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Friday, February 1, 2008
The B is for "Bwah hah ha ha!"
IRVING High crude prices helped Exxon Mobil become the most profitable company in U.S. history, with a record $40.6 Billion.
Posted by ccuellar
Catherine, are you subtly implying that is somehow wrong for Exxon-Mobil to earn so much money? Their net profit margin is only 9.2% (see http://finance.google.com/finance?cli...), which isn't exactly a stellar performance.
Many, many companies exhibit much higher net profit margins. Just run a query on net profit margin on the MSN Money Stock Screener (see http://moneycentral.msn.com/investor/... ). Exxon Mobil doesn't even rank.
It's all about statistics, not the absolute numbers. Exxon Mobil is a big company. Big companies can earn a lot of money but still not perform well statistically.
Conversely, small companies don't necessarily make a lot of money, but can have an incredibly high net profit margin. If just the two of us set up a widget company with an initial investment of $10,000 and earned $2 million in the first year, it wouldn't be a lot of money by Exxon Mobil standards, but it would a fantastic return on investment.
Sorry, but after your performance in reporting on illegal immigration in Farmers Branch last week, I'm just a little bit suspicious.
I read the 19 words in this post 3 times, and if she is being subtle, it's really friggin subtle. Really, really, really. I even tried to read between the lines, but since there were only 2 lines, I only had to look in one place.
I agree with rkiosk -- Exxon's headquarters are in Irving and we report local news, so any bias you see in that two-line story is non-existent.
Okay, I'll take Catherine's word on this one. However, pay attention to all of the politicians and pundits over the next week who most definitely will be painting Exxon Mobil's profits as obscene. The left will be in a frenzy calling for windfall profit taxes and nary a word will be mentioned about the fairly measly 9.2% net profit margin. We go through this every quarter, with the left paying the class envy card.
Catherine, I'll ask you: Do you think that it's okay for a company to post a $46 billion profit? Since it's you that we're talking about, it makes sense to ask your opinion, which you are, of course, entitled to.
$46B, no; $40.6B yes.
Sorry about my typo, now fixed.
Mike, don't be a jerk.
If CC really wanted to, I'm sure she could weasel her way into finding some random stat showing Exxon-Mobil as the most profitable ever (I see where you're going, profit and profitable are different b/c one's aggregate and one's relative). You're taking this out of context. Granted, I'm not big on absolutes, but jfc lynch someone else other than the publisher of a one-line blurb article.
I didn't see a hint of any implication that it's wrong to make that much money. Methinks you're making presumptions from the context of 'the most'...or from the site overall.
Either way, you're baiting people. Plain and simple. You must have been bored today b/c you've done it quite a bit.
From my perspective, it's outlandish that gas prices have increased the way they have and these guys come out with record profits. Considering advertising, overhead costs, people's salaries, etc. are included in expenses and not the profit reported...it doesn't seem justified that there's $46 billion left on the table, much less whatever the suppliers of the oil bank. Even if there was a negative tone perceived, I don't disagree.
$40.6B. Point stands.
*I didn't see a hint of any implication that it's wrong to make that much money. Methinks you're making presumptions from the context of 'the most'...or from the site overall.*
I have already apologized to Catherine privately. And by the way, I didn't lynch her -- merely voiced a suspicion based on a previous article that she had written. And, yes, the overall tone of the site has a little bit to do with it as well.
You know as well as I do that the left and their buddies in the media will be screaming over the next week that a company should not be allowed to make so much money. They count on people not being able to understand fancy cypherin' like net profit margin.
*From my perspective, it's outlandish that gas prices have increased the way they have and these guys come out with record profits. ... Even if there was a negative tone perceived, I don't disagree.*
Wow, color me surprised. The main number that investors will be looking at is the 9.2% net profit, though other numbers matter, too, such as the rate of return on investment. If you don't like it, then I'm sorry.
*Considering advertising, overhead costs, people's salaries, etc. are included in expenses and not the profit reported...*
Oh, my goodness. You really don't understand. Of course salaries are counted as an expense, not as profit. Step down the hall and have a chat with the person who does the bookkeeping at Pegasus. Scott, I'm not being sarcastic -- I'm being serious.
