User 160194

Why I'm Buying Foster Wheeler on Its Earnings Miss

FWLT has an enormous strength in its Reading office but some significant weaknesses in its E&C Division.Its Houston operation is very weak and weakness in the home of US International Oil and Gas is restrictive on client portfolio.It only has one product line and is dogged by poor quality.FWLT has masked 2007 financial results. In 2006 they were awarded a project in Saudi Arabia which they fronted but Hyundai executed.FWLT checked quality and took an $80m fee. Good opportunistic business but unfortunately that has let a competitor into a key market, not much future in that.That sort of opportunity probably arises once in a while, hence lumpy earnings.FWLT are now a reimbusible contractor,getting the resources to execute these projects should be interesting. Expect a bidding war on engineers salaries as FWLT and their competitors eat through their backlog. No wonder McDermott is preferred on a parallel blog, they are not a churner of manhours.