Market has already priced it in.
12 replies (most recent on top)
@1jta+172VsreO same person replying. I agree with the bloated management part. Cutting people across the board is not right. I worked in a great performing asset for years on a great team but we had headcount reduction and Capex cuts while underperforming assets and useless support expenses were not targeted. They lost people like myself through regretted attrition (I found a better company). These cuts across the boards will not work, targeted divestments and layoffs are warranted based on business need.
@1buh+172VsreO
You did not read my comment with any comprehension - I never excluded mgmt from cost-cutting.
But are you suggesting that we cut mgmt / HQ and suddenly our margins will improve? Suddenly demand will return to pre-COVID levels? Our margins will surpass our competitors?
We cannot cut our way to prosperity. Dividend cuts will not save the company. Every other oil company has been in job cutting mode since 2016 (BP, CVX, COP, RDS, Total, etc), we would be arrogant to think we are above that.
Do not confuse my statement with my endorsement or support or enthusiasm about headcount reduction. I am saddened at the current state of the company, and like everyone on this board, also at risk of being unemployed.
But that does not mean we should continue to ignore the basic fundamentals here. We are $48B short over the next two years. Dividends payments are $14.8B/yr. Cutting dividends will close some of the gap, but it will destroy stock price. And it ignores that our margins are 25% lower than our competitors, that our D&C costs are higher than our competitors, our volumes/employee ratio is lower than our competitors, and a myriad other benchmarks. We need to purge non-performing assets, bloated mgmt ranks, fungible/exportable business services in high-cost countries, and non-essential workers.
@1orl+172VsreO inefficient workforce means management and non cash generating areas like HQ its funny how you skip over that fine detail
Cutting the dividend for what? We have to live within our means, i.e. free cash flow pays for dividends and capex. But the problem is that we are UNECONOMIC! The margins from Shell and CVX are 25 to 30% higher than XOM. Cutting the dividend does not help margins! We have to cut disadvantaged assets, inefficient workforce, consolidate BUs, cancel non-value-add projects, etc.
If we cut dividends, and leave these structural issues, then the market cap of the company will disappear further.
I have to agree that a dividend cut is already priced in. Why would an A credit rated company be paying a 9% dividend? Given the very low yields on Treasuries and other fixed income investments the market should be piling into XOM as a bond proxy. But obviously at $37 share price they are not. Either the market expects the dividend to be cut significantly, or it expects the share price to fall significantly.
I think the Board of Directors should cut the dividend 50%, and use the $7B/yr to maintain investment in the few key projects with high potential cash flow and high probability of success. In a time of crisis all opex needs to be looked at, and all non-essential activity needs to stop. That unfortunately means the organization will have to be right-sized for the new level of activity, so jobs will be lost.
Management needs to keep in mind that no company has ever saved their way to prosperity. You have to focus on improving cash flow generation by concentrating on the activities that will most likely be successful. Frankly, tinkering with employee benefits like the savings plan match and college tuition assistance is small ball. It won’t help very much, and it will demotivate the people you need to help get the company out of the ditch. Right now employee morale is the lowest it’s been in decades.
Management needs to forego any bonuses this year. Their performance has not merited a bonus. No whining that this is all caused by COVID. ExxonMobil was in the ditch long before COVID hit. It was 10 years of bad investment decisions that got it there, not too much savings plan contributions. And the HR VP that dreamed up the new ranking mess, the layoff hoax, and the employee benefit cuts should be the first to go.
Yes! Modern day Robin Hood. Rob for the rich to give to the poor. Remember he said he was under paid? So now it’s the time to pay himself first! With the sweet dividends!
What is "the market"
- Are you referring to... This article? This article is certainly not the market... I sure hope this loser got PIP'D...
https://www-barrons-com.cdn.ampproject.org/v/s/www.barrons.com/amp/articles/options-traders-are-pricing-in-an-exxon-dividend-cut-analyst-says-51600181938?amp_js_v=a2&_gsa=1&usqp=mq331AQFKAGwASA%3D#aoh=16006579620943&referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s&share=https%3A%2F%2Fwww.barrons.com%2Farticles%2Foptions-traders-are-pricing-in-an-exxon-dividend-cut-analyst-says-51600181938
The man is just a modern day Robin Hood. His only priorities the widows and orphan’s that rely on the dividend!
Market has not priced a dividend cut.. EM will not cut dividends. Darren Woods needs to help those living in the dividends.. then again.. the man has no credibility left.
There are so many index and institutional retirement funds that include XOM. If they drop the dividend, the selling will dwarf the previous price drop. Hard to believe but the price could go down to the single digits if the dividend were cut or suspended. Be careful what you wish for. I personally think the dividend won't be cut.
Just put it on the credit card again, this is America after all...
I have a feeling it will be cu next quarter. We just don't have the money to afford.