enron mentions enron shares fall on concern over cfo ' s partnerships ( update 4 )
bloomberg , 10 / 19 / 01
usa : update 1 - enron stock sustains further heavy losses .
reuters english news service , 10 / 19 / 01
enron corp . cut to ` hold ' at a . g . edwards
bloomberg , 10 / 19 / 01
bandwidth beat : enron broadband unit takes a beating
dow jones energy service , 10 / 19 / 01
dynegy chief : bandwidth growth won ' t wait for trading
dow jones energy service , 10 / 19 / 01
uk : jobs in base metals down but definitely not out .
reuters english news service , 10 / 19 / 01
new power hldg sees meeting 3 q loss estimate
dow jones news service , 10 / 19 / 01
enron shares fall on concern over cfo ' s partnerships ( update 4 )
2001 - 10 - 19 16 : 24 ( new york )
enron shares fall on concern over cfo ' s partnerships ( update 4 )
( updates with chief financial officer fastow didn ' t
immediately return a call for comment in fifth paragraph . )
houston , oct . 19 ( bloomberg ) - - enron corp . ' s shares have
fallen 26 percent in the past three days on concern the biggest
energy trader ' s dealings with partnerships run by its chief
financial officer contributed to investment losses .
enron ' s stock dropped 10 percent today . enron ' s board cost
the company at least $ 35 million by allowing chief financial
officer andrew fastow to manage ljm cayman and ljm 2 co - investment ,
partnerships that bought enron assets , a shareholder alleged
wednesday in a lawsuit .
the lawsuit came the day after enron reported $ 1 . 01 billion
in third - quarter losses from failed investments . the wall street
journal reported $ 35 million of the losses were connected with the
two limited partnerships . enron also reduced shareholders ' equity
by $ 1 . 2 billion when it bought back 55 million shares from the
partnerships , the paper reported yesterday .
` ` it looks sleazy , ' ' said roger hamilton , a manager at john
hancock ' s value funds , which own 600 , 000 shares . ` ` if you are
someone who invests in a company ' s management , it ' s almost time to
punt with enron . ' '
enron spokeswoman karen denne didn ' t return calls or written
requests seeking comment . fastow didn ' t immediately return a
telephone call for comment .
fastow and a handful of associates made more than $ 7 million
last year in management fees and about $ 4 million in capital
increases on an investment of about $ 3 million in one of the
partnerships , the journal reported today .
buying enron assets
fastow is involved in 17 other similar companies and
partnerships that appear to have ties to houston - based enron ,
based on filings with the texas secretary of state .
the foreign business corporations and limited liability
companies have directors , officers or managers whose address is
listed as 1400 smith street in houston , enron ' s corporate address ,
according to texas records .
fastow is listed as a director , officer or managing member in
each one . at least one of the companies bought and sold enron
assets , including foreign power plants .
whitewing management , which lists fastow as its managing
member , received $ 807 million from the sale of enron debt last
year .
under the terms of the debt sale , whitewing is allowed to use
the proceeds to buy power plants from enron or make other
` ` permitted investments . ' ' whitewing has bought 14 enron plants or
companies since 1999 and sold four .
enron ' s denne has not responded to written requests about
fastow ' s role at whitewing or whether he used his knowledge of the
value of enron assets to benefit outside investors or company
executives at enron ' s expense .
shares of enron fell $ 2 . 95 to $ 26 . 05 . they have fallen
69 percent this year .
- - russell hubbard in the princeton newsroom , 609 - 750 - 4651 or
rhubbard 2 @ bloomberg . net , and jim kennett in houston ,
( 713 ) 353 - 4871 or jkennett @ bloomberg . net / pjm / alp / pjm
usa : update 1 - enron stock sustains further heavy losses .
10 / 19 / 2001
reuters english news service
( c ) reuters limited 2001 .
