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Tuesday, October 03, 2006

The Horror At Halliburton (HAL)

Halliburton's stock was down nearly 23% in the third quarter, with 15% of that fall coming in September. The company has spun off the one real dog in its array of businesses, Kellogg, Brown and Root. One would think the market would give HAL some credit. Jim Cramer likes the stock. Fitch also upgraded HAL's debt recently. And, Wall St. analysts view the shares as attractive.

Drilling seems to be rising, especially in difficult environments like the Gulf of Mexico. Halliburton's advanced technology should be in its element for this kind of project. Halliburton also announced it was upping its share buy-back program by $2 billion. But, buy-backs are not always a sign that a company believes that its share price will do well short term, and it does decrease shares outstanding and make EPS look better.

But, oil prices are falling.

In the June quarter, Halliburton's revenue rose 12% to $5.545 billion. Net income rose 51% to $591. But, a drop in the price of a barrel of oil could change all of that.

Ther are times when a stock gets wrapped up in broader economic moves. That seems to be the case with Halliburton and falling oils prices. If so, the company fundamentals may well pull the shares back up.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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