Enron Jolt: Investments, Assets Generate Big Loss --- Part of Charge Tied To 2 Partnerships Interests Wall Street
The Wall Street Journal, 10/17/01
Enron Posts Loss For Quarter, Citing One-Time Charges
The Asian Wall Street Journal, 10/17/01
Enron Reports $1 Billion In Charges And a Loss
The New York Times, 10/17/01
COMPANIES & FINANCE THE AMERICAS - Enron tries to see bright side of $1bn levy.
Financial Times (U.K. edition), 10/17/01
OBSERVER - Excuse me - AVENUE OF THE AMERICAS.
Financial Times (U.K. edition), 10/17/01
WORLD STOCK MARKETS - Financials lead Wall Street to modest gains.
Financial Times (U.K. edition), 10/17/01
WORLD STOCK MARKETS - End of Wall St surge leaves techs struggling.
Financial Times (U.K. edition), 10/17/01
Enron posts loss after write-downs
Houston Chronicle, 10/17/01
MARK TO MARKET: A Defiant Spring In Their Steps
Capital Markets Report, 10/17/01
LEX COLUMN - Enron LEX COLUMN.
Financial Times (U.K. edition), 10/17/01
Internet Tax Ban Extended
The Washington Post, 10/17/01
United States
The Globe and Mail, 10/17/01
Enron Corp. Reiterated `Strong Buy' at First Albany
Bloomberg, 10/17/01

Brazil Energy Rules Deter Investment as Shortages Choke Economy
Bloomberg, 10/17/01

Former Montana governor named U.S. envoy in lumber dispute
Associated Press Newswires, 10/16/01
Enron reports third-quarter loss due to investment writeoff
Associated Press Newswires, 10/16/01
Enron long-term debt ratings on review for possible downgrade - Moody's
AFX News, 10/16/01
Enron - Chmn. & CEO
CNNfn: Market Coverage - Morning, 10/16/01
Enron CEO - Interview
Fox News: Your World

Enron Corp. CHMN. & CEO - Interview
CNBC/Dow Jones Business Video, 10/16/01

Enron Jolt: Investments, Assets Generate Big Loss --- Part of Charge Tied To 2 Partnerships Interests Wall Street
By John Emshwiller and Rebecca Smith
Staff Reporters of The Wall Street Journal

