Baker Hughes Incorporated (NYSE:BHI) reported strong fourth-quarter results today. However, the enthusiasm was dimmed by a massive round of job cuts announced by the oil-field services giant. The company is clearly digging in for what it sees as a tumultuous 2015.

Drilling down into the results
Baker Hughes delivered record-breaking financial results in the fourth quarter. The company announced record revenue of $6.6 billion in the fourth quarter, which was up 6% from the third quarter. It also set a record for adjusted earnings per share, which hit $1.44 in the quarter and was up 41% from the third quarter. Finally, free cash flow set a record as the company generated $1.6 billion during 2014. Overall, Baker Hughes obliterated analysts' estimates in the quarter as its earnings beat estimates by $0.37 per share while revenue was $190 million higher than expected.

In commenting on the quarter, CEO Martin Craighead noted that the company's results...

[...] punctuate a record year for our company in 2014. We delivered very strong growth in revenue, earnings and free cash flow during the fourth quarter. In spite of increasing concerns of challenging market conditions, we remained focused on achieving the performance objectives that we laid out last year. This was made possible by managing the business more efficiently and delivering on our strategy of converting innovations into earnings through new technologies that provide value to customers and competitive differentiation for Baker Hughes.

Clearly, the company was firing on all cylinders during 2014. However, as Craighead noted, there are increasing concerns of challenging market conditions, which will act as a major headwind during 2015.

Preparing for a storm
In order to prepare for the challenges of the year ahead, Baker Hughes announced a massive round of layoffs. The company is laying off 7,000 employees in the first quarter of 2015 as it reacts to the drilling slowdown that it's expecting to see in 2015 as oil producers idle drilling rigs in response to low oil prices.

Craighead commented on the current market conditions:

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. 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. We are taking proactive steps to manage the business through these challenges, and we are well positioned financially for the months ahead. Our strategy remains unchanged as we continue to focus on execution and delivering new technologies that lower the cost of well construction, optimize well production, and increase ultimate recoveries.

He notes that the company is being proactive by adjusting its workforce to manage through the challenges it sees in the year ahead. However, he does point out that the company's financial position is strong, and its strategy remains unchanged. This includes its merger with Halliburton Company (NYSE:HAL), which remains on track to close later on in the year.

Investor takeaway
Baker Hughes delivered a record quarter, but it doesn't expect that to continue in 2015. Instead, it's bracing itself for a rough patch and is proactively reducing its headcount to better align with expected activity. Meanwhile, it remains on track to merge with Halliburton in 2015 as the two oil-field service giants look to emerge from the downturn as a thriving entity that's poised to deliver strong long-term results.