BAKER HUGHES NYSE-BHI

TIMELINESS
SAFETY
TECHNICAL

3
3
4

High:
Low:

Raised 11/12/10

36.3
15.0

RECENT
PRICE
43.4
19.6

45.3
25.8

39.9
22.6

32.9 RELATIVE
DIVD
Median: 25.0) P/E RATIO 1.51 YLD 1.2%
49.28 P/ERATIO 24.2(Trailing:
36.2
26.9

45.3
31.6

63.1
40.7

89.3
59.9

100.3
62.3

90.8
24.4

48.2
25.7

54.8
35.6

Target Price Range

2013 2014 2015

LEGENDS
12.0 x Cash Flow p sh
. . . . Relative Price Strength
Options: Yes
Shaded areas indicate recessions

New 7/27/90
Raised 11/12/10

BETA 1.35 (1.00 = Market)

VALUE
LINE

160
120
100
80
60
50
40
30

2013-15 PROJECTIONS

Annl Total
Price
Gain
Return
High 105 (+115%) 22%
Low
70 (+40%) 10%
Insider Decisions
to Buy
Options
to Sell

D
0
1
0

J
0
0
1

F
0
0
0

M
0
0
0

A
0
0
0

M
0
0
0

J
0
0
0

J
0
1
0

A
0
0
1

% TOT. RETURN 10/10

Institutional Decisions
4Q2009
1Q2010
2Q2010
215
266
241
to Buy
to Sell
260
307
339
Hlds(000) 301998 393214 376155

Percent
shares
traded

36
24
12

1 yr.
3 yr.
5 yr.

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
17.78 18.54 20.95 21.79 19.30 13.79 15.68 16.02 14.95 15.94 18.13 21.04 28.22 33.06
1.76
1.87
2.50
2.55
3.36
2.58
2.43
2.33
1.56
2.05
2.67
3.68
5.62
6.45
.56
.67
1.23
1.73
1.05
.22
.60
1.30
.66
.97
1.57
2.56
4.11
4.73
.46
.46
.46
.46
.46
.46
.46
.46
.46
.46
.46
.48
.52
.52
.77
.98
1.26
2.03
4.03
1.92
1.80
.95
.94
1.22
1.03
1.40
2.88
3.57
10.21 10.64 11.69 15.40
9.78
9.31
9.13
9.90 10.12 10.09 11.57 13.76 16.39 19.99
140.89 142.24 144.55 169.10 327.10 329.80 333.70 336.00 335.80 332.00 336.60 341.50 319.90 315.40
35.9
30.1
22.2
22.0
28.8
NMF
54.5
27.9
49.2
31.8
24.6
20.0
17.9
16.7
2.35
2.01
1.39
1.27
1.50
NMF
3.54
1.43
2.69
1.81
1.30
1.06
.97
.89
2.3%
2.3%
1.7%
1.2%
1.5%
1.7%
1.4%
1.3%
1.4%
1.5%
1.2%
.9%
.7%
.7%
CAPITAL STRUCTURE as of 9/30/10
Total Debt $3846.0 mill. Due in 5 Yrs $754.0 mill.
LT Debt $3555.0 mill. LT Interest $143.0 mill.
(LT interest coverage: 9.0x)
(21% of Capl)
Leases, Uncapitalized Annual rentals $54.5 mill.
Pension Assets 12/09 $594.0 mill. Oblig. $702.0
mill.
Pfd Stock None
Common Stock 431,088,811 shares
as of 8/4/10
MARKET CAP: $21.2 billion (Large Cap)
CURRENT POSITION 2008
2009
($MILL.)
Cash Assets
1955.0 1595.0
Receivables
2759.0 2331.0
Inventory (LCM)
2021.0 1836.0
Other
410.0
463.0
Current Assets
7145.0 6225.0
Accts Payable
888.0
821.0
Debt Due
558.0
15.0
Other
1065.0
777.0
Current Liab.
2511.0 1613.0
ANNUAL RATES Past
of change (per sh)
10 Yrs.
Revenues
6.5%
Cash Flow
7.5%
Earnings
14.5%
Dividends
2.0%
Book Value
6.5%
Calendar

2007
2008
2009
2010
2011
Calendar

2007
2008
2009
2010
2011
Calendar

2006
2007
2008
2009
2010

9/30/10
1856.0
3763.0
2509.0
582.0
8710.0
1371.0
291.0
1374.0
3036.0

Past Estd 07-09

5 Yrs.
to 13-15
16.0%
7.5%
22.5%
7.0%
29.0%
5.5%
4.0%
4.0%
15.5% 13.0%

QUARTERLY REVENUES ($ mill.)

