enron mentions enron names special committee to examine transactions
dow jones news service , 10 / 31 / 01
enron says sec opens formal inquiry into related - party transactions
afx news , 10 / 31 / 01
enron says sec informal inquiry now a formal investigation
bloomberg , 10 / 31 / 01
key enron employees aren ' t jumping ship , recruiters say
dow jones energy service , 10 / 31 / 01
houston , we have a problem : how much is enron worth ?
dow jones news service , 10 / 31 / 01
enron ' s stock jumps amid takeover speculation
associated press newswires , 10 / 31 / 01
usa : few signs of domino effect among enron ' s peers .
reuters english news service , 10 / 31 / 01
waste management will start pulp and paper trading tomorrow
bloomberg , 10 / 31 / 01
enron ends 10 - day skid with 25 % jump
cbsmarketwatch . com , 10 / 31 / 01
enron ' s stock jumps amid takeover speculation
associated press newswires , 10 / 31 / 01
class action lawsuit commenced against enron corp . by the law offices of marc s . henzel
pr newswire , 10 / 31 / 01
some enron trading customers tighten credit reins , cut trades
bloomberg , 10 / 31 / 01
usa : enron rebounds , but investors seek more disclosure .
reuters english news service , 10 / 31 / 01
waiting for balance sheets amid enron ' s debacle : david wilson
bloomberg , 10 / 31 / 01
enron shares rise , rebounding from nine - year low ( update 3 )
bloomberg , 10 / 31 / 01
enron names special committee to examine transactions
10 / 31 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones & company , inc . )
houston - ( dow jones ) - enron corp . ( ene ) created a special committee to examine deals related to the security and exchange commission investigation into transactions involving enron ' s former chief financial officer , which has now turned into a formal investigation .
the energy - trading company also named william powers jr . to its board , making him in charge of the special committee , the company said in a press release wednesday .
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron says sec opens formal inquiry into related - party transactions
10 / 31 / 2001
afx news
( c ) 2001 by afp - extel news ltd
houston ( afx ) - enron corp said the securities and exchange commission has opened a formal inquiry into the company ' s transactions with entities connected with related parties .
in a statement , enron said " the sec has opened a formal investigation into certain of the matters that were the subject of recent press reports and that previously were the subject of its informal inquiry . "
earlier this month , enron announced a charge of 1 . 01 bln usd , or 1 . 11 usd per share , and an incremental 1 . 2 bln usd reduction in stockholders ' equity , related to the unwinding of investments with the related ljm partnership .
the sec requested the company provide information on these related - party transactions days later , and the company dismissed its chief financial officer , andrew fastow , for his involvement in running the ljm partnerships .
in today ' s statement , the company announced the election of william powers jr to the board , effective immediately .
powers , who is dean of the university of texas school of law , will chair a special committee to examine and take any appropriate actions with respect to transactions between enron and entities connected to related parties , it said .
in addition to reviewing the transactions in question , the special committee is charged with communicating with the sec and recommending any other actions it deems appropriate .
" i have asked the board to take this action to address fully and forthrightly investors ' questions and concerns , " said enron chairman and chief executive officer kenneth lay .
" responding to the sec offers us an additional opportunity to achieve this same goal for investors , and we will cooperate fully . we will also make every appropriate public disclosure during the course of the sec ' s investigation . "
pav /
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron says sec informal inquiry now a formal investigation
2001 - 10 - 31 17 : 37 ( new york )
enron says sec informal inquiry now a formal investigation
houston , oct . 31 ( bloomberg ) - - enron corp . said an informal
inquiry by the securities and exchange commission is now a formal
investigation , and the houston - based company ' s board is appointing
a special committee to address allegations related to partnerships
run by its former chief financial officer .
william powers jr . , dean of the university of texas law
school , will chair a committee to handle the sec ' s requests for
information about the partnership , enron said .
- - andy pratt in the princeton newsroom at ( 609 ) 750 - 4657 or
key enron employees aren ' t jumping ship , recruiters say
by michael rieke
of dow jones newswires
10 / 31 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones ken rice , former head of enron capital and trade as well as former chief executive of enron broadband services ; kevin hannon , former president of enron broadband services ; and lou pai , former chairman and chief executive of enron energy services .
the lure of cashing out lucrative stock options won ' t cost enron any more employees any time soon . the company ' s share price has fallen too far too quickly , leaving the options underwater .
the company ' s shares traded as high as $ 80 early this year . by july the price had dropped to around $ 50 , leaving employees with options that were virtually worthless . so enron told employees it would issue new options in august .
but the company ' s share price continued to fall as more and more bad news came out . the new options issued in august , when the share prices were around $ 40 , are now underwater also .
now that the options are out of the money , enron employees are more vulnerable to the lure of other companies , peterson said .
enron could face another problem in keeping key people . its employees work under two - year contracts . if they leave enron before their contracts expires , a noncompete clause could prevent them for working for a competitor .
some of those contracts will expire at the end of the year . without the incentive of lucrative stock options , enron might have a difficult time getting employees to agree to new contracts with a noncompete clause , peterson said .
an enron spokeswoman said the company isn ' t planning to issue more new options to employees .
- by michael rieke , dow jones newswires ; 713 - 547 - 9207 ; michael . rieke @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
houston , we have a problem : how much is enron worth ?
by christina cheddar
of dow jones newswires
10 / 31 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones & company , inc . )
new york - ( dow jones ) - with billions of dollars shaved off of the market capitalization of enron corp . ( ene ) in the past two weeks , the stock is trading at about its book value , begging the question : so how much is it worth anyway ?
the answer is far from easy .
ever since enron metamorphosed from a stodgy gas pipeline company into what was seen by many as a dynamic energy trading firm , the company has become increasingly more difficult to understand .
just a glance at the wide - range of wall street analysts who follow the company illustrates the point . in the mix are analysts who track natural gas and the pipeline industry as well as those who follow electric utilities .
one enticing prospect is that the assets in its portfolio are valuable in and of themselves and could be seen by some as worthwhile acquisition targets .
by enron ' s own definition , the company houses four main divisions : enron wholesale services , enron energy services , enron transportation services , and enron broadband services .
wholesale services houses the company ' s energy marketing business and enrononline . this segment accounts for the bulk of enron ' s profits , and has become synonymous with what enron means to most people today .
not only does enron trade gas , oil and coal , but it also trades commodities such as pulp and paper , petrochemicals , lumber , plastics and even weather risk .
enron energy services is the company ' s retail arm . the company provides electricity , gas and commodity risk management services through this division .
enron transportation services operates four natural gas pipelines that span about 25 , 000 miles and have a peak capacity of 9 . 8 billion cubic feet per day . through these pipelines the company says it transports about 15 % of the natural gas the u . s . needs . the segment also includes portland general , a oregon utility company enron is selling to northwest natural gas co . ( nwn ) for $ 1 . 9 billion in cash and stock .
in addition , the company provides bandwidth and network services through its enron broadband services division .
but enron ' s reach is even wider than this list suggests . the company also has a number of other corporate investments , including its stake in the azurix water business , enron renewable energy corp . as well as methanol and mtbe plants .
through enron ' s unconsolidated affiliates , the company also has investments in additional water assets , a power plant in india and a natural gas pipeline in argentina among other things .
what makes any valuation of enron difficult is what remains unknown about the company ' s financial structure .
enron has yet to file a balance sheet for the third quarter , and doesn ' t expect to do so until nov . 15 , when balance sheets must be filed under securities and exchange commission regulations .
without the balance sheet , some of the details needed for calculating a company ' s value are missing .
also , much still remains unknown about the company ' s obligations to its off - balance sheet financing vehicles .
using what is known about enron ' s finances , several analysts have arrived at their own conclusions about valuation .
merrill lynch 201 - 938 - 5166 ; christina . cheddar @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron ' s stock jumps amid takeover speculation
by juan . a . lozano
associated press writer
10 / 31 / 2001
associated press newswires
copyright 2001 . the associated press . all rights reserved .
houston ( ap ) - after plummeting to a nine - year low following recent economic losses and an investigation by federal securities regulators , shares of enron corp . jumped nearly 25 percent wednesday amid speculation the company was ripe for takeover .
shares of enron , the nation ' s largest natural gas and power marketer , rose $ 2 . 74 to close at $ 13 . 90 wednesday on the new york stock exchange . shares though are still down 69 percent since the company reported third quarter earnings just over two weeks ago .
carol coale , an analyst with prudential securities inc . in houston , said wednesday ' s surge was likely a reaction to a the wall street journal report that enron ' s beaten - down stock price has stirred rumors of a possible takeover .
others may be buying figuring the stock has hit bottom , she said .
on tuesday , enron ' s stock closed at $ 11 . 16 , its lowest level since 1992 .
enron shares began their steady fall in the middle of october , when the company reported a net loss of $ 638 million in the third quarter , taking a one - time charge of $ 1 . 01 billion attributed to investment losses , troubled assets and unit restructurings .
some of these losses have been tied to partnerships managed by enron ' s former chief financial officer , andrew fastow , who was ousted last week .
the potential conflict of interest has prompted an inquiry by the securities and exchange commission .
earlier this week , moody ' s investors service downgraded the company ' s long - term debt and warned of possible further downgrades .
potential buyers include general electric ' s ge capital unit , warren buffett ' s berkshire hathaway and royal dutch shell , the journal said .
duane grubert , an analyst with sanford c . bernstein and co . in new york , said shell , which has a small presence in energy marketing , would be a good fit .
" shell tried to be in the merchant energy arena and didn ' t really succeed , " he said . " to buy into an established franchise must be attractive to shell . "
enron officials did not immediately return telephone calls from the associated press on wednesday .
while enron ' s stock price has made it attractive , coale said the energy marketer ' s problems present a substantial drawback .
