Oil must be dissolved and split into 34 companies. Two of these companies were Jersey Standard, which eventually became Exxon, and Socony ("Standard Oil Company of New York"), which eventually became Mobil.*</p>
<p>So we're basically back to square one. The public, the government and the Supreme Court all agreed that a company with that much power, that much market power was a bad idea, bad for consumers and decided to break it up. Seems to me that they were right then and they'd be right now. </p>
<p>
[quote]
You kids seem to think the shareholders (owners) are some faceless fat rich white republicans, when in reality it is your parents, your teachers, anybody who owns mutual funds is probably a partial owner of one of these oil companies.</p>
<p>Your union's pension plans? guess what they probably own shares of Exon through a mutual fund. Your 401k? same thing, your highschool teachers 403b retirement plan again probably owns shares of oil companies, along with just about every other <em>EVIL</em> corporation.
[/quote]
</p>
<p>You're kidding me right? How come you Exxon lovers always manage to do a complete end-around the $400 milllion retirement package? Why no mention of that? How did that help shareholders? How did the $50 million annual salary of the departing chairman (5 times the CEO pay of Chevron) help shareholders? Exxon stock hasn't outperformed Chevron - its competitor, so how can one justify paying the chairman five times Chevron's CEO? Why no answer for this? Why the "head-in-the-sand" for this? Because YOU HAVE NO ANSWER. How do you defend that kind of BASE GREED?</p>
<p>Exxon has been an absolute CRAP investment as a stock. Its board and management have been filling one anothers' pockets full of cash hand over fist - and yet the stock's performance has been dismal.</p>
<p>You want action that will actually BENEFIT the shareholders? You want to make sure that your 401K investments actually make a decent return? Then the gov't should BREAK UP EXXON MOBILE:</p>
<p>1) Break up ExxonMobile
2) Existing shareholders would receive shares (pro rata) in each of the new companies created.
3) Each company would be run as a proper business - no more $400 million golden handshakes
4) Let market competition work its magic.
5) See prices fall</p>
<p>Tell us what happened when they did that with Ma Bell.</p>
<p>
[quote]
Tell us what happened when they did that with Ma Bell.
[/quote]
</p>
<p>What happened? True competition. Massive innovation is what happened.</p>
<p>Fiber optics for starters (which has been the backbone highway of the Internet). Further deregulation (Telecommunications Act '96) paved the way to an even greater more open marketplace where competitive local exchange carriers (CLECs) where competing head to head with the Baby Bells and AT&T providing phone services and infrastructure.</p>
<p>The stock market boom led to "easy money" which subsequently fueled even greater investment in the race to lay down a global network of fiber optics ... (and, of course, when the stock market bubble burst, it laid waste to a number of companies) BUT and here is the critical point - THE CRITICAL INNOVATION HAS NOT BEEN ERASED. The fiber optic cables are still in the ground ---> lowering internet broadband, telecommunication, VOIP prices.</p>
<p>Basically, the key point is these massive corporate "mega"-mergers rarely (if ever) produce a fraction of the positive benefits that are touted in the beginning (you hear catch phrases like "synergies" and "accretive EPS") but the brutal, harsh, cold reality is that they generally fall way short.</p>
<p>Take for instance, the 90s buzz word: "synergies" - the magic word on Wall St. - But now its more like a dirty word or cautionary tale.</p>
<p>Take a look at the most famous acquisition of the 80's - KKR's buyout of RJR Nabisco - that fiasco led to the infamous book "Barbarians at the Gate" which detailed the even more infamous $53 million golden handshake for the departing CEO.</p>
<p>And what about the largest M&A deal of the 90's? The $166 billion merger of Time Warner and AOL? That deal has been a complete disaster for shareholders. And now AOL is no longer part of AOL Time Warner's corporate moniker and now there is talk about spinning AOL off!!!... huh? What was the point of the merger in the first place? Answer? There WAS NO POINT! It was just a gigantic waste of time and money - while the corporate officers and M&A bankers got paid!</p>
<p>Corporation have begun to smell the coffee. Shareholders (including the largest mutual funds) are becoming more activist. And now with Sarbanes Oxley, CEO's can go to jail if they try and pull any financial shenanigans.</p>
<p>Bottom line? Very few mega-mergers succeed in producing the promised "accretive" pro-forma results. ExxonMobile has been no exception to say the least.</p>
<p>Very good arguement the_Prestige. I can see why you're right and others are wrong. They cant back their shiit up!</p>
<p>"You kids seem to think the shareholders (owners) are some faceless fat rich white republicans, when in reality it is your parents, your teachers, anybody who owns mutual funds is probably a partial owner of one of these oil companies."</p>
<p>This is true but, I still disagree where you are going with this. I don't know shiit about economics and the such but tell me if I'm wrong; these "normal" citizens might hold shares in the company, but are they the ones making the business decisions? Is every shareholder contacted before executives get their huge (YES HUGE YOU IDIOTS) bonuses? I would like to think not, but prove me wrong, I'm open to change.</p>