Oilfield-services provider Baker Hughes Inc. on Wednesday said its fourth-quarter profit rose 8 percent, exceeding Wall Street estimates, but warned of a dismal 2009 outlook for the company due to the recession, low oil prices and constrained credit markets that will hinder customer spending globally.
Quarterly earnings rose to $432 million, or $1.41 per share, up from $401 million, or $1.26 per share, a year earlier.
Results include an impairment of auction rate securities of $25 million after-tax, or 8 cents per share.
Revenue for the final three months of 2008 climbed 16 percent to $3.19 billion, up from $2.74 billion, in 2007.
Analysts polled by Thomson Reuters, on average, forecast a profit of $1.26 on revenue of $3.05 billion. Analysts typically exclude one-time items.
For all of 2008, Baker Hughes' earnings totaled $1.64 billion, or $5.30 per share, on $11.86 billion of revenue. It earned $1.51 billion, or $4.73 per share, on $10.43 billion of revenue, in 2007.
Baker Hughes' director of investor relations, Gary Flaharty, said Monday that the company will cut 1,500 workers worldwide or about 4 percent of its work force, over the next couple of weeks, the Houston Chronicle reported Wednesday morning. The move comes after similar announcements by larger rivals Schlumberger Ltd. and Halliburton Co. ConocoPhillips is also eliminating jobs.
Baker Hughes Chief Executive Chad Deaton said he foresees a troubled outlook for 2009 year as weak global economic, financial and commodity conditions will likely persist and hurt demand.
"Many of our international customers are trimming their exploration plans, giving priority to spending on production and development," Deaton said.
"In North America, where the U.S. rig count has already fallen 25% from peak, customers are continuing to reduce their budgets to address an oversupplied gas market," he added.
As the global economic crisis has worsened and unemployment has increased, demand for oil and services related to drilling for oil has sharply declined, along with the broader pullback in energy demand. Crude oil prices have plummeted more than 70 percent to hover around $40 per barrel from a record peak of $147.27 per barrel in July. Baker Hughes shares have followed oil's trajectory, plunging more than 60 percent from its summer peak of $89.56.
Shares of Baker Hughes rose $1.26, or 3.8 percent, to $34.03 in Wednesday morning trading.