Full
Mar.31 Jun.30 Sep.30 Dec.31 Year
2472.8 2537.5 2677.6 2740.3 10428.2
2670.4 2997.5 3009.6 3186.5 11864.0
2668.0 2336.0 2232.0 2428.0 9664.0
2539.0 3374.0 4078.0 4134
14125
4150 4250 4350 4450
17200
EARNINGS PER SHARE A
Full
Mar.31 Jun.30 Sep.30 Dec.31 Year
1.17
1.09
1.22
1.26
4.73
1.27
1.23
1.39
1.41
5.30
.63
.28
.18
.27
1.36
.41
.23
.59
.62
1.85
.60
.70
.80
.90
3.00
QUARTERLY DIVIDENDS PAID B
Full
Mar.31 Jun.30 Sep.30 Dec.31 Year
.13
.13
.13
.13
.52
.13
.13
.13
.13
.52
.13
.13
.15
.15
.56
.15
.15
.15
.15
.60
.15
.15
.15
.15

(A) Based on diluted shares. Excludes net nonrecurring gains (losses): 94, (34); 95, (10);
97, ($1.08); 98, ($1.97); 99, (9); 00, (29);
02, (18); 03, (59); 04, 1; 05, 1; 06,

5233.8
20.6%
611.5
200.2
31.3%
3.8%
1498.8
2049.6
3046.7
5.6%
6.6%
1.6%
76%

5382.2
20.0%
344.7
438.0
33.8%
8.1%
1484.8
1682.4
3327.8
10.0%
13.2%
8.5%
35%

5020.4
17.1%
301.6
223.7
41.2%
4.5%
1475.4
1424.3
3397.2
5.8%
6.6%
2.0%
69%

5292.8
18.1%
349.2
330.2
35.0%
6.2%
1222.0
1133.0
3350.4
8.5%
9.9%
5.3%
47%

6103.8
19.5%
371.8
528.2
32.3%
8.7%
1731.1
1086.3
3895.4
11.4%
13.6%
9.6%
29%

7185.5
22.5%
382.4
874.4
31.6%
12.2%
2479.4
1078.0
4697.8
15.8%
18.6%
15.2%
18%

9027.4
26.2%
433.7
1363.4
31.6%
15.1%
3345.9
1073.8
5242.9
22.1%
26.0%
22.7%
13%

38.39 30.97 32.75 39.80

7.35
3.63
4.15
5.90
5.30
1.36
1.85
3.00
.56
.60
.60
.60
4.22
3.48
3.60
4.15
22.03 23.35 32.40 34.70
309.00 312.00 431.10 432.00
12.3
27.3 Bold figures are
Value Line
.74
1.80
estimates
.9%
1.6%

10428.2 11864.0 9664.0

26.8% 25.4% 15.1%
521.2 637.0 711.0
1513.9 1635.0 421.0
32.9% 29.5% 31.1%
14.5% 13.8%
4.4%
3837.7 4634.0 4612.0
1069.4 1775.0 1785.0
6305.6 6807.0 7284.0
21.0% 19.6%
5.4%
24.0% 24.0%
5.8%
21.4% 21.5%
3.2%
11%
11%
44%

14125
16.5%
1050
730
37.0%
5.2%
5500
3550
13960
4.5%
5.0%
3.5%
32%

17200
20.5%
1250
1295
37.0%
7.5%
5000
3200
14995
7.5%
8.5%
7.0%
20%

THIS
STOCK

VL ARITH.
INDEX

11.8
-44.3
-10.8

27.8
7.7
42.8

VALUE LINE PUB., INC.