10/17/2001
The Wall Street Journal
C1
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Enron Corp. yesterday took a $1.01 billion charge mostly connected with write-downs of soured investments, producing a $618 million third-quarter loss. The loss highlights the risom a pipeline com a particular slice raises anew vexing conflict-of-interest questions. The slice is connected with a pair of limited partnerships that until recently were run by Enron's chief financial officer. The company said the charge connected with the partnerships is $35 million and involves the "early termination . . . of certain structured finance arrangements."
Two years ago, the chief financial officer, Andrew S. Fastow, entered into the unusual arrangement with his employer. With the approval of the board of Enron, Mr. Fastow set up and ran the partnerships that stood to make him millions or more, according to partnership documents. While the company says that this arrangement was proper, some corporate-governance watchdogs have questioned whether a chief financial officer, who is responsible for overseeing the financial interests of the company, should have been involved in such a partnership that was, among other things, looking to purchase assets from Enron.
The two partnerships, LJM Cayman LP and the much larger LJM2 Co-Investment LP, have engaged in billions of dollars of complex hedging transactions with Enron involving company assets and millions of shares of Enron stock. It isn't clear from Enron filings with the Securities and Exchange Commission what Enron received in return for providing these assets and shares. In a number of transactions, notes receivable were provided by partnership-related entities.
Mr. Fastow's role as chief financial officer made him privy to internal asset analyses at Enron. An offering memorandum for the LJM2 partnership said that this dual role "should result in a steady flow of opportunities . . . to make investments at attractive prices." Mr. Fastow would find his interests "aligned" with investors because the "economics of the partnership would have significant impact on the general partner's wealth," according to this document.
In a written statement in response to questions, Enron, based in Houston, said "there never was any obligation for Enron to do any transaction with LJM. Enron and its Board established special review and approval processes with its senior management and external audit and legal counsel to ensure that each transaction with the LJM partnership was fair, in the best interest of Enron and its shareholders, and appropriately disclosed."
Mr. Fastow, through an Enron spokesman, declined to be interviewed.
In announcing the third-quarter loss, Enron said the partnership-related write-offs were part of a larger $544 million charge related to the diminished value of investments in a retail-power business, broadband telecommunications and technology. In addition, there was also a $287 million write-off resulting from its investment in Azurix Corp., a water company Enron spun off and then repurchased. In all, Enron posted a third-quarter loss of 84 cents a share, compared with a gain of 34 cents a share in the year-earlier period. Revenue rose 59% to $47.6 billion.
At 4 p.m. yesterday, Enron's stock was up 67 cents a share to $33.84 in composite trading on the New York Stock Exchange, but remains far below its 52-week high of $84.88. On Monday, the day before the earnings announcement, Enron stock dropped by about 7%.
In an interview, Enron's chairman and chief executive, Kenneth Lay, said the write-offs were designed as part of an effort to "find anything and everything that was a distraction and was causing a cloud over the company."
The quarterly loss is the latest in a series of setbacks faced by Enron recently after years of almost unbroken success. There have been mounting problems from expensive moves into the water and telecommunications businesses.
And there has been a steady stream of executive departures, most notably the surprise resignation in August of Enron's president and chief executive, Jeffrey Skilling, who said he left for personal reasons and because of the fallen stock price.
The partnership arrangement involving Mr. Fastow, the highly regarded chief financial officer, first surfaced in an Enron SEC filing in 1999, but only recently has it attracted Wall Street's concern. In late July, Mr. Fastow severed his relations with the partnerships, according to a company SEC filing. Company officials said that move was partly related to questions raised by analysts and large Enron shareholders.
Little about the inner workings of the LJM partnerships has been disclosed to date. Private partnership documents reviewed by The Wall Street Journal indicate that Enron agreed to a partnership arrangement with potentially huge financial rewards for Mr. Fastow.
The LJM Cayman partnership raised a relatively modest $16 million, according to the documents. The more ambitious LJM2 aimed to raise at least $200 million, the documents show. Among investors were Credit Suisse Group's Credit Suisse First Boston, Wachovia Corp. and General Electric Co.'s General Electric Capital Corp. The Arkansas Teachers Fund committed $30 million, of which $7.4 million had been tapped by late last month. Bill Shirron, a fund manager there, said the LJM arrangement had "already returned $6 million to us." It's been "a home run so far," Mr. Shirron added.
According to the LJM2 offering document, the general partner, made up of Mr. Fastow and at least one other Enron employee, received a management fee of as much as 2% annually of the total amounts invested. Additionally, the general partner was eligible for profit participation that could produce millions of dollars more if the partnership met its performance goals over its projected 10-year life. In exchange, the general partner was obliged to invest at least 1% of the aggregate capital commitments.
In an interview earlier this year, Mr. Lay said the LJM arrangement didn't produce any conflicts of interest. Such related-party transactions, involving top managers or directors, aren't unusual, he said. "Almost all big companies have related-party transactions."
Typically, related-party transactions involve dealings with partly owned affiliates or a contract with a firm tied to one of the company's outside directors. It is rare for a top executive to be in a position where he could have conflicting fiduciary responsibilities. The LJM2 offering document states that the responsibilities of Mr. Fastow and other partnership officials to Enron could "from time to time conflict with fiduciary responsibilities owed to the Partnership and its partners."
Some institutions approached as potential LJM investors demurred partly because of such potential conflicts.
Enron has publicly stated that the partnership deals were aimed to help it hedge against fluctuating values for its growing portfolio of assets. In the past decade, Enron has seen its asset base rocket to more than $100 billion. As a result of this rapid growth, Enron has at times been strapped for capital and has sought ways to bring in outside investors to help bolster its balance sheet.
Charles LeMaistre, an outside Enron director and president emeritus of the M.D. Anderson Cancer Center at the University of Texas, said he viewed the partnership arrangement partly as a way of keeping Mr. Fastow at Enron. "We try to make sure that all executives at Enron are sufficiently well-paid to meet what the market would offer," he said.
Enron's interest in retaining Mr. Fastow may have been heightened by an exodus of top managers who were cashing out large stock-option grants after the company's success in 1999 and 2000. Mr. Fastow's yield from options for the 12 months through Aug. 31 was $4.6 million, according to disclosure reports compiled by Thomson Financial. Mr. Lay netted about $70 million from exercising options during this period, while Mr. Skilling, the former president, realized nearly $100 million.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

International News
Enron Posts Loss For Quarter, Citing One-Time Charges
Dow Jones Newswires

10/17/2001
The Asian Wall Street Journal
2
(Copyright (c) 2001, Dow Jones & Company, Inc.)

HOUSTON -- Enron Corp. posted a third-quarter loss despite a 59% surge in revenue, hurt by several charges related to investment losses and trouble related to its Azurix Corp. water-services unit.
The energy and trading company on Tuesday reported a loss of $618 million, or 84 cents a basic share, compared with net income of $292 million, or 34 cents a share, a year earlier.
Results in the latest quarter included charges totaling $1.01 billion, or $1.11 a share. They included $544 million related to losses associated with certain investments; $287 million related to so-called asset impairments recorded by Azurix; and $180 million for the restructuring of broadband services.
Excluding items, Enron, which is based in Houston, said it earned $393 million, or 43 cents a share, helped by its core wholesale and retail energy businesses and natural gas pipelines. That figure matched a consensus estimate from analysts, according to Thomson Financial/First Call.
Revenue soared to $47.61 billion from $30.01 billion.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Business/Financial Desk; Section C
Enron Reports $1 Billion In Charges And a Loss
By KENNETH N. GILPIN