( new first paragraph , adds additional analyst comment )
by andrew kelly
houston , oct 19 ( reuters ) - enron corp . stock sustained further heavy losses on friday as investor confidence in the former wall street favorite was rocked by reports about the company ' s relationship with a limited partnership that was run until recently by enron ' s chief financial officer .
the energy giant ' s stock closed down $ 2 . 95 or 10 . 2 percent at $ 26 . 05 per share , making a cumulative loss of 27 percent for a week in which enron reported a third - quarter loss of $ 638 million , its first quarterly loss in over four years .
analysts said confidence was shaken by several articles in the wall street journal this week alleging possible conflicts of interest on the part of chief financial officer andrew fastow , who until recently ran a limited partnership that bought assets worth hundreds of millions of dollars from enron .
" i don ' t think this thing passes the smell test , " said one analyst who spoke on condition of anonymity . " i think the cfo should be out of there right now . in the interest of the stockholders , that cfo should be gone , " he said .
enron has rejected the suggestion that there was anything improper about the arrangements , but fastow severed his ties with the ljm 2 partnership earlier this year to allay concerns raised by investors and analysts about his dual responsibilities .
poor judgment ?
analysts said that at the very least , the arrangement showed poor judgment by senior managers at enron , which recently pledged to be more open with investors and analysts following a series of high - profile stumbles that culminated with the shock resignation of new chief executive officer jeff skilling in august .
" for a company that had a lot of question marks around it already , these questions about financial dealings are really worrisome for investors , " said commerzbank securities analyst andre meade . " it points to poor decision - making on behalf of the board and top management at enron , " he said .
enron , north america ' s biggest buyer and seller of natural gas and electricity , was one of wall street ' s high flyers last year , when its stock posted a gain of 87 percent .
the stock ' s ascent was driven by enthusiasm for the company ' s plans to build a broadband telecommunications business and the success of its enrononline internet energy trading platform .
this year enron ' s shares have fallen 69 percent as sentiment toward broadband and the internet soured , skilling resigned after only six months as ceo , and the company ' s dabhol power plant project in india became mired in a payments dispute .
moody ' s investors service said earlier this week that it had placed all of enron ' s long - term debt obligations on review for a possible downgrade after enron took $ 1 . 01 billion in write - downs and charges that substantially reduced valuations for several non - core businesses , including broadband and water services .
some of enron ' s financing arrangements require the company to maintain investment grade credit ratings .
analysts said enron ' s credibility has been severely damaged and the recent reports about the ljm 2 partnership had raised concerns that more unpleasant surprises may lie ahead .
" what don ' t we know that went on at that company ? where ' s the credibility ? " asked one frustrated analyst . " we don ' t know if it ' s limited to this , " he said .
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron corp . cut to ` hold ' at a . g . edwards
2001 - 10 - 19 16 : 27 ( new york )
princeton , new jersey , oct . 19 ( bloomberg data ) - - enron corp . ( ene us )
was downgraded to ` ` hold ' ' from ` ` buy ' ' by analyst michael c heim at a . g .
edwards & sons inc .
bandwidth beat : enron broadband unit takes a beating
by michael rieke
10 / 19 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones 713 - 547 - 9207 ; michael . rieke @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
dynegy chief : bandwidth growth won ' t wait for trading
by erwin seba
of dow jones newswires
10 / 19 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones 713 - 547 - 9214 ; erwin . seba @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
uk : jobs in base metals down but definitely not out .
by amanda cooper
10 / 19 / 2001
reuters english news service
( c ) reuters limited 2001 .
london , oct 18 ( reuters ) - dismal industrial demand and the fickleness of hedge funds seduced by more volatile markets have slashed london metal exchange members ' profits over the past year and set off a gathering wave of job cuts .
the decline and fall of base metal prices in the past year and a half has prompted a series of high - profile companies to withdraw from the market , casting a pall over next week ' s yearly lme week industry gathering in london .
jobs have gone from front office to back in trading houses and banks , raising questions about the prospects for those now seeking work .
" good people can always be placed . as long as there is a job to fill and the company has a budget to hire , " sarah gilley of london - based recruitment group exchange consulting said .
