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Baker Hughes Falls Short

The shares are declining.

Oil services firm

Baker Hughes

(BHI)

announced Wednesday that its fourth-quarter earnings climbed 23% from last year, but came in just shy of Wall Street's estimates.

The company earned $400.5 million, or $1.26 a share, up from $326.2 million, or $1.02 a share, during the same period last year. However, the results missed analyst expecations of $1.28 a share.

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Revenue rose to $2.74 billion from $2.45 billion a year earlier.

Operating income from well completion and production activities totaled $314.8 million, up from $249.7 million last year. Earnings from drilling and evaluation activities were $347.4 million, down from $355.8 million in the fourth quarter of 2006. The reduction was caused by "lower-than-expected activity in the Gulf of Mexico, a more competitive market in North America and a labor disruption in Algeria," according to a press release.

CEO Chad Deaton wrote in a prepared statement that the global market fundamentals look good for Baker Hughes. "For the foreseeable future, the world will need more hydrocarbons to satisfy its growing energy demand, and oil and gas companies will work to fill that need by increasing their spending on exploration, development and production."

Looking ahead, Deaton said that he expects Baker Hughes' completion and production segment to remain strong, especially in North America, while growth elsewhere may decrease slightly in 2008.

During the fourth quarter, Baker Hughes spent $315.9 million in capital expenditures and repurchased 3 million shares at a cost of $521.5 million.

Shares of Baker Hughes were recently down 8.6% at $67.15.