By Chelsey Dulaney
Baker Hughes Inc.'s results in its December quarter easily
topped Wall Street expectations, as the oil-field services company
benefited from stronger-than-projected demand and cost cuts.
Still, Baker Hughes Chief Executive Martin Craighead warned on
Tuesday that 2015 results would likely be pressured by the recent
drop in oil prices. The company said it would cut about 7,000
workers--or about 12% of its workforce--mostly during the first
quarter.
Shares of the company fell 1.8% Tuesday to $55.56.
"When we reflect on the marketplace, the bearish sentiment that
has pervaded our industry is understandable, considering the steep
drop in commodity prices in recent months," Mr. Craighead said.
"While market demand ended up being more resilient in the fourth
quarter than many had predicted, the recent declines seen in rig
counts will clearly affect results in 2015."
On Friday, activist investor ValueAct Capital Management LP
reported a 5.1% stake in Baker Hughes--an unusual move, since Baker
Hughes is in an agreement to be bought by larger rival Halliburton
Co.
ValueAct didn't indicate its motives in the filing with the
Securities and Exchange Commission that revealed its stake.
The deal with Halliburton, struck in November and valued at
almost $35 billion at the time, underscored the new realities for
energy companies in a world suddenly awash with oil. As a result,
oil-field services companies, which are hired to drill and pump
wells, are facing less demand for their services and pressure to
cut prices.
Since the deal was struck, oil prices have continued their
downward spiral.
For the fourth quarter ended Dec. 31, Baker Hughes reported a
profit of $663 million, or $1.52 a share, up from $248 million, or
56 cents a share, a year earlier. Excluding a gain on
deconsolidation of a join venture, adjusted per-share earnings were
$1.44.
Revenue grew 13.2% to $6.64 billion.
Analysts polled by Thomson Reuters were expecting adjusted
earnings of $1.07 a share on revenue of $6.41 billion.
The North American segment, the company's largest geographic
business by revenue, reported a 20.4% increase in revenue to $3.3
billion. Revenue climbed 13.1% in the Middle East and Asia Pacific
region, and 5% in the Europe, Africa and Russia Caspian segment.
Latin America revenue edged down 2%.
Expenses, meanwhile, fell 4.5%.
Alison Sider contributed to this report.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
Access Investor Kit for Baker Hughes, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0572241075
Access Investor Kit for Halliburton Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US4062161017
Subscribe to WSJ: http://online.wsj.com?mod=djnwires