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Other shareholders think they should spend more. ExxonMobil's older oil fields in North America are in natural decline, yet the company has not cranked up spending on newer fields abroad--while competitors like ChevronTexaco and ConocoPhillips have begun to do so. "I would love to see them make more investments, especially in some of the areas that have recently reopened, like Libya," says Ted Parrish, co-manager of the Henssler Equity fund, which counts ExxonMobil as its No. 1 holding. Other investors put it more bluntly: "Over time you may have to question whether they are being too disciplined," says John Linehan, manager of T. Rowe Price Value fund, which owns ExxonMobil shares. "If you told people that we would be in an environment of $50 oil, and capital spending would be as constrained as it is, I think you'd have a lot of people scratching their heads."
The flip side: if the company can't find investment opportunities for all that cash, then why not hand it over to shareholders? ExxonMobil already gives its investors a hefty payout: last year it returned some $15 billion in the form of dividends and share buybacks. The company recently increased its dividend 7% and announced that it would accelerate its share buybacks by $1 billion a quarter, to $3.5 billion. At that rate, ExxonMobil could repurchase some $14 billion in stock by year-end. That's no small number, yet the company has the capacity to share even more.
Questions about what ExxonMobil might do with its cash are unlikely to die down anytime soon. After all, the company's growth is slowing--Wall Street projects its five-year growth rate at 8%, vs. the industry's 14%--and its share price, after a dramatic run-up last year that pushed the company's market value past that of General Electric, is now off its peak by 16%, at a recent $54. Yet the cash hoard just keeps growing, rising $7 billion in the first quarter alone. "A lot of investors might think that share buybacks and dividends and paying down debt are the way to go," says Robb Parlanti, a senior portfolio manager at Turner Investment Partners (which owns other energy stocks but not Exxon). "But the bigger question is, What are they going to do to grow the company long term?" That's a question that even the most disciplined companies eventually have to answer.