10/17/2001
The New York Times
Page 5, Column 1
c. 2001 New York Times Company

The Enron Corporation, the nation's leading wholesale electricity marketer and natural gas trader, posted a third-quarter loss yesterday because of more than $1 billion in one-time charges for various businesses.
The company reported a net loss of $618 million, or 84 cents a share, in contrast to net income of $292 million, or 34 cents a share, in the period a year earlier. Excluding charges, Enron said it earned $393 million, or 43 cents a share. Revenue jumped 59 percent, to $47.6 billion, from $30 billion a year ago.
The charges, which total $1.01 billion, or $1.11 a share, included a $287 million write-down on Azurix, the company's troubled water-management division, and $180 billion in restructuring charges at its broadband telecommunications operation.
But more than half the charges were related to various investment losses, mostly from Enron's stake in the New Power Company, a retail electricity joint venture with AOL Time Warner and I.B.M.
''After a thorough review of our businesses, we have decided to take these charges to clear away issues that have clouded the performance and earnings potential of our core energy businesses,'' Kenneth L. Lay, Enron's chairman and chief executive, said in a statement.
Even as its stock surged last year and into this year, analysts complained that the company had a complex web of businesses and lacked clarity in its financial reporting.
In the wake of the California energy crisis, the value of Enron shares began a sharp retreat, and the focus on problems at some of its operations intensified.
On Aug. 14, Jeffrey K. Skilling abruptly resigned as president and chief executive after just six months on the job. The move forced Mr. Lay, who transformed the company from an intrastate pipeline company into an energy conglomerate, to resume operational control.
Wall Street had been expecting write-offs, and analysts said more could be coming. But the news yesterday had little effect on Enron's shares, which rose 67 cents, to $33.84. They are off 59 percent this year.
''They didn't telegraph exactly what they were going to do, or when or how,'' said David Fleischer, an analyst at Goldman, Sachs. ''But for many quarters the topic has been how many billions are they going to write off? Now the question is, 'What's next?' ''
Ronald Barone, an analyst at UBS Warburg, said the write-offs were ''a step in the right direction.''
''Investors can look at this with more confidence that problems are being faced and addressed,'' he said.
Mr. Barone and others said the company might have to make decisions at some point about troubled international assets, including its power plant in India as well as its broadband unit.
Earlier this year, Mr. Skilling insisted that Enron's broadband trading business was worth $35 billion. After the restructuring yesterday, Enron has a $600 million investment in broadband.
''I don't think anyone knows what the broadband operation is worth,'' said Todd Shipman, an analyst at Standard & Poor's. ''It seems to me they don't think there is a big prospect of a short-term turnaround. They are putting the whole thing in cold storage.''
Despite Enron's potential, analysts said Mr. Lay faced a considerable task.
''Management has lost credibility and have to reprove themselves,'' Mr. Fleischer at Goldman, Sachs said. ''They need to convince investors these earnings are real, that the company is for real and that growth will be realized. That has to be proven over time.''
The earnings report issued yesterday provides ''a little more breakdown,'' he added, ''but it will take more disclosure.''

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

COMPANIES & FINANCE THE AMERICAS - Enron tries to see bright side of $1bn levy.
By JULIE EARLE.

10/17/2001
Financial Times (U.K. edition)
(c) 2001 Financial Times Limited . All Rights Reserved

COMPANIES & FINANCE THE AMERICAS - Enron tries to see bright side of $1bn levy - DIVERSIFIED INDUSTRIALS FAILED INVESTMENTS IN TELECOMMUNICATIONS, ENERGY AND WATER TAKE THEIR TOLL.
Enron, the US energy trader, yesterday attempted to reassure the market after it revealed a hefty $1.01bn charge related to its failed investments in telecommunications, retail energy sales and water businesses.
The Houston-based company outlined a recovery plan, including more asset sales, but the charge, along with a weaker-than-expected performance in Europe and no sign of improvement in its broadband division overshadowed any good news.
Some analysts, who had exerted pressure on the company to release detailed financial results, warned of more surprises at an analysts meeting in New York tomorrow.
Moody's Investors Service placed Enron's $13bn of debt securities on review for downgrade. By midday in New York, the company's shares were 17 cents lower at $33, continuing a 60 per cent share slide this year.
Ken Lay, the chairman who is back at the helm after the abrupt resignation of former chief executive Jeff Skilling in August, said he had three main concerns.
Enron remains entangled in the fallout from the California energy crisis, the sale of its troubled Dahol power project in India and the slump in the broadband division, he said.
"Investors have been willing to overlook a lack of clarity with Enron but now with more difficult times, they want to dig a little deeper. Enron should have been doing that all along," said Chris Ellinghause, analyst at Williams Capital Group.
Mr Lay said yesterday that Enron planned to offload other assets after selling its electricity utility Portland General Electric to Northwest Natural Gas for $1.8bn this month.
Mr Lay said that despite the charge, the company had had a strong quarter and the fundamentals remained strong.
"There is some optimism for the fourth quarter and for next year. We have cleaned up some operations and hopefully by doing this, we will get a sharper focus on the company's true strengths and growth to come."
Earlier, Mr Lay revealed a $618m, or 84 cents a share, loss for the quarter, against a profit of $292m, or 34 cents, last time.
The charges included $544m for losses on investments in The New Power Company, broadband and technology investments. The company took a $180m charge to restructure its broadband division and a $287m loss related to Azurix, the water treatment and infrastructure business.
Revenue jumped 60 per cent to $47.6bn.
The company's main profit driver, its wholesale energy division, had strong results in its natural gas and electricity trading, especially in North America.
Asked if Enron intended to report any other charges, Mr Lay said: "If we thought we had other impaired assets they would be on the list today."
(c) Copyright Financial Times Ltd. All rights reserved.
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

OBSERVER - Excuse me - AVENUE OF THE AMERICAS.

