NEW YORK (

TheStreet

) -- Expect

Baker Hughes

(BHI)

to follow in the earnings trade path of

Halliburton

(HAL) - Get Report

and have a tough day on Tuesday.

There's no worse place to be right now in the oil service business than North America. Halliburton was at least able to turn in a good fourth quarter, even on lower margins -- and guiding to lower margins in the first quarter of 2012 -- but Baker Hughes turned in a miss in the fourth quarter, the last thing it needed.

Raymond James didn't mince words in its review of Baker Hughes' fourth-quarter North American results, writing that the oil service company "whiffs" in North America.

Baker Hughes posted earnings per share of $1.22, versus a Wall Street consensus of $1.32, and that was without any special one-time charges denting earnings. Raymond James called it a "clean miss."

Operating margin in North America came in at 18.7% -- 400 basis points below Raymond James' estimate. Halliburton North American margins declined by roughly 200 basis points in the fourth quarter.

The Baker Hughes miss was driven by pressure pumping, and management noted the impact will likely creep into results for the first half of 2012 -- as Halliburton had said -- though it wouldn't guide beyond the first quarter. Baker Hughes guided to a better second half.

Both Baker Hughes and Halliburton were expected to have short-term margin weakness as pressure pumpers transition to the oil basins in North America.

The bottom line, though, is that when North American margins stabilize remains a wildcard, and if it's to be a back-end loaded year for the oil service stocks that are transitioning earnings away from the North American pressure pumping market and to international as an earnings lever, investors won't pay up today, and the sentiment may continue to favor

Schlumberger

(SLB) - Get Report

, the most internationally levered of all the stocks, on a relative basis.

The silver lining for Baker Hughes was that international operating margins were 100 basis points (1%) ahead Raymond James estimate of 15.6%, leading to a 3-cent outperformance on international earnings.

It's not a surprise that Baker Hughes pressure pumping results would be down after

the Halliburton results. Yet the magnitude of the North American weakness -- remember, at least Halliburton turned in a good quarter before saying things would get worse -- is surprising, in the opinion of Raymond James.

On Monday, news from the largest independent natural gas driller in the U.S.,

Chesapeake Energy

(CHK) - Get Report

, that it would

shut down production and idle 50% of its natural gas rigs, sent natural gas stocks into a rally, but issued a warning about the magnitude of the crisis for pressure pumpers like Halliburton and Baker Hughes.

There is solace in the fact that Halliburton and Baker Hughes will likely be able to

weather the turn in the North American market better than smaller players, but it's only a silver lining on a bad situation.

There was also good news in that Baker Hughes' margins in international continued to improve, but that just shows that the investor "trigger issue" has flip-flopped. A year ago, Baker Hughes was getting beaten up for being a laggard in international execution. Now its weak North American performance and lower margins are going to hit the shares.

International is

the only story that works right now in oil service, though it's far from firing on all cylinders early in the year. With the capital spending plans of the majors expected to increase throughout the year -- barring a global economic meltdown -- that suggests Schlumberger gets more investor attention right now, even if there's value longer-term in Halliburton and Baker Hughes.

-- Written by Eric Rosenbaum from New York.

RELATED STORIES:

>>Why Halliburton Shares Can't Find a Bottom

>>5 Catalysts for Chesapeake Energy in 2012

>>The Drilling Market Catch-22s That Will Keep Natural Gas Stocks in the ICU

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