Exxon Mobil Corp. (NYSE: XOM), whose huge profits have made it one of the most vilified companies in America, was brought down to earth today after posting disappointing earnings.Net income at the world's largest oil company rose 17% to $10.9 billion, or $2.03 per share, from $9.3 billion, or $1.62 per share, a year earlier. Revenue rose 34% to $116.9 billion. Analysts had expected profit of $2.13 on revenue of $124.4 billion, according to Thomson Financial. Shares of the company fell.
Just because oil prices remain above $100 per barrel doesn't necessarily mean everything is going Exxon's way. For one thing, high oil prices resulted in "significantly lower" refining margins, which pushed down downstream earnings by $746 million to $1.16 billion. Lower margins also pushed down profit in Exxon's chemical business by $208 million to $1.03 billion. Moreover, spending on capital and exploration projects soared 30% to $5.5 billion "as we continued to actively invest in projects to bring additional crude oil, natural gas and finished products to market."
The problem is that's proving to be difficult. For one thing, production at the company's oil wells dropped as did natural gas production in the Middle East, The U.S., Canada, South America and Asia. This is happening as surging demand from the developing world is keeping oil prices at record levels. Exxon is "having trouble raising production, and that's not a good sign,'' Leeb Capital Management's Stephen Leeb told Bloomberg News.
It's doubtful that many people are going to shed a tear for Exxon as the company had cash flow from operations and asset sales of $21.8 billion. It also bought $9 billion worth of stock in the first quarter. The company has become a lightening rod for people's anger over rising gas prices.
Democratic presidential candidate Hillary Clinton has accused oil companies of manipulating energy markets to drive up the price of oil. She also advocates a windfall profits tax on oil companies and a temporary suspension of the gasoline tax, ideas which economists have rightly denounced.
If people want to hurt Exxon, all they have to do is drive less and turn down their thermostats in the winter. It's that simple and that complicated.
Closing Bell: A six-day rally (AIG, REGN, M, MOT, PALM, RIMM)
Tesla Roadster sets a record -- travels 313 miles on a single charge
Cramer on BloggingStocks: China's industrial focus helps lots of U.S. names 
Reader Comments (Page 1 of 1)
5-01-2008 @ 3:33PM
Richard Brulato said...
How can anyone feel sorry for a company who is recording recoed profits every quarter and screwing us at he pump??
5-01-2008 @ 3:42PM
Harry said...
These gas prices aren't effecting anyone. Do you see any less cars on the road? Perhaps when we are paying $8.89 per gallon, then we will be willing to change.
5-01-2008 @ 3:59PM
Bernie R. said...
Ha ha ha ha ha ha ha ha ha ha!!!!
You are hilarious! You said:
"Exxon Mobil Corp. (NYSE: XOM), whose huge profits have made it one of the most vilified companies in America [only to liberals and marxists like you], was brought down to earth today after posting disappointing earnings."
What happened to the "excessive" profits ExxonMobil is vilified for? Aren't you happy that ExxonMobil did not "gouge" consumers even MORE this quarter?
Do you REALLY believe $10.9 BILLION in PROFIT in a quarter is "disappointing"???
The $10.9 BILLION profit was EARNED on $116 Billion in revenue (that would be sales to you) and that equals a 9.3% profit margin.
Your government gouges more taxes out of you at the pump (for PRODUCING NOTHING!).
What is stopping you losers who don't INVEST in ExxonMobil from joining the wealth express known as ExxonMobil? Guilt? Envy? Hatred of Capitalism?
What is a quasi-Marxist doing on a stock blog? You should be applauding ExxonMobil's management and employees all over the world for not quitting and thereby reducing supply, and driving the price of gas even higher (see "Atlas Shrugged" by Ayn Rand). Most ExxonMobil employees have enough stock to quit and work in easy jobs the rest of their lives.
Why should they work hard every day to get gasoline to ingrates like you who blog but still MAY use their dad's car to try to pick up women (and thereby waste fuel)?
So you want to "hurt" ExxonMobil (The name has not been Exxon since 1999, so at least get the name correct)? That means hurting pensioners, employees with 401k in the company stock, little old ladies who receive dividends from ExxonMobil stock.
ExxonMobil does more for the common person then YOU or any government program will ever do. So yank yourself dry over ExxonMobil's "loss" today. At least the pensioners and little old ladies will still have a strong company working for them.
They don't have to rely on non-productive twits like YOU or Hillary Clinton...
Let's think about this: We should let "geniuses" like you and other liberals go to the North Sea and Sakhalin Island off the Arctic coast of Russia and somehow get the oil out of the ground and refine it into gasoline.
All of that work in sub-freezing cold and stormy seas just might crimp your weekly happy hours trying to meet chicks (At least, I PRAY that you are trying to meet chicks...). C'est la vie...
Bernard M. Russelman (NJ)
5-01-2008 @ 4:30PM
Robert Entwistle said...
I have owned ExxonMobil stock for a long time and it is worth less than I paid for it. Their return on sales of 9.3% is a reasonable return compared to other companies earning double or triple that amount. The problem to most people is they do not understand the size of their company and confuse large earnings with excess profits. Many companies earn twice their "profit" without any criticism from Hillary or Congress. In fact Congress is primarily the cause of the steep increase in oil/gasoline prices due to their excess money supply, and our printing money we don't have. There is a direct correlation between the money supply vs prices for crude oil - example is the more money in circulation the higher the oil. I don't see anyone in Congress willing to reduce spending to reduce the prices, but until that happens welcome to $200 oil and $10 gas.
5-02-2008 @ 4:24PM
Jeff said...
Jonathan, I thought the best way to refute your article was to develop a response that questions the integrity of your arguments. I will do this by implementing the following proven rebuttal techniques:
Call you a “liberal Marxist”.
Not understand sarcasm.
Explain things as if they were teaching a second grade class.
Make improper correlations between business and government.
Call you a “loser”.
Ask why you are not on the bandwagon of success.
Question your “qualifications”.
Be grateful we’re only being “screwed somewhat”.
Wonder why people “work” for a paycheck.
Insinuate that you are a child.
Insinuate that you support taking money from honest employees and “old ladies”.
Suggest that you have done nothing for the world.
Call you a twit.
Bring in unrelated political agendas.
Question your “intelligence”.
Assume that only Exxon can provide for the future of the world, while mocking the idea of your contributions.
Call you “gay”.
5-01-2008 @ 9:00PM
Mike Sanders said...
Margins on gas production could still come down more, just as interest rates have... 17% is astronomical, given the current situation. 7% is moderate, but 17% is way too liberal. A conservative profit, during a crisis, should not exceed 5%.
5-02-2008 @ 9:43AM
Johnny said...
I think the bigger story here is why did the analysts miss their projections? Who are these guys who projected better earnings than were actually seen by Exxon. Could it be they aren't smart enough to know how to project earnings with a greater degree of accuracy? And should we believe the analysts next time? I won't.