U.S. oilfield equipment and services company National Oilwell Varco Inc reported a better-than-expected profit on Monday but gave a cautious outlook and its shares fell nearly 5 percent.

While the 30 percent drop in third-quarter profit was not as severe as Wall Street expected, the company burned through a chunk of its order backlog and gave a cautiously optimistic outlook as customers have delayed plans due to the economic turmoil.

There really hasn't been anything that's fallen off the table, Chief Executive Pete Miller told analysts on a conference call. It's just a question of timing.

Chief Financial Officer Clay Williams called recent orders frustratingly slow and partly blamed access to financing as the credit market recovers at a decidedly glacial pace.

Also, a much-anticipated order by Brazil's Petrobras for 28 deepwater rigs has now been formally approved and National Oilwell expects those orders to start flowing in the middle of next year, instead of this year, he said.

Third-quarter net profit fell to $385 million, or 92 cents per share, from $548 million, or $1.31 per share, a year before. Excluding restructuring and transaction charges, it earned 95 cents per share, topping the 92 cents analysts had forecast, according to the average on Thomson Reuters I/B/E/S.

Revenue fell 15 percent to $3.09 billion, beating the $2.9 billion that analysts had expected. But its backlog of rig equipment orders fell to $7.3 billion at the end of September from $8.7 billion three months earlier.

The company has run only about $1.2 billion of orders year-to-date, well off the pace to achieve the $3-$4 billion guidance for 2009 given in the beginning of the year, Pritchard analyst Mark Brown said in a note.

CFO Williams said the company, which he believes is unique in viewing mergers and acquisitions as a full-time endeavor, will have done about $600 million in M&A in 2009 by year-end. The company has made half a dozen as-yet-unsuccessful proposals on the order of plus or minus $1 billion, he added.

National Oilwell increased its cash on hand by more than $900 million during the quarter to about $3.2 billion.

Shares of National Oilwell were down 4.8 percent to $44.65 in afternoon trading. As of Friday, the stock had been up 92 percent in 2009, versus a 69 percent rise for the Philadelphia oil service index .OSX.

(Reporting by Matt Daily and Braden Reddall in San Francisco, editing by Dave Zimmerman and Tim Dobbyn)

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