08 February 2007
PepsiCo reports 4th quarter profits of $1.78 billion. That profit is on $10.38 billions in revenue for that quarter. That profit margin works out to 17.15 percent.

Recall, now, that ExxonMobile reported profits for 2006 of $39.5 billions, or a paltry 10.5 percent profit (on $377.1 billions in revenue). 10.5 percent, a little more than a measly dime on every dollar of revenue. A dime. Outrageous.

Hmmmm. PepsiCo makes a 17 percent profit. ExxonMobile makes a 10.5 percent profit.

Yes I do realized that with respect to PepsiCo we’re talking about a single quarter, and with ExxonMobile we’re talking an entire year’s worth of business. But just about every quarter we’re treated to harangues about the evils of Big Oil.

PepsiCo’s profit margin (17 percent) tells us that PepsiCo is charging comparatively more for its products than ExxonMobile (with a 10.5 percent profit margin) is for its products. Think we’re going to be hearing about the evils of Big Soda any time soon?

And when you think about it, Big Oil does much more for us than Big Soda. Big Oil gets us to work, school, wherever, every day. Big Soda makes us fat and diabetic. (PepsiCo owns the Frito-Lay snacks, Pepsi beverages, Gatorade sports drinks, Tropicana juices and Quaker foods businesses. It used to own Taco Bell. Mmmmmm. Yo quiero.)

Big Oil is evil. Big Soda is benign.

If only people knew a thing or five about business and economics. Pitiful.

Note: Yes, I understand that I’m comparing PepsiCo’s 4th quarter profit with ExxonMobile’s 2006 year-end profit, so it seems a bit unfair. But I’ve been tracking ExxonMobile’s profits for several quarters now, and 10 percent-plus-or-minus-a-few-points was about its average quarterly profit last year. Assuming both companies’ profits follow current trends the comparison is pretty close to fair.


About Me

James Frank Solís
Former soldier (USA). Graduate-level educated. Married 26 years. Texas ex-patriate. Ruling elder in the Presbyterian Church in America.
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