What's Happening: Shares of oil and gas equipment manufacturer FMC Technologies (NYSE:FTI) have fallen as much as 10% during the trading day on the announcement that it had missed earnings estimates for the second quarter and that it is planning to make further cuts to its labor force in anticipation of weaker times ahead in its offshore segments.

Why It's Happening: FMC Technologies, which reported earnings after the market closed yesterday, saw normalized earnings per share fall 28% year over year. The $0.52 normalized EPS results also came in below consensus estimates of $0.61 per share.

The largest culprit for the decline in earnings was its surface technologies and energy infrastructure segments, which saw operating profits fall 65% and 71%, respectively, while its subsea segment held up with only a 5% decline in operational profit. FMC also saw a near-$2 billion decline in its order backlog from this time last year. Most of this backlog drawdown came from its subsea segment.

The reason FMC's management is deciding to cut head count for its subsea segment now despite its more resilient earnings is that offshore drilling projects are a longer-cycle development than land-based operations, and so some of the residual effects from the decline in oil and gas drilling activity have not yet completely hit the subsea segment. As its backlog shows, though, business in this segment is looking weaker. Combine this with the less-than-stellar results from its land-based operations and you have the makings of a 10% decline.

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