(Rewrites, adds details, SAN FRANCISCO to dateline)

NEW YORK/SAN FRANCISCO (Reuters) - Baker Hughes Inc
, the third-largest U.S.-listed oilfield services
company, posteda quarterly profit that did not live up to
investors' raised expectations, and its stock tumbled 13
percent.

The U.S. company said flat international earnings offset
strong results at home, with revenue in Africa and Latin
America, where it has invested heavily, lagging other markets.

It was a similar story for Smith International Inc,
which also reported on Tuesday, as lower customer spending in
Latin America took the shine off its land-based U.S. growth.

Shares of Baker Hughes, which had strongly outperformed the
sector this year, dropped 13 percent in early trading to
$43.75, with results from its competitors leading investors to
expect a positive second-quarter surprise.

Industry leader Schlumberger Ltd had met market
expectations, while Halliburton Co benefited from its
greater presence in the resurgent U.S. market and comfortably
beat analysts' estimates.

Weatherford International, rounding out the
oilfield services "big four," also topped estimates.

Baker Hughes has added more exposure to North American
drilling with the takeover of pressure pumping specialist BJ
Services, which was completed on April 28.
However, it is still running the U.S. parts of the companies
separately pending the sale of stimulation vessels, which it
hopes will get Department of Justice approval "pretty soon."

Smith, which is set to be taken over by Schlumberger this
month after getting DoJ clearance last week,
said net income rose to $65.1 million, or 26 cents per share,
from $24.4 million, or 11 cents a share, last year.

Smith said the drilling moratorium put in place after the
BP Plc spill in the Gulf of Mexico would knock earnings
down by 4 cents to 6 cents per share in the third quarter.

Baker Hughes said the moratorium took 3 cents per share off
second-quarter profit, and would trim off 8 to 11 cents per
quarter in the second half of the year, as analysts expected.

Baker's second-quarter operating margins rose a percentage
point over the first quarter to 10 percent, with North America
improving but international margins flat at about 7 percent.

Chief Executive Chad Deaton said the international recovery
was running about quarter behind, but was pleased that with the
BJ deal, his company now had the "full toolkit" to compete in
the unconventional shale plays driving North American growth.

Second-quarter net income rose to $93 million, or 23 cents
per share, from $87 million, or 28 cents per share, a year
earlier. The company issued 118 million shares of common stock
to BJ Services stockholders during the quarter.

The latest quarter includes a charge of 13 cents per share
related to the acquisition, a 7 cents-per-share impact from a
higher tax rate due to lower-than-expected profits in certain
African countries, and other items.

Analysts had expected a profit of 43 cents per share
according to the average on Thomson Reuters I/B/E/S.

Revenue grew 44 percent to $3.37 billion, but came in below
analysts' average estimate of $3.47 billion.

But leaving out the Gulf of Mexico impact, Deaton said
margins could reach the mid to high teens in the second half.

At Monday's close, Baker Hughes shares had risen 24 percent
in 2010, compared with a 3 percent decline in the Philadelphia
Stock Exchange oil service index, which includes stocks
battered by the Gulf of Mexico disaster such as Transocean Ltd
.
(Reporting by Adveith Nair in New York and Braden Reddall in
San Francisco, editing by Dave Zimmerman)