April 26 (Reuters) - National Oilwell Varco Inc, the largest U.S. oilfield equipment provider, reported a larger-than-expected decline in quarterly profit as margins were squeezed and the North American market was softer than expected. Shares of the company fell 2.5 percent to $65.50 in early trade on the New York Stock Exchange on Friday. "We are very cautious about North America and continue to see headwinds here as pricing and volume remain under pressure and as demand for pressure pumping and drilling equipment remains weak and operators defer expenditures," Chief Operating Officer Clay Williams said on a conference call. First-quarter net income fell 17 percent to $502 million, or $1.17 per share, from $606 million, or $1.42 per share, a year earlier. Excluding one-time items, the Houston-based company made $1.29 per share, whereas analysts on average expected earnings of $1.36 per share, according to Thomson Reuters I/B/E/S. Revenue rose 23 percent to $5.3 billion. Operating margins for the rig technology business fell to 21.2 percent from 22.4 percent in the fourth quarter. Oil and gas work in North America has slumped along with prices for natural gas and natural gas liquids.