Bloomberg News reports that ExxonMobil (NYSE: XOM) reported a disappointing first quarter -- making only $10.9 billion in net profit. This crushingly poor performance of $2.03 a share was 10 cents below analyst expectations.
Regrettably, Exxon simply cannot produce enough product to take advantage of the record prices for oil and gas. Its 17% profit increase lagged behind the gains of 25% and 63% reported this week by Royal Dutch Shell Plc and BP Plc. Meanwhile Exxon's oil and gas production fell 5.6% and -- like Valero Energy (NYSE: VLO) the profit margins in its gasoline and chemical refineries were squeezed by their inability to raise prices enough to offset the rise in the price of the oil that goes into these refineries.
Another "crushing" blow for Exxon analysts was the mere 34% rise to $116.9 billion in its revenues. This was almost $2.6 billion below analyst estimates. The good news, if there can be any in such an abysmal report, is that Exxon is planning to increase spending on new wells and plant expansions by at least 20% this year to more than $25 billion.
In early trading, Exxon shares are down 3.8%. We as a country need to push our government to help Exxon recover from this calamitous situation. For the good of America, we must demand an immediate repeal of all its corporate taxes and force retailers to sell gasoline at $7 a gallon.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
Starbucks: The next McDonald's
Wal-Mart's launch of $20 slimming jeans will be a huge success
Why I spent some of my stimulus check on GE
Reader Comments (Page 1 of 1)
5-01-2008 @ 11:55AM
Steve in Denver said...
According to my arithmetic their profit represents about a 9% net. Show me ANYBODY who would take the risks of the oil business and put up with anything less. The oil biz ain't like being a college teacher. No ass sittin' and proselytizing to naive empty skulls. XOM is a business that is owned by millions of people(shareholders) to whom management is accountable. It has absolutely NO control over oil prices. Oil is a commodity. The closest they can come is by hedging it. They've clearly done a good job. Mr. Cohan owes an apology to XOM, his students and the public for writing such a juvenile, cowardly and sophomoric column. Go get a real Mr. Cohan!
5-01-2008 @ 12:02PM
Gillon said...
Steve - get over yourself and your platitudes. The column was a satire. Read a little more carefully next time.
5-01-2008 @ 12:03PM
Lucky said...
this guy is a idiot, we need to make more fuel efficient automobiles, and not increase the cost
of fuel, because this would just fuel a recession,
increase the cost of food, exporting our products,
vactions which do fuel the economy, and almost everything that americans do, this guy must be working for the oil companies.
5-01-2008 @ 12:58PM
charlie mcmasters said...
The democrats have fought all drilling off our coasts, in Alaska, and other places. NOw he/she want to tax them 20% on their "windfall profits" Typical democratic repsonse to any successful business.
Yes lets increase the price of gas 20 percent over night and that will punish those using gas amd make them drive less...like taxi drivers, truck delivery folks. commuters.. we will get them driving less..yea thats the ticket.. oh those democrats are SMART
5-01-2008 @ 7:17PM
Allen Dunn said...
May be the analyst made a "poor estimate" instead of Exxon Mobil making a "poor" (10.9B) performance.