MarketWatch First Takes
Breaking news commentary for Feb. 1, 2008
• Exxon Mobil profit hews close to oil-patch blueprint
• Microsoft-Yahoo proposal could be ruined by a culture clash
• Yahoo deal sure to get a 'hooray' from Wall Street
• Last pillar of denial is gone, now that jobs are being lost
• Microsoft admits it can't fight Google alone
• Exxon Mobil profit hews close to oil-patch blueprint
• Microsoft-Yahoo proposal could be ruined by a culture clash
• Yahoo deal sure to get a 'hooray' from Wall Street
• Last pillar of denial is gone, now that jobs are being lost
• Microsoft admits it can't fight Google alone
Exxon profit builds on oil-patch blueprint
Commentary: Replenishing reserves defines the bottom line
Last Update: 2:31 PM ET Feb 1, 2008
SAN FRANCISCO (MarketWatch) — Exxon Mobil cranked out a record fourth-quarter profit Friday on historically high oil prices. That's the simple explanation behind the whopping $11.66 billion it netted in the last three months of 2007, a period which saw crude top $90 a barrel for the first time. See full story.
But it goes deeper than that.
While soaring oil prices lift the fortunes of all oil producers, their latest quarterly results have been uneven. Companies whose own output can't keep pace with the needs of their refining operations get clipped when oil prices spike because they're at the mercy of the global oil market.
Lately, that's been less of a problem at Exxon (XOM:![]()
,
,
)
than for others. It registered a 1% increase in combined oil and gas output during the latest quarter, compared for example with a 6% drop at rival Royal Dutch Shell Plc. (RDSA:![]()
,
,
)
and a 1.5% drop at Chevron Corp. (CVX:![]()
,
,
)
.
XOM
Sponsored by:
RDSA
Sponsored by:
CVX
Sponsored by:
The world's biggest oil company has stayed ahead of the pack by focusing on the oil patch, successfully placing big bets on finding reserves in corners of the world that carry huge risks - politically, as well as economically and geographically.
Meanwhile, oil prices have tumbled 10% from their record $100 high in early January, raising the prospect of an oil glut and even lower prices in the months ahead.
While Exxon is clearly watching the trend like a hawk, its executives are far less likely to fret over it than investors. That's because they measure the results of their investments over decades rather than quarters.
After enduring years of criticism from Wall Street analysts for lagging the rest of the industry in the effort to bump up reserves, Exxon is now sitting comfortably atop several large, newly-developed fields in such remote places as offshore Angola. These will yield a fat revenue stream for many years and keep Exxon refineries' dependence on purchased oil just that much lower than their competitors.
What keeps Exxon executives awake at night is not the long-term, billion-dollar commitments required to find new fields, but the likelihood their holdings might be expropriated by host governments, as happened last year in Venezuela, or that some nations will exclude the American giant from future exploration licenses.
As world oil demand continues to grow and the field gets more crowded, Exxon still has enormous wealth and clout to throw around. Like everyone else in the business, it knows reserves are at the core of future profits. Recent results show Exxon is still very much in the game, using a blueprint John D. Rockefeller would readily recognize.
Microsoft-Yahoo proposal could have culture clash
Commentary: America Online-Time Warner plan was undermined by rivalries
Last Update: 12:53 PM ET Feb 1, 2008
NEW YORK (MarketWatch) — Right now, the Wall Street and Silicon Valley buzz is centering on the fantastic potential of Microsoft Corp.'s unsolicited $44.6 billion bid for Yahoo Inc. See full story.
They key word may well be "unsolicited." Even if the deal navigates Washington and goes through without any drama, the biggest obstacle to success will come when the two companies get down to business.
It's anything but a guarantee that this deal will be the slam-dunk success that some pundits are forecasting. I foresee a very big problem bubbling beneath the surface and buoyant proclamations today.
I remember the optimism that surrounded America Online's takeover of Time Warner (TWX:![]()
,
,
)
seven years ago. But the deal quickly became a fiasco largely because the AOL and Time Warner armies proved to have about as much in common as the Union and Confederate troops.
TWX
Sponsored by:
The AOL and Time Warner executives clashed over which company's culture would rule. AOL was accustomed to moving at a fast pace while Time Warner was deliberate. Time Warner thought AOL was reckless. AOL thought Time Warner was stodgy.
Yahoo strategic for many reasons
Commentary: Wall Street should get a boost from $44.6 billion offer
Last Update: 12:23 PM ET Feb 1, 2008
NEW YORK (MarketWatch) — There's nothing like a $44 billion deal to inject a little optimism into a market suffering from recession blues and an antsy mergers and acquisitions environment.
Early in the session, Microsoft Corp.'s (MSFT:![]()
,
,
)
more-than-decent proposal for Yahoo Inc. (YHOO:![]()
,
,
)
has already goosed the market. The Dow Jones Industrial Average (DJIA:![]()
,
,
)
and S&P 500 (SPX:![]()
,
,
)
were higher and the tech-heavy Nasdaq Composite Index ($COMPQ:![]()
,
,
)
lead with a full 1% gain, before sentiment over the gloomy employment numbers sent the market lower.
MSFT
Sponsored by:
YHOO
Sponsored by:
DJIA
Sponsored by:
SPX
Sponsored by:
$COMPQ
Sponsored by:
But the big gainer on the news was the brokerage sector, the Amex Securities Broker/Dealer Index ($XBD:![]()
,
,
)
got the biggest jolt. Deal making revives Wall Street, and it was the multibillion-dollar deal that the industry was sorely missing. Read David Weidner's Writing on the Wall on deal making and the markets.
