NEW YORK (AP) -- Drilling contractor Nabors Industries' stock fell sharply on Wednesday as fourth-quarter results disappointed Wall Street and the company warned that its first-quarter income will drop because of a low rig count and depressed spot market rates.
THE SPARK: Nabors announced late Tuesday that it earned $27.1 million, or 9 cents per share, for the period ended Dec. 31. Revenue declined 8 percent to $1.63 billion as the company had a near suspension of pressure pumping work in late December that continued into early January.
Analysts expected earnings of 28 cents per share on revenue of $1.66 billion, according to a FactSet poll.
While Nabors said its near-term outlook is "challenging," the company anticipates results improving starting in the second half of the year.
THE ANALYSIS: J. Marshall Adkins of Raymond James said in a client note that if you strip out a $158 million asset sales gain, a $143 million asset impairment charge, the effect of a lower tax rate and higher-than-normal investment income, earnings were closer to 26 cents per share. Adkins had expected fourth-quarter earnings of 27 cents per share.
The analyst also said that drilling and rig services results weakened in Alaska and overseas from the subsequent quarter, with the only growth coming from Canada.
SHARE ACTION: Shares of Nabors Industries Inc. dropped $1.26, or 7 percent, to $16.74 in afternoon trading. The stock has traded in a 52-week range of $12.40 to $22.73.