" i would fault a company for acquiring enron with all of this hanging over it , " she said . " there are too many uncertainties . "
grubert said he believes enron has the ability " to weather the storm and restore their enterprise on their own . "
since reporting its disappointing third quarter losses , enron has been negotiating with banks to establish new credit lines . the company last week decided to cash in about $ 3 billion in revolving credit it has with various banks to shore up investor confidence .
- - -
on the net :
http : / / www . enron . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : few signs of domino effect among enron ' s peers .
by andrew kelly
10 / 31 / 2001
reuters english news service
( c ) reuters limited 2001 .
houston , oct 31 ( reuters ) - u . s . energy traders such as dynegy inc . and aquila inc . have taken a knock as a result of enron corp ' s recent woes , but analysts do not expect a broad loss of investor confidence in the sector to trigger massive losses in stock prices like enron has suffered .
" the issues impacting enron are pretty much specific to that company , " said credit lyonnais securities analyst gordon howald . " i don ' t believe that a lot of its peers have the same type of potential negative impact , " he said .
enron ' s widespread use of complex off - balance - sheet financing deals and its reluctance to disclose details about them are a key reason why investors have dumped the company ' s stock , causing it to fall more than 60 percent in the last two weeks .
and while other natural gas and electricity marketers use similar techniques to avoid overloading their balance sheets with debt , nobody does so to the same extent as enron , analysts said .
" enron is a unique case in the magnitude of off - balance sheet transactions , " said prudential securities analyst carole coale .
uncomfortable with disclosure
coale said she was not comfortable with the level of disclosure provided by many of enron ' s peers about such deals , but she said this was less of a problem at other companies because they have less exposure to the risky energy trading and marketing business which contributes about 80 percent of enron ' s profits .
el paso corp . , for example is channeling over $ 1 billion in off - balance - sheet financing into its project electron venture which was set up to acquire and manage power plants .
analysts say they are reasonably pleased with the information that el paso has provided to them about electron .
el paso ' s stock has fallen a relatively modest 5 percent over the last two weeks and analysts attribute this in large part to the fact that marketing and trading operations generate only about one quarter of the company ' s earnings .
dynegy ' s stock is down some 17 percent over the last two weeks and analysts said this was linked to dynegy ' s assumption of a leadership role among u . s . energy marketers in many investors ' eyes as enron began to fall out of favor and as dynegy attained a correspondingly high price - earnings ratio .
asked about dynegy ' s use of off - balance - sheet financing , spokesman john sousa drew a contrast between his own company and enron , saying dynegy had no financing that was backed by issuance of stock , nor any " related party transactions " .
former high - fliers shunned
analysts said that in the current uncertain investment climate , investors are shunning trading - oriented companies ' whose stocks had previously commanded high price - earnings multiples and seeking out more modestly valued companies which own physical assets such as power plants and natural gas pipelines .
in terms of recent stock price performance this trend has punished a marketer - trader like aquila , whose shares are down 27 percent over the last two weeks .
on the other hand it has been relatively kind to companies such as williams cos . and duke energy corp . , which until recently were treated with scorn by enron executives who aggressively propounded an " asset - light " philosophy .
williams ' stock has fallen about 5 percent over the last fortnight while duke ' s shares are down less than 1 percent and have outperformed the broader u . s . stock market .
j . p . morgan analyst anatol feygin said enron had fallen victim to its unique taste for sophisticated financing techniques and its failure to explain them when doubts started to surface .
" enron took it to an extreme in terms of financial engineering , but it didn ' t disclose enough information about what is behind all of these structures , " he said .
credit lyonnais securities ' howald had a simpler explanation , saying that as the euphoria which surrounded enron last year subsided , people began to see enron for what it was .
" trading companies have always had a history of winning big and losing big , " he said . " i think the days of the big valuations are over , " he added .
copyright ? 2000 dow jones & company , inc . all rights reserved .
waste management will start pulp and paper trading tomorrow
2001 - 10 - 31 16 : 52 ( new york )
waste management will start pulp and paper trading tomorrow
houston , oct . 31 ( bloomberg ) - - waste management inc . , north
america ' s largest trash hauler , will start trading paper and pulp
tomorrow to limit the effects of price fluctuations of recycled
materials and offer a service its biggest rivals don ' t provide .
in the past three years , waste management has reduced its
exposure to price swings by placing 75 percent of its recycled -
commodity sales under long - term , fixed - price contracts . still , the
company ' s revenue from recycling fell 38 percent to $ 154 million
in the second quarter .
chief executive officer maurice myers is hoping the trading
business will help stabilize recycling revenue even when prices
for cardboard , newspaper and aluminum cans fall . trading allows
waste management to further limit its own exposure to prices , as
well as offer contracts to customers who want to lock in prices .
` ` what waste management is doing is going to reduce the
company ' s risk and their customer ' s risk , ' ' said thomas leritz , an
analyst at banc of america capital management , which owns more
than 1 million shares of waste management . ` ` i think it ' s a smart
move . it ' s a reflection of the new management team . ' '
myers joined the company in november 1999 as it struggled to
track costs from acquisitions . he has put new financial - systems
software in place and made other efforts to cut costs . the company
has also raised prices where it ' s the dominant hauler .
myers ' s efforts , along with the sale of overseas businesses ,
have helped the company regain regard among investors . the shares
have risen 22 percent in the past year .
pulp and paper
most of waste management ' s solid - waste customers produce or
consume pulp and paper . waste management collects , processes and
sells more than five million tons a year of paper , plastic , glass ,
aluminum and other metals .
recycled - cardboard prices fell 62 percent to $ 48 a ton in the
second quarter from $ 125 a year earlier , and the price for
recycled newsprint fell to $ 55 a ton from $ 90 , myers said in
august . prices were little changed from the second quarter to the
third quarter , said steve ragiel , waste management ' s vice
president of recycling .
waste management , which will report third - quarter results
next week , had expected to begin trading in the third quarter . its
plans were delayed because it took longer than expected to find
people to run the operation , raigel said .
jeff harbert , formerly of enron corp . , is heading the
operation along with two other enron traders . enron , also based in
houston , has created the largest business of trading commodities
including electricity , natural gas , pulp and paper .
risk management
waste management ' s initial focus in the trading business will
be on managing its own price risk . it probably only will complete
five to 10 trades in each of the first few months , raigel said .
the company hopes to set fixed prices for the commodities it
picks up , then sell those commodities to a third company , such as
a paper producer , at a higher set price .
` ` we ' ll get with a counter party such as a paper mill or a
consumer - products company and cut a deal , ' ' raigel said . ` ` we can
find a paper mill that wants to lock in a fixed price on what they
buy and what they sell . they get a minimum return on their
investment and greater control on their raw material costs . ' '
the company hasn ' t said how much it expects to make from
trading . analysts aren ' t expecting the business to contribute
significantly to waste management ' s earnings .
` ` they are looking at it as a good time to get in on trading
but i don ' t see it as a major contributor to their business , ' '
said stewart scharf , an analyst with standard & poor ' s equity
group . he rates waste management ` ` accumulate ' ' and doesn ' t own
shares .
republic services group inc . , the no . 3 u . s . waste company ,
contracts with individual mills to supply recycled commodities at
fixed prices , but hasn ' t started a trading operation , spokesman
will flower said .
allied waste industries inc . , the second - largest trash hauler
in north america , said it has no plans to get into trading .
` ` we ' ll leave trading to people like enron , ' ' allied waste
spokesman michael burnett said .
- - mark johnson in the princeton newsroom ( 609 ) 750 - 4662
enron ends 10 - day skid with 25 % jump
lisa sanders
cbsmarketwatch . com
october 31 , 2001
houston ( cbs . mw ) - - shares of enron , which had lost about 66 percent of their value over the past 10 sessions , spiked wednesday after a report that pegged the beleaguered company as a takeover target .
enron added 25 percent , or $ 2 . 74 , to close at $ 13 . 90 . more than 43 million shares changed hands , making the stock the most actively traded on the new york stock exchange .
a . g . edwards ' analyst michael heim warned wednesday against buying enron shares . he noted that enron ' s troubles could be hurting its trading operations , the company ' s strength .
" people interested in betting on ene should ask themselves this - - if a person offered to double your money when a coin lands heads and take away half your money when it is tails , would you take the bet ? what if the person flipping the coin is a magician you don ' t trust ? "
a wall street journal report wednesday speculated on enron ' s potential as an acquisition for a more stable company . an enron spokesman said the company doesn ' t comment on such matters .
enron has been under pressure for more than two weeks , beginning when the energy merchant reported a $ 1 billion charge in its third - quarter earnings . a securities and exchange commission probe into two of the company ' s limited partnerships and a rating downgrade by moody ' s investors service haven ' t helped .
john olson , an analyst at sanders morris harris , said he thought an enron takeover unlikely at this point .
" however , if the stock were to keep coming down , and their financial difficulties were extended , the odds would increase , " he said .
olson pointed out that enron ' s heavy losses over the last 10 sessions partly reflects the end of the tax year for mutual funds . the calendar year for funds ends at the close of business wednesday .
" mutual funds who own enron stock have been trying to offset other gains by selling off enron , " he said . " mutual funds have to register all their gains or losses and offset them by selling or buying stock by the close today . "
taking bets
art smith , chairman and chief executive of the research firm john s . herold , said he ' d be surprised if enron was not entertaining offers . " it ' s one of the ways that enron gets the genie back in the bottle . "
on the other hand , smith said , it would take a potential acquirer time to become comfortable with the valuation of the business .
