Beyond Tea-Party Somnambulism!

Posts tagged ‘revenue’

People Suffer…Big Corporations Prosper!

We continue to hear how the economy teeters on the brink of another dip. Millions are still unemployed; have no healthcare; are losing their homes; in other words, the decline of the American Dream continues.

Not Just the Brits!

There is a bright spot, however: corporate earnings, supposedly indicative of a robust economy, continue to meet, exceed and even bust all previous records! One such star in the cloud-filled sky, is Exxon-Mobil.  Is anyone surprised?  Of course not!  Big oil continues to prosper, while the Middle Class and poor have no choice but to help fuel the record profits.

Just announced:

“ExxonMobil Profit Tops Estimates, Posts 3Q EPS of $2.13, on Revenue of $125.33 Billion.”

Ok, so what exactly does that mean?  Let’s break it down, so we can understand what seems to be a typical ‘financialese’ statement.  When Wall Street talks about EPS, they’re referring to ‘Earnings Per Share.’  Now, ‘Earnings’ is not the total revenue that a company takes in; it is the remaining PROFIT, left over after reducing its revenues by its expenses. According to Investopedia, ‘Earnings’ is defined as:

“The portion of a company’s profit allocated to each outstanding share of common stock. Earnings Per Share serves as an indicator of a company’s profitability.”

Read more: http://www.investopedia.com/terms/e/eps.asp#ixzz1bzgbjtm1

So, ExxonMobil not only met expectations, but exceeded even their own predictions of how much revenue and profit they would make this past quarter (July 1 – Sept 30). Yes…I said QUARTER!  ExxonMobil had net profit of $2.13 per share on total revenue (sales + other income) of $125,330,000,000, between July 31 and September 30, 2011.  Since ExxonMobil had approximately 4.9 Billion Common shares of stock outstanding at the end of the quarter, we just need to multiply the earnings per share ($2.13) by the number of outstanding shares (4.9 billion), to come up with the total profit figure:

$2.13    x    4,900,000,000    =     $10,437,000,000

When 1+1=$10 Billion!

Not bad for one quarter!  Now, I am a former business owner and I appreciate profit as much as the next person, however, there is ‘profit’ and then, there is ‘PROFIT!’  When reasonable ‘profit’ becomes unconscionable ‘PROFIT’, there is something wrong with the picture.  Who am I to determine what is ‘reasonable’ and what is ‘unconscionable?’  I don’t think it takes a rocket scientist or even a Wall Street financial analyst to figure that one out.

It seems to me that reasonable profit approaches unconscionable profit when the profit-producing company is in a position that equates with a monopoly on the product or commodity being sold and purchased. Further, when the need for that product or commodity is a requirement for everyday living by a majority of the population.  When these definitions are met, the product or commodity becomes a necessity, like electricity, water, food and shelter.  People have no alternative but to purchase the product or commodity, whatever its price!

Is a profit of $10 Billion per quarter ‘reasonable’ or ‘unconscionable?’  I am going to step out on a limb here and proffer that it is ‘unconscionable.’  Crude oil prices are down from their highs, however, it doesn’t seem that lower crude oil costs equate to lower gas prices.  If they don’t correspond, what can be a reasonable explanation?  Another limb <*crack*> and my response is greed, pure and simple.  While millions and millions are losing everything they’ve worked for over their lifetimes, mostly as a result of more greed from the financial industry, Big Oil continues to bring in profits exceeding their own estimates.

FORECAST: Profit Today, With Increasing Profit Overnight & Tomorrow, Continuing Into the Foreseeable Future!

What’s the answer?  Since gasoline has been, and continues to be, a requirement and necessity for the country, just as electricity and natural gas, we need to see the States step in to regulate the price.  The States already have in place Public Utility Commissions that regulate the rates for electricity and natural gas, why not gasoline?  Utilities like Pacific Gas & Electric, Dayton Power & Light, Duke Energy, Consolidated Edison, and others across the country, are all publicly traded companies, making reasonable profits and paying dividends. They have one thing in common: they are regulated by the States they serve.