" where the situation starts to get difficult is where everyone is cutting budgets , people are not being replaced when they leave and there have been an awful lot of redundancies . "
last week , scotiamocatta , a subsidiary of the bank of nova scotia and a key ring dealing member , unveiled its decision to give up open outcry trading on the lme floor , prompting around 25 job losses among traders , phone jockeys and clerks .
then blue - blooded banker n . m . rothschild & sons closed its london and new york base metals units . it left its core precious metals business intact , but 20 base metals staff were laid off in the process .
in the same week , the lme ' s largest floor trader , enron metals , said it planned to cut 10 to 20 percent of its metals staff as part of an exercise to cut 250 to 500 jobs in the enron group .
security
with three big market players and several major banks with commodities divisions slashing jobs at the same time , competition in the labour market will intensify and those in work are becoming wary about job security .
" what we ' re finding at the moment is that there is still demand for traders with a track record , which is possibly increasing because people are nervous about their jobs and so they ' re keen to stay put , " gilley said .
" so whereas someone who might be a big money - spinner with a track record would have previously stayed in their job for two to three years , they are now staying for three to five years .
" they probably feel that they ' re reasonably safe where they are , they ' re well recognised and not going to stick their necks out , " she said .
bonus fears
october has never traditionally been a strong month for the the jobs market in base metals as players are often distracted by lme week functions and conferences
also , traders tend to be looking towards their annual performance - linked bonuses , which are usually announced at the end of the year .
" those who are in work at the moment are sticking . often at this time of year , people are hanging on for their bonuses . but i don ' t think any of them are anticipating good bonuses . they ' re probably just happy to have a job , " sian griffiths of exchange consulting said .
lme volumes traded have been fallen over the past 18 months as the powerful hedge funds that once took a shine to the metals swarmed into areas such as hi - tech and telecomms stocks .
metals traders who handled the large volume of fund activity have begun to focus again on moree traditional clients , and this may yet prove a boon for the jobs market .
companies are seeking to fill a shortage of staff schooled in the traditional practices of trading physical metal .
" a lot of companies who had sidelined the traditional physical business are now re - aligning their focus and need poeple who understand the physical market and know how to set up a hedge and manage it , " gilley said .
" the other area where demand has markedly increased in comparison to a few years ago is marketing , " she added .
as for morale in the industry , individuals ' confidence in their future is seemingly undimmed .
" just because i ' ve lost my job doesn ' t mean i ' m going to sell my porsche , " one trader said .
copyright ? 2000 dow jones & company , inc . all rights reserved .
new power hldg sees meeting 3 q loss estimate
10 / 19 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones and said it has revised an agreement with enron corp . ( ene ) , lowering the collateral new power must post under a master netting agreement .
in a press release friday , new power said the amendment to the enron pact and cost - cutting efforts will allow the company to continue to conduct business until it secures ongoing asset - backed financing .
the company reiterated its earlier expectations of a third quarter loss of $ 65 million to $ 70 million , or $ 1 . 12 to $ 1 . 20 a share .
analysts put the company ' s third quarter loss at $ 1 . 16 a share , according to thomson financial / first call .
third quarter revenue will be " slightly lower " than the $ 60 million to $ 65 million forecast in august , new power said .
in the year - ago third quarter new power lost $ 1 . 23 a share on revenue of $ 18 . 19 million .
the amendment to the master netting agreement with enron north america corp . , enron energy services inc . and enron power marketing inc . affects the master cross - product netting , setoff , and security agreement , and expands through jan . 4 the types of collateral that new power is permitted to post to the enron units .
under the amended pact , the first $ 70 million of posted collateral must be in the form of cash , while amounts in excess of $ 70 million may consist of not more than $ 40 million of eligible receivables and inventory of new power , valued at discounts specified in the amendment , and subject to a $ 25 million limit for october 2001 .
shares of new power traded recently on the new york stock exchange at $ 1 . 67 , up 1 cent , or 0 . 6 % , on early composite volume of 7 , 900 shares . average daily volume is 223 , 800 shares .