*Either way, you're baiting people. Plain and simple.*
Nope, merely pointing out truths that you find inconvenient. You would rather not be confronted with the fact that Exxon Mobil makes profits in the single digits.
Mike, you've revealed how little you know about Progressive politics. You might want to adjust those blinders you've got on as you read this....
Progressives are very happy that Exxon made $40B, or $46B, or whatever. Because in an ideal (progressive) world, a large chunk of that money would be used for the following:
A. Research into alternative/green energy sources.
B. Paying their fare share of taxes.
C. Stop fighting the facts of the Valdez oil spill and just fork over to Alaska to make things right again...finally (http://www.gov.state.ak.us/archive.ph...)
I would propose that if Exxon could do a better job of educating the public as to what they are doing to find alternative energy sources, people wouldn't get so upset over their profits. The media doesn't scream over Microsoft profits. Why is Exxon different? Exxon has continued to show that, ever since and including the Valdez disaster, they haven't improved their skills at PR.
I'm an investor. I see Exxon made a huge, record profit. I see it's a very, very large number. I don't spend a lot of time reading annual reports and such because I know there are accounting tricks to make them say whatever they want them to say.
I probably don't count in your world though, since I'm not wealthy.
*Mike, you've revealed how little you know about Progressive politics.*
Oh, no -- I know about progessive politics all too well. That's why I'm so opposed to it.
Progressives are very happy that Exxon made $40B, or $46B, or whatever. Because in an ideal (progressive) world, a large chunk of that money would be used for the following:
A. Research into alternative/green energy sources. B. Paying their fare share of taxes. C. Stop fighting the facts of the Valdez oil spill and just fork over to Alaska to make things right again...finally....
Exxon Mobil is an oil company. They drill for oil. It's not their job to find alternative sources of energy. There are plenty of other companies and institutes where green energy is being researched. That's their job. I wouldn't expect them to drill for oil.
I was in the environmental field for 15 years -- I'm all for green, though 90% of the blather the environmental wackos talk about really aren't green at all.
Say, why don't you urge Pegasus to research green fuel resources? It makes about as much sense as forcing Exxon Mobil to do the same.
If Exxon-Mobil payed higher taxes, where do you think those higher taxes will show up? At the gas pump, of course. Taxing any company is a cost of business which is passed on to the consumer. Corporations should not pay any taxes at all. When they pay taxes, you'll have to spend more for their products.
Mercy, does anyone at Pegasus understand even the basic rudiments of economics? Am I the only one here who has ever run a company?
When you tax people enough to where they have no incentive to invest, the economy stops. If you tax the heck out of Exxon Mobil, do you think that investors will be willing to put their money into the company? The economy will tank and there won't be any money to do the pie-in-the-sky politics that you're advocating.
If you want to see what happens when a country adopts progressive poliics, look no further than Europe. They're finally realizing that progressive politics is actually regressive and they simply cannot afford it.
Why do you want to control how companies and individuals spend their money? Yes, I know that you did not mention individuals in your post, but instituting progressive politics would hurt individuals.
You want totalitarionism. I want freedom.
*I'm an investor. I see Exxon made a huge, record profit. I see it's a very, very large number. I don't spend a lot of time reading annual reports and such because I know there are accounting tricks to make them say whatever they want them to say.*
*I probably don't count in your world though, since I'm not wealthy.*
I don't know who you were replying to, but if you're an investor and you follow the basics, you'll do well. You'll be surprised at how quickly your money grows.
I never read annual reports either. I rely on anaylist's reports for my information and websites like msn money.
I'm certainly not wealthy either but I've planned ahead and will have a comfortable retirement. I don't expect the government to take care of me.
Here's a little primer on the importance of net profit margin from <a href="http://www.fool.co.uk/school/2003/sch030627.htm">Motley Fool UK</a>. And, no, I'm not insulting you -- Motley Fool is an excellent enterprise that teaches people the basics of investment. I still refer to it on occasion.
By the way, did you notice that Exxon Mobil's stock was down 45 cents for the day? Investors weren't as wowed by the numbers as you were.
