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Shares of

Baker Hughes


gained 15% after the oil drilling company purged two more top executives.

Max L. Lukens, who joined the company in 1981 and became chief executive in October 1996, and Thomas R. Bates Jr., senior vice president since 1998, became casualties Nos. 7 and 8 of the company's continuing stock market troubles.

"It's not an easy decision to take," said Gary R. Flaharty, a company spokesman. Baker Hughes expects to replace its ousted leader within 120 days, he said. Concentrating its efforts within the energy industry, a search team will seek a strong communicator with proven experience setting and meeting performance objectives, he said.

"While our customers have been pleased with our performance, we have not been satisfied with our performance in the stock market," said Joe B. Foster, the board member appointed interim chief executive Monday. "We want to improve value for the shareholders of Baker Hughes."

It worked, at least in the short term: The stock price gained 3 1/8 to 23 15/16 by midafternoon Monday. The price is off a 52-week high of 36 1/4, reached in August. (It closed up 3 7/8, or 18.6%, at 24 11/16.)

But the company's Wall Street credibility has suffered for years. The stock trailed its peers from 1995 to 1997, when the company was criticized for dragging its heels as oil drilling opportunities flourished.

By the time Baker Hughes began increasing capacity in late 1997, oil prices had begun to fall. Investors continued to punish the stock, treating the September 1998 acquisition of

Western Atlas

as a sign the company had again misread the business cycle, this time with capacity passing demand on an upward escalator.

That deal left the company with the highest debt-to-equity ratio in the industry, 0.89% at the most recent quarter's close, a conundrum analysts said Foster promised to address. He spoke to analysts in a conference call Monday.

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The company disclosed Dec. 8 that it had discovered accounting problems in its


division that could cost $40 million to $50 million, to be discussed in detail when the company reports its earnings on Feb. 17.

Wall Street ran both ways after the disclosure of the accounting problems, with three firms lowering their ratings on the stock, three others raising their ratings and one beginning coverage with a strong buy rating, all within 48 hours of the disclosure.

The company said Lukens' departure was unrelated to the accounting issues.

While investors treated the shake-up as a buying opportunity, analysts said the accounting issues are still a concern.

"We're coming close to the end of management defections if not the absolute end," said Gary L. Russell, the

Frost Securities

analyst who initiated his coverage of the company with a strong buy rating following the December disclosure. His company has done no underwriting for Baker Hughes.

Since the

Organization of Petroleum Exporting Countries

declared on March 2 that they intended to cut production, analysts have expected a market favorable to oil field services companies, of which Baker Hughes is the third largest.

Russell said the company is poised to take advantage of improved market conditions, provided it has now solved its management problems and accounting irregularities. The two are arguably a clearly delineated, self-contained cause-and-effect chain, he added.

Since May 1999, when the company parted ways with its chief financial officer and its controller, Baker Hughes has now lost eight executives.