Baker Hughes Good Quarter, Bad Forecast (BHI, HAL, WFT, SLB)

That Baker Hughes Inc. (NYSE:BHI) this morning reported better-than-expected results for its fourth quarter shouldn’t really be a surprise. When Halliburton Company (NYSE:HAL) and Weatherford International Limited (NYSE:WFT) reported results, the market got its good-news surprise package for the week.

Still, Baker Hughes beat analysts’ expectations on EPS and revenue forboth the quarter and the full year. But now everyone is waiting to hearabout the future. And that’s where the bad news is.

The company’s chairman, president, and CEO said that "the outlook for2009 has continued to deteriorate." Rig counts in the US are off 25%from their peak, and the company’s customers continue to pull back onspending in an already over-supplied gas market.

Baker Hughes has already announced a layoff of about 1,500 employees,and in this it follows industry leader Schlumberger Limited (NYSE:SLB).The oilfield services industry is digging in until the overall economyturns around. No one knows when that will be, but in the oilfieldservices business, expectations seem to be that change will come laterrather than sooner.

Paul Ausick
January 28, 2009