The Quarter That WasThere wasn't much to be excited about in Halliburton's first-quarter results. That said, these performances, along with those from rivals like Schlumberger ( SLB) and Baker Hughes ( BHI), need to be kept in the context of the overall industry, which has been marred by slumping oil prices.
In that regard, management deserves some credit for what was actually pretty decent results relative to expectations. Revenue rose slightly to $6.97 billion. Bears will argue that this was less than 2% year-over-year growth, while falling 4% sequentially. While this might be true, Halliburton still managed to beat Street estimates of $6.88 billion. The rest of the results, however, were mixed. Some arrived as surprises while others didn't. For instance, that Halliburton did so poorly in North America was a bit of a letdown. This is despite margins arriving very strong. Granted, weakness in North America has been an issue for some time. But Halliburton showed some signs of improvement in the fourth quarter. So an 11% drop in revenue, which came in at $3.71 billion, was also a disappointment. It's hard to fall in love with the stock at these levels, especially given Halliburton's 43% drop in operating income.
International Business Looking StrongThe earnings-per-share beat was helped by better operating income in North America, which grew 30% sequentially. Likewise, the company benefited greatly from a 21% surge in its international business, which included double-digit performances across all geographies. This is even though international margins weren't as impressive as in North America -- albeit in line with expectations. Since posting a 5% revenue decline in international business in the third quarter, Halliburton's management has now posted two consecutive quarters of 20% revenue increases in international markets, which affirms that Halliburton is gaining traction against Schlumberger.
Clearly, the company's new focus on international markets is working well --much more quickly than even the company expected. Still, this doesn't erase concerns about prolonged weakness in North America, especially because Halliburton has more North American exposure than both Baker Hughes and Schlumberger.