POV
From Investor's Business Daily..
Pro Bono Work?
Tue Oct 26, 7:00 PM ET
Halliburton: Despite Democrat myth, Dick Cheney (news - web sites)'s old firm is not making a bundle in Iraq (news - web sites). To the contrary, its latest results make it look downright patriotic.
We all know the line: Thanks to connections with its former CEO (the vice president), logistics and oil-field services giant Halliburton Co. got an inside track to lucrative Iraqi reconstruction work. The loonier left sees a Cheney-Halliburton nexus as a driving force behind the Iraq war itself.
Whatever version you pick, the point's the same: A big corporation (doubly evil because it works with oil) is profiting from its undue influence with the Bush administration.
It's true that Halliburton is getting plenty of work in Iraq, including a sole-source (a.k.a. no-bid) contract to provide logistical support for U.S. troops. Its third-quarter report, released Tuesday, showed that the Iraq-related business brought in revenue of $1.4 billion. That's a large slice, 29%, of overall sales for the period.
But to be a war profiteer, you have to make a nice, fat profit. Halliburton is barely breaking even. Operating income from Iraq work totaled all of $4 million. That's a minuscule margin of 0.3%.
Halliburton happens to be doing well outside of Iraq in oil-field services. With crude over $50 a barrel, it's a good time to be in the drilling business, and the company's stock has been rising nicely as a result. But the war work is a different story. Halliburton is doing crucial work for a modest profit, plus facing real danger.
As CEO David Lesar noted recently, 48 of its employees and subcontractors have been killed in Iraq. Whatever Halliburton's reasons for being in Iraq, it's clearly not there for easy money.
There are good business reasons why a company like Halliburton might want to take on low-margin government work. Profit from that side, though never lavish, do tend to level out the boom-bust cycle on the oil side and cut risk overall.
Working in Iraq also helps sustain Halliburton's reputation as a one-of-a-kind company, able to provide support services at a scale and on timetables that no other firm can match. As the Government Accountability Office has noted, Halliburton was the only firm up to the task of quickly restoring the flow of Iraqi oil; hence its sole-source contract for that job.
But if Halliburton is looking to its shareholders' interests, as it should, it's doing so in a way that spreads a lot of good around. It's really supporting our troops, helping build a better life for the people of Iraq and giving American taxpayers full value for their money.
Instead of brickbats, it should be getting some kind of a medal.
Pro Bono Work?
Tue Oct 26, 7:00 PM ET
Halliburton: Despite Democrat myth, Dick Cheney (news - web sites)'s old firm is not making a bundle in Iraq (news - web sites). To the contrary, its latest results make it look downright patriotic.
We all know the line: Thanks to connections with its former CEO (the vice president), logistics and oil-field services giant Halliburton Co. got an inside track to lucrative Iraqi reconstruction work. The loonier left sees a Cheney-Halliburton nexus as a driving force behind the Iraq war itself.
Whatever version you pick, the point's the same: A big corporation (doubly evil because it works with oil) is profiting from its undue influence with the Bush administration.
It's true that Halliburton is getting plenty of work in Iraq, including a sole-source (a.k.a. no-bid) contract to provide logistical support for U.S. troops. Its third-quarter report, released Tuesday, showed that the Iraq-related business brought in revenue of $1.4 billion. That's a large slice, 29%, of overall sales for the period.
But to be a war profiteer, you have to make a nice, fat profit. Halliburton is barely breaking even. Operating income from Iraq work totaled all of $4 million. That's a minuscule margin of 0.3%.
Halliburton happens to be doing well outside of Iraq in oil-field services. With crude over $50 a barrel, it's a good time to be in the drilling business, and the company's stock has been rising nicely as a result. But the war work is a different story. Halliburton is doing crucial work for a modest profit, plus facing real danger.
As CEO David Lesar noted recently, 48 of its employees and subcontractors have been killed in Iraq. Whatever Halliburton's reasons for being in Iraq, it's clearly not there for easy money.
There are good business reasons why a company like Halliburton might want to take on low-margin government work. Profit from that side, though never lavish, do tend to level out the boom-bust cycle on the oil side and cut risk overall.
Working in Iraq also helps sustain Halliburton's reputation as a one-of-a-kind company, able to provide support services at a scale and on timetables that no other firm can match. As the Government Accountability Office has noted, Halliburton was the only firm up to the task of quickly restoring the flow of Iraqi oil; hence its sole-source contract for that job.
But if Halliburton is looking to its shareholders' interests, as it should, it's doing so in a way that spreads a lot of good around. It's really supporting our troops, helping build a better life for the people of Iraq and giving American taxpayers full value for their money.
Instead of brickbats, it should be getting some kind of a medal.
posted by BC at 9:22 AM
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