(Recasts, adds analyst comments, updates share movement)
By Chakradhar Adusumilli
BANGALORE, April 17 (Reuters) - Rowan Cos Inc (RDC.N), a provider of contract drilling services, warned its first-quarter operating results might fall short of consensus estimates due to lower drilling revenue and delays in shipments in the manufacturing division.
The news prompted at least two brokerages, including Lehman Brothers, to cut their quarterly earnings estimates for the company by about 16 percent to 17 percent.
The company forecast a sequential decline in manufacturing operating results for the first quarter. It had reported fourth-quarter income of $38.3 million from manufacturing operations, which produces equipment for the drilling, mining and timber industries.
"The big surprise to us was on the manufacturing side and not on the drilling side," said Tristone Capital Inc analyst Waqar Syed, who lowered his earnings estimate for the company to 81 cents from 98 cents a share for the quarter.
Analysts on average were expecting earnings of 96 cents a share, before items, on revenue of $542.2 million, according to Reuters Estimates.
The Houston, Texas-based company said its offshore fleet was about 91 percent utilized during the quarter, down from the prior quarter due to rig relocations and modifications.
"They did say that on the drilling side, the utilization is going to be lower but that was expected by us and it was already in our numbers," Syed, who has a "market perform" rating on the stock, said.
The company said three rigs were under tow or in the shipyard during the quarter hurting revenue.
Lehman Brothers, which has an "overweight" rating on the stock, cut its first-quarter earnings estimate to 82 cents from 98 cents a share citing the manufacturing delays and a slightly more rig downtime than it had previously forecast.
Rowan said it still expects to meet its 2008 manufacturing operating goals with external revenue exceeding $900 million and gross margins of over $200 million.
The company's shares, which had gained 7 percent so far this year, were down 3 percent at $41.13 in afternoon trade on New York Stock Exchange.
"Investors who are owning (the stock) are basically owning it for the spin-off of the manufacturing division. They believe that at some point, the business would be spun off fully or partly and so the stock is not reacting too negatively to the short-term issues," Syed said.
Last month, the company said it would pursue a sale or spin-off of its manufacturing unit, LeTourneau Technologies Inc, and hired Lehman Brothers and Morgan Stanley as financial advisers. (Editing by Jarshad Kakkrakandy, Deepak Kannan)