The fire under
stock fizzled out Thursday as the company's results cooled.
The Houston-based energy services giant blamed "soft industry conditions" for a 47% plunge in third-quarter profits. The company also slashed its guidance for the fourth quarter and revived asbestos concerns by announcing a Dec. 11 deadline for settlement talks with plaintiffs in more than 200,000 asbestos claims.
The stock, which had soared Wednesday following election gains by Republicans, who are often not enthusiastic on the subject of asbestos lawsuits, gave up most of those gains Thursday after Halliburton offered its sober outlook. At midday the stock was off $1.41, or 8.4%, at $16.44.
Excluding special charges, Halliburton actually zoomed past analysts' expectations for the latest quarter. The company posted operating profits of 28 cents a share that, while down sharply from 42 cents a year ago, easily topped consensus estimates of 21 cents.
The company also set itself up to beat fourth-quarter expectations by lowering its guidance from 24 cents to at least 22 cents a share, excluding restructuring charges. Restructuring and other extraordinary charges took a 6-cent bite out of Halliburton's third-quarter profits.
"We tried to build some caution in," Haliburton CEO Dave Lesar said of Halliburton's projections for both quarters. "We're just building some conservatism in because we're concerned about the direction of the market."
Sales at Halliburton slumped by 12% to $3 billion in the latest quarter. Even so, the company said it's performing well in comparison to peers also hurt by the sluggish energy industry and the overall economy. And it pointed to certain divisions -- particularly an energy services unit that enjoyed a 33% hike in sequential pro forma earnings -- as bright spots.
Still, despite the optimistic patches in the company's operating outlook, investors were consumed Thursday with questions about asbestos lawsuits. Although pelted with questions by analysts who wondered whether Halliburton's $585 million in litigation reserves will be sufficient, the company declined to speculate on the final outcome of its asbestos negotiations.
"There's no assurance we'll be able to reach an acceptable agreement," Lesar said Thursday. "I don't think it's in our best interest at this time to ... try to put a handicap on the likely outcome."
Lesar was hesitant to share the market's confidence that Republicans, who now control both houses of Congress, will pull through with asbestos-friendly legislation.
"We do not want to embark on a resolution strategy that depends on something positive happening in Washington," he said.
Halliburton has lost roughly $6 billion in market value over asbestos concerns and accounting issues that trace back to decisions made when Vice President Dick Cheney led the company. Both Halliburton and Cheney have been sued by the Judicial Watch group for allegedly overstating company revenues by $445 million during Cheney's tenure. The
Securities and Exchange Commission
is also probing the accounting matter.
Halliburton reassured investors Thursday that it continues to cooperate with the SEC and that the inquiry remains informal in nature. Meanwhile, the company is hoping for better days ahead.
"We're certainly looking forward to getting this year behind us and moving forward," Lesar said.
In other energy news, Atlanta-based
( MIR) tumbled 7.5% to $2.72 despite new promises from the company that it committed no fraud when overstating profits. Mirant blamed the $41 million overstatement on accounting errors when it filed its overdue second-quarter earnings report on Thursday. The company said it unintentionally overstated 1999-2001 income by $51 million and understated profits for the first half of 2002 by $10 million.
Mirant described the resulting restatements as minor.
"Importantly, the net effect of the errors was modest relative to our overall results and financial condition during the period," said Mirant CEO Marce Fuller. "The company regrets these errors and any uncertainty they may have caused our investors, employees and other stakeholders."
, another troubled energy company, weathered some punishment on Thursday as well. The Florida-based utility tumbled 13% to $14.08 after UBS Warburg downgraded its shares from buy to hold. The stock fell to a decade low of $10.60 last month, when the company surprised investors with news of an unexpected equity offering.
, a debt-laden energy trader, proved to be the sector's brightest star Thursday. The stock soared 17% to $2.44 as investors shrugged off lingering concerns about the company's future. The stock briefly dipped below $1 last month after the company's spinoff from former parent Reliant.