10/17/2001
Financial Times (U.K. edition)
(c) 2001 Financial Times Limited . All Rights Reserved

Excuse me?
Ken Lay, chairman of Enron, the US energy group and trader, was in the hot seat yesterday trying to explain a surprise $1bn charge to analysts and the media on the company's third-quarter conference call when a hapless caller offered some light relief.
"Is this the Duke conference call?" the listener asked, interrupting Lay's explanation for a hefty third-quarter loss from failed investments in telecommunications, retail energy sales and water.
(Duke Energy competes head on with the aggressive, Houston-based Enron.)
The conference host moved in swiftly: "You are calling about Duke? This is Enron's third-quarter call", as much laughter ensued.
Then Lay, who has promised to provide analysts with more information about the company, chimed in: "Now if you'd like to ask about Duke, we'll do that too."
Lay's approach was noticeably relaxed - despite the poor result - and unlike that of his predecessor and right-hand man, Jeff Skilling, who quit the company in August but is still fondly remembered for his use of vivid epithets during conference calls.
(c) Copyright Financial Times Ltd. All rights reserved.
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

WORLD STOCK MARKETS - Financials lead Wall Street to modest gains.
By MARY CHUNG.

10/17/2001
Financial Times (U.K. edition)
(c) 2001 Financial Times Limited . All Rights Reserved

US equities reversed their losses and posted modest gains in late trading with financials leading the way.
Stocks bounced in and out of positive territory before making a decisive move higher. The Dow Jones Industrial Average closed up 36.61 at 9,384.23 while the S&P 500 index edged up 7.56 at 1,097.54. The Nasdaq Composite rose 25.76 to 1,722.07. Volume remained low with 1.2bn trades in the NYSE, which traders said accounted for some of the session's exaggerated moves.
Investors combed through a slew of corporate earnings reports and braced for more big-cap results after the close, including statements from tech heavyweights Intel and IBM. Intel was up
2.4 per cent while IBM slipped 0.15 per cent.
"We're kind of hot and heavy in earnings season and the main focus is on results," said Tom Van Leuven, US equity strategist at JP MorganChase. "It's the same trend in lowered expectations and that is translating into lower consensus growth numbers."
Financials showed strength with Bank One up 8 per cent at $32.81 after it reported third-quarter earnings that surpassed expectations.
Shares in Wells Fargo fell 1.4 per cent at $40.19 after reporting a 42 per cent rise in net income, although earnings fell short of analysts' estimates.
Dow components American Express rose 1.3 per cent at $31.30 and Citigroup 2.9 per cent at $46.09. Caterpillar slipped 0.35 per cent at $48.03 after the construction equipment manufacturer reported third-quarter earnings failed to meet Wall Street estimates.
United Technologies brought cheer to investors after the company topped expectations and posted a 14 per cent rise in profits. The company also said it would cut 5,000 jobs. Its shares rose 2 per cent at $54.
Johnson & Johnson was up 2 per cent at $56.77 after the health and consumer products maker posted results that beat estimates.
Energy stocks were broadly higher with Enron, the energy trader, up 2 per cent at $33.84 after reporting quarterly results that met expectations but excluded a $1bn charge.
Wl Paso gained 2 per cent at $52.52 and ChevronTexaco tacked on 0.8 per cent at $89.15.
Leading technology stocks were higher with Microsoft up 0.7 per cent at $58.45 while Cisco Systems gained 4.7 per cent at $16.97.
The morning's economic data were negative. September industrial production fell 1 per cent following August's 0.7 per cent decline.
Toronto closed higher, led by gains in technology and base-metal stocks. The S&P 300 composite index rose 71.99 or 1.03 per cent to end at 7,027.62.
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http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

WORLD STOCK MARKETS - End of Wall St surge leaves techs struggling.
By MARY CHUNG.

10/17/2001
Financial Times (U.K. edition)
(c) 2001 Financial Times Limited . All Rights Reserved

