What will be the market impact of the Exxon-Mobil merger?
In the oil business, they have set a precedent for size. Other companies are going to need to get bigger in order to compete with XOM, especially in international markets. The new combination of Exxon and Mobil presents a huge possible cost savings. However, the shares are trading at 26 times my 2000 estimate, and at that lofty valuation I have a difficult time predicting further capital gains. Therefore, I have a “hold” recommendation on the company. Q: Any thoughts as to the effect the new natural-gas-fired power plants will have on natural-gas demand? A: The biggest factor in natural-gas demand is weather. Right now we are seeing an abnormally warm winter in the key natural-gas consuming markets. I have had to lower my natural-gas estimates to reflect the high supply and low winter demand. Q: Would you hold or sell Atlantic Richfield now? A: I have a “hold” rating on ARCO. The spread between its buyout price and current trading price has become much more attractive. However, the mer
