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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 MoreExxonMobil 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.

Why not buy back even when your share price is down? Exxon knows it cannot predict oil prices. What if they stay low for another two years?

Read MoreCullen/Frost CEO: We can handle oil at $37

What Exxon has been doing is gradually increasing its dividends:

Exxon dividend per share

  • 2011: $1.85
  • 2012: $2.18
  • 2013: $2.46
  • 2014: $2.76

Indeed, this is one of the big differentiators for Exxon. Shell, for example, has frozen its dividend. The oil major has been increasing its dividend for something like 27 years.

Read MoreNext for oil: Mergers, layoffs and 'death spirals'

Will Exxon have writedowns in asset values? Some of its projects cannot be economical at $50 a barrel. Chevron has already written down some assets.

On CNBC this morning, Oppenheimer analyst Fadel Gheit pointed out that every $10 change in oil prices reduces Exxon's earnings by $5 billion yearly. Oil prices were $94 on average last year. Even if it is $74 next year, that's $20 billion less. In 2014, Exxon earned $32 billion. That's a big difference.