This one was anything but a surprise. Two weeks ago, big oilfield service company Baker Hughes
For the quarter, the company's net income was $349.6 million, or $1.09 per fully-diluted share. Those numbers compare to $1.40 billion, or $4.14 per share a year ago. And while that slide represented a 75% decline on the income line, much of the difference related to a $1 billion after-tax gain in 2006 from the sale of the company's 30% interest in WesternGeco. Revenue for the most recent quarter nevertheless was up 15% to $2.54 billion from $2.20 billion a year earlier.
As the company had indicated would be the case, softness in North America was the primary culprit in the past quarter's year-over-year slide. As company CEO Chad Deaton said, "A 21% year-over-year increase in revenue in the second quarter from outside North America was partially offset by weaker activity in Canada and the U.S. offshore. Net income in the quarter was impacted by lower profit from our Drilling and Evaluation business in Canada."
It thereby appears -- particularly if one examines the results of other oilfield services companies in the quarter -- that up or down results are largely dependent upon the degree of the company's business that's tied to North America. Schlumberger
Baker Hughes has long been a leader in technological innovation within the oil patch, and management is in the midst of a "West to East" redirection of the company's geographic concentration. As such, I'm inclined to believe that recent softness for the company likely will constitute only a temporary speed bump.
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Fool contributor David Lee Smith does own shares in Baker Hughes and Halliburton, but not in the other companies mentioned. He welcomes your communiques. The Motley Fool does have a disclosure policy.