" it ' s doubtful that a potential acquirer can resolve all the valuation issues quickly , " smith said . he said it ' s likely that any sort of purchase agreement would contain what he called a " look - back provision , " which would protect the acquirer from being strapped to a fixed value .
smith said he could see either general electric ' s ge capital or royal dutch shell making a bid . both were mentioned in the journal report .
" ge capital is big enough that if it didn ' t work out it won ' t cripple ge , and they ' ve been opportunistic on things like this , " smith said . " and shell always keeps us guessing . "
olson also included aig and citigroup as potential acquirers .
" enron has certainly had some appeal to people that are used to an aggressive trading culture , " he said .
smith said that even without enron , the energy marketing and trading business would continue to thrive .
" even if enron went away , it would not change what has developed into a healthy market for commodity forward markets and hedging , " he said .
lisa sanders is a dallas - based reporter for cbs . marketwatch . com .
enron ' s stock jumps amid takeover speculation
by juan . a . lozano
associated press writer
10 / 31 / 2001
associated press newswires
copyright 2001 . the associated press . all rights reserved .
houston ( ap ) - after plummeting to a nine - year low following recent economic losses and an investigation by federal securities regulators , shares of enron corp . jumped nearly 25 percent wednesday amid speculation the company was ripe for takeover .
shares of enron , the largest u . s . natural gas and power marketer , rose dlrs 2 . 74 to close at dlrs 13 . 90 wednesday on the new york stock exchange . though still down 69 percent since the company reported third quarter earnings just over two weeks ago .
carol coale , an analyst with prudential securities inc . in houston , said wednesday ' s surge was likely a reaction to a the wall street journal report that enron ' s beaten - down stock price has stirred rumors of a possible takeover .
others may be buying figuring the stock has hit bottom , she said .
on tuesday , enron ' s stock closed at dlrs 11 . 16 , its lowest level since 1992 .
enron shares began their steady fall in the middle of october , when the company reported a net loss of dlrs 638 million in the third quarter , taking a one - time charge of dlrs 1 . 01 billion attributed to investment losses , troubled assets and unit restructurings .
some of these losses have been tied to partnerships managed by enron ' s former chief financial officer , andrew fastow , who was ousted last week .
the potential conflict of interest has prompted an inquiry by the securities and exchange commission .
earlier this week , moody ' s investors service downgraded the company ' s long - term debt and warned of possible further downgrades .
potential buyers include general electric ' s ge capital unit , warren buffett ' s berkshire hathaway and royal dutch shell , the journal said .
duane grubert , an analyst with sanford c . bernstein and co . in new york , said shell , which has a small presence in energy marketing , would be a good fit .
" shell tried to be in the merchant energy arena and didn ' t really succeed , " he said . " to buy into an established franchise must be attractive to shell . "
while enron ' s stock price has made it attractive , coale said the energy marketer ' s problems present a substantial drawback .
" i would fault a company for acquiring enron with all of this hanging over it , " she said . " there are too many uncertainties . "
copyright ? 2000 dow jones ( ii ) that the company ' s operating results were materially overstated as result of the company failing to timely write - down the value of its investments with certain limited partnerships which were managed by the company ' s chief financial officer ; and ( iii ) that enron was failing to write - down impaired assets on a timely basis in accordance with gaap . on october 16 , 2001 , enron surprised the market by announcing that the company was taking non - recurring charges of $ 1 . 01 billion after - tax , or ( $ 1 . 11 ) loss per diluted share , in the third quarter of 2001 , the period ending september 30 , 2001 . subsequently , enron revealed that a material portion of the charge related to the unwinding of investments with certain limited partnerships which were controlled by enron ' s chief financial officer and that the company would be eliminating more than $ 1 billion in shareholder equity as a result of its unwinding of the investments . as this news began to be assimilated by the market , the price of enron common stock dropped significantly . during the class period , enron insiders disposed of over $ 73 million of their personally held enron common stock to unsuspecting investors .
plaintiff is represented by the law offices of marc s . henzel . if you are a member of the class described above , you have until december 21 , 2001 , to participate in the case and ask the court to appoint you as one of the lead plaintiffs for the class . in order to serve as lead plaintiff , however , you must meet certain legal requirements . you do not need to seek appointment as a lead plaintiff in order to share in any recovery .
if you have any questions concerning this case or your rights or interests with respect to these matters , please contact : marc s . henzel , esq . of the law offices of marc s . henzel , 273 montgomery ave , suite 202 bala cynwyd , pa 19004 - 2808 , by telephone at ( 888 ) 643 - 6735 or ( 610 ) 660 - 8000 , by facsimile at ( 610 ) 660 - 8080 , by e - mail at mhenzell 82 @ aol . com or visit the firm ' s website at http : / / members . aol . com / mhenzell 82 .
make your opinion count - click here
/ contact : marc s . henzel , esq . of the law offices of marc s . henzel , + 1 - 888 - 643 - 6735 or + 1 - 610 - 660 - 8000 , fax : + 1 - 610 - 660 - 8080 , or mhenzell 82 @ aol . com / 16 : 50 est
copyright ? 2000 dow jones & company , inc . all rights reserved .
some enron trading customers tighten credit reins , cut trades
2001 - 10 - 31 16 : 05 ( new york )
new york , oct . 31 ( bloomberg ) - - american electric power co . ,
exelon corp . and northeast utilities are among energy companies
restricting business with enron corp . as the largest energy trader
negotiates a credit line to keep access to cash .
` ` we are keeping a tight dollar limit on trades , ' ' said john
rowe , co - chief executive officer of exelon , the largest u . s .
nuclear power producer . ` ` we are keeping a close eye on our
exposures . ' '
enron has said it is seeking new sources of credit as the
company tries to assure trading partners and rating agencies that
it can meet day - to - day obligations and keep its investment - grade
credit rating . enron , which handles 25 percent of the energy
trading in the u . s . , relies on having investment - grade credit to
borrow enough to settle its transactions daily .
enron corp . shares , down 59 percent since oct . 16 , rose 25
percent today to $ 13 . 90 from a nine - year low amid speculation the
company may be a takeover target . still , enron stock is down 83
percent this year .
moody ' s investors service last week lowered enron ' s long - term
debt to two notches above junk status and placed enron ' s
commercial paper on review for downgrade .
` ` we will be tracking very closely their wholesale volumes , ' '
said stephen moore , a vice president at moody ' s . ` ` that will be
the leading indicator of where the company is going . ' '
credit people
energy trading accounted for about 98 percent of enron ' s $ 773
million in income before interest and taxes last quarter . the
company last week drew down a $ 3 billion credit line after
surprising investors by writing off $ 1 . 2 billion of shareholder
equity . the company also ousted its chief financial officer andrew
fastow after it reported that a partnership he set up lost $ 35
million for the company . the securities and exchange commission
has asked the company questions about partnerships like fastow ' s .
enron spokeswoman karen denne said the company ' s trades have
not declined in size while natural gas trading volume has dipped
consistent with monthly pattern .
some energy executives said yesterday that companies were
limiting enron trading to reduce credit risks .
` ` credit people are coming to their traders and saying ,
` enron is on hold for any new positions , and at some point we may
need you ( to ) trade out of your existing positions , ' ' ' said
charlie sanchez , an energy markets manager at houston - based gelber
& associates corp . , an energy trading adviser .
watching closely
minneapolis , minnesota - based xcel energy inc . , an electricity
and natural - gas seller , is limiting its business to same - day and
next - day delivery , chief executive officer wayne brunetti said at
an energy conference in new orleans . american electric power chief
executive linn draper said at the same conference that his company
is also making only short - term trades .
` ` we are watching very closely , ' ' draper said . ` ` we are
focusing our new deals with them in the short term , november ,
december . we think they ' ll make it , but it ' s a serious
situation . ' '
northeast utilities , based in berlin , connecticut , will
continue to trade with enron as long as its debt ratings remain
investment grade , said chief financial officer john forsgren , also
at the conference . northeast is new england ' s biggest utility
owner .
` ` three weeks ago , we started monitoring our position with
enron , ' ' said forsgren . ` ` right now , we have a net payable to
them , so there ' s no exposure on our side , and we ' ll probably keep
it that way . ' '
overblown
many companies say that enron remains the most economical and
efficient place to trade electricity , and that the company ' s
credit woes are overblown .
` ` we ' re still actively trading with them and we believe they
will work their way out of this , ' ' said mike griswold , a trader
with hafslund trading co . , a subsidiary of norwegian energy
company hafslund asa . ` ` they have the best liquidity and the best
prices . they are the premier trading market . ' '
- - david ward and bradley keoun in san francisco
usa : enron rebounds , but investors seek more disclosure .
by carolyn koo
10 / 31 / 2001
reuters english news service
( c ) reuters limited 2001 .
new york , oct 31 ( reuters ) - shares of enron corp . snapped back from 10 straight days of losses on wednesday after investors said the deep plunge had made the stock attractive .
shares of houston - based enron , which lost more than $ 17 billion in market capitalization during the rout , surged almost 27 percent in heavy trade , making the stock second - most active on the new york stock exchange and third - biggest gainer by percentage .
despite the surge , investors and analysts said they were still dissatisfied with enron ' s failure to disclose key information and said the rebound could prove short - lived for the largest trader of natural gas and power in north america .
" at this level the stock is attracting money . however , the near term is not going to be good , " said tim ghriskey , president of money managers ghriskey capital partners llc .
