Wall Street Is Wrong About Schlumberger: Opinion

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Tim Begany

NEW YORK ( StreetAuthority) -- If I had to describe the stock market in two words, then I'd pick "shortsighted" and "skittish."

A brief hiccup in revenue growth, a discouraging word from management about quarterly earnings or even a bit of bad press can sometimes trigger a significant selloff.

This sort of thing might actually be comical if real money weren't at stake.

One of the latest examples involves an energy stock familiar to most investors: Schlumberger ( SLB), the world's largest provider of technology, information (i.e., seismic surveys), transportation services, project management and other services to the oil and gas industry.

The company generated $39.7 billion of revenue and $5 billion of net income in 2011.

The stock has taken a hit because CEO Paal Kibsgaard said decreased business related to slumping natural gas prices in North America "represents an element of uncertainty" in 2012. This area is responsible for about one-third of Schlumberger's revenue.

He added that, during the first quarter, downward pricing in natural gas also affected oil, and the frequent need to move drilling equipment from natural gas fields to oil deposits increased costs and reduced operational time.

"Together, these factors will have an impact on our results both in North America, and overall, in this and in the coming quarters," Kibsgaard cautioned.

Schlumberger's stock has fallen about 5% since Kibsgaard made these comments on March 26, from $73.61 to about $70 a share.

The stock actually started to slide about one month ago, however, as the market began to anticipate this sort of negative news. Shares are down a total of 12% in the past four weeks.

This is great for patient investors -- the Buffett types who love to grab high-quality stocks when the rest of the market, skittish as it can be, has lost sight of the fantastic long-term potential. And long-term potential is exactly what Schlumberger has now, just like it did in the days leading up to Kibsgaard's warning.

It seems the market has totally forgotten Schlumberger operates in 85 countries and gets two-thirds of revenue outside North America, where most of the growth opportunities lie.

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