said Wednesday that it would save $1 billion more than it initially estimated from the merger that made it the world's largest publicly traded oil company.
But that amount did not make a big impression on Wall Street, where ExxonMobil's stock posted only modest gains, rising 11/16, or 1%, to close at 83 1/16. And some analysts raised questions about the future growth of the combined company.
ExxonMobil, based in Irving, Texas, said it now expected merger-related pre-tax savings of $3.8 billion, well in excess of the $2.8 billion originally projected in December 1998. It had forecast earlier this month that the savings would exceed the initial estimates.
"The number being bandied about by analysts was $4 billion," said Ed Moran, analyst for
, who has a buy rating on the stock. His firm hasn't done underwriting for ExxonMobil and wasn't involved in the merger.
The company also said that almost 16,000 jobs would be eliminated by the end of 2002, also well in excess of the 9,000 predicted last year.
About 2,000 jobs have been cut so far. A company spokesman said another 10,000 jobs would be eliminated in 2000, including 4,000 in the U.S. Of the cuts, 60% will be positions from the former Exxon, while 40% will be former Mobil jobs.
The 16,000 in job cuts includes 6,000 retirements. A spokesman said the remaining 10,000 includes employees who voluntarily accepted severance packages.
As a result, the company forecast that the merger, completed last month, would add about $1 billion to earnings in 2000 and about $2.5 billion to earnings in 2001.
ExxonMobil said the $3.8 billion in savings did not include any savings tied to its divestitures of various operations, which are being sold to satisfy regulators' antitrust concerns.
The corporation said that in 1999, the then-separate companies saved a total of $1.2 billion from "base business efficiency efforts."
Since early December, when the company first said savings would be higher than it previously predicted, ExxonMobil's stock price has risen from a Dec. 1 close of 82 1/2 to a Dec. 9 closing high of 86 1/8.
By contrast, the
Nasdaq Oil Index
, which includes the company's stock, has fallen from 517.15 to 508.75 in the same period.
Federal Trade Commission
has forced the company to
divest a total of 2,431 gas stations, including 1,740 sold to
Despite the savings, some analysts were skeptical about the company's prospects for growth.
The main reason for cutting cost structures in the first place was to make expensive projects like deepwater exploration and development feasible, said George Gasper, analyst for
Robert W. Baird & Co
. The firm hasn't done underwriting for ExxonMobil and didn't have a hand in the merger. Gasper rates the stock a market perform, the equivalent of hold.
"Both companies have slowed the train on exploration and development," Gasper said. "They'd better get in gear because what they've been doing for the last 12 months is not impressive in my point of view."
The companies first announced the merger a little more than a year ago.
Analysts expect the job cuts to come in all areas, including engineers and geologists.
"Apparently they're going to become the market leader in everything in every area in the world," Moran said. "The big question that nobody's been able to answer is, how are they going to be able to continue growing the combined entity after they finish cutting the jobs?"