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Halliburton Sees Writing on Wall, Plans to Divest Itself of KBR Before the You-Know-What Hits the Fan

Reported by Marie Therese - November 27, 2006 -

On Saturday's edition of Forbes on FOX, Forbes Senior Editor Elizabeth MacDonald recommended that FOX viewers buy Halliburton, giving as a reason the fact that they are looking to divest themselves of Kellogg, Brown & Root (KBR), a subsidiary which is under investigation for mishandling vital services to the U.S. military in Iraq. The name KBR has become synonymous with waste, fraud and incompetence.

According to MacDonald: "This is a beaten up stock because of the procurement scandal at its unit Kellogg, Brown & Root, but they're spinning off 20%. They're gonna fully spin off Kellogg, Brown & Root by April of 2007. This is the unit, you know, that delivers turkey dinners, for example, to our troops in Iraq. But Halliburton has a solid, solid earnings performance and a solid balance sheet. I think you're gonna see a run up in this stock at least through the spring."

Forbes Associate Editor Lea Goldman disagreed with MacDonald: "I think, you know, the writing's on the wall in Iraq, and if we do withdraw, which does seem to be a conclusion we're looking at, Halliburton stands to lose billions of dollars in contracts."

MacDonald countered by saying, "No, actually it's KBR that will lose it but you know, KBR has a solid $15 billion or so in the pipeline already, so I see their earnings going to be supported by that."

MacDonald concluded by saying, "I like Halliburton. They've got a solid oil services unit and they're really strong in that area."

COMMENT
It's been rumored since 2004 that Halliburton was trying to unload KBR. However, it would seem that no less a personage that the Senior Editor of Forbes Magazine now believes it is a certainty. Could this have anything to do with the recent Democratic sweep of both houses of Congress and the virtual certainty that there will be investigations into the various private contractors who have made obscene profits at the expense both of the American taxpayer and the Iraqi people?