Schlumberger's profit disappoints

Schlumberger announced fourth-quarter profit that fell just short of analysts' estimates.

NEW YORK (CNNMoney.com) -- Oil technology provider Schlumberger's profit surged in the latest quarter, helped by strong overseas demand, although the earnings fell short of Wall Street's estimates.

Schlumberger (SLB) shares tumbled 6 percent in early morning trading as investors expressed disappointment with the results, even as sales exceeded expectations.

The Houston, Texas-based company said Friday that net income rose 22 percent to $1.38 billion, or $1.12 per share, in the fourth quarter ended Dec. 31.

Excluding an after-tax gain of $17 million related to the sale of workover rigs, profit rose to $1.37 billion, or $1.11 a share.

Analysts polled by Thomson Financial had expected fourth-quarter earnings of $1.13 a share.

Revenue rose nearly 17 percent to $6.25 billion during the quarter, versus analysts' estimates for sales of $6.14 billion.

The company, which supplies technology, project management and information solutions to the oil and gas industry, did well abroad. In Latin America, revenues climbed 40 percent from year-ago period, while sales grew 30 percent in the Middle East and Asia.

In North America, however, revenues from oilfield services declined 7 percent year-over-year on "unusual" inclement weather and sinking oil services prices.

The company noted that despite the overall gain in earnings and revenues, the near future may be more challenging.

"Shorter-term growth presents a more complex picture than the immediate past," Schlumberger Chairman and CEO Andrew Gould told analysts during a conference call.

"For North American natural gas drilling, 2008 will be a plateau year ... [and] international growth may be a bit slower than some people are assuming," he said.

But the company was upbeat about the long-term outlook, saying it expects strong gains in the future on a large number of orders for offshore rigs and an increase in research and development ventures.

"This quarter's setbacks do not reflect the long-term trends," said Gould. "Overall, I see 2008 as a transition year into a cycle that is going to be dominated offshore."

The company also bought back 5.8 million shares for $557 million in the fourth quarter and raised its quarterly dividend 20 percent to 21 cents a share.

Schlumberger's shares soared nearly 56 percent last year as oil prices surged. Even though crude prices touched $100 a barrel at the start of 2008, Schlumberger's stock has slid recently amid fears that a slowing U.S. economy may lower demand for oil.

"Over the long term, demand for oil has affected the demand for Schlumberger's technology as drilling increased," Raymond James & Associates analyst Colin Gerry told CNNMoney.com.

For the 2007 fiscal year, Schlumberger reported revenues of $23.28 billion, up about 22 percent from 2006. Net income for the full year surged 39 percent to $5.16 billion.