" we don ' t own any enron . we have in the past and sold a while ago . we ' ve been tempted a couple of times during the slide , but the information flow is not that strong , and there is potential for more negative surprises . "
enron closed up $ 2 . 74 , or 24 . 6 percent , to $ 13 . 90 on the nyse . the stock surged to an intraday high of $ 14 . 17 , recouping the past two days of losses , but is far from $ 33 . 84 , the closing price for enron on oct . 16 , the last day before the 10 - day tumble began .
enron shares have been hammered over the past two weeks amid a series of unwelcome disclosures , including murky off - balance - sheet deals with partnerships once run by chief financial officer andrew fastow .
the disclosures forced fastow ' s ouster , led to a securities and exchange commission inquiry into enron and caused at least one credit rating agency to cut enron ' s senior - debt credit status .
the company said fastow ' s removal was aimed at assuaging investor concerns as the almost daily disclosures forced it to draw down about $ 3 billion from existing credit lines .
trying to quantify ' worst - case scenario '
but that ' s not enough , say analysts and investors .
" enron needs to substantially improve the level of disclosures , " said nitin khandkar , a portfolio manager with dubai - based al majid investment co . , which owns enron stock . " the accounting policies it follows should not be merely legal but should also reflect the company ' s true profitability . "
as an industry heavyweight , " investors expect enron to come clean on the controversial issues , " he said .
one issue enron would do well to address is its partnerships and the liabilities they may have .
" people are still struggling with trying to quantify what the worst - case scenario could be , " said mike heim , an analyst with a . g . edwards & sons , of the existing partnerships .
" instead of dismissing the worst - case scenario , i think it would make sense to mathematically show that ' here ' s what happens under such a scenario ' and then let analysts make their own assessments . "
enron ' s refusal to make public its finances with greater transparency is a hallmark of arrogance , noted one academic .
" the lack of transparency is an arrogance that says , ' i don ' t have to explain anything because if people don ' t want to buy my shares , they can just sit and spin , ' " said paul kedrosky , a professor at the university of british columbia who sits on the board of exponentia , a company dedicated to improving communications with shareholders .
" it ' s an arrogance that says , ' i do not have to disclose anything until i am forced to , ' " kedrosky said . " the crucial thing is to disclose early and disclose all . "
copyright ? 2000 dow jones & company , inc . all rights reserved .
waiting for balance sheets amid enron ' s debacle : david wilson
2001 - 10 - 31 16 : 39 ( new york )
( commentary . david wilson is a columnist for bloomberg news .
the opinions expressed are his own . )
princeton , new jersey , oct . 31 ( bloomberg ) - - international
business machines corp . ' s press release about its third - quarter
results included this statement , attributed to louis gerstner ,
chairman and chief executive officer :
` ` ibm ' s balance sheet remains among the strongest in the
technology industry , or any industry . ' '
the largest maker of computers and provider of computer
services wasn ' t the only company to cite its balance sheet , a
statistical summary of what a company owned , what it owed , and
what was left over for shareholders on a specific date .
general electric co . , the largest company by stock market
value , and citigroup inc . , the no . 1 financial - services company ,
made similar references in their third - quarter releases .
none of the companies really showed people what they were
telling them . ibm , general electric and citigroup are among 19
members of the dow jones industrial average whose most recent
quarterly releases didn ' t include balance sheets .
the evidence will come only when the companies submit their
quarterly reports to the u . s . securities and exchange commission .
balance sheets are required in the so - called 10 - q filings , along
with the 10 - k filings that cover the full year .
not much publicity
by then , statistics about the companies ' assets , liabilities
and shareholders ' equity , the accounting terms for what ' s owned ,
what ' s owed and what ' s left over , will be rather outdated .
u . s . companies have 45 days from the end of a fiscal quarter
to submit 10 - q reports , and 90 days from the end of a fiscal year
for 10 - k reports .
these filings usually don ' t arrive until weeks after the
publication of earnings releases . so it ' s easy to overlook the
additional information they provide , especially when it doesn ' t
receive the kind of publicity that the earnings release does .
yet the recent example of enron corp . - - another company that
omits balance sheets from press releases - - provides evidence that
investors who forgo the extra effort needed to find them do so at
their own peril .
enron , the largest energy trader , reported $ 1 . 01 billion in
` ` non - recurring ' ' costs in the third quarter from an expansion
into water , telecommunications and retail - energy sales . the
expense contributed to a $ 618 million loss for the quarter .
these numbers were part of the houston - based company ' s income
statement , a summary of sales , costs and expenses , and profits or
losses during a specified time period . income statements are the
cornerstone of any company ' s earnings release .
billion - dollar numbers
the release didn ' t even mention a larger figure that affected
the balance sheet : a $ 1 . 2 billion drop in shareholders ' equity
during the quarter resulting from the company ' s repurchase of 55
million shares from two partnerships , ljm cayman lp and ljm 2 co -
investment lp , that helped finance projects . andrew fastow , who
ran both partnerships , was ousted from his job as chief financial
officer last week .
chairman and ceo kenneth lay disclosed the repurchase in a
subsequent conference call .
such a one - two punch dealt a blow to investors ' fortunes .
since oct . 17 , the day after the earnings release , enron ' s shares
have fallen each day and have lost two - thirds of their value . the
low of $ 10 . 90 yesterday was the lowest price since july 1992 .
enron ' s third - quarter statement referred only to a loss on
` ` finance arrangements with a previously disclosed entity ' ' which
contributed to $ 544 million of investment losses . the size of that
item was later put at $ 35 million .
the latter number amounts to just 3 . 5 percent of the overall
figure for ` ` non - recurring ' ' costs , and less than 1 percent of the
company ' s $ 47 . 6 billion in revenue for the quarter .
growing debt burden
the $ 1 . 2 billion figure is considerably larger not only in
dollars , but also in percentage terms . enron had $ 11 . 74 billion of
shareholders ' equity as of june 30 , according to the balance sheet
in its second - quarter 10 - q filing . the reduction equaled more than
10 percent of that total .
among other things , the balance sheet also shows that the
company relied more heavily on debt financing during this year ' s
first half . short - term debt , due in one year or less , doubled to
$ 3 . 46 billion . long - term debt , maturing in more than one year ,
rose 9 . 4 percent to $ 9 . 36 billion .
there ' s even more to the story of enron ' s indebtedness . the
company guaranteed $ 3 . 3 billion in borrowing by osprey trust and
marlin water trust , which bought some of its power plants . unless
they pay off the debt by reselling the plants , the company may
have to come up with the difference .
nevertheless , any summary of a company ' s financial position
provides a more complete picture than the income statement alone .
this also holds true for companies whose finances are in better
shape - - ibm , general electric and citigroup , to name three .
knowing by showing
other members of the dow industrials that wait until their
filings to provide balance sheets are american express co . , at & t
corp . , boeing co . , caterpillar inc . , coca - cola co . , walt disney
co . , dupont co . , eastman kodak co . , exxon mobil corp . , general
motors corp . , honeywell international inc . , johnson & johnson ,
mcdonald ' s corp . , merck & co . , procter & gamble co . and sbc
communications inc .
companies that include them in releases are alcoa inc . ,
hewlett - packard co . , home depot inc . , intel corp . , international
paper co . , microsoft corp . , minnesota mining & manufacturing co . ,
j . p . morgan chase & co . , philip morris cos . , united technologies
corp . and wal - mart stores inc .
citigroup ' s third - quarter earnings release has this quote
from sandy weill , chairman and ceo : ` ` we have the balance sheet
strength to make timely acquisitions to expand our franchises . ' '
the new york - based company had more than $ 85 billion of ` ` total
equity , ' ' weill said in the statement .
general electric ' s release quoted chairman and ceo jeffrey
immelt as saying ` ` our strong balance sheet , which gives us the
flexibility to pursue strategic opportunities , ' ' is one of the
fairfield , connecticut - based company ' s ` ` fundamental strengths . ' '
investors can only take these ceos at their word for now .
their companies , and many others , are only telling rather than
showing - - at least in their earnings releases .
enron shares rise , rebounding from nine - year low ( update 3 )
2001 - 10 - 31 16 : 20 ( new york )
enron shares rise , rebounding from nine - year low ( update 3 )
( closes shares . )
houston , oct . 31 ( bloomberg ) - - enron corp . shares jumped 25
percent , one day after falling to their lowest level in more than
nine years , amid speculation the company may be a takeover target .
shares of the top energy trader rose $ 2 . 74 to $ 13 . 90 in
trading of 43 . 4 million shares , more than four times the three -
month daily average of 10 . 4 million . the shares reached $ 14 . 20
earlier in the day .
shares of houston - based enron have fallen 83 percent this
year . they have dropped 49 percent this month amid a u . s .
securities and exchange commission inquiry into partnerships
headed by andrew fastow , enron ' s former chief financial officer .
fastow was ousted last week in an attempt to restore confidence in
the stock .
` ` there are rumors out there that they are a potential
takeover target , but i think it ' s very unlikely that anyone will
buy them out at this point , ' ' said zach wagner , an analyst at
edward jones & co . ` ` there are too many uncertainties . ' '
enron is more likely to get a large cash infusion from an
investor , wagner said . wagner has a ` ` reduce ' ' rating on enron
shares . he doesn ' t own the stock .
the wall street journal today said general electric co . ' s ge
capital , warren buffett ' s berkshire hathaway inc . and royal dutch
petroleum co . are ` ` among the names bandied about ' ' as potential
buyers for all or part of enron .
merrill lynch analyst donato eassey said in a report issued
today that enron has a net asset value of $ 16 to $ 24 a share . he
based that on a total asset value of $ 32 billion to $ 38 . 6 billion
and total obligations of $ 18 . 2 billion .
eassey has a ` ` near - term accumulate ' ' rating on enron ' s
shares . he said enron should be considered as an investment for
` ` high - risk profile investors ' ' because of the uncertainty
attached to the company .