- bill platt ; dow jones newswires ; 201 - 938 - 5400
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron mentions
enron shares fall on concern over cfo ' s partnerships ( update 4 )
bloomberg , 10 / 19 / 01
usa : update 1 - enron stock sustains further heavy losses .
reuters english news service , 10 / 19 / 01
enron corp . cut to ` hold ' at a . g . edwards
bloomberg , 10 / 19 / 01
bandwidth beat : enron broadband unit takes a beating
dow jones energy service , 10 / 19 / 01
dynegy chief : bandwidth growth won ' t wait for trading
dow jones energy service , 10 / 19 / 01
uk : jobs in base metals down but definitely not out .
reuters english news service , 10 / 19 / 01
new power hldg sees meeting 3 q loss estimate
dow jones news service , 10 / 19 / 01
enron shares fall on concern over cfo ' s partnerships ( update 4 )
2001 - 10 - 19 16 : 24 ( new york )
enron shares fall on concern over cfo ' s partnerships ( update 4 )
( updates with chief financial officer fastow didn ' t
immediately return a call for comment in fifth paragraph . )
houston , oct . 19 ( bloomberg ) - - enron corp . ' s shares have
fallen 26 percent in the past three days on concern the biggest
energy trader ' s dealings with partnerships run by its chief
financial officer contributed to investment losses .
enron ' s stock dropped 10 percent today . enron ' s board cost
the company at least $ 35 million by allowing chief financial
officer andrew fastow to manage ljm cayman and ljm 2 co - investment ,
partnerships that bought enron assets , a shareholder alleged
wednesday in a lawsuit .
the lawsuit came the day after enron reported $ 1 . 01 billion
in third - quarter losses from failed investments . the wall street
journal reported $ 35 million of the losses were connected with the
two limited partnerships . enron also reduced shareholders ' equity
by $ 1 . 2 billion when it bought back 55 million shares from the
partnerships , the paper reported yesterday .
` ` it looks sleazy , ' ' said roger hamilton , a manager at john
hancock ' s value funds , which own 600 , 000 shares . ` ` if you are
someone who invests in a company ' s management , it ' s almost time to
punt with enron . ' '
enron spokeswoman karen denne didn ' t return calls or written
requests seeking comment . fastow didn ' t immediately return a
telephone call for comment .
fastow and a handful of associates made more than $ 7 million
last year in management fees and about $ 4 million in capital
increases on an investment of about $ 3 million in one of the
partnerships , the journal reported today .
buying enron assets
fastow is involved in 17 other similar companies and
partnerships that appear to have ties to houston - based enron ,
based on filings with the texas secretary of state .
the foreign business corporations and limited liability
companies have directors , officers or managers whose address is
listed as 1400 smith street in houston , enron ' s corporate address ,
according to texas records .
fastow is listed as a director , officer or managing member in
each one . at least one of the companies bought and sold enron
assets , including foreign power plants .
whitewing management , which lists fastow as its managing
member , received $ 807 million from the sale of enron debt last
year .
under the terms of the debt sale , whitewing is allowed to use
the proceeds to buy power plants from enron or make other
` ` permitted investments . ' ' whitewing has bought 14 enron plants or
companies since 1999 and sold four .
enron ' s denne has not responded to written requests about
fastow ' s role at whitewing or whether he used his knowledge of the
value of enron assets to benefit outside investors or company
executives at enron ' s expense .
shares of enron fell $ 2 . 95 to $ 26 . 05 . they have fallen
69 percent this year .
- - russell hubbard in the princeton newsroom , 609 - 750 - 4651 or
rhubbard 2 @ bloomberg . net , and jim kennett in houston ,
( 713 ) 353 - 4871 or jkennett @ bloomberg . net / pjm / alp / pjm
usa : update 1 - enron stock sustains further heavy losses .
10 / 19 / 2001
reuters english news service
( c ) reuters limited 2001 .
