NEW YORK, Oct 28 (Reuters Breakingviews) – Exxon Mobil (XOM.N) might be able to give Apple (AAPL.O) a lesson in disruption. The oil company said Friday that it earned $20 billion in the third quarter, its best quarter ever, and nearly as much as Apple said it made earlier in the week. But the oil giant, which was the world’s most valuable firm about a decade ago, is only worth a fifth of the $2.5 trillion technology firm. The market’s newfound respect for earnings, and the recognition that ingrained beliefs can be fleeting, could partly close this gap.
Exxon’s profit was nearly triple last quarter what it was in the same quarter last year, and it wasn’t alone. Chevron’s profit, announced the same day, came close to doubling. The results are largely a function of higher commodity prices. Exxon said volume, or barrels of oil equivalent, only rose 1%, while Chevron (CVX.N) production was flat. Firms are also keeping investment under tight control. Oil investors have been clear that they want discipline, as demand will likely peak soon if it hasn’t already.
That means Exxon will presumably never reclaim its crown as the world’s most valuable firm, and Apple still earned far more than the company in the past year. Plus the $2.3 trillion technology giant’s earnings have grown far faster over the past 20 years. Investors assume, with good reason, that earnings growth at Tim Cook’s company will therefore continue to be faster.
Yet investor perceptions of future profit can be reassessed rapidly, as the massive falls in other tech companies like Amazon.com (AMZN.O) and Meta Platforms (META.O) illustrated this week. They lost about $200 billion between them, as investors were disappointed with their growth, and the hefty investment they need to stay on top. It’s not unthinkable that, like with oil, new technologies will eventually upend Apple’s business. Staying profitable in the meantime is key.
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CONTEXT NEWS
Exxon Mobil and Chevron reported third-quarter earnings on Oct. 28.
Exxon earned $19.7 billion in the quarter, nearly tripling what it earned in the same period last year. Chevron earned $11.2 billion in the quarter, compared to $6.1 billion in the same period last year. Earnings per share rose 81% to $3.19.
Exxon produced 3.7 million barrels of oil equivalent per day in the quarter. That’s 1% more than it produced in the same period last year. Chevron’s production was unchanged compared to the same quarter last year.
Editing by Lauren Silva Laughlin, Amanda Gomez and Sharon Lam
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