Weatherford Sees Q4 Earnings Below View, To Cut 7000 Jobs - Quick Facts

(RTTNews) - Oilfield services provider Weatherford International Ltd. (WFT) forecast earnings for the fourth quarter sharply below analysts' estimates, citing several factors, and said it will cut 7,000 jobs in order to make its cost base more efficient.

The Switzerland-based company now forecasts adjusted earnings for the fourth quarter in a range of $0.05 to $0.08 per share. On average, thirty one analysts polled by Thomson Reuters expect the company to earn $0.26 per share for the quarter. Analysts' estimates typically exclude special items.

The company said that fourth-quarter earnings were impacted by several factors, including capital discipline driven activity reductions in Latin America and operational disruptions in the Middle East.

In addition, earnings for the quarter were also impacted by severe weather conditions that adversely impacted activity in North America and the North Sea, and incremental tax planning items that increased the fourth quarter effective tax rate to approximately 50 percent.

However, Weatherford noted that it reduced its net debt by nearly $700 million during the fourth quarter, reflecting strong operating cash flow and the partial monetization of the previously announced divestiture of the Borets joint venture.

Further, the company said that it in 2014, it was focused on growing its core businesses, making the cost base more efficient and divesting non-core businesses as well as reducing net debt.

In order to make its cost base more efficient, the company has decided to reduce its workforce by 7,000 employees, primarily from its fixed support cost base. The company noted that the reduction will not affect its non-core businesses that have been earmarked for divestiture in 2014.

The company expects the workforce reduction to be completed during the first half of 2014, resulting in annualized savings of $500 million, with roughly half of this amount impacting 2014 earnings. Weatherford noted that actions will not affect or compromise in any way its accounting and tax processes.

For fiscal 2014, Weatherford forecasts adjusted earnings per share in a range of $1.10 to $1.20. Street expects the company to report earnings of $1.22 per share for the year.