- - margot habiby in the dallas newsroom ( 214 ) 954 - 9452
enron mentions
enron names special committee to examine transactions
dow jones news service , 10 / 31 / 01
enron says sec opens formal inquiry into related - party transactions
afx news , 10 / 31 / 01
enron says sec informal inquiry now a formal investigation
bloomberg , 10 / 31 / 01
key enron employees aren ' t jumping ship , recruiters say
dow jones energy service , 10 / 31 / 01
houston , we have a problem : how much is enron worth ?
dow jones news service , 10 / 31 / 01
enron ' s stock jumps amid takeover speculation
associated press newswires , 10 / 31 / 01
usa : few signs of domino effect among enron ' s peers .
reuters english news service , 10 / 31 / 01
waste management will start pulp and paper trading tomorrow
bloomberg , 10 / 31 / 01
enron ends 10 - day skid with 25 % jump
cbsmarketwatch . com , 10 / 31 / 01
enron ' s stock jumps amid takeover speculation
associated press newswires , 10 / 31 / 01
class action lawsuit commenced against enron corp . by the law offices of marc s . henzel
pr newswire , 10 / 31 / 01
some enron trading customers tighten credit reins , cut trades
bloomberg , 10 / 31 / 01
usa : enron rebounds , but investors seek more disclosure .
reuters english news service , 10 / 31 / 01
waiting for balance sheets amid enron ' s debacle : david wilson
bloomberg , 10 / 31 / 01
enron shares rise , rebounding from nine - year low ( update 3 )
bloomberg , 10 / 31 / 01
enron names special committee to examine transactions
10 / 31 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones & company , inc . )
houston - ( dow jones ) - enron corp . ( ene ) created a special committee to examine deals related to the security and exchange commission investigation into transactions involving enron ' s former chief financial officer , which has now turned into a formal investigation .
the energy - trading company also named william powers jr . to its board , making him in charge of the special committee , the company said in a press release wednesday .
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron says sec opens formal inquiry into related - party transactions
10 / 31 / 2001
afx news
( c ) 2001 by afp - extel news ltd
houston ( afx ) - enron corp said the securities and exchange commission has opened a formal inquiry into the company ' s transactions with entities connected with related parties .
in a statement , enron said " the sec has opened a formal investigation into certain of the matters that were the subject of recent press reports and that previously were the subject of its informal inquiry . "
earlier this month , enron announced a charge of 1 . 01 bln usd , or 1 . 11 usd per share , and an incremental 1 . 2 bln usd reduction in stockholders ' equity , related to the unwinding of investments with the related ljm partnership .
the sec requested the company provide information on these related - party transactions days later , and the company dismissed its chief financial officer , andrew fastow , for his involvement in running the ljm partnerships .
in today ' s statement , the company announced the election of william powers jr to the board , effective immediately .
powers , who is dean of the university of texas school of law , will chair a special committee to examine and take any appropriate actions with respect to transactions between enron and entities connected to related parties , it said .
in addition to reviewing the transactions in question , the special committee is charged with communicating with the sec and recommending any other actions it deems appropriate .
" i have asked the board to take this action to address fully and forthrightly investors ' questions and concerns , " said enron chairman and chief executive officer kenneth lay .
" responding to the sec offers us an additional opportunity to achieve this same goal for investors , and we will cooperate fully . we will also make every appropriate public disclosure during the course of the sec ' s investigation . "
pav /
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron says sec informal inquiry now a formal investigation
2001 - 10 - 31 17 : 37 ( new york )
enron says sec informal inquiry now a formal investigation
houston , oct . 31 ( bloomberg ) - - enron corp . said an informal
inquiry by the securities and exchange commission is now a formal
investigation , and the houston - based company ' s board is appointing
a special committee to address allegations related to partnerships
run by its former chief financial officer .
william powers jr . , dean of the university of texas law
school , will chair a committee to handle the sec ' s requests for
information about the partnership , enron said .
- - andy pratt in the princeton newsroom at ( 609 ) 750 - 4657 or
key enron employees aren ' t jumping ship , recruiters say
by michael rieke
of dow jones newswires
10 / 31 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones ken rice , former head of enron capital and trade as well as former chief executive of enron broadband services ; kevin hannon , former president of enron broadband services ; and lou pai , former chairman and chief executive of enron energy services .
the lure of cashing out lucrative stock options won ' t cost enron any more employees any time soon . the company ' s share price has fallen too far too quickly , leaving the options underwater .
the company ' s shares traded as high as $ 80 early this year . by july the price had dropped to around $ 50 , leaving employees with options that were virtually worthless . so enron told employees it would issue new options in august .
but the company ' s share price continued to fall as more and more bad news came out . the new options issued in august , when the share prices were around $ 40 , are now underwater also .
now that the options are out of the money , enron employees are more vulnerable to the lure of other companies , peterson said .
enron could face another problem in keeping key people . its employees work under two - year contracts . if they leave enron before their contracts expires , a noncompete clause could prevent them for working for a competitor .
some of those contracts will expire at the end of the year . without the incentive of lucrative stock options , enron might have a difficult time getting employees to agree to new contracts with a noncompete clause , peterson said .
an enron spokeswoman said the company isn ' t planning to issue more new options to employees .
- by michael rieke , dow jones newswires ; 713 - 547 - 9207 ; michael . rieke @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
houston , we have a problem : how much is enron worth ?
by christina cheddar
of dow jones newswires
10 / 31 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones & company , inc . )
new york - ( dow jones ) - with billions of dollars shaved off of the market capitalization of enron corp . ( ene ) in the past two weeks , the stock is trading at about its book value , begging the question : so how much is it worth anyway ?
the answer is far from easy .
ever since enron metamorphosed from a stodgy gas pipeline company into what was seen by many as a dynamic energy trading firm , the company has become increasingly more difficult to understand .
just a glance at the wide - range of wall street analysts who follow the company illustrates the point . in the mix are analysts who track natural gas and the pipeline industry as well as those who follow electric utilities .
one enticing prospect is that the assets in its portfolio are valuable in and of themselves and could be seen by some as worthwhile acquisition targets .
by enron ' s own definition , the company houses four main divisions : enron wholesale services , enron energy services , enron transportation services , and enron broadband services .
wholesale services houses the company ' s energy marketing business and enrononline . this segment accounts for the bulk of enron ' s profits , and has become synonymous with what enron means to most people today .
not only does enron trade gas , oil and coal , but it also trades commodities such as pulp and paper , petrochemicals , lumber , plastics and even weather risk .
enron energy services is the company ' s retail arm . the company provides electricity , gas and commodity risk management services through this division .
enron transportation services operates four natural gas pipelines that span about 25 , 000 miles and have a peak capacity of 9 . 8 billion cubic feet per day . through these pipelines the company says it transports about 15 % of the natural gas the u . s . needs . the segment also includes portland general , a oregon utility company enron is selling to northwest natural gas co . ( nwn ) for $ 1 . 9 billion in cash and stock .
in addition , the company provides bandwidth and network services through its enron broadband services division .
but enron ' s reach is even wider than this list suggests . the company also has a number of other corporate investments , including its stake in the azurix water business , enron renewable energy corp . as well as methanol and mtbe plants .
through enron ' s unconsolidated affiliates , the company also has investments in additional water assets , a power plant in india and a natural gas pipeline in argentina among other things .
what makes any valuation of enron difficult is what remains unknown about the company ' s financial structure .
enron has yet to file a balance sheet for the third quarter , and doesn ' t expect to do so until nov . 15 , when balance sheets must be filed under securities and exchange commission regulations .
without the balance sheet , some of the details needed for calculating a company ' s value are missing .
also , much still remains unknown about the company ' s obligations to its off - balance sheet financing vehicles .
using what is known about enron ' s finances , several analysts have arrived at their own conclusions about valuation .
merrill lynch 201 - 938 - 5166 ; christina . cheddar @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron ' s stock jumps amid takeover speculation
by juan . a . lozano
associated press writer
10 / 31 / 2001
associated press newswires
copyright 2001 . the associated press . all rights reserved .
houston ( ap ) - after plummeting to a nine - year low following recent economic losses and an investigation by federal securities regulators , shares of enron corp . jumped nearly 25 percent wednesday amid speculation the company was ripe for takeover .
shares of enron , the nation ' s largest natural gas and power marketer , rose $ 2 . 74 to close at $ 13 . 90 wednesday on the new york stock exchange . shares though are still down 69 percent since the company reported third quarter earnings just over two weeks ago .
carol coale , an analyst with prudential securities inc . in houston , said wednesday ' s surge was likely a reaction to a the wall street journal report that enron ' s beaten - down stock price has stirred rumors of a possible takeover .
others may be buying figuring the stock has hit bottom , she said .
on tuesday , enron ' s stock closed at $ 11 . 16 , its lowest level since 1992 .
enron shares began their steady fall in the middle of october , when the company reported a net loss of $ 638 million in the third quarter , taking a one - time charge of $ 1 . 01 billion attributed to investment losses , troubled assets and unit restructurings .
some of these losses have been tied to partnerships managed by enron ' s former chief financial officer , andrew fastow , who was ousted last week .
the potential conflict of interest has prompted an inquiry by the securities and exchange commission .
earlier this week , moody ' s investors service downgraded the company ' s long - term debt and warned of possible further downgrades .
potential buyers include general electric ' s ge capital unit , warren buffett ' s berkshire hathaway and royal dutch shell , the journal said .
duane grubert , an analyst with sanford c . bernstein and co . in new york , said shell , which has a small presence in energy marketing , would be a good fit .
" shell tried to be in the merchant energy arena and didn ' t really succeed , " he said . " to buy into an established franchise must be attractive to shell . "
enron officials did not immediately return telephone calls from the associated press on wednesday .
while enron ' s stock price has made it attractive , coale said the energy marketer ' s problems present a substantial drawback .
