Neocons can Celebrate July 23rd, too: Halliburton Profits Soar


Halliburton Shares Soar10% After It Posts Second Quarter Profit

By Pam Easton, Associated Press
Friday July 22, 2005

HOUSTON (AP) — Oilfield services firm Halliburton Co.’s shares soared 10 percent Friday after it reported that an influx of new government contracts at its KBR and energy services units drove it to a second-quarter profit.

“It was a fundamentally solid quarter,” Halliburton chief executive David Lesar said during a Friday morning conference call with analysts. “There are good reasons for all of us to feel proud and good about what we have accomplished.”

In a report after the markets closed Thursday, Halliburton said it earned $392 million, or 78 cents per share, for the three months ended June 30 compared with a loss of $667 million, or $1.52 per share, last year. The year-ago result included a $200 million loss from an offshore engineering, procurement, installation, and commissioning project in Brazil.

Revenue rose 4 percent to $5.2 billion from $5 billion.

“Absolutely stellar financial results here,” research analyst Dan Pickering with Pickering Energy Partners Inc. said Friday. “It is clear that their business is strong and the current levels of profitability are sustainable.”

On average, analysts surveyed by Thomson Financial expected earnings of 56 cents per share on revenue of $4.87 billion.

Halliburton shares rose $4.59, or 9.4 percent, to close at $53.29 Friday on the New York Stock Exchange, surpassing the previous 52-week closing high of $50.

Halliburton’s shares last exceeded $53 on Sept. 12, 2000, closing at $54.37.

Three years ago, on July 23, 2002, Halliburton shares closed at $9.10. It was the lowest the company’s stock price has been in a decade. Halliburton spokeswoman Cathy Mann said the company has experienced a 488 percent rebound in three years since.

In December 2002, when Halliburton announced its asbestos settlement before the start of the war in Iraq, the company’s shares sold for just over $18.

“I think they are in a sweet spot right now as the numbers today proved,” Pickering said. “The market agrees. They are loving it.”

Halliburton attributed the reversal to its KBR unit and Energy Services Group.

Pickering said two-thirds of the company’s improved results are related to the strong energy market while the other third can be attributed to self-help measures Halliburton put in place.

“If you step back a couple of years and listen to them talk about their business, they would spend 75 percent of the time talking about areas where they were having problems,” he said. “Now they spend 95 percent of the time talking about areas where they are growing. Big difference.”

Two years ago, Pickering said analysts thought Halliburton may be bankrupted by asbestos litigation the company inherited when it acquired Dresser Industries Inc. for $7.7 billion in 1998, during Vice President Dick Cheney’s tenure as CEO.

Earlier this year, Halliburton cleared itself of the litigation, distributing more than $2 billion in cash and 59 million shares to asbestos and silica claimants.

During the second quarter, KBR, which was formerly known as Kellogg, Brown & Root, reported operating income of $122 million versus a loss of $277 million a year ago, with government and infrastructure business rising to $73 million from $19 million last year. The year-ago results reflected a pretax loss of $310 million related to the Brazilian project in the unit’s energy and chemicals segment.

Meanwhile, Halliburton’s energy services group, which provides drilling and production services, posted operating income of $522 million, up 93 percent from the same period last year.

“When you fix the problem areas, you can focus on growth,” Pickering said. “I think they have fixed most of the problem areas.”

KBR, Halliburton’s engineering and construction subsidiary, manufactures oil and gas drill bits and technology to help energy companies maximize exploration and production efforts.

The subsidiary is the largest U.S. contractor in Iraq with more than $10 billion in work orders from the Army to support U.S. troops and rebuild Iraq’s oil industry.

Halliburton was run by Cheney for five years until he resigned in 2000 to be President Bush’s running mate. It has been under fire since the beginning of the war in Iraq and various agencies are investigating allegations of overbilling and favoritism because of Cheney’s past connections.

Company officials have denied wrongdoing. Cheney and the Pentagon have said the vice president has no role in contract decisions.

Halliburton executives have expressed a desire to sell or spin off KBR. But company officials said Friday they have not begun any discussions with potential buyers and are working to improve the unit’s performance to get the best value for shareholders.

“We have stated that we first needed to establish a track record of value for a number of quarters,” Lesar said. “We are making progress.”

Halliburton Chief Operating Officer Andy Lane said he is pleased with KBR’s turnaround.

“On the KBR side, we have clearly put our business back on a solid platform,” he said. “Halliburton is performing very well and is stronger than ever.”


Source article here.

Editor’s Note:

While nervous nellies continue to fret that the 9/11-justified Iraq war is destroying our nation’s social programs, credibility and security, we should also recall its silver lining for great American institutions like Halliburton (and VP Cheney who still holds 433,333 stock options). Witness the dramatic growth curve here since July 23, 2002, the exact date of the Downing Street Memo. It may perhaps be lamented that what is good for Halliburton and Cheney now seems to doom the country, but it’s obviously just another one of those amazing unfortunate coincidences that 9/11 students know so well. – Ed.

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