The ink on Exxon Mobil's balance sheet comes in one grade: Premium. The energy giant fell just short of setting a company -- and world -- record for profits this year. The last world record was set by -- you guessed it -- Exxon Mobil, back in 2008. The abundance of cheaper domestic energy both hurt and helped the company in 2012. A greater supply of U.S. crude and natural gas drove production revenues down. But it was Exxon's refineries that saved the day. With supplies close at hand, making fuel was a lot cheaper, which helped boost profits.
In its first year without Steve Jobs, Apple managed to climb a notch on our list of most profitable companies. How long it can stay there is another story. 2012 results were driven by the iPhone. In the fourth quarter alone, sales of the smartphone spiked 58% year over year. But sales growth for the iPad dropped, disappointing fanboys and investors used to blowout results. Meanwhile shares have dropped about 40% since September's all-time high on worries over demand, supply issues, shrinking profit margins, and the looming threat of rival Samsung and its Android-driven devices.
Like Exxon Mobil, Chevron relied on its refineries to hold up its bottom line in 2012. When oil prices were climbing, integrated energy companies were urged to dump their low-margin refining units. But Chevron and Exxon didn't listen, and when crude prices dropped, the hedge paid off. Profits at Chevron's U.S. downstream operations jumped by a third year over year on increased supply of domestic energy. That wasn't enough to keep overall profits from slipping, however, as big bets on upstream ops, like natural gas exploration, have yet to pay off.
It was a year of records and reckoning for J.P. Morgan Chase. The bank's highest annual profit ever was tainted by the $6.2 billion "London Whale" trading loss on risky bets. The scandal also cut into CEO Jamie Dimon's bottom line when the board hit him with a 50% pay cut. But as Mr. Dimon likes to say: Life goes on. 2012 marked strong results across all of J.P. Morgan's units. Until interest rates finally rise from rock-bottom levels, however, the bank will continue to get pinched on the profit it makes off its loans.
For the bank that provides a third of all U.S. mortgages, the housing recovery has been a boon. Wells Fargo posted record annual profits last year on the back of an industry-wide refi-renaissance. But in the final quarter of 2012, Wells rang a warning bell that the boom might be ending. Mortgage lending slowed for the first time in more than a year, and like J.P. Morgan, the bank continues to suffer from low interest rates. Wells Fargo's net interest margin -- a key measure that tracks loan profitability -- shrank in the quarter and continues to contract into 2013.
If you're still not convinced the housing recovery is well under way, take a look at Fannie Mae. The mortgage financing giant posted record profits for 2012 on a sharp drop in foreclosures and delinquencies on the loans it owns or guarantees. That's quite the turnaround from four years ago, when the federal government had to take control after the housing bubble burst. Now that Fannie Mae is profitable, it's well on track to pay back the $116 billion Uncle Sam put up to bail the company out.
Reporting your first quarterly loss ever is not the way a company wants to end its fiscal year. But a bad bet on online ad unit aQuantive forced Microsoft to report a $6.2 billion writedown in its fourth-quarter results last June. The software giant has redeemed itself since then. Microsoft released Windows 8 last fall, and despite a dying PC market, sales jumped 23% last quarter. The company's smartphone and tablet offerings have yet to make a dent against their rivals, but with boosts from the Xbox and a move to cloud computing, Microsoft is growing again and meeting expectations.
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