( new first paragraph , adds additional analyst comment )
by andrew kelly
houston , oct 19 ( reuters ) - enron corp . stock sustained further heavy losses on friday as investor confidence in the former wall street favorite was rocked by reports about the company ' s relationship with a limited partnership that was run until recently by enron ' s chief financial officer .
the energy giant ' s stock closed down $ 2 . 95 or 10 . 2 percent at $ 26 . 05 per share , making a cumulative loss of 27 percent for a week in which enron reported a third - quarter loss of $ 638 million , its first quarterly loss in over four years .
analysts said confidence was shaken by several articles in the wall street journal this week alleging possible conflicts of interest on the part of chief financial officer andrew fastow , who until recently ran a limited partnership that bought assets worth hundreds of millions of dollars from enron .
" i don ' t think this thing passes the smell test , " said one analyst who spoke on condition of anonymity . " i think the cfo should be out of there right now . in the interest of the stockholders , that cfo should be gone , " he said .
enron has rejected the suggestion that there was anything improper about the arrangements , but fastow severed his ties with the ljm 2 partnership earlier this year to allay concerns raised by investors and analysts about his dual responsibilities .
poor judgment ?
analysts said that at the very least , the arrangement showed poor judgment by senior managers at enron , which recently pledged to be more open with investors and analysts following a series of high - profile stumbles that culminated with the shock resignation of new chief executive officer jeff skilling in august .
" for a company that had a lot of question marks around it already , these questions about financial dealings are really worrisome for investors , " said commerzbank securities analyst andre meade . " it points to poor decision - making on behalf of the board and top management at enron , " he said .
enron , north america ' s biggest buyer and seller of natural gas and electricity , was one of wall street ' s high flyers last year , when its stock posted a gain of 87 percent .
the stock ' s ascent was driven by enthusiasm for the company ' s plans to build a broadband telecommunications business and the success of its enrononline internet energy trading platform .
this year enron ' s shares have fallen 69 percent as sentiment toward broadband and the internet soured , skilling resigned after only six months as ceo , and the company ' s dabhol power plant project in india became mired in a payments dispute .
moody ' s investors service said earlier this week that it had placed all of enron ' s long - term debt obligations on review for a possible downgrade after enron took $ 1 . 01 billion in write - downs and charges that substantially reduced valuations for several non - core businesses , including broadband and water services .
some of enron ' s financing arrangements require the company to maintain investment grade credit ratings .
analysts said enron ' s credibility has been severely damaged and the recent reports about the ljm 2 partnership had raised concerns that more unpleasant surprises may lie ahead .
" what don ' t we know that went on at that company ? where ' s the credibility ? " asked one frustrated analyst . " we don ' t know if it ' s limited to this , " he said .
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron corp . cut to ` hold ' at a . g . edwards
2001 - 10 - 19 16 : 27 ( new york )
princeton , new jersey , oct . 19 ( bloomberg data ) - - enron corp . ( ene us )
was downgraded to ` ` hold ' ' from ` ` buy ' ' by analyst michael c heim at a . g .
edwards & sons inc .
bandwidth beat : enron broadband unit takes a beating
by michael rieke
10 / 19 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones 713 - 547 - 9207 ; michael . rieke @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
dynegy chief : bandwidth growth won ' t wait for trading
by erwin seba
of dow jones newswires
10 / 19 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones 713 - 547 - 9214 ; erwin . seba @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
uk : jobs in base metals down but definitely not out .
by amanda cooper
10 / 19 / 2001
reuters english news service
( c ) reuters limited 2001 .
london , oct 18 ( reuters ) - dismal industrial demand and the fickleness of hedge funds seduced by more volatile markets have slashed london metal exchange members ' profits over the past year and set off a gathering wave of job cuts .
the decline and fall of base metal prices in the past year and a half has prompted a series of high - profile companies to withdraw from the market , casting a pall over next week ' s yearly lme week industry gathering in london .
jobs have gone from front office to back in trading houses and banks , raising questions about the prospects for those now seeking work .
" good people can always be placed . as long as there is a job to fill and the company has a budget to hire , " sarah gilley of london - based recruitment group exchange consulting said .
