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Yet it's so small: XOM ('12) GOOG ('13) Revenue $453 B/a $60 B/a Profit $45 B/a $13 B/a Market cap $393 B $394 B h
by throwaway_yy2Di 13y ago
Yet it's so small:
XOM ('12) GOOG ('13)
Revenue $453 B/a $60 B/a
Profit $45 B/a $13 B/a
Market cap $393 B $394 B
https://en.wikipedia.org/wiki/Google https://en.wikipedia.org/wiki/Google
https://en.wikipedia.org/wiki/ExxonMobil https://en.wikipedia.org/wiki/ExxonMobil
(101 for anyone who doesn't know this: revenue is how much you sell, profit is what's left over for shareholders, market cap is how much shareholders think that profit stream is worth).
Relevant: check out wikipedia's rankings of company size:
https://en.wikipedia.org/wiki/List_of_largest_companies_by_revenue https://en.wikipedia.org/wiki/List_of_largest_companies_by_r... (and the see also)
- milkshakes 13y agoYou're neglecting growth: https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1391806800000&chddm=981801&chls=IntervalBasedLine&cmpto=NASDAQ:GOOG&cmptdms=0&q=NYSE:XOM&ntsp=0&ei=U0b1Usi0OuOtiAKvkgE https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
- deleted 13y ago[deleted]
- diminish 13y agoOne Question remaining is when Google's market value will surpass Apple's. That'll likely happen before the end of this year, so get ready for the repetition of the same HN discussion, replacing Apple with Exon.
- scoofy 13y agoThis is a reasonable thing to point out. When valuing equities, i tend to use a strategy out of the playbook of a less famous fund manager, John Neff. That is, one that includes total return. Indicator: Neff Ratio = (EPS growth rate + dividend yield)/PE This is similar to the inverse of PEG, a much more common indicator, but it includes yield as part of total return. It's one of my primary screens when looking for equities, because both Exxon and Google would have good marks, even though their return would be from different sources.
- skriticos2 13y agoHm, applying a bit of my personal sense, I'd say Exxon's business is drying up in the foreseeable future (oil is running out, renewable energy is on the rise). Google is a software business with very strong network effects. I definitely see how there is more demand for software in 100 years than for oil (as a fuel). Economics is not a pure numbers game. They [edit: the numbers] just try abstract what the companies do now and in the future.
- hawkharris 13y agoExxon Mobil invests more money in alternative energy research than any other organization in the world.
- JonFish85 13y agoExxon Mobil isn't going anywhere. As oil-usage decreases (which is still likely a long ways off), I'm sure they'll be right there to provide whatever the next energy source is.
- WildUtah 13y agoActually worldwide oil usage peaked in 2005 and has been gyrating around that level ever since. About half the months since then have seen decreases and half increases, so it's not a long way off. It's almost a decade ago. Eventually heroic measures will start to fail and usage will be dropping every month for the next century as the oil fields slowly dry up.
- waps 13y agoIt's not just that. Investment projects to increase oil output are having costs going through the roof : http://online.wsj.com/news/articles/SB10001424052702303277704579348332283819314 http://online.wsj.com/news/articles/SB1000142405270230327770... (just an example) But it's not just that EREOI in Saudi Arabian oil is projected to be at most 10 currently (down from > 30). While that's not that serious, it is decreasing exponentially and a value of < 5 would be catastrophic. Most other projects are far worse off. (Why ? At EREOI of 10 you have to "waste" 11% of oil, up from 4% at 30. However at 5, the factor becomes 25%, at 4 it's 33%, at 3 it's 51%, at 2 it's 100%), note that current total reseve oil output is 2% at best, and minimum depletion rates are 7%. Here's the net problem : the world will run out of oil in 6 months - 12 months. The US has a stay of execution though, but not for long : 2-3 years at most, and the US will need to implement protectionist measures to keep oil at a reasonable rate. Given what happened every other time we have a few percent drop in oil availability, I'm expecting a total stock crash and a new crisis by the end of the year.
- hayksaakian 13y agoWe often ridicule tech companies for having inflated valuations. I don't disagree with this in general. In your specific comparison, which company do you genuinely think will grow more over the next N years? Google has shown the ability to dominate multiple markets time after time. I can't see Exxon as any more than an oil company. There's certainly nothing stopping them (any more than any other business) from innovating.