US equities were mixedby midday after an earlyrally evaporated, sending blue chips lower and leaving technology stocks battling to stay in positive territory.
The Dow Jones Industrial Average lost momentum and was down 10.72 at 9,336.90 while the S&P 500 index edged up 0.52 at 1,090.50. The Nasdaq Composite held on to a 7.13 gain at 1,703.44.
Investors combed through a slew of corporate earnings reports and braced for more big-cap results after the close, including statements from tech heavyweights Intel and IBM. Intel was up 1 per cent while IBM slipped 1 per cent.
"We're kind of hot and heavy in earnings season and the main focus is on results," said Tom Van Leuven, US equity strategist at JP MorganChase. "It's the same trend in lowered expectations and that is translating into lower consensus growth numbers."
Caterpillar weighed on the Dow after the construction equipment manufacturer reported third-quarter earnings failed to meet Wall Street estimates. The stock fell 2 per cent at $47.31.
United Technologies brought cheer to investors after the company topped expectations and posted a 14 per cent rise in profits. The company also said it would cut 5,000 jobs. Its shares rose 3 per cent at $54.65.
Johnson & Johnson was up 1.2 per cent at $56.40 after the health and consumer products maker posted results that beat estimates.
Enron, the energy trader, was up 1 per cent at $33.45 after reporting quarterly results that met expectations but excluded a $1bn charge.
Financials were stronger with American Express up 1 per cent at $31.16 and Citigroup 2.2 per cent at $45.81. Wells Fargo gained 0.34 per cent at $40.91 after reporting a 42 per cent rise in net income, although earnings fell short of analysts' estimates.
Bank One rose 6.2 per cent at $32.34 after it reported third-quarter earnings that surpassed expectations.
Leading technology stocks were mixed with Microsoft trading near flat at $58.13 while Cisco Systems gained 1 per cent at $16.38.
The morning's economic data were negative. September industrial production fell 1 per cent following August's 0.7 per cent decline.
Toronto rose in early trading, led higher by a rally for technology stocks. The S&P 300 composite index was up 0.4 per cent at 6,982.80 at midsession.
Top-weighted Nortel Networks gained 11 cents to C$9.31 and Sierra Wireless C$1.55 to C$21.15. Research in Motion added 36 cents at C$27.30.
Banks were hit by negative broker comment. Imperial Bank of Commerce lost 38 cents at C$50.50 and Bank of Nova Scotia 32 cents at C$44.70.
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Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Oct. 16, 2001, 11:32PM
Enron posts loss after write-downs
Core businesses considered solid
Houston Chronicle
By LAURA GOLDBERG
Copyright 2001 Houston Chronicle
Enron Corp. posted a third-quarter loss after taking $1.01 billion in charges aimed at dealing with problems it said distracted investors from focusing on the company's core energy businesses.
With write-offs in its water and broadband businesses and on a retail electricity investment, the energy trader Tuesday reported a loss of $618 million or 84 cents a diluted share. That compares with net income of $292 million, or 34 cents a diluted share, a year ago.
"The underlying earnings from what Enron does well, which in my view is wholesale and retail energy, were solid," said Andre Meade, an analyst with Commerzbank Securities in New York. "The big news item is the significant write-down."
The charges include:
? $287 million to reflect losses on assets to be sold by troubled water and wastewater services unit Azurix.
? $180 million related to downsizing in Enron's broadbroad operations including severance cost and losses on both inventory sales and customer contracts.
? $544 million for investment losses and dismantling a financial vehicle used by Enron for investment projects that was disliked by some on Wall Street.
About half the amount is related to New Power Co., a retail electricity and natural gas provider that is 45 percent owned by Enron.
Enron created New Power and then spun it off. In last year's initial public offering, New Power shares debuted at $21. Tuesday, they closed at $1.90.
Enron also has its own retail energy business that follows a different model.
Other portions of the charge cover losses on investments in broadband and technology ventures.
Meade said the charges call into the question some of the directions Enron has moved in outside of its core energy business.
He added: "It certainly confirmed a lot of the businesses that they went into and were highly touted have destroyed value. That's not good for a company like Enron, which is very innovative."
Excluding the charges, Enron's third-quarter net income increased 35 percent year-over-year to $393 million, or 43 cents a diluted share.
Analysts surveyed by Thomson Financial/First Call expected, on average, Enron to report a profit, before one-time charges, of 43 cents a diluted share.
Ken Lay, Enron's chairman and chief executive, said Enron turned out strong results in its core wholesale and retail energy businesses, as well as its natural gas pipelines.
"As these numbers show, Enron's core energy business fundamentals are excellent," Lay said on a conference call.
Income for its wholesale services division, before interest and taxes, rose 28 percent year-over-year.
Enron also made good on its pledge to give analysts and investors more detailed financial information.
In its earnings release, it broke down performances in its core wholesale division by segment. For example, it included lines with details about its coal, metals and other specific commodities.
Enron promised more financial data as it worked to restore investor confidence lost after CEO Jeff Skilling unexpectedly resigned in August, citing personal reasons.
"It's definitely an improvement. I was happy with that," Meade said of the information Enron provided. But he would have liked even more detail.
Shares in Enron closed up 67 cents Tuesday, at $33.84.
Wall Street was looking for Enron to clean house this quarter and expected write-offs of $2 billion to $3 billion, said Carol Coale, an analyst with Prudential Securities in Houston.
"They spruced up the house, but they didn't actually clean out all the cobwebs," she said, adding that she suspects further write-downs may follow.
Enron did note three areas still facing uncertainty: ongoing disputes over its India power plant project, its broadband business and money owed for power sold in California.
Coale said she is concerned about further hits to Enron's balance sheet that could lower its credit rating, which is currently of investment-grade quality. But she also said pending assets sales may reduce or eliminate any balance sheet problems, she said.
Three separate deals to sell international assets for almost $900 million are slated to close this year. And earlier this month, Enron announced a deal to sell power utility Portland General Electric for almost $1.9 billion, which includes $1.55 billion in cash. The buyer is also to assume about $1.1 billion in debt.
Other asset sales are in the works.
Enron stressed it's committed to keeping its investment-grade rating. After Enron's earnings were released, Standard & Poor's affirmed its ratings for Enron, while Fitch also said it expects no change in its credit ratings.
However, Moody's Investors Service put all Enron's long-term debt obligations on review for potential downgrade. Moody's did say the Portland General sale "will go a long way to help restore Enron's balance sheet," but noted it still requires regulatory approval and is likely to take up to a year to complete.

MARK TO MARKET: A Defiant Spring In Their Steps
By Jim Murphy

10/17/2001
Capital Markets Report
(Copyright (c) 2001, Dow Jones & Company, Inc.)

