Combine plummeting energy prices, a global credit crunch, the effects of a couple of marauding hurricanes, analysts trying to forecast results with more accuracy than is realistic, and stuff your concoction with a general market rollover.
Bake it all for an hour, and you're likely to have a day like that experienced by Baker Hughes
One difficulty was that Wall Street had expected $1.35 a share on revenues of $3.09 billion. So in a day when all the stars lined up against the energy names, the company's shares tumbled a whopping 22% to close at $30.35. Of course, Baker Hughes wasn't completely alone, being joined at least directionally by a 16.6% fall for Weatherford
Baker Hughes’ slump was enough to make you think the company had punted the quarter, which it hadn't. Indeed, revenues from its Drilling and Evaluation unit rose by 15%, while those from Completion and Production were up 10%. And all this occurred in the face of antics from Gustav and Ike, which together cost it an estimated $78 million in quarterly revenues and $0.11 a share on the bottom line.
Geographically, North America and Latin America each jacked up their revenues by double-digit percentages, while Europe/Africa/Russia/Caspian and Middle East/Asia Pacific were up 9% and 8% respectively. Pretax profits were up in all the regions except the Middle East/Asia Pacific.
Like a number of companies in various industries, from Schlumberger to 3M
So we now have an interesting convergence of events to consider: Members of OPEC will meet Friday to discuss production cuts, because as of this writing, crude prices have declined to $66.20 a barrel on Thursday. That has the makings of profits in at least the intermediate term. But with Baker Hughes’ shares near its five year low, and our world decidedly upside-down, I'd suggest that Fools not imbued with steel nerves and a surfeit of patience remain on the sidelines until Planet Earth resumes its rightful orientation.
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