Baker Shares Dive by $1 on Gloomy Industry Forecast

Times Staff Writer

Already battered by a seemingly never-ending slump in the oil-drilling business, Baker International Corp.'s common stock fell $1 a share to $10.25 and was the New York Stock Exchange's fourth-most-active issue Wednesday. Investors sold heavily on industry projections of more bad news for the oil service sector.

Shares of the Orange oil field equipment firm have slipped steadily to hit new 12-month lows this week. The $1 fall Wednesday came after an analyst predicted that Schlumberger Ltd., the industry leader, would post a second-half loss.

The bearish report, issued by the New York investment firm of First Boston Corp., did not specifically mention Baker, but analysts said jittery investors took it as a cue to sell their holdings in the company.

Also fueling the sell-off was speculation that Baker, which has paid cash dividends each year since 1929, may reduce its 23-cent-a-share quarterly dividend next Wednesday when it releases quarterly results.

With an annual dividend of 92 cents a share, Baker's percentage yield is one of the highest among Big Board-listed companies.

"If you were holding shares of Baker, you'd be a little concerned," said M. Craig Schwerdt, an analyst with the Los Angeles investment house of Morgan, Olmstead, Kennedy & Gardner.

In all, more than 1.8 million shares changed hands. Eric Mattson, Baker's treasurer, said two large institutional holders accounted for the bulk of the volume. He said he was unable to identify them.

Mattson declined to say whether the dividend will be cut but said "the Street seems to think so. . . . The climate is not as optimistic as it was six months ago, so it's not out of the question."

Baker reported a $254.9-million loss for its fiscal second quarter, which ended March 31. The loss, which contrasted sharply with net earnings of $21 million a year earlier, resulted from write-downs totaling $340 million.

Mattson would not say Wednesday whether the quarter just ended brought more losses. He did say that unlike the second quarter, there were no write-offs.

Because of the write-downs earlier this year, he added, Baker will have a loss for the year, but not an operating loss.

Frank Podbelsek, who follows Baker for the Los Angeles investment firm of Wedbush, Noble, Cook Inc., said Wednesday that he expects the company to post a 1986 net loss between $2 and $2.50 a share.

"The outlook for the oil services industry and drilling in general just isn't that good," said Podbelsek, noting that rig counts have fallen sharply and that much domestic drilling has ceased altogether.

On Wednesday, common shares of Orange County's two other oil services firms--already down substantially because of the industry slump--were unaffected by First Boston's gloomy prediction. Smith International Inc. of Newport Beach closed at $3.125 a share, off 12.5 cents. Varco International Inc., based in Orange, closed at $2.875 a share, unchanged for the day.

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