20
15

13-15

Revenues per sh
Cash Flow per sh
Earnings per sh A
Divds Decld per sh B
Capl Spending per sh
Book Value per sh C
Common Shs Outstg D
Avg Annl P/E Ratio
Relative P/E Ratio
Avg Annl Divd Yield

52.85
8.65
5.25
.70
4.50
45.10
435.00
17.0
1.15
.8%

Revenues ($mill)
Operating Margin
Depreciation ($mill)
Net Profit ($mill)
Income Tax Rate
Net Profit Margin
Working Capl ($mill)
Long-Term Debt ($mill)
Shr. Equity ($mill)
Return on Total Capl
Return on Shr. Equity
Retained to Com Eq
All Divds to Net Prof

23000
23.0%
1475
2285
37.0%
9.9%
5000
3000
19625
10.5%
11.5%
10.0%
13%

BUSINESS: Baker Hughes Inc. provides products and services for

the oil and gas well drilling business. Operates in 90 countries. Drilling and Evaluation segment (drilling fluids, bits, systems, well logging) accounted for 48% of revenues and 31% of operating profits
in 09. Completion and Production segment (tools, specialty chemicals, pumps, recovery maximization) was 52% and 69%. In 2009,

revenues outside North America. were 63% of total. Acq. BJ Services, 4/10. Has 52,000 employees. Wellington Mngt. owns 14.0% of
stock; Capital Res. 10.6%; Dodge & Cox, 9.1%; Capital World Inv.
7.1% (4/10 Proxy). Chairman & CEO: Chad Deaton. Pres. & COO:
Martin Craighead. Inc.: DE. Addr.: 2929 Allen Parkway, Ste. 1200,
Houston, TX 77019. Tel.: 713-439-8600. www.bakerhughes.com.

Baker Hughes is pulling in notably

more orders these days. A pickup in the
drilling business and the nicely timed,
May acquisition of BJ Services are powering the advance. A 40% rise in the rig
count and improved global economies are
providing support. Overall, we look for a
better than 30% earnings gain in 2010.
The North American onshore market
is clearly the big driver these days.
Customer interest in developing shale
plays is likely to remain high, since the
sort of reserves-boosting opportunities that
shale drilling presents dont come around
very often. Drillers are keen to make the
most of this new asset class before a mature phase sets in.
Slower times in the domestic offshore
business are proving somewhat of an
offset. Producers are adjusting to new
rules in the Gulf of Mexico following the
lifting of the drilling moratorium there.
The permitting process has slowed, as
well. Offshore work will eventually perk
up, but not right away.
International prospects are the biggest wild card heading into 2011. Some
areas, typically those having better geolog-

ical prospects, do better than others in the

early stages of a drilling recovery. Its no
different this time around. Currently,
more industry capacity needs to be utilized
overseas to drive pricing higher. Our 2011
estimate for a big share-earnings gain is
based on the assumption that worldwide
business conditions continue to improve,
and lift energy demand.
What has changed is that Baker
Hughes approaches the future with a
broader and deeper product lineup.
The BJ Services acquisition outfits the
company with needed service offerings to
best compete in the global market. Expected annual cost savings of $150 million
from eliminating overlap is an added plus.
The company got a sweet deal on its
recent $1.5 billion debt offering. Locking in 30-year financing at a low 518% rate
was a smart move. The initial use of funds
was to pay off around $500 million in commercial paper. Another $250 million of BJ
Services notes are due in June.
The stock offers attractive 3- to 5year possibilities, but is only neutrally ranked for Timeliness (3).
Robert Mitkowski, Jr.
November 12, 2010

$3.17. Quarterlies may not sum to full-year total due to rounding. Next earnings report due
early February.
(B) Dividends historically paid mid-February,

May, August, and November. Dividend reinvestment plan available.

(C) Intangibles of $1.6 bill. at 12/31/09, or
$5.17 a share. (D) In millions.

2010, Value Line Publishing, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.
THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscribers own, non-commercial, internal use. No part
of it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.

Companys Financial Strength

Stocks Price Stability
Price Growth Persistence
Earnings Predictability

A
45
60
45

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