Global oilfield services firm Baker Hughes (NYSE: BKR) announced results that sorely missed expectations. Revenue came in at $6.35 billion, 2% behind consensus of $6.47 billion, while earnings per share of $0.07 missed the consensus estimate of $0.31 by 75%.
Results included writedowns and impairments of $216 million, a regular occurrence for Baker Hughes lately.
Full-year revenues were up 1% compared to 5% growth in 2018 over 2017, demonstrating a tough environment for oil and gas companies.
In the medium term, expert say there is not much to get excited about with flat oil prices and belt-tightening among many customers.
Results were disappointing with revenue in the U.S. fell 11% compared to a U.S. rig count that declined only 5% in the fourth quarter.
Weak pricing obviously continued in the U.S. as oil producers pull back on activity in key shale basins to rationalize spending.
Even though the analyst community likes to back out every write-off and call it one time, impairments like Baker Hughes saw this quarter are why this sector has trouble earning its cost of capital over time.
Writeoffs are portrayed as being one time but looking through history we can see it has certainly not been a one-off with regular write-offs during periods of contraction and falling oil prices.
Baker Hughes stock is down 4.5% this year. This compares to the S&P 500 which is up 1% for the year.
Shares slid 15 cents to $22.58