$XBD
Sponsored by:
Microsoft, after all, has spent more than $10 billion on deals in the last nine years for which it used advisers including Lazard Ltd. (LAZ:![]()
,
,
)
and Goldman Sachs Group Inc. (GS:![]()
,
,
)
. For Yahoo, Morgan Stanley (MS:![]()
,
,
)
won the plum assignment as adviser to Microsoft and the fees, according to Dealogic.
LAZ
Sponsored by:
GS
Sponsored by:
MS
Sponsored by:
In last year's record $4.83 trillion year for deal making, investment banks collected an estimated $22 billion in advisory fees, according to Dealogic. Unlike other resource-intensive Wall Street businesses it's the financial advice and the public offerings that carry the biggest profit margins.
The tech sector continues to be among the biggest drivers of overall M&A with 4,627 deals last year valued at $268 billion.
It looks as if that's going to continue in 2008. It's enough to make any investment banker shout hooray.
Last pillar of denial is gone
Commentary: Only a slim reed of hope remains that recession can be avoided
Last Update: 9:08 AM ET Feb 1, 2008
WASHINGTON (MarketWatch) - The last pillar to hide behind has fallen. Jobs are being lost in the U.S. economy.
The 17,000 jobs destroyed in January add to the evidence that a recession has begun, but they do not prove the point. One month of hiring cutbacks does not make a recession, but it is a necessary condition. See full story on January employment report.
As noted on Thursday, the employment data in December and January are hard to read. Economist Ray Stone calls them the "dirtiest of the entire year," because weather and the usual swings in employment can cloud the underlying reality.
But most economists believed weather and the seasonal factors would work in favor of January data that looked better it really was. Uh oh.
The figures released Friday by the Labor Department were grim, relieved only by a decline in the jobless rate. It's a slim reed to hold on to.
Employment is falling in almost every sector of the economy. Only the health-care sector, which is immune to the business cycle, was spared completely.
Few industries are hiring, or even taking on temporary help. Hours worked are falling. Wages are barely keeping pace with inflation.
All of this is no surprise to those who've been watching the Federal Reserve and Congress scramble to provide support for a fragile economy.
Expect more.
—Rex Nutting, Washington bureau chief
Microsoft admits it can't fight Google alone
Commentary: Bid for Yahoo acknowledges the game has changed
Last Update: 7:50 AM ET Feb 1, 2008
LONDON (MarketWatch) — Microsoft Corp.'s $44.6 billion bid for Yahoo is a candid admission that the game has changed — and that the software giant can't battle the Google juggernaut alone.
Microsoft (MSFT:![]()
,
,
)
admitted as much in announcing the acquisition bid.
MSFT
Sponsored by:
"The online advertising market is growing at a very fast pace," the world's biggest software company said in its press release. "Today this market is increasingly dominated by one player."
Of course, Microsoft (MSFT:![]()
,
,
)
knows plenty about what it's like when one player dominates.
MSFT
Sponsored by:
All the same, it's been hamstrung in efforts to spend the billions in cash thrown off by its Windows and Microsoft Office franchises because of its near-monopoly in the computer operating systems market and the associated regulatory and legal battles.
But the accelerating dominance that Google (GOOG:![]()
,
,
)
has staked out in the fast-growing online advertising market — expected to double in 2010 from the $40 billion a year seen in 2007 — means that Microsoft can seek to take over Yahoo (YHOO:![]()
,
,
)
without much fear of regulatory disapproval.
GOOG
Sponsored by:
YHOO
Sponsored by:
Or, as Kevin Johnson, president of the Platforms & Services Division of Microsoft: "The industry will be well served by having more than one strong player."
Just remember that old rule of thumb, Kevin. Don't be evil.
- Tom Bemis, assistant managing editor
More MarketWatch First Takes
| 09:08 PM 1/31/08 | Motorola's cell phone woes won't be solved by a sale | |
| 05:08 PM 1/31/08 | Google's miss adds to tech investor skittishness | |
| 12:40 PM 1/31/08 | Starbucks' fast track collides with a sluggish economy | |
| 11:43 AM 1/31/08 | Conflicting motives as bond insurers struggle | |
| 10:54 AM 1/31/08 | Commentary: Jobs data at the start of the year are hard to read | |
| 10:52 AM 1/31/08 | Why Europe stocks are doing worse than their U.S. counterparts |
Companies in today’s First Takes
| Exxon Mobil Corp (XOM) | |
| Royal Dutch Shell Plc (RDSA) | |
| Chevron Corp New (CVX) | |
| Time Warner Inc (TWX) | |
| Microsoft Corporation (MSFT) | |
 | Add to Portfolio |
| Create Alert |
| MarketWatch Premium Products |
 | The Technical Indicator Technical analysis for sophisticated traders |  Let MarketWatch’s leading industry experts help guide you in optimizing your portfolio’s performance. MarketWatch Premium Products for the self-directed investor, offer research, analysis and actionable ideas to help you reach your investing goals. Get started today!   |
| | MarketWatch Options Trader The ultimate guide to options trading | |
| | Hulbert Financial Digest Get the definitive guide to investment newsletters | |
| | HFD Newsletter Profiles In-depth studies of a newsletter's performance | |
| | Hulbert Interactive Access the 180-newsletter HFD database | |
| | Retirement Weekly Get the retirement you deserve | |
| | ETF Trader Profit from exchange-traded funds | |
| | MarketWatch Global Resources Trader The exploding commodities markets revealed | |
| | Proactive Fund Investor with Bill Donoghue Mutual fund strategies in both bull and bear markets | |
Editors' picksMost read
Most commentedMost emailed
TRADING CENTER
Copyright © 2008 MarketWatch, Inc. All rights reserved.
By using this site, you agree to the Terms of Service and Privacy Policy.