A Dow Jones Newswires Column

NEW YORK -(Dow Jones)- Insouciance is the word I'm looking for.
Of late, Wall Street seems insouciant, intent on keeping the sunny side up, maintaining its cheer in the face of bad news.
Tuesday, on the earnings front, there was plenty of bad news - before stock markets opened, while they were open and after they closed.
For example, more than two hours before the NYSE opened, Enron Corp. reported its largest quarterly loss ever. But its shares closed with a gain of 67 cents.
On the other hand, Enron shares dropped 7% on Monday, which again raises a question never far from the minds of those who follow Wall Street: What did whoever know and when did they know it? Which is the interrogatory form of "Some pigs are more equal than others."
After the bell Tuesday, IBM reported that third-quarter earnings fell 19% on a 6% decline in sales. No matter. In after-hours trading, in less than two hours after the news, IBM shares had gained almost $4.00 each.
All the major stock indexes closed higher Tuesday, with one of the most inclusive of all, the Russell 2000, rising 1.03%.
Corporate earnings releases Wednesday will be even heavier than on Tuesday. Many of them will contain bad news. Until, however, we see evidence indicating otherwise, bet on Wall Street again to respond with insouciance.
Not incidentally, economists, analysts, and the financial media all are alike in how we handle a stock's response to bad news. To wit and for example: "Enron shares shrugged off an abysmal earnings report Tuesday to post a modest gain of 67 cents each..." or, "Enron shares were toiletized Tuesday after the company reported its greatest quarterly loss ever..."
In fact, in both cases, we know only that B followed A. We don't know, and never can know, the relationship between event A and event B. Whatever the relationship(s), it isn't obvious, nor can it be obtained by interviewing oneself.
Big Al, Plus Two Nominees To His Committee

Everyone is waiting for Uncle Al, the markets' pal, to testify on Capitol Hill at 10 a.m. EDT (1400 GMT).
Fed chairman Greenspan will then tell the Joint Economic Committee of Congress all he deems it appropriate for the public to hear on monetary policy and the U.S. economy, post-Sept. 11.
Meantime, professional Fed watchers, who are far fewer in number than amateur Greenspan watchers, will be paying close attention, beginning at 9:30 a.m. EDT (1330 GMT), to a session of the Senate Banking Committee.
The panel is holding confirmation hearings for the first two of President George W. Bush's nominations for Federal Reserve Governor. Fed governors are voting members of the rate-setting FOMC.
Are these two people, both with backgrounds in commercial banking, interest-rate hawks or doves or somewhere in between? That is to say: Are they or are they not preemptive inflation fighters?
One of the two, Susan Bies, is executive vice president of First Tennessee National Corp.
The other, Mark Olson, was once the chief executive of a bank in Fergus Falls, Minn., which I would guess is a hometown bank. In 1986-87, Olson was president of the American Bankers Association.
He was also, get this, a staff member of the Senate Banking Committee, which, by golly, is the committee holding the confirmation hearings. Of course, we have no way of knowing whether familiarity bred contempt. Whether, for example, Olson became notorious among staffers for not making a fresh pot of coffee after he helped himself to the last cup in the old pot.
Both Bies and Olson must be confirmed by the full Senate.
Fifth Third

The name is bizarre, but the explanation is pedestrian.
Early in the previous century, Fifth Bank and Third Bank merged to become Fifth Third Bank.
Perhaps the CEOs at the time both had tin ears. Or perhaps each wanted the name of his bank to survive the marriage.
Thanks for the answer to Todd, Brian, David and David.
In Tuesday afternoon's column, I wondered about the genesis of a whacky name like Fifth Third Bancorp.
And, as Brian notes, "God help us all if they merge with Second National Bank and then Fourth National Bank."
OPERATOR: "Second Third Fourth Fifth Bancorp. Can I hep yew?"
(Jim Murphy can be reached at (201) 938-2145 or Jim.Murphy@DowJones.Com)

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

LEX COLUMN - Enron LEX COLUMN.

10/17/2001
Financial Times (U.K. edition)
(c) 2001 Financial Times Limited . All Rights Reserved

Enron
Enron has entered a new phase in its development: rebuilding credibility. Concerns about California, India etc have not gone away, but efforts to improve transparency in its financial reporting constitute a real improvement. The momentum of the core wholesale energy trading and marketing business is undiminished and recurring net income growth of 35 per cent, before charges, is impressive. But short-term distractions do not make it easy to focus on the long-term growth story.
Attention to the balance sheet is welcome - but the charges are not insubstantial. The charge for asset impairments at Azurix is hardly surprising given the state of the business. The $180m for restructuring Broadband Services comes on top of another $80m of losses in the quarter. Cutting broadband down to a sensible size is proving expensive. The $544m for losses associated with "certain other investments" (half relating to New Power) is not the end of the story, not least because broadband investments are still valued at some $600m. Still, asset sales should reduce debt from 50 per cent of total capital at the end of this year to a more comfortable 40 per cent at the end of 2002.
Enron's ventures outside energy trading have not been roaring successes. The long-term potential lies in convincing investors that the earnings growth in the core business is real and sustainable. The multiple of 16 times 2002 earnings still suggests that the market is not giving Enron full credit for the prospect of 20 per cent annual earnings growth next year and beyond. Given the noise, that is unsurprising.
(c) Copyright Financial Times Ltd. All rights reserved.
http://www.ft.com.

