Baker, Smith International Report Substantial Losses

Reflecting depressed oil drilling and price-slashing competition, Baker International reported a $273-million net loss Friday for its fiscal 1986, while Smith International posted a third-quarter loss of $64.4 million.

Baker, the Orange-based oil services company that recently announced plans to merge with Hughes Tool, said its loss for the fiscal fourth quarter hit $22.7 million. The company had reported net income of $26 million for the fourth quarter a year earlier and a net profit of $87.7 million for all of fiscal 1985.

At Smith, which is in a Chapter 11 bankruptcy reorganization after being ordered to pay a $204-million damage award to Hughes Tool in a patent infringement case, the third-quarter loss included a $46-million writedown of inventory and capital assets. For the first nine months, the Newport Beach-based company reported a net loss of $104.6 million, nearly double the $58.3-million loss reported a year ago.

Baker’s losses came despite a consolidation of facilities and a 30% payroll reduction in the past year. The bulk of the company’s full-year loss came from a $340-million writedown of assets and inventories taken in the second fiscal quarter.

Wall Street analysts, however, said they were “not surprised” by Baker’s money-losing performance, attributing the loss for the final quarter to competition-forced price discounting, a sales slump because of severely depressed domestic drilling and a decline in international drilling.

Sam Albright, an oil industry analyst with Kidder, Peabody & Co., said, however, that he believes the benefits of Baker’s cost-reduction program will be felt in later quarters, after the company absorbs the initial costs associated with the layoffs and plant closings.