Net profit margin is the first thing that I look at when making a stock investment. I do a lot more investigating as well, but if the net profit margin is low, I don't buy the stock. I don't own Exxon Mobil because they just don't have a stellar rate of return. There are plenty of other companies out there whose net profit margin makes Exxon Mobil look anemic.
Stocks from developing countries have been very, very good to me over the past few years, though their numbers have slipped recently on fears of the US economy.
Fortunately, Bush is addressing the economic situation unlike Bill Clinton did when the stock market tanked in 2000. As usual, he blamed Republicans for "<a href="http://transcripts.cnn.com/TRANSCRIPTS/0103/20/cf.00.html">talking down the economy</a>." And the press fell for Clinton's nonsense hook, line, and sinker.
Hell of a job Bush is doing, approving rampant spending from the Republican Congress he had through most of his presidency, waging a silly war at incredible cost to the country, driving the budget deficit and national debt ever upward. And now that there are signs of a slow down, what does he do? Spend more. Smart. Bigger deficits and debts, an even more weakened dollar (which has the effect of driving up the cost of oil and other imports), and continued denial about the fundamental unsoundness of how our government is managing its money.
Hell of a job Bush is doing, approving rampant spending from the Republican Congress he had through most of his presidency
Yep, fully agree with you on that one. I was glad to see the Republicans get doused a couple of years ago. They abandoned their conservative principles. Not only that, but many Republicans, like John McCain, Susan Collins, and Olympia Snowe, don't have a conservative bone in their body.
waging a silly war at incredible cost to the country
Have to disagree with you on this one. We have got to fight the Muslim extremists just as we fought the Nazis and the Japanese military complex.
And now that there are signs of a slow down, what does he do? Spend more.
I'm not happy with much of the package, such as giving tax rebates to people who didn't pay taxes, but the general idea is sound. Allow people to decide how to spend their money instead of giving it to the government.
Unlike Greenspan and Clinton, Bush is taking action. Every time a tax cut has been enacted, the economy grows and the government coffers grow. Liberals hate to admit that fact, but I give credit to the Democrats in congress who have worked with Bush on tax cuts.
John F. Kennedy was an ardent tax cutter. If he suddenly came back to life, he wouldn't recognize the Democrat Party.
an even more weakened dollar
I'm not happy with that either. However, a weak dollar encourages exports, which is a good thing. Overall, though, I would rather have a stronger dollar, even if it did increase the the trade deficit.
By the way, I don't know how the trade deficit got such a bad wrap. We give other countries dollars and we get goods in return. Those goods have value and that value remains in the United States. It's an even trade, especially for durable goods.
and continued denial about the fundamental unsoundness of how our government is managing its money
Clinton was in denial and blamed the Republicans for talking down the economy. What a doofus. Greenspan was too little, too late in lowering interest rates.
Bush is taking action with his tax rebate package and Bernanke has been surprisingly aggressive at cutting interrest rates. Both are good for the economy.
Bush should have used his veto pen more often on spending bills.
Recessions and market corrections are a natural part of the economic cycle. I'm not too worried. I give the odds at less than 50% that we slip into an actual recession, and if we do, it will be mild.
Mike, I'm not sure why you addressed me twice - do I win a prize? But I'll play into your shenanigans once more b/c I'm procrastinating from doing something else.
I realize you had a suspicion about CC from a previous article, I read the site. Hence my comment about you baiting quite a bit.
I'm not one of those libs...but I gotta say that I can understand how record profits, with gas costs inflating as they have, doesn't sit well with them.
FYI, I don't work at Pegasus, and I've only met CC once (briefly). Even if they have an accounting department down the hall - I can't readily visit it.
I mentioned things roll into expenses rather then earnings b/c you'd be surprised how many people don't take that into account. I'm in insurance, and it bothers me to no end when media reports that only X% of our premiums paid losses at any given time...without mentioning our expense ratio is typically 30%. Everybody's out to be profitable, and I don't hold it against them that they're making good money in the somewhat free market - but considering I hate paying more than I have to for anything, I empathize with naysayers.