" where the situation starts to get difficult is where everyone is cutting budgets , people are not being replaced when they leave and there have been an awful lot of redundancies . "
last week , scotiamocatta , a subsidiary of the bank of nova scotia and a key ring dealing member , unveiled its decision to give up open outcry trading on the lme floor , prompting around 25 job losses among traders , phone jockeys and clerks .
then blue - blooded banker n . m . rothschild & sons closed its london and new york base metals units . it left its core precious metals business intact , but 20 base metals staff were laid off in the process .
in the same week , the lme ' s largest floor trader , enron metals , said it planned to cut 10 to 20 percent of its metals staff as part of an exercise to cut 250 to 500 jobs in the enron group .
security
with three big market players and several major banks with commodities divisions slashing jobs at the same time , competition in the labour market will intensify and those in work are becoming wary about job security .
" what we ' re finding at the moment is that there is still demand for traders with a track record , which is possibly increasing because people are nervous about their jobs and so they ' re keen to stay put , " gilley said .
" so whereas someone who might be a big money - spinner with a track record would have previously stayed in their job for two to three years , they are now staying for three to five years .
" they probably feel that they ' re reasonably safe where they are , they ' re well recognised and not going to stick their necks out , " she said .
bonus fears
october has never traditionally been a strong month for the the jobs market in base metals as players are often distracted by lme week functions and conferences
also , traders tend to be looking towards their annual performance - linked bonuses , which are usually announced at the end of the year .
" those who are in work at the moment are sticking . often at this time of year , people are hanging on for their bonuses . but i don ' t think any of them are anticipating good bonuses . they ' re probably just happy to have a job , " sian griffiths of exchange consulting said .
lme volumes traded have been fallen over the past 18 months as the powerful hedge funds that once took a shine to the metals swarmed into areas such as hi - tech and telecomms stocks .
metals traders who handled the large volume of fund activity have begun to focus again on moree traditional clients , and this may yet prove a boon for the jobs market .
companies are seeking to fill a shortage of staff schooled in the traditional practices of trading physical metal .
" a lot of companies who had sidelined the traditional physical business are now re - aligning their focus and need poeple who understand the physical market and know how to set up a hedge and manage it , " gilley said .
" the other area where demand has markedly increased in comparison to a few years ago is marketing , " she added .
as for morale in the industry , individuals ' confidence in their future is seemingly undimmed .
" just because i ' ve lost my job doesn ' t mean i ' m going to sell my porsche , " one trader said .
copyright ? 2000 dow jones & company , inc . all rights reserved .
new power hldg sees meeting 3 q loss estimate
10 / 19 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones and said it has revised an agreement with enron corp . ( ene ) , lowering the collateral new power must post under a master netting agreement .
in a press release friday , new power said the amendment to the enron pact and cost - cutting efforts will allow the company to continue to conduct business until it secures ongoing asset - backed financing .
the company reiterated its earlier expectations of a third quarter loss of $ 65 million to $ 70 million , or $ 1 . 12 to $ 1 . 20 a share .
analysts put the company ' s third quarter loss at $ 1 . 16 a share , according to thomson financial / first call .
third quarter revenue will be " slightly lower " than the $ 60 million to $ 65 million forecast in august , new power said .
in the year - ago third quarter new power lost $ 1 . 23 a share on revenue of $ 18 . 19 million .
the amendment to the master netting agreement with enron north america corp . , enron energy services inc . and enron power marketing inc . affects the master cross - product netting , setoff , and security agreement , and expands through jan . 4 the types of collateral that new power is permitted to post to the enron units .
under the amended pact , the first $ 70 million of posted collateral must be in the form of cash , while amounts in excess of $ 70 million may consist of not more than $ 40 million of eligible receivables and inventory of new power , valued at discounts specified in the amendment , and subject to a $ 25 million limit for october 2001 .
shares of new power traded recently on the new york stock exchange at $ 1 . 67 , up 1 cent , or 0 . 6 % , on early composite volume of 7 , 900 shares . average daily volume is 223 , 800 shares .
- bill platt ; dow jones newswires ; 201 - 938 - 5400
copyright ? 2000 dow jones & company , inc . all rights reserved .