UPDATE: Smith International Profit Falls 97%
(Updates with additional figures and comments from the company)
By Steve Gelsi
A depressed U.S. market for drilling natural gas nearly wiped out Smith
International Inc.'s third-quarter profit, financial results showed Thursday.
Weathering a steep summer downturn in business, Smith International (SII) said
earnings for the three months ended Sept. 30 fell 97% to stand at $7 million, or
3 cents a share, down from $209.8 million, or $1 a share, earned in the year-
earlier third quarter.
Quarterly revenue for the oil-service giant declined to $1.88 billion from the
prior year's $2.85 billion.
A survey of analysts by FactSet Research yielded consensus estimates of 15
cents a share for profit as well as $1.91 billion for revenue.
Shares of Smith International fell 2.8% to close at $29.15.
"Unfavorable economic fundamentals in the North American natural-gas market
... contributed to continued pricing pressure within the U.S. operations,"
Houston-based Smith International said.
In response to a glut in supply and lack of capital available for drilling,
gas companies have been busy pulling rigs out of the ground for most of 2009.
A modest seasonal recovery of drilling activity in Canada, sequential
quarterly revenue growth in Latin America and relative strength of its M-I Swaco
deep-water unit couldn't offset deterioration in both revenue and margins, the
company said.
Smith International didn't provide specific targets for the fourth quarter but
said it's seeing signs of business stabilization. It said it cut staff by about
5% to help contain costs.
Looking ahead to 2010, Smith International said it expects more of a favorable
industry environment, marked by increased activity as compared to current
levels.
-Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
10-29-091907ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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