" i would fault a company for acquiring enron with all of this hanging over it , " she said . " there are too many uncertainties . "
grubert said he believes enron has the ability " to weather the storm and restore their enterprise on their own . "
since reporting its disappointing third quarter losses , enron has been negotiating with banks to establish new credit lines . the company last week decided to cash in about $ 3 billion in revolving credit it has with various banks to shore up investor confidence .
- - -
on the net :
http : / / www . enron . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : few signs of domino effect among enron ' s peers .
by andrew kelly
10 / 31 / 2001
reuters english news service
( c ) reuters limited 2001 .
houston , oct 31 ( reuters ) - u . s . energy traders such as dynegy inc . and aquila inc . have taken a knock as a result of enron corp ' s recent woes , but analysts do not expect a broad loss of investor confidence in the sector to trigger massive losses in stock prices like enron has suffered .
" the issues impacting enron are pretty much specific to that company , " said credit lyonnais securities analyst gordon howald . " i don ' t believe that a lot of its peers have the same type of potential negative impact , " he said .
enron ' s widespread use of complex off - balance - sheet financing deals and its reluctance to disclose details about them are a key reason why investors have dumped the company ' s stock , causing it to fall more than 60 percent in the last two weeks .
and while other natural gas and electricity marketers use similar techniques to avoid overloading their balance sheets with debt , nobody does so to the same extent as enron , analysts said .
" enron is a unique case in the magnitude of off - balance sheet transactions , " said prudential securities analyst carole coale .
uncomfortable with disclosure
coale said she was not comfortable with the level of disclosure provided by many of enron ' s peers about such deals , but she said this was less of a problem at other companies because they have less exposure to the risky energy trading and marketing business which contributes about 80 percent of enron ' s profits .
el paso corp . , for example is channeling over $ 1 billion in off - balance - sheet financing into its project electron venture which was set up to acquire and manage power plants .
analysts say they are reasonably pleased with the information that el paso has provided to them about electron .
el paso ' s stock has fallen a relatively modest 5 percent over the last two weeks and analysts attribute this in large part to the fact that marketing and trading operations generate only about one quarter of the company ' s earnings .
dynegy ' s stock is down some 17 percent over the last two weeks and analysts said this was linked to dynegy ' s assumption of a leadership role among u . s . energy marketers in many investors ' eyes as enron began to fall out of favor and as dynegy attained a correspondingly high price - earnings ratio .
asked about dynegy ' s use of off - balance - sheet financing , spokesman john sousa drew a contrast between his own company and enron , saying dynegy had no financing that was backed by issuance of stock , nor any " related party transactions " .
former high - fliers shunned
analysts said that in the current uncertain investment climate , investors are shunning trading - oriented companies ' whose stocks had previously commanded high price - earnings multiples and seeking out more modestly valued companies which own physical assets such as power plants and natural gas pipelines .
in terms of recent stock price performance this trend has punished a marketer - trader like aquila , whose shares are down 27 percent over the last two weeks .
on the other hand it has been relatively kind to companies such as williams cos . and duke energy corp . , which until recently were treated with scorn by enron executives who aggressively propounded an " asset - light " philosophy .
williams ' stock has fallen about 5 percent over the last fortnight while duke ' s shares are down less than 1 percent and have outperformed the broader u . s . stock market .
j . p . morgan analyst anatol feygin said enron had fallen victim to its unique taste for sophisticated financing techniques and its failure to explain them when doubts started to surface .
" enron took it to an extreme in terms of financial engineering , but it didn ' t disclose enough information about what is behind all of these structures , " he said .
credit lyonnais securities ' howald had a simpler explanation , saying that as the euphoria which surrounded enron last year subsided , people began to see enron for what it was .
" trading companies have always had a history of winning big and losing big , " he said . " i think the days of the big valuations are over , " he added .
copyright ? 2000 dow jones & company , inc . all rights reserved .
waste management will start pulp and paper trading tomorrow
2001 - 10 - 31 16 : 52 ( new york )
waste management will start pulp and paper trading tomorrow
houston , oct . 31 ( bloomberg ) - - waste management inc . , north
america ' s largest trash hauler , will start trading paper and pulp
tomorrow to limit the effects of price fluctuations of recycled
materials and offer a service its biggest rivals don ' t provide .
in the past three years , waste management has reduced its
exposure to price swings by placing 75 percent of its recycled -
commodity sales under long - term , fixed - price contracts . still , the
company ' s revenue from recycling fell 38 percent to $ 154 million
in the second quarter .
chief executive officer maurice myers is hoping the trading
business will help stabilize recycling revenue even when prices
for cardboard , newspaper and aluminum cans fall . trading allows
waste management to further limit its own exposure to prices , as
well as offer contracts to customers who want to lock in prices .
` ` what waste management is doing is going to reduce the
company ' s risk and their customer ' s risk , ' ' said thomas leritz , an
analyst at banc of america capital management , which owns more
than 1 million shares of waste management . ` ` i think it ' s a smart
move . it ' s a reflection of the new management team . ' '
myers joined the company in november 1999 as it struggled to
track costs from acquisitions . he has put new financial - systems
software in place and made other efforts to cut costs . the company
has also raised prices where it ' s the dominant hauler .
myers ' s efforts , along with the sale of overseas businesses ,
have helped the company regain regard among investors . the shares
have risen 22 percent in the past year .
pulp and paper
most of waste management ' s solid - waste customers produce or
consume pulp and paper . waste management collects , processes and
sells more than five million tons a year of paper , plastic , glass ,
aluminum and other metals .
recycled - cardboard prices fell 62 percent to $ 48 a ton in the
second quarter from $ 125 a year earlier , and the price for
recycled newsprint fell to $ 55 a ton from $ 90 , myers said in
august . prices were little changed from the second quarter to the
third quarter , said steve ragiel , waste management ' s vice
president of recycling .
waste management , which will report third - quarter results
next week , had expected to begin trading in the third quarter . its
plans were delayed because it took longer than expected to find
people to run the operation , raigel said .
jeff harbert , formerly of enron corp . , is heading the
operation along with two other enron traders . enron , also based in
houston , has created the largest business of trading commodities
including electricity , natural gas , pulp and paper .
risk management
waste management ' s initial focus in the trading business will
be on managing its own price risk . it probably only will complete
five to 10 trades in each of the first few months , raigel said .
the company hopes to set fixed prices for the commodities it
picks up , then sell those commodities to a third company , such as
a paper producer , at a higher set price .
` ` we ' ll get with a counter party such as a paper mill or a
consumer - products company and cut a deal , ' ' raigel said . ` ` we can
find a paper mill that wants to lock in a fixed price on what they
buy and what they sell . they get a minimum return on their
investment and greater control on their raw material costs . ' '
the company hasn ' t said how much it expects to make from
trading . analysts aren ' t expecting the business to contribute
significantly to waste management ' s earnings .
` ` they are looking at it as a good time to get in on trading
but i don ' t see it as a major contributor to their business , ' '
said stewart scharf , an analyst with standard & poor ' s equity
group . he rates waste management ` ` accumulate ' ' and doesn ' t own
shares .
republic services group inc . , the no . 3 u . s . waste company ,
contracts with individual mills to supply recycled commodities at
fixed prices , but hasn ' t started a trading operation , spokesman
will flower said .
allied waste industries inc . , the second - largest trash hauler
in north america , said it has no plans to get into trading .
` ` we ' ll leave trading to people like enron , ' ' allied waste
spokesman michael burnett said .
- - mark johnson in the princeton newsroom ( 609 ) 750 - 4662
enron ends 10 - day skid with 25 % jump
lisa sanders
cbsmarketwatch . com
october 31 , 2001
houston ( cbs . mw ) - - shares of enron , which had lost about 66 percent of their value over the past 10 sessions , spiked wednesday after a report that pegged the beleaguered company as a takeover target .
enron added 25 percent , or $ 2 . 74 , to close at $ 13 . 90 . more than 43 million shares changed hands , making the stock the most actively traded on the new york stock exchange .
a . g . edwards ' analyst michael heim warned wednesday against buying enron shares . he noted that enron ' s troubles could be hurting its trading operations , the company ' s strength .
" people interested in betting on ene should ask themselves this - - if a person offered to double your money when a coin lands heads and take away half your money when it is tails , would you take the bet ? what if the person flipping the coin is a magician you don ' t trust ? "
a wall street journal report wednesday speculated on enron ' s potential as an acquisition for a more stable company . an enron spokesman said the company doesn ' t comment on such matters .
enron has been under pressure for more than two weeks , beginning when the energy merchant reported a $ 1 billion charge in its third - quarter earnings . a securities and exchange commission probe into two of the company ' s limited partnerships and a rating downgrade by moody ' s investors service haven ' t helped .
john olson , an analyst at sanders morris harris , said he thought an enron takeover unlikely at this point .
" however , if the stock were to keep coming down , and their financial difficulties were extended , the odds would increase , " he said .
olson pointed out that enron ' s heavy losses over the last 10 sessions partly reflects the end of the tax year for mutual funds . the calendar year for funds ends at the close of business wednesday .
" mutual funds who own enron stock have been trying to offset other gains by selling off enron , " he said . " mutual funds have to register all their gains or losses and offset them by selling or buying stock by the close today . "
taking bets
art smith , chairman and chief executive of the research firm john s . herold , said he ' d be surprised if enron was not entertaining offers . " it ' s one of the ways that enron gets the genie back in the bottle . "
on the other hand , smith said , it would take a potential acquirer time to become comfortable with the valuation of the business .
