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DryShips shares tumble on shipping industry woes

NEW YORK (AP) -- Shares of DryShips Inc., which owns and operates oil rigs and dry cargo carriers, tumbled Thursday, after the company warned that the shipping market remains "severely depressed" and one of its rivals filed for bankruptcy protection.

THE SPARK: In releasing its third-quarter results Wednesday, DryShips noted that both tanker and drybulk spot charter rates have been at historic low levels for some time. Meanwhile ongoing economic deterioration in Europe has prompted banks to stop lending to shipping companies and the value of DryShips' assets continues to fall, the company said.

Also on Wednesday, tanker operator Overseas Shipholding Group Inc. filed for Chapter 11 bankruptcy protection, blaming tough industry conditions over the past few years.

THE BIG PICTURE: DryShips said the slide in spot charter rates comes at a time when its lucrative legacy charters continue to expire on a staggered basis. The lack of available credit is occurring at the same time that the company needs to finance its drybulk and tanker building programs.

DryShips said it's in talks to reduce and extend its capital spending program and warned that those negotiations will be "difficult and drawn out."

The Greek company also posted a larger-than-expected third-quarter loss. Excluding one-time items, DryShips' loss totaled 9 cents per share, while analysts expected a loss of 2 cents per share, according to FactSet.

Revenue rose 8 percent to $343.6 million. Analysts expected $329.6 million.

THE SHARES: Down 36 cents, or 17.3 percent, to $1.72 in heavy afternoon trading, after dropping to a 52-week low of $1.69 earlier in the session.