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Profits Climb at Baker Hughes

Chuck Marvin

Oil-services firm Baker Hughes (BHI Quote - Cramer on BHI - Stock Picks) announced Tuesday that its earnings in the first quarter rose 5% over the same period last year, beating analyst estimates.

Higher-than-expected revenue from its North American segment was cited as the primary reason behind the earnings gain.

The company reported net income of $395 million, or $1.27 a share, in the quarter, up from $374 million, or $1.17 a share, during the same quarter in 2007. Excluding the sale of an asset, Baker Hughes earned $1.21 a share during the latest quarter.

According to a survey conducted by Thomson Financial, analysts were expecting earnings of $1.20 a share.

North American revenue was up 8% from the year-ago first quarter. International revenue also rose 8%. Total revenue climbed to $2.67 billion from $2.47 billion a year ago.

"Results from North America were better than expected," said CEO Chad C. Deaton in a prepared statement. "Improving fundamentals for natural gas reflected in lower storage levels, higher natural gas prices, increased oil-directed drilling, and announcements by E&P operators of spending increases support higher drilling activity and additional opportunities for Baker Hughes in North America in the second half of 2008."

Outside the U.S., Baker Hughes saw seasonal declines in export shipments and regular downtime from inclement weather in Russia and in the North Sea. However, Deaton said he expects international revenue to increase in the low-to-mid teens this year compared with 2007.

Baker Hughes spent $227 million on capital expenditures and $41 million on dividend payments during the quarter. It also repurchased 8.2 million shares for a total cost of $568 million.

Shares of Baker Hughes eased 0.9% to $81.12.

Elsewhere, Smith International (SII Quote - Cramer on SII - Stock Picks) reported that its first-quarter earnings rose 9% and revenue climbed 12%. Smith's earnings growth was sparked by improved oilfield segment earnings.

Also out were the latest quarterly results from BJ Services (BJS Quote - Cramer on BJS - Stock Picks), which showed a 32% decline in its first-quarter earnings, citing lower prices in North America.

Smith's shares fell 1.7% to $76.69, while BJ Services tumbled 14.7% to $27.98.

Aside from BJ Services' earnings report, the latest results from the oilfield-services segment have been largely positive. On Monday, Halliburton (HAL Quote - Cramer on HAL - Stock Picks) reported that its net income jumped 18.5% year-on-year, and Weatherford International (WFT Quote - Cramer on WFT - Stock Picks) announced that it beat analyst estimates for the quarter. Last week Schlumberger (SLB Quote - Cramer on SLB - Stock Picks) said its earnings climbed 14% year over year.

Global Industries (GLBL Quote - Cramer on GLBL - Stock Picks) will issue its first-quarter earnings results next week.