While I certainly appreciate you sharing your investment analysis process with us, if it were that simple the market wouldn't be what it is. You hedge your bets how you'd like.
Someone's net profit isn't a direct correlation of what stock-holders can expect their returns to look like...and perhaps not every shareholder invests with Exxon-Mobil to make the absolute highest return possible that year. They could prefer stability, market dominance, etc above potential higher returns elsewhere. I imagine that's why most people who simply buy shares have anything to do with oil & gas - diversify their book in something relatively profitable and stable (to date).
I concur about foreign stocks. I don't have the funds to play around in the market atm, but when allocating my 401(k) investments I deliberately place 25% of stock investments overseas b/c it makes me think I'm better diversified and there's ridiculous growth opportunity. I'm not a retarded person on the topic, but in the same light I don't claim to know the industry or how it should be invested in - I'm somewhat educated in investing and I'd honestly rather not argue about it over a one-line blurb that you took to heart.
*Mike, I'm not sure why you addressed me twice - do I win a prize? But I'll play into your shenanigans once more b/c I'm procrastinating from doing something else. *
Thank you for the very nice post, Scott. I'm an expert at procrastinating, too. My wife, stepdaughter, and baby grandson (step-grandson?) are all taking naps right now after we went to see the chick flick "27 Dresses" and a round of shopping.
I hate to admit this publicly, but I like a lot of chick flicks. I'm an incurable romantic. My wife mentions to me at least once a week about how I cried at our wedding while she didn't.
*I'm not one of those libs...but I gotta say that I can understand how record profits, with gas costs inflating as they have, doesn't sit well with them.*
I understand how you feel about that. I'm not keen at all on government intervention in companies, but I do have a beef with the grossly inflated salaries and golden parachutes of top executives. Companies need to be more equitable in their salaries because current practices are just inviting in more governent regulation.
I'm so glad to hear that your not a lib. That's because you have a real job and aren't cloistered in some make-believe world. I'm sorry though that I don't empathize with your empathy for the libs. Weird sentence, but you know what I mean. They look at the $40.6 billion profit but have no clue about economics and what it costs to run a company. XOM is one of the biggest companies in the world, it's hugely expensive to run, and it's natural to expect them to have a high profit dollar-wise. Most libs wouldn't believe you if you pointed out to them that XOM has <a href="http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=ProfitMargins&Symbol=XOM">has underperformed both the industry and the S&P 500 over the last 5 years</a>.
I recall when Sonny Bono became a conservative after opening up a restaurant and dealing with all of the government regulations, taxes, fees, licenses, etc. Like they say: A conservative is a liberal who's been mugged.
*While I certainly appreciate you sharing your investment analysis process with us, if it were that simple the market wouldn't be what it is. You hedge your bets how you'd like. *
Yeah, all I shared was a very basic explanation of the term "net profit margin" and why it's the stat that most investors first look at. As for me, I'm into -- or was until the market went crazy a few months ago -- the options markets so I worry about implied volatility, being delta neutral, and things like that. Some months I make a lot of money, other months I lose everything I had made over the previous 3 or 4 months. It isn't for the faint of heart.
*Someone's net profit isn't a direct correlation of what stock-holders can expect their returns to look like...and perhaps not every shareholder invests with Exxon-Mobil to make the absolute highest return possible that year. They could prefer stability, market dominance, etc above potential higher returns elsewhere. *
I agree with you absolutely. One only has to look back as far as the dot-com bust. I sat out on that one entirely though I now regret it. My parents own XOM and like it because of it's stability, good growth rate, and especially the dividends. My brother and I handle their investments because they're getting up in years and we invest according to their wishes. Personally, I'm a little more aggressive investor.
Scott, I'm sorry because it seems like I caught you on a bad day yesterday, or vice versa, or even both. Today you seem very reasonable and educated. When you wrote yesterday about salaries and expenses not being included in profits, my jaw dropped. Hence the basic accounting lesson. It wasn't shenanigans -- it was something that everyone needs to know. Obviously, the sentence was a typo or was written hurriedly because you've shown your business acument today.
