Sunday, October 30, 2005

Contempt for "Fueling Contempt"

Coyote Blog weighs-in on an anti-business hit-piece called "Fueling Contempt" on the front page of the AZ Republic:

The article is mainly focused on the profit announcement at Exxon-Mobil, so I will use their numbers to put "staggering" into context. E-M announced profits of $9.9 billion on sales of $101 billion. For those who cannot divide, that is a profit margin of 9.9% of sales. Since when is a profit margin at a cyclical peak of 9.9% considered "staggering"? Microsoft makes 30%, in good times and bad, with a raction of the investment or risk X-M takes. From this chart, you can see the average for all industry is about 8%, with the oil industry generally below this number in all but cyclical peak quarters and banks, pharma, software, semiconductors, financials, household products and many others all consistently over 10%. Procter and Gamble makes a margin of nearly 13% of sales selling toothpaste and detergent but we are going to begrudge oil companies 7.6% on average and 10% in their best quarters?

The article does absolutely nothing to put the profits in their proper context, though I was able to do it in one paragraph.
Related: Hands Off The Windfall Oil Profits


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