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Exxon Mobil slashing jobs
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December 15, 1999: 2:20 p.m. ET
Oil producer to cut 14,000 more by late 2002; sees $3.8B in annual savings
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NEW YORK (CNNfn) - Newly formed Exxon Mobil Corp. announced Wednesday that it will cut 14,000 more jobs over the next three years, as part of a plan to save $3.8 billion a year by late 2002 - more than $1 billion a year more than initially projected.
The Irving, Texas-based company’s new blueprint comes on top of a total of 9,000 job cuts that Exxon Corp. and Mobil Corp. had projected when they first announced their merger plan last December. Since the end of 1998, the companies forecasted $2.8 billion in annual savings by 2002.
"While we were excited about the prospects for Exxon Mobil in 1998, we are even more positive today," said Chairman and Chief Executive Officer Lee Raymond in a statement.
"We certainly appreciate the contributions all employees have made to Exxon and Mobil over the years, and we have plans in place to help cushion the impact on those who must separate," he said.
Shares of Exxon Mobil (XOM), one of 30 stocks in the Dow Jones industrials average, rose 1-9/16 to 83-15/16 early Wednesday afternoon.
Exxon Mobil has already been in slim-down mode. To pass muster with regulators for their merger, the company agreed to divest more than 2,400 stations. Two days after completing the deal, it sold 1,700 of those to Texas-based Tosco Corp.
Exxon Mobil said the moves are part of recasting the company around 11 strategic units and putting its focus more on global operations. It now projects income will rise by about $1 billion in 2000, with the improvement increasing to about $2.5 billion a year by 2003.
The cuts amount to 13 percent of the total Exxon Mobil workforce of 123,000. Mobil and Exxon this year have already trimmed 2,000 employees in the run-up to the merger, bringing their total over a four-year span to 16,000.
"I was not expecting 16,000,” said Tyler Dann, an analyst with Bank of America Securities, who rates Exxon Mobil shares a "buy” and has a 12 month price target of $92 a share.
Dann said he expects Exxon Mobil will rack up greater savings that those announced Wednesday.
"We don’t think they are done ratcheting up their targets,” he said, predicting savings of $4 billion to $5 billion when all of the merger’s effects are tallied. "Their body English sort of said that,” he said, citing comments by Raymond in a conference call.
The merger, Dann added, "is basically taking the best parts of Exxon’s strategy and the best parts of Mobil’s strategy and fusing them together.” He said that culturally Exxon was known for its cost-cutting and Mobil’s reputation was for a strong customer focus.
As part of the restructuring, about 1,000 executive positions will be cut, or about one-third of the total at the two companies.
Exxon Mobil expects proceeds of between $4 billion and $5 billion from the divestiture of the stations. Tom Cirigliano, a company spokesman, said he did not know how many people of its workforce are now employed in those stations that are earmarked for sale. 
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Exxon Mobil
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