An operating expense ration (OER) of 30% isn't really out of line. It is reported in financial results, but it's not considered one of the core statistics for a company. I couldn't find the OER for XOM (everyone's waking up now) but the <a href="http://stocks.us.reuters.com/stocks/incomeStatement.asp?symbol=XOM&period=Q">operating expense for XOM is very high.</a> Gotta' go now.
Well, Mike, in our industry one of the most tracked ratios is the combined ratio: expense ratio + loss ratio (quite surprising how simple insurance peeps analyze their performance considering the complexity of our forms, but that's a different discussion altogether). If combined ratio is below 1, profit.
I wasn't implying 30% OER is out of line, I'm simply bothered by the approach a lot of people take when reporting on insurance companies - without mentioning our expense ratio, they give the public a perception that whatever we don't pay out in losses = money in our pocket.
Commenting from work is very different from doing so on my own time; it's typically hurried and not terribly well thought out. I took investment, accounting, finance, etc courses in college - but I'm certainly no guru, and I don't follow it at all now that I'm out (wish I would, but I don't). I'm incredibly risk averse at the moment, and I'd sooner put my money into high-yield savings accounts for the fixed return than play the market.
I realize that's effectively allowing other people to play the market with my money, but I'm okay with that...especially considering the recent turn of events and the fact that I don't have piles of money laying around. As my wealth accumulates I'll probably get into the game, especially since being a young single guy means I can take risks most shouldn't.
You seem like a reasonable guy and I doubt a lot of other users give you a fair shake, probably b/c you take a hard-line position on almost everything and are wordy to boot. But I appreciate how thorough you are in posting. Apologies that I jumped on you the way I did, but I don't agree with you calling out someone simply for sharing a news blurb. It's good to hear you apologized to CC.
For the record, you crying at your wedding and considering yourself an "incurable romantic" is likely shocking to a lot of users. Made me laugh, though. =)
...."I'm so glad to hear that your not a lib. That's because you have a real job and aren't cloistered in some make-believe world."
Sounds like you are close to retirement. I assume that as a good conservative, you'll be foregoing the Medicare and Social Security?
Thanks in advance. Us Libs WITH real jobs (management, medical industry) will appreciate having the funds to allocate to someone who appreciates them.
Good info on Exxon's tax burden:
As for the comments that started this whole thread, just go nuke a gay whale for Jesus all ready and get it out of your system.
DC endorses CC for uhh posting content...
I'm a liberal. I've taught high school English for the past eight years. Is that a real job?
By the way, it's "you're" not "your." "Your" is possessive. You wanted the contraction for "you are." However, I live in a make-believe world, so what do I know? :)
In truth, I enjoyed reading your discussion -- sincerely, and without irony.
As condescending as he was, I miss him stirring things up. Seems Mike Mac <a href="http://www.pegasusnews.com/users/DallasMike/comments/">has moved on</a> from PegNews, so there likely won't be anymore discussions to read. Very unfortunate.
While digging up Mike Mac's username, I stumbled across <a href="http://www.pegasusnews.com/users/DallasProgress/">Mike D.</a> as well (aka DallasProgress, formally known as Michael Davis). Where you at, mang? I miss your contributions, too.
That is unfortunate. The site benefits from a wide range of opinions and ideas. I learn something when I read these comments.
Take a look at the sldieshow on Exxon Mobil on my slide share website.
If we still don't understand where our money is going when we are paying $4 at the gas pump then we never will.
Wow! Very nice the reading the various post. I was just surfing and came across this site. Information is knowledge and I just learned a lot on different point's of view that I had not thought of before. Thanks to everyone for their thought's and a difference in prospectives. I think of myself as a conservite but I have some liberal views too. I thought I was a Republican but now I have gotten to the point that I don't see either party as what I once knew them to be. John in Tennessee Keep up the good post. Thanks
Wow! Very nice reading of various post. I was just surfing and came across this site. Information is knowledge and I just learned a lot on different point's of view that I had not thought of before. Thanks to everyone for their thought's and a difference in prospectives. I think of myself as a conservite but I have some liberal views too. I thought I was a Republican but now I have gotten to the point that I don't see either party as what I once knew them to be. John in Tennessee Keep up the good post. Thanks
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