" it ' s doubtful that a potential acquirer can resolve all the valuation issues quickly , " smith said . he said it ' s likely that any sort of purchase agreement would contain what he called a " look - back provision , " which would protect the acquirer from being strapped to a fixed value .
smith said he could see either general electric ' s ge capital or royal dutch shell making a bid . both were mentioned in the journal report .
" ge capital is big enough that if it didn ' t work out it won ' t cripple ge , and they ' ve been opportunistic on things like this , " smith said . " and shell always keeps us guessing . "
olson also included aig and citigroup as potential acquirers .
" enron has certainly had some appeal to people that are used to an aggressive trading culture , " he said .
smith said that even without enron , the energy marketing and trading business would continue to thrive .
" even if enron went away , it would not change what has developed into a healthy market for commodity forward markets and hedging , " he said .
lisa sanders is a dallas - based reporter for cbs . marketwatch . com .
enron ' s stock jumps amid takeover speculation
by juan . a . lozano
associated press writer
10 / 31 / 2001
associated press newswires
copyright 2001 . the associated press . all rights reserved .
houston ( ap ) - after plummeting to a nine - year low following recent economic losses and an investigation by federal securities regulators , shares of enron corp . jumped nearly 25 percent wednesday amid speculation the company was ripe for takeover .
shares of enron , the largest u . s . natural gas and power marketer , rose dlrs 2 . 74 to close at dlrs 13 . 90 wednesday on the new york stock exchange . though still down 69 percent since the company reported third quarter earnings just over two weeks ago .
carol coale , an analyst with prudential securities inc . in houston , said wednesday ' s surge was likely a reaction to a the wall street journal report that enron ' s beaten - down stock price has stirred rumors of a possible takeover .
others may be buying figuring the stock has hit bottom , she said .
on tuesday , enron ' s stock closed at dlrs 11 . 16 , its lowest level since 1992 .
enron shares began their steady fall in the middle of october , when the company reported a net loss of dlrs 638 million in the third quarter , taking a one - time charge of dlrs 1 . 01 billion attributed to investment losses , troubled assets and unit restructurings .
some of these losses have been tied to partnerships managed by enron ' s former chief financial officer , andrew fastow , who was ousted last week .
the potential conflict of interest has prompted an inquiry by the securities and exchange commission .
earlier this week , moody ' s investors service downgraded the company ' s long - term debt and warned of possible further downgrades .
potential buyers include general electric ' s ge capital unit , warren buffett ' s berkshire hathaway and royal dutch shell , the journal said .
duane grubert , an analyst with sanford c . bernstein and co . in new york , said shell , which has a small presence in energy marketing , would be a good fit .
" shell tried to be in the merchant energy arena and didn ' t really succeed , " he said . " to buy into an established franchise must be attractive to shell . "
while enron ' s stock price has made it attractive , coale said the energy marketer ' s problems present a substantial drawback .
" i would fault a company for acquiring enron with all of this hanging over it , " she said . " there are too many uncertainties . "
copyright ? 2000 dow jones ( ii ) that the company ' s operating results were materially overstated as result of the company failing to timely write - down the value of its investments with certain limited partnerships which were managed by the company ' s chief financial officer ; and ( iii ) that enron was failing to write - down impaired assets on a timely basis in accordance with gaap . on october 16 , 2001 , enron surprised the market by announcing that the company was taking non - recurring charges of $ 1 . 01 billion after - tax , or ( $ 1 . 11 ) loss per diluted share , in the third quarter of 2001 , the period ending september 30 , 2001 . subsequently , enron revealed that a material portion of the charge related to the unwinding of investments with certain limited partnerships which were controlled by enron ' s chief financial officer and that the company would be eliminating more than $ 1 billion in shareholder equity as a result of its unwinding of the investments . as this news began to be assimilated by the market , the price of enron common stock dropped significantly . during the class period , enron insiders disposed of over $ 73 million of their personally held enron common stock to unsuspecting investors .
plaintiff is represented by the law offices of marc s . henzel . if you are a member of the class described above , you have until december 21 , 2001 , to participate in the case and ask the court to appoint you as one of the lead plaintiffs for the class . in order to serve as lead plaintiff , however , you must meet certain legal requirements . you do not need to seek appointment as a lead plaintiff in order to share in any recovery .
if you have any questions concerning this case or your rights or interests with respect to these matters , please contact : marc s . henzel , esq . of the law offices of marc s . henzel , 273 montgomery ave , suite 202 bala cynwyd , pa 19004 - 2808 , by telephone at ( 888 ) 643 - 6735 or ( 610 ) 660 - 8000 , by facsimile at ( 610 ) 660 - 8080 , by e - mail at mhenzell 82 @ aol . com or visit the firm ' s website at http : / / members . aol . com / mhenzell 82 .
make your opinion count - click here
/ contact : marc s . henzel , esq . of the law offices of marc s . henzel , + 1 - 888 - 643 - 6735 or + 1 - 610 - 660 - 8000 , fax : + 1 - 610 - 660 - 8080 , or mhenzell 82 @ aol . com / 16 : 50 est
copyright ? 2000 dow jones & company , inc . all rights reserved .
some enron trading customers tighten credit reins , cut trades
2001 - 10 - 31 16 : 05 ( new york )
new york , oct . 31 ( bloomberg ) - - american electric power co . ,
exelon corp . and northeast utilities are among energy companies
restricting business with enron corp . as the largest energy trader
negotiates a credit line to keep access to cash .
` ` we are keeping a tight dollar limit on trades , ' ' said john
rowe , co - chief executive officer of exelon , the largest u . s .
nuclear power producer . ` ` we are keeping a close eye on our
exposures . ' '
enron has said it is seeking new sources of credit as the
company tries to assure trading partners and rating agencies that
it can meet day - to - day obligations and keep its investment - grade
credit rating . enron , which handles 25 percent of the energy
trading in the u . s . , relies on having investment - grade credit to
borrow enough to settle its transactions daily .
enron corp . shares , down 59 percent since oct . 16 , rose 25
percent today to $ 13 . 90 from a nine - year low amid speculation the
company may be a takeover target . still , enron stock is down 83
percent this year .
moody ' s investors service last week lowered enron ' s long - term
debt to two notches above junk status and placed enron ' s
commercial paper on review for downgrade .
` ` we will be tracking very closely their wholesale volumes , ' '
said stephen moore , a vice president at moody ' s . ` ` that will be
the leading indicator of where the company is going . ' '
credit people
energy trading accounted for about 98 percent of enron ' s $ 773
million in income before interest and taxes last quarter . the
company last week drew down a $ 3 billion credit line after
surprising investors by writing off $ 1 . 2 billion of shareholder
equity . the company also ousted its chief financial officer andrew
fastow after it reported that a partnership he set up lost $ 35
million for the company . the securities and exchange commission
has asked the company questions about partnerships like fastow ' s .
enron spokeswoman karen denne said the company ' s trades have
not declined in size while natural gas trading volume has dipped
consistent with monthly pattern .
some energy executives said yesterday that companies were
limiting enron trading to reduce credit risks .
` ` credit people are coming to their traders and saying ,
` enron is on hold for any new positions , and at some point we may
need you ( to ) trade out of your existing positions , ' ' ' said
charlie sanchez , an energy markets manager at houston - based gelber
& associates corp . , an energy trading adviser .
watching closely
minneapolis , minnesota - based xcel energy inc . , an electricity
and natural - gas seller , is limiting its business to same - day and
next - day delivery , chief executive officer wayne brunetti said at
an energy conference in new orleans . american electric power chief
executive linn draper said at the same conference that his company
is also making only short - term trades .
` ` we are watching very closely , ' ' draper said . ` ` we are
focusing our new deals with them in the short term , november ,
december . we think they ' ll make it , but it ' s a serious
situation . ' '
northeast utilities , based in berlin , connecticut , will
continue to trade with enron as long as its debt ratings remain
investment grade , said chief financial officer john forsgren , also
at the conference . northeast is new england ' s biggest utility
owner .
` ` three weeks ago , we started monitoring our position with
enron , ' ' said forsgren . ` ` right now , we have a net payable to
them , so there ' s no exposure on our side , and we ' ll probably keep
it that way . ' '
overblown
many companies say that enron remains the most economical and
efficient place to trade electricity , and that the company ' s
credit woes are overblown .
` ` we ' re still actively trading with them and we believe they
will work their way out of this , ' ' said mike griswold , a trader
with hafslund trading co . , a subsidiary of norwegian energy
company hafslund asa . ` ` they have the best liquidity and the best
prices . they are the premier trading market . ' '
- - david ward and bradley keoun in san francisco
usa : enron rebounds , but investors seek more disclosure .
by carolyn koo
10 / 31 / 2001
reuters english news service
( c ) reuters limited 2001 .
new york , oct 31 ( reuters ) - shares of enron corp . snapped back from 10 straight days of losses on wednesday after investors said the deep plunge had made the stock attractive .
shares of houston - based enron , which lost more than $ 17 billion in market capitalization during the rout , surged almost 27 percent in heavy trade , making the stock second - most active on the new york stock exchange and third - biggest gainer by percentage .
despite the surge , investors and analysts said they were still dissatisfied with enron ' s failure to disclose key information and said the rebound could prove short - lived for the largest trader of natural gas and power in north america .
" at this level the stock is attracting money . however , the near term is not going to be good , " said tim ghriskey , president of money managers ghriskey capital partners llc .
