Halliburton Loses More Money

Halliburton, closely tied to Vice President Cheney, is a favorite bogeyman of the anti-corporatists world wide. As the US government tries to put Iraq back together again, the unlearned left whines about the no-bid contract in the country to get basic services up and running. In their mythology, Halliburton is profiting from the war and from the bloodshed after the end of major combat operations. It's a lovely picture for frustrated communards, but there's a small problem with it. Halliburton's latest earnings report showed the company lost money.

The quarter's net loss was a hefty $663 million, including a $603 million loss from an asbestos and silica settlement. Since that operation has been discontinued and the payout is ending, it is better to look at the second quarter 2004 loss from continuing operations, which was $54 million, or around 12 cents a share. It is difficult to make the case that Halliburton is profiting from the occupation of Iraq when there was no profit posted.

Students of the Halliburton case know that it is the KBR subsidiary that operates in Iraq, and it is there that any benefits from the conquest of Iraq will turn up. And indeed, revenues are 68% higher at $5 billion for the quarter -- and according to the company's 10-Q filing with the SEC, much of that is due to the occupation. The Iraq-related revenue figure is $1.7 billion for KBR, resulting in $23 million before taking corporate costs and taxes into consideration.

When added into the subsidiary's entire operation, the Iraq money amounts to almost nothing. The second quarter 2004 operating loss (once again not a profit) reached $277 million, up from a $148 million loss in the second quarter of 2003. Without the $23 million in Iraq, the picture doesn't get too much worse -- a loss of $300 million doesn't hurt much less than a loss of $277 million. Had the Barracuda-Caratinga project, done with Brazilian oil company Petrobras, not lost $310 million in the quarter, KBR would have been profitable, and so would Halliburton.

In this case, the anti-corporate crowd are as laughably full of nonsense as the apologists for crony capitalism in the White House. Halliburton can't profit from its work in Iraq if it has no profits to post. Yes, it's got some revenues coming in from Iraq, and there is an operating income to show for it. However, the operation is so close to break even that one has to ask whether the people at Halliburton know what they are doing in Iraq; they are awfully close to losing money from a no-bid government deal.


© Copyright 2004 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.


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