Stone-Wall Street!

Will we continue to allow the greed and unconscionable profits of Wall Street and big corporations to drain the wealth and security from the lives of the Middle Class and poor?  Is this class warfare?

Is it jealousy of the big salaries and bonuses received by corporate execs and financial money-pushers?  Is it unreasonable for the average US corporate executive to earn 400 times what the average worker earns?  These are the questions being posed today by the Occupy Wall Street protesters…and millions of Americans like me & you.  Where do you stand?

9-9-9…I’d rather have a pizza!

At first blush, almost any plan looks better than the jumble of rules, regulations and loopholes of our current tax code. Unfortunately, the proof is in the pudding, as they say, and when you run Herman Cain’s plan in various scenarios, it just doesn’t work. In order for a plan to be truly effective, it needs to be run in every scenario possible, with positive results. This ‘plan’ is especially ineffective in most scenarios and actually INCREASES taxes for most Americans and many businesses. EX. http://www.washingtonpost.com/blogs/fact-checker/post/herman-cains-misleading-pitch-for-the-999-plan/2011/10/12/gIQAHszPgL_blog.html

Cain’s plan makes no distinction between profits and revenues for a business…so, if a company has revenue during the year, but still has a loss (which many businesses do for their first few years), they STILL have to pay the Sales Tax 9% AND the Corporate tax 9%, for a total of 18%…even though they show a loss!! How do you think THAT will fare with business owners? I’m one of them and I would NOT be happy!

9-9-9 May Be A Good Price for A Pizza...But It Doesn't Work for A Tax Overhaul!

Also…right now, everything a company invests in its business is tax-deductible, including worker salaries…not so under the Cain plan. The figures show that companies (especially small companies) will pay more under Cain’s plan than current. For instance, if a company has capital expenses now, they’re deductible. Under Cain, they’re deductible ONLY if the purchases are for products made in America! Sounds really good until you realize that we are a world economy today and that there are no (or very few) semiconductors or integrated circuits (and other computer parts) that are made in America. Without those deductions, MOST companies would go bankrupt, being unable to deduct their product & inventory (cost of goods) purchases…they just couldn’t get by without the deduction, and then add 18% tax on top of that (corporate income 9% and sales tax 9%). EXAMPLE: if a company wants to buy 500 Apple computers because of expansion, would they be deductible because they are being purchased from an American company? Herman Cain’s answer to that very question is, “Ahhh…I don’t know!” LOL. “I DON’T KNOW????” Mr. Cain, you wrote the plan…if you don’t know, who does?

Sorry, on a purely financial analysis, Cain’s 9-9-9 plan is untenable and will drive businesses into bankruptcy and lose more American jobs than you can imagine! If someone out there has a different analysis, I’d love to see it. BTW…if a Democrat had proposed this plan, the right-wing would be up in arms against the “anti-business” socialist who wants to destroy business in America!  

As another aside: Cain’s preference for American goods only, would be a direct violation of the many international trade agreements that we have signed over the decades. Sure, we could say, screw the agreements…BUT, then, America would not be able to sell our products overseas…then what!?? Sometimes, what seems so simple is just that…simple…too simple and impractical.

Rich Lowrie - economics advisor to Cain - has no economics degree or experience! He's a Wells Fargo financial planner!

Life…and economics…is more complicated than that. THAT’S the problem with Cain’s economic advisor…he has none! The only adviser Cain has been willing to mention by name —Rich Lowrie –  is a wealth manager for a division of Wells Fargo, and according to his LinkedIn page, holds an accountancy degree from Case Western Reserve University. Lowrie also spent three (3) years on the advisory board of the conservative third-party group Americans For Prosperity. Not totally surprising is that the 9-9-9 plan that Lowrie came up with was actually co-opted the tax system from the Sims videogame!!  I think Mr. Lowrie (AND Mr. Cain) are operating a little out of their league!  But, I’ll leave that for you to decide.

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