Thursday, October 30, 2008
This post is about 12 hours late because the day job was weighing me down, but I have a question that remains worth asking: Why did ExxonMobil decide to release its record earnings today, instead of -- say -- next Wednesday? There are only two explanations. First, XOM's executives actually want Barack Obama to be elected. You know, because why not go with the guy who has promised to increase taxes on your company's profits, cap your salary, and let unions organize your refineries without elections? Or, second, because they are idiots.
I struggle to imagine what the third reason would be.
Well, McCain must have went senile today because
this was his response today, concerning Exxon:
"When I'm President, we're not gonna let Exxon reap record profits"
I. Just. Don't. Know.
Read the entire article. "The company said its revenue totaled $137.7 billion in the third quarter." That means that they spent over $122 billion. That's a 12% profit. Back off. I can't believe how people react to a 12% profit.
socalmike, I did not intend to criticize. Regular readers know that I have huge respect for the oil industry, and especially ExxonMobil. Indeed, I took some savings from a summer job in law school back in 1985, bought 50 shares of XOM for a little over $2000, put it on dividend reinvestment, and now, 26 years later, it is a lot of money. I just do not understand why the management decided to slap a "kick me" sign on its back by reporting its numbers today, rather than next week (still within the SEC deadline for Q3).
TH, I am sorry that I sounded like I was criticizing you - I was actually just blowing off some steam. I love your blog, and I don't want to sound like some blowhard that likes to piss off people. Keep up the good work.
XOM's been reporting earnings on the last day of each month for as long as Googling can dig up? If they release their earnings after the election, I imagine there would be increased volatility in the stock, as traders struggle to figure out what's going on. Remember, XOM's duty is to the shareholders, not any political candidate, or so Milton Friedman said.
My guess is that XOM management, which has been beaten up by politicians all year, could have decided in, say, April, to calendar is Q3 earnings for November 5 and nobody would have cared. If somebody would have asked, it could have said back then that "we are the biggest oil company in the world, and we do not want our financial results to become the subject of last minute demagoguery at the very end of the presidential campaign." People would have made brief mention of it back then, there would have been a few blog posts, and then end of story. And, no, I do not really think XOM should be playing for any particular candidate, but when one candidate demonizes your company and industry sincerely in every stump speech and the other one only smacks you around to avoid losing all 50 states, you need to give some thought to not forcing the second guy to denounce you as well.
I mentioned before that my grandfather and father both worked in the oil industry. (Dad's now in natural gas and chemicals, though) They both worked for Mobil, which was a good company that they were very happy with. Grandfather retired as a lifetime Mobil man, and was treated well.
Exxon acquired Mobil what, like 10 years ago? 8? Something like that. And they promptly began to drive the Mobil people crazy.
Apparently Exxon is run by jackasses who don't understand the business and are more concerned that safety paperwork is filled out than if the actual job gets accomplished. They hire 22 year old chemical engineering graduates and put them in charge of whole divisions of 20 year veterans. They expect operations managers (the guys who make sure plants don't explode) to spend their hours filling out paperwork, instead of making sure that the plants don't explode. And so forth.
Well, the senior Mobil folks didn't have to put up with that shit. They grabbed their pensions and jumped ship into (sometimes early) retirement. This caused vacuums at crucial upper levels that Exxon decided to fill by inserting spirit-crushing bureaucrats who've never smelled crude in their lives and college kids who've only smelled crude in laboratories their sophomore year, exacerbating the problems that caused the senior Mobil employees to leave in the first place.
The company drives on and succeeds by virtue of a kind market and their size. When oil is over $100 a barrel and you produce the most of it, it's hard not to make money. But it is not run well. Other companies have smelled this, and are starting to poach folks away from Exxon. (like my father, who got two different offers in the span of like, 4 months. Turned them down because he's old and didn't want to move.)
So... yeah. Idiots. That's my vote.
Or, second, because they are idiots. ?
Yes. See Dawnfire82 comments. XON is the other mastodon company, after GM. But in my experience, all oil companies are kind of like that. They find it, they pump it, and they sell it. Not brain surgery.
Did you see Good Will Hunting? Remember Matt Damon is describing how his father would beat him (in the movie) and he said he could have a choice, the belt or the wrench? He chose the wrench. And when asked why (I can't now remember if its Robin Williams (his shrink) or Minnie Driver (his girl) who asks) he would choose the wrench, Damon says "because fuck him."
XOM is pretty well known for saying Fuck Him. Very Texas.
DFire and Tom L., I'm not sure the numbers support your view of XOM's stupidity in general. It has better financial performance than most other integrated oil companies as measured by the usual metrics (not size, actually, but operating margins and the like).
The third possibility is that XOM management believes they have a legal duty to act as they normally would in communicating with the investing public, and choose to ignore the politics of their earnings as unavoidably beyond their control. Socialism won't hurt XOM anyway. If anything big corporates like XOM would probably like state control of market access lots better than the present situation. After all, while XOM performs well financially, the company isn't very large by international standards in reserves owned or production. Government sponsorship will help rectify that deficiency.