surprised Wall Street Monday by forecasting a third-quarter loss related to the writedown of a joint venture and lower profitability in its main oilfield-services business.
The shares were off $1.68, or 5%, to $19.96 in premarket trading.
The Houston company now expects to lose 6 cents to 8 cents a share from continuing operations in the third quarter, compared with its previous forecast for net income of 26 cents to 29 cents a share. Analysts surveyed by Thompson First Call were forecasting 28 cents a share.
The predicted loss includes Baker Hughes' share of a $106 million charge at WesternGeco, a joint venture with
that maps mineral deposits. It also reflects a $40 million of charges related to its Bird Machine unit and an unfavorable "geographic mix" in well activity.
In July, Baker Hughes predicted that a shortfall in Gulf of Mexico rig activity would be offset on the top line by increased international revenue. According to Monday's release, however, the shift will hurt profitability.
The company said it continues to review the WesternGeco investment and could be forced to take more writedowns on it.
"Although the evaluation will not be completed for several weeks, based on preliminary estimates and calculations, the company estimates that the remaining carrying value could be impaired by an amount of between $40 million and $80 million," Baker Hughes said. "The company cautions however that the final amount of impairment, if any, could vary significantly from these preliminary estimates."