Baker Hughes said Tuesday it will lay off 7,000 mostly in the first quarter of 2015, amid a crude oil price slump and drilling slowdown it expects to worsen in the next quarter.
The announcement came shortly after the oil service company reported that its net income for the three months ending Dec. 30 rose to a record high of $663 million, or $1.52 a share. After adjustments to exclude deconsolidation of a joint venture, the company reported an earnings per-share of $1.44.
In the same period of 2013, Baker Hughes reported $248 million in profit.
The layoffs are an about 11 percent cut to the 62,000-plus employees Baker Hughes said it employs globally on Tuesday. The company said it expects to book a one-time charge in the next period in the range of $160 million to $185 million for severance, and said it is reviewing its facilities for possible closures.
“This is really the crappy part of the job, and this is what I hate about this industry frankly,” said Martin Craighead, Baker Hughes Chairman and CEO told analysts on a conference call discussing the results. “This is the industry, and it’s throwing us another one of these downturns, and we’re going to be good stewards of our business and do the right thing. But these are never decisions that are done mechanically.”
Baker Hughes’ fourth quarter was exceptional by almost any other measure. The company’s reported adjusted earnings per share of $1.44 soundly exceeded analysts’ expectations of about $1.07 per share. Across 2014, the company said it saw $1.71 billion in net income, compared to $1.1 billion in 2013.
Several analysts on the call praised CEO Craighead’s performance during a question and answer session. In a note to clients, energy investment investment bank Tudor, Pickering, Holt & Co. LLC called the past months “one heck of a quarter.”Read more by clicking right here.
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