- wmeredith 13y agoThe only market that Google has ever dominated profitably is search engine advertising. Despite, Glass, self driving cars, Android (free), Feedburner (dominated and shuttered) Gmail, Maps, etc... 96%[1] of their revenue is from selling ads. I love a lot of Google products, but the only one they make any money on, is one I despise. It pays for everything else. [1]http://venturebeat.com/2012/01/29/google-advertising/ http://venturebeat.com/2012/01/29/google-advertising/
- igorgue 13y agoI was thinking about it last time. And it's sad that it's 2014 and most tech companies that get tons of press and admiration make money with advertisement, something we all hate.
- wutbrodo 13y ago> something we all hate Doubtless there are some (perhaps even many, in certain circles) who would rather pay directly for services, but you're sorely mistaken if you think that it's anywhere near-universal (even on HN/in tech) that people hate ads more than they hate paying. What you actually mean is "something we all hate, given that we feel entitled to getting services completely for free".
- igorgue 13y agoYeah you're right :)
- 13y ago
- igorgue 13y agoWe all know what PG says the most important thing for a startup like Google is growth and that's the only thing that matters :)
- MichaelApproved 13y agoI believe one reason why Google and even Apple are able to surpass Exxon is because Exxon pays out a large portion of its profit in dividends while Google and Apple retain much of theirs in bank accounts as assets. If Exxon didn't pay a dividend they'd easily be the largest company in the world with regards to market cap.
- ihaveajob 13y agoI'm not sure that is a correct line of logic. Often, companies pump their stock prices by handing over dividends. That's a sign of a mature company, which can't expect to grow much, but is still valuable to its shareholders if it can provide results in any other way.
- tedsanders 13y agoNo, if the company pays out dividends, its price ought to fall. For example if a stock is at $100, and then pays out $5 in dividends, afterward the price will be $95. The company is worth less after giving away a pile of its cash.
- mkaziz 13y agoWhat's the logic behind giving out dividends then, if you don't mind me asking?
- nicholas73 13y agoThe logic is really stock price management, as I answer above. A secondary reason is simply cash management. You don't want your managers feeling rich and simply wasting money on acquisitions or otherwise splurging on themselves.
- silverbax88 13y agothe dividends are not related to stock price- although logically, dividend paying stocks should make a stock more valuable. Dividends are just a portion of profits paid out to public investors. Companies that don't pay dividends on C class stock still pay dividends on other classes of stock.
- suyash 13y ago"market cap is how much shareholders think that profit stream is worth" => Wrong, Market Cap has little to do with what you mentioned. It is calculated by determining the total dollar market value of all of a company's outstanding shares. Ref: http://www.investopedia.com/terms/m/marketcapitalization.asp http://www.investopedia.com/terms/m/marketcapitalization.asp
- tedsanders 13y agoActually, both definitions are essentially the same. The market consensus sets the price.
- mcherm 13y agoActually, he is right. We presume that no one owns shares of a company just for bragging rights. (This might not be 100% true.) We presume that no one owns shares of a company because they're irrational. (This is 100% false. But hey, economics has to assume something.) People own shares of a company because they can get money for owning it. They can get money by being paid dividends, and they can get money by selling it to someone else after the price rises (or stays the same, or goes down). That other person will only pay for it based on the same thing: dividends paid plus the value of selling it to someone else. So the total value of the company should be the current value of the company's total future dividends. We calculate it by multiplying the current price by the shares outstanding, but it's presumed to be an estimate of the future dividend stream.
- cbr 13y agoHow does this square with tech companies generally not paying dividends?
- mcherm 13y agoWell, the assumption is that the tech companies aren't paying dividends NOW because they're focused on growth. After they grow they'll pay dividends. Theory and reality may diverge in this instance.
- 13y ago
- bad_user 13y agoThat's not so bad. The difference in my mind is that Exxon is making money from natural resources that are not renewable and the cost for extracting oil is on the rise. If they don't reinvent themselves, they'll die. Google on the other hand is making money out of software. Software is the artifact of our own mind. So the way I see it - for companies such as Google or Apple, the sky is the limit. For Exxon, unless they reinvent themselves, there's nowhere they can go. And btw, isn't it awesome that software/hardware companies are starting to dominate the Top 10?
- clarky07 13y agoAnd yet Apple is making Exxon type money and still has a multiple like Exxon instead of Google.
- sliverstorm 13y agoGoogle needs to reinvent itself too, perhaps even more & faster than XOM. The industry moves too fast for them to sit still for more than a couple years, while XOM has got decades to figure things out.