ExxonMobil's earnings, buyback send a bad signal

ExxonMobil reported fourth quarter earnings per share on Monday that were down about 18 percent from the same period a year ago. The company was doing reasonably well until the final quarter of 2014.

Indeed, full-year earnings for 2014 were up compared to 2013. That's because oil prices held up over $90 for most of the year, until the fourth quarter. The real problem is the estimates for 2015.

Exxon earnings:

  • 2012: $8.10
  • 2013: $7.37
  • 2014: $7.45
  • 2015 (est.): $4.28

Wow, that is a 42-percent drop in 2015 from 2014! Is there any wonder the stock is near a 52-week low and down 5.4 percent in January alone?

Read More ExxonMobil earnings beats, but revenues trail

Also getting a lot of attention is the reduction in Exxon's buyback to $1 billion for the first quarter from $3.3 billion in Q4. But keep in mind the numbers have been coming down for several years:

Exxon buybacks (in billions):

  • 2011: $21
  • 2012: $21
  • 2013: $16
  • 2014: $12.9
  • 2015 (est.): $4

Still, that is a big drop. A $4 billion-per-year buyback (provided Exxon does $1 billion for all four quarters) is a drop in a bucket when you have a market cap of $370 billion. It's a rounding error.