" we don ' t own any enron . we have in the past and sold a while ago . we ' ve been tempted a couple of times during the slide , but the information flow is not that strong , and there is potential for more negative surprises . "
enron closed up $ 2 . 74 , or 24 . 6 percent , to $ 13 . 90 on the nyse . the stock surged to an intraday high of $ 14 . 17 , recouping the past two days of losses , but is far from $ 33 . 84 , the closing price for enron on oct . 16 , the last day before the 10 - day tumble began .
enron shares have been hammered over the past two weeks amid a series of unwelcome disclosures , including murky off - balance - sheet deals with partnerships once run by chief financial officer andrew fastow .
the disclosures forced fastow ' s ouster , led to a securities and exchange commission inquiry into enron and caused at least one credit rating agency to cut enron ' s senior - debt credit status .
the company said fastow ' s removal was aimed at assuaging investor concerns as the almost daily disclosures forced it to draw down about $ 3 billion from existing credit lines .
trying to quantify ' worst - case scenario '
but that ' s not enough , say analysts and investors .
" enron needs to substantially improve the level of disclosures , " said nitin khandkar , a portfolio manager with dubai - based al majid investment co . , which owns enron stock . " the accounting policies it follows should not be merely legal but should also reflect the company ' s true profitability . "
as an industry heavyweight , " investors expect enron to come clean on the controversial issues , " he said .
one issue enron would do well to address is its partnerships and the liabilities they may have .
" people are still struggling with trying to quantify what the worst - case scenario could be , " said mike heim , an analyst with a . g . edwards & sons , of the existing partnerships .
" instead of dismissing the worst - case scenario , i think it would make sense to mathematically show that ' here ' s what happens under such a scenario ' and then let analysts make their own assessments . "
enron ' s refusal to make public its finances with greater transparency is a hallmark of arrogance , noted one academic .
" the lack of transparency is an arrogance that says , ' i don ' t have to explain anything because if people don ' t want to buy my shares , they can just sit and spin , ' " said paul kedrosky , a professor at the university of british columbia who sits on the board of exponentia , a company dedicated to improving communications with shareholders .
" it ' s an arrogance that says , ' i do not have to disclose anything until i am forced to , ' " kedrosky said . " the crucial thing is to disclose early and disclose all . "
copyright ? 2000 dow jones & company , inc . all rights reserved .
waiting for balance sheets amid enron ' s debacle : david wilson
2001 - 10 - 31 16 : 39 ( new york )
( commentary . david wilson is a columnist for bloomberg news .
the opinions expressed are his own . )
princeton , new jersey , oct . 31 ( bloomberg ) - - international
business machines corp . ' s press release about its third - quarter
results included this statement , attributed to louis gerstner ,
chairman and chief executive officer :
` ` ibm ' s balance sheet remains among the strongest in the
technology industry , or any industry . ' '
the largest maker of computers and provider of computer
services wasn ' t the only company to cite its balance sheet , a
statistical summary of what a company owned , what it owed , and
what was left over for shareholders on a specific date .
general electric co . , the largest company by stock market
value , and citigroup inc . , the no . 1 financial - services company ,
made similar references in their third - quarter releases .
none of the companies really showed people what they were
telling them . ibm , general electric and citigroup are among 19
members of the dow jones industrial average whose most recent
quarterly releases didn ' t include balance sheets .
the evidence will come only when the companies submit their
quarterly reports to the u . s . securities and exchange commission .
balance sheets are required in the so - called 10 - q filings , along
with the 10 - k filings that cover the full year .
not much publicity
by then , statistics about the companies ' assets , liabilities
and shareholders ' equity , the accounting terms for what ' s owned ,
what ' s owed and what ' s left over , will be rather outdated .
u . s . companies have 45 days from the end of a fiscal quarter
to submit 10 - q reports , and 90 days from the end of a fiscal year
for 10 - k reports .
these filings usually don ' t arrive until weeks after the
publication of earnings releases . so it ' s easy to overlook the
additional information they provide , especially when it doesn ' t
receive the kind of publicity that the earnings release does .
yet the recent example of enron corp . - - another company that
omits balance sheets from press releases - - provides evidence that
investors who forgo the extra effort needed to find them do so at
their own peril .
enron , the largest energy trader , reported $ 1 . 01 billion in
` ` non - recurring ' ' costs in the third quarter from an expansion
into water , telecommunications and retail - energy sales . the
expense contributed to a $ 618 million loss for the quarter .
these numbers were part of the houston - based company ' s income
statement , a summary of sales , costs and expenses , and profits or
losses during a specified time period . income statements are the
cornerstone of any company ' s earnings release .
billion - dollar numbers
the release didn ' t even mention a larger figure that affected
the balance sheet : a $ 1 . 2 billion drop in shareholders ' equity
during the quarter resulting from the company ' s repurchase of 55
million shares from two partnerships , ljm cayman lp and ljm 2 co -
investment lp , that helped finance projects . andrew fastow , who
ran both partnerships , was ousted from his job as chief financial
officer last week .
chairman and ceo kenneth lay disclosed the repurchase in a
subsequent conference call .
such a one - two punch dealt a blow to investors ' fortunes .
since oct . 17 , the day after the earnings release , enron ' s shares
have fallen each day and have lost two - thirds of their value . the
low of $ 10 . 90 yesterday was the lowest price since july 1992 .
enron ' s third - quarter statement referred only to a loss on
` ` finance arrangements with a previously disclosed entity ' ' which
contributed to $ 544 million of investment losses . the size of that
item was later put at $ 35 million .
the latter number amounts to just 3 . 5 percent of the overall
figure for ` ` non - recurring ' ' costs , and less than 1 percent of the
company ' s $ 47 . 6 billion in revenue for the quarter .
growing debt burden
the $ 1 . 2 billion figure is considerably larger not only in
dollars , but also in percentage terms . enron had $ 11 . 74 billion of
shareholders ' equity as of june 30 , according to the balance sheet
in its second - quarter 10 - q filing . the reduction equaled more than
10 percent of that total .
among other things , the balance sheet also shows that the
company relied more heavily on debt financing during this year ' s
first half . short - term debt , due in one year or less , doubled to
$ 3 . 46 billion . long - term debt , maturing in more than one year ,
rose 9 . 4 percent to $ 9 . 36 billion .
there ' s even more to the story of enron ' s indebtedness . the
company guaranteed $ 3 . 3 billion in borrowing by osprey trust and
marlin water trust , which bought some of its power plants . unless
they pay off the debt by reselling the plants , the company may
have to come up with the difference .
nevertheless , any summary of a company ' s financial position
provides a more complete picture than the income statement alone .
this also holds true for companies whose finances are in better
shape - - ibm , general electric and citigroup , to name three .
knowing by showing
other members of the dow industrials that wait until their
filings to provide balance sheets are american express co . , at & t
corp . , boeing co . , caterpillar inc . , coca - cola co . , walt disney
co . , dupont co . , eastman kodak co . , exxon mobil corp . , general
motors corp . , honeywell international inc . , johnson & johnson ,
mcdonald ' s corp . , merck & co . , procter & gamble co . and sbc
communications inc .
companies that include them in releases are alcoa inc . ,
hewlett - packard co . , home depot inc . , intel corp . , international
paper co . , microsoft corp . , minnesota mining & manufacturing co . ,
j . p . morgan chase & co . , philip morris cos . , united technologies
corp . and wal - mart stores inc .
citigroup ' s third - quarter earnings release has this quote
from sandy weill , chairman and ceo : ` ` we have the balance sheet
strength to make timely acquisitions to expand our franchises . ' '
the new york - based company had more than $ 85 billion of ` ` total
equity , ' ' weill said in the statement .
general electric ' s release quoted chairman and ceo jeffrey
immelt as saying ` ` our strong balance sheet , which gives us the
flexibility to pursue strategic opportunities , ' ' is one of the
fairfield , connecticut - based company ' s ` ` fundamental strengths . ' '
investors can only take these ceos at their word for now .
their companies , and many others , are only telling rather than
showing - - at least in their earnings releases .
enron shares rise , rebounding from nine - year low ( update 3 )
2001 - 10 - 31 16 : 20 ( new york )
enron shares rise , rebounding from nine - year low ( update 3 )
( closes shares . )
houston , oct . 31 ( bloomberg ) - - enron corp . shares jumped 25
percent , one day after falling to their lowest level in more than
nine years , amid speculation the company may be a takeover target .
shares of the top energy trader rose $ 2 . 74 to $ 13 . 90 in
trading of 43 . 4 million shares , more than four times the three -
month daily average of 10 . 4 million . the shares reached $ 14 . 20
earlier in the day .
shares of houston - based enron have fallen 83 percent this
year . they have dropped 49 percent this month amid a u . s .
securities and exchange commission inquiry into partnerships
headed by andrew fastow , enron ' s former chief financial officer .
fastow was ousted last week in an attempt to restore confidence in
the stock .
` ` there are rumors out there that they are a potential
takeover target , but i think it ' s very unlikely that anyone will
buy them out at this point , ' ' said zach wagner , an analyst at
edward jones & co . ` ` there are too many uncertainties . ' '
enron is more likely to get a large cash infusion from an
investor , wagner said . wagner has a ` ` reduce ' ' rating on enron
shares . he doesn ' t own the stock .
the wall street journal today said general electric co . ' s ge
capital , warren buffett ' s berkshire hathaway inc . and royal dutch
petroleum co . are ` ` among the names bandied about ' ' as potential
buyers for all or part of enron .
merrill lynch analyst donato eassey said in a report issued
today that enron has a net asset value of $ 16 to $ 24 a share . he
based that on a total asset value of $ 32 billion to $ 38 . 6 billion
and total obligations of $ 18 . 2 billion .
eassey has a ` ` near - term accumulate ' ' rating on enron ' s
shares . he said enron should be considered as an investment for
` ` high - risk profile investors ' ' because of the uncertainty
attached to the company .
- - margot habiby in the dallas newsroom ( 214 ) 954 - 9452