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Financial
Internet Tax Ban Extended

10/17/2001
The Washington Post
FINAL
E02
Copyright 2001, The Washington Post Co. All Rights Reserved

EARNINGS
Bank One reported its strongest quarterly results since pulling out of a deep slump this year, posting a 30 percent increase in profits as aggressive cost cutting continued to pay off. Net earnings for the third quarter were $754 million, up from $581 million a year earlier.
Cargill of Wayzata, Minn., the largest U.S. agricultural company, said its fiscal first-quarter profit rose to $288 million, from $172 million in the year-earlier period.
Caterpillar, the largest maker of earth-moving equipment, said third-quarter earnings fell 5.1 percent, to $205 million.
Duke Energy, the nation's largest utility company, said third-quarter net income rose to $796 million, from $770 million a year earlier. Revenue rose 6.6 percent, to $16.7 billion.
Enron, the nation's largest energy trader, reported a $638 million third-quarter loss, citing $1.01 billion in one-time charges. In the third quarter of 2000, Enron earned $292 million. The write-offs included $544 million in investment losses, $287 million for asset impairment and $180 million to restructure its high-speed Internet venture.
IBM said third-quarter profit fell 19 percent as orders for corporate servers and semiconductors declined. Net income dropped to $1.60 billion, from $1.96 billion in the year-earlier period, the company said in a statement. Sales were lower than expected, falling 6.2 percent, to $20.4 billion from $21.8 billion.
Johnson & Johnson said third-quarter profit rose 17.8 percent, to $1.5 billion. The maker of health-care products said worldwide sales climbed 10.8 percent, to $8.2 billion.
Knight Ridder's profit plunged 27 percent in the third quarter as the Sept. 11 attacks led to a steep drop-off in newspaper advertising and higher costs associated with increasing news coverage. The nation's second-largest newspaper publisher reported net income of $55.7 million for the three-month period ended Sept. 30, compared with $76.1 million in the same period a year ago.
Charles Schwab posted earnings of $81 million in the third quarter, a 51 percent drop from a year earlier, as the four-day market shutdown after Sept. 11 and a decline in trading sliced commissions at the discount broker.
Wells Fargo, the fifth-largest U.S. bank, said third-quarter profit rose 42 percent, to $1.16 billion, from $816 million for the same period a year ago.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers

http://www.washingtonpost.com
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Report on Business: The Wall Street Journal
What's News
United States
Wall Street Journal

10/17/2001
The Globe and Mail
Metro
B10
"All material Copyright (c) Bell Globemedia Publishing Inc. and its licensors. All rights reserved."

Enron Corp. surprised investors yesterday with a $1.01-billion (U.S.) after-tax charge mostly connected with writedowns of impaired assets and soured investments, producing a $618-million third-quarter loss, its worst quarter ever. The loss highlights the risks the onetime high flier has taken in transforming from a pipeline company into a behemoth that trades everything from electricity to weather futures. In all, Enron posted a third-quarter loss of 84 cents a share, compared with a gain of 34 cents a share in the year-earlier period.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron Corp. Reiterated `Strong Buy' at First Albany
2001-10-17 07:32 (New York)

     Princeton, New Jersey, Oct. 17 (Bloomberg Data) -- Enron Corp. (ENE US)
was reiterated ``strong buy'' by analyst Robert L. Christensen Jr at First
Albany Corp.  The price target is $80.00 per share.

Brazil Energy Rules Deter Investment as Shortages Choke Economy
2001-10-17 08:10 (New York)

Brazil Energy Rules Deter Investment as Shortages Choke Economy

     Sao Paulo, Oct. 17 (Bloomberg) -- Enron Corp. built a 400
million-reais ($145 million) electricity plant in Brazil expecting
to sell power to factories that face their biggest energy shortage
in more than 50 years.

     It didn't work out. Government subsidies on existing power-
supply contracts led companies to cut output as much as 20 percent
rather than seek alternative supplies. The Enron plant, fired up
for an opening ceremony Sept. 24, lies idle.

     ``We need prices that reflect the cost of generating
energy,'' said Orlando Gonzalez, president of Enron America do Sul
Ltda., the Brazilian unit of the largest energy trader.

     The obstacles faced by Enron and other utilities mean
Brazil's power industry is unlikely to get the estimated $3.6
billion annual investment it needs to meet growing energy demand.
The country needs to add 6,000 megawatts of capacity every year to
avoid rationing that has forced companies such as Alcoa Inc., an
aluminum maker, to cut energy use 20 percent since June.

     Brazil's energy policy ``is bad because it doesn't create
incentives for companies to build plants,'' said Eduardo Bernini,
president of the Brazilian unit of Electricidade de Portugal SA,
Portugal's biggest power company.

     The energy shortage, the result of inadequate investment in
new power plants combined with a drought that has reduced
hydroelectric output, caused the government to ration supplies to
companies and also to about two-thirds of Brazil's 170 million
population. This, combined with higher interest rates and a
currency that has lost almost a third of its value against the
dollar this year, will cut 2001 economic growth to about 1.6
percent from the 4.5 percent forecast in January, according to
economists' estimates.

                           El Paso Plant

     Enron isn't alone in being unable to sell its power.

     Houston-based El Paso Corp., the largest U.S. natural gas
pipeline owner, may have to idle a 870-megawatt thermoelectric
plant in Macae, Rio de Janeiro state, when it opens Nov. 7. El
Paso, which spent $500 million on the plant, says it has no buyers
for the electricity.

     Some investment already has been delayed. Enron couldn't
raise $600 million in loans to build a second gas-fired plant near
Rio de Janeiro, Gonzalez said. AES Corp., a U.S. power producer
with business in 27 countries, has failed to obtain $1.5 billion
in financing for three gas-fired plants the company plans to build
in Brazil, said Luiz David Travesso, president of the utility's
Brazilian unit.

     Brazilian companies buy most of their energy through long-
term contracts with former state-owned generators and distributors
at prices that are subsidized by the government. On average, they
pay about 40 percent less than it costs to produce energy, said
Electricidade de Portugal's Bernini.

