Saturday, January 28, 2012


Schlumberger announced 2011 Q4 earnings last Friday. As always, the good folks at Seeking Alpha have a transcript of the conference call and Q&A session available here. Alternatively, you can download a .mp3 from SLB’s public investor relations page.

You can find any number of articles on what the company and business outlook look like and what’s going on with stock performance. Personally, I tend to use Yahoo! Finance as my starting point when looking for how or why SLB is in the news. Given that, I’m not going to dwell much on the company performance (not bankrupt like some) or the business outlook (which looks like this). Instead, it’s all about the Q&A session with this most recent one being the first without former CEO and still chairman of the board (until April) Andrew Gould being an active participant.

For several years now, I have been reading the transcripts and listening to the call recordings. I often let the Q&A session play in the background on my computer while I work. Gould was (and still is) very well-respected within the industry having helmed Schlumberger for the previous eight years and overseeing its rise back to industry prominence. For many years, it was him and his dulcet voice during the Q&A sessions after the earnings announcements. He has now moved on to join the Board of Directors at BG Group and is tagged to be their next chairman sometime after he steps down as chairman of Schlumberger in April. Anyway, I typically found his answers quite illuminating both of the direction of the company as well as the overall industry. Combined with how well spoken he generally was, listening to him field questions was rather entertaining in a certain educational sense.

On this most recent conference call, I found the Q&A session with the new CEO Paal Kibsgaard less interesting than previous calls. It was partly to do with the questions themselves which I generally thought were not all that interesting or pointed. And there was nothing wrong with any of the answers either. Nonetheless, the call failed to spark the same level of eager interest from me that it used to engender. The reasons are most likely three-fold. First, the new CEO is simply not as well spoken as Gould. There are a couple different reasons for why this could be, but regardless of the specifics, I expect this to get better with time. The second reason is that 2012 is looking like a relatively straightforward year. There is always uncertainty in this business, but this could be the most predictable year in the past five or six. Thus, questions and subsequent answers about the business outlook didn’t have much meat to them. Combined with the first point, I also think the Kibsgaard erred to the side of caution and preferred to give less, rather than more information. This left some of the answers feeling a bit bland, but it’s also easier to put out a press release with more information than trying to unsay something. The third, and probably most significant reason that the Q&A session lacked punch, is that I know more than I used to in the past. My personal understanding of the business is much broader than it was even two years ago. This has been motivated by a mix of more time working, being overseas and seeing different operating environments, and my current and previous locations which have given me better insight into the other segments and product lines outside of my own.

We’ll see what happens three months from now when the next call comes around. Perhaps it will be more exciting, though that’s not necessarily a good thing.

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