Baker Hughes Net Income Drops 87%

HOUSTON (TheStreet) -- Baker Hughes (BHI Quote) reported a sharp drop in third-quarter results as the company was impacted by greater-than-expected price discounting.

Baker Hughes posted net income of $55 million, or 18 cents a share, in the quarter ended Sept. 30, falling sharply from a year-ago profit of $429 million, or $1.39 a share. Results also fell sequentially from earnings of $87 million, or 28 cents a share, in the second quarter.

Excluding restructuring costs and higher allowance for doubtful accounts, the company would have earned 26 cents a share in the third quarter.

Revenue dropped 26% from a year earlier to $2.23 billion. That number was also down 4% sequentially. "International results were disappointing, with revenue less than expected and price discounting greater than expected," said Chairman and CEO Chad Deaton.

Analysts, on average, were looking for a profit of 36 cents a share on revenue of $2.26 billion, according to a poll by Thomson Reuters.

Looking ahead, Baker Hughes said gas-directed drilling in North America is gradually increasing and it believes this trend will likely continue through 2010.

"Internationally, we believe that customer spending reached its low point this quarter and that forecasts for increasing economic growth, particularly in China, India and the Middle East, combined with modest spare production capacity are supporting higher oil prices and laying the foundation for increased spending in 2010," the company added.

Baker Hughes also said it now expects its acquisition of BJ Services (BJ Quote) to close in the first quarter of 2010 after the company received a 'second request' from the Department of Justice.

-- Written by Robert Holmes in New York.

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