XOM Preview: Perched Upon a Pile of Cash

ExxonMobil (XOM - commentary - Cramer's Take) is scheduled to release third-quarter 2008 results before the markets open on Thursday and follow up with its quarterly conference call later that morning.

Analysts expect the company to post earnings of $2.39 per share on revenue of $131.38 billion. In the year-ago quarter, ExxonMobil earned $1.70 per share on revenue of $102.34 billion.

I am expecting the company to perform well on the upstream part of the business as a result of increasing realizations from rising crude prices through the early part of the quarter. In the downstream businesses, lower refining and retail margins will likely be challenging.

Taken together, this is exactly what we heard from Occidental Petroleum (OXY - commentary - Cramer's Take) earlier in the week and what I also expect to hear from Chevron (CVX - commentary - Cramer's Take) later this week.

We must factor into our forward thinking the lower price of crude, recessionary demand drops and ExxonMobil's desire to exit the retail business.

I constantly ponder what management is going to do with the company's huge cash war chest of nearly $40 billion. I would not rule out additional stock buybacks at these depressed levels nor would I rule out a strategic acquisition. Perhaps ExxonMobil will give analysts and investors some insight into its plans.

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At the time of publication, Rothbort had no positions in the stocks mentioned, although positions can change at any time.

Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. He also is the founder and manager of the social networking educational Web site TheFinanceProfessor.com.

Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.

Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Term Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.

For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com. Scott appreciates your feedback; click here to send him an email.