                         Subsidies at Risk

     If companies enter additional long-term contracts to acquire
electricity they lose the subsidies on their existing contracts,
with the result that the cost of all their energy purchases rise.

     Brazil's spot electricity market, created two years ago to
enable manufacturers to cover additional energy needs without
signing long-term contracts, doesn't provide an alternative, said
Enron's Gonzalez.

     Enron abandoned plans to sell energy from its new plant
through the spot market because there were no guarantees it would
be paid, he said.

     The ``market isn't clearing trading, so you don't receive
money,'' said Gonzalez. ``We cannot run the plant without cash.''

     Some companies that sold electricity through the market
haven't paid. Tradener Comercializacao de Energia, controlled by
Cia. Paranaense de Energia, Brazil's second-biggest integrated
utility, has been waiting since April to receive 96 million reais
from energy sales, said Walfrido Victorino Avila, chief executive
of the electricity trading company.

                            Unpaid Bill

     Centrais Eletricas Brasileiras SA, the country's largest
power generator, hasn't paid for electricity purchased through the
spot market last year. A spokesman at the company, which needed
the electricity to cover contracts after construction of its Angra
2 nuclear plant was delayed, said the account will be settled.

     From the consumers' point of view, prices on the spot market
are prohibitively high, said analysts. Prices are established by a
formula that takes into account water levels in reservoirs of
hydroelectric plants, which represent 84 percent of Brazil's
generating capacity. Lower water levels mean higher prices for
electricity on the spot market.

     A drought, which has reduced water levels to the lowest in
nearly 70 years, has caused the market price to soar to three
times what companies pay under long-term contracts, said Marcos
Severine, a power utility analyst at Banco Sudameris SA's
brokerage in Sao Paulo.

     Brazil's government has appointed new management to sort out
the spot market's problems. It has also set up a committee led by
Francisco Gros, president of Brazil's National Development Bank,
to draw up rules to encourage investment in new generating
capacity.

     Utilities are optimistic solutions will be found.
     ``We believe the government is working toward solving the
energy problems Brazil is facing at the moment,'' said Enron's
Gonzalez.

     In the meantime, generators that may help relieve Brazil's
energy crisis stand idle.

Former Montana governor named U.S. envoy in lumber dispute
By CHRISTOPHER THORNE
Associated Press Writer

10/16/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

WASHINGTON (AP) - President Bush named former Montana Gov. Marc Racicot on Tuesday as a special envoy to try to broker a settlement in a long-running lumber dispute with Canada.
U.S. Trade Representative Robert Zoellick and Commerce Secretary Donald Evans cited Racicot's familiarity with the timber industry and public forests as reasons for his appointment.
"This dispute has endured for decades, and it is our hope that, with the governor's help, we can achieve a lasting market-based solution," Evans said.
Racicot said in a statement that he was honored and "committed to identifying a fair and lasting solution."
The appointment comes at a critical time in the slow-moving negotiations with Canada. In two weeks, the Commerce Department is expected to announce its decision on whether Canadian companies "dump" softwood lumber on U.S. markets at artificially low prices.
In a preliminary decision issued in August, the department said too-low Canadian fees give Canada's lumber industry an unfair advantage and suggested a 19 percent tariff on Canadian lumber.
Softwood lumber is used in framing houses. The U.S. homebuilding industry has said a 19 percent tariff would hurt American consumers by adding up to $1,000 to the cost of building a home, but the U.S. lumber industry says the levy is needed to save jobs.
Trade representatives have met in long, private sessions in Washington and Ottawa in the last six weeks without agreement.
Rodney Moore, a spokesman for the Canadian Embassy, welcomed Racicot's appointment. "It indicates to us the high level of importance that the Bush administration places on the softwood lumber trade," he said.
Racicot, a Republican, was barred by term limits from seeking a third term as Montana's governor last year. He gained national attention as a spokesman for Bush during the recount in Florida and was considered for attorney general but took himself out of the running.
He also was discussed as a potential opponent to Sen. Max Baucus, D-Mont., who is up for re-election in 2002, but said in February he would not run for office again.
Racicot (pronounced RAHS'-koh) works as a partner in the Washington office of Bracewell & Patterson, a Texas law firm that counts the huge energy company Enron among its clients.
---
On the Net: U.S. International Trade Commission: http://www.usitc.gov/
Department of Commerce: http://www.doc.gov/

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron reports third-quarter loss due to investment writeoff

10/16/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

HOUSTON (AP) - Enron Corp., the nation's top natural gas trader and the leading wholesale electricity marketer, reported a $638 million third-quarter loss Tuesday due to a onetime charge.
The loss for the July-September period amounted to 84 cents per share.
Without the charge, Enron would have posted a profit of $393 million, or 43 cents per share. That matched the consensus forecast of analysts surveyed by Thomson Financial/First Call.
In the third quarter of 2000, Enron earned $292 million, or 34 cents per share.
Revenue rose to $47.6 billion from $30 billion in the same period a year ago.
Enron wrote off $1.01 billion in after-tax non-recurring expenses in the quarter. The writeoffs included $544 million in investment losses, primarily on its New Power Company, broadband and technology investments; $287 million for asset impairments by its Azurix Corp. division, which owns, operates and manages water and wastewater systems; and $180 million to restructure its high-speed Internet venture.
"After a thorough review of our businesses, we have decided to take these charges to clear away issues that have clouded the performance and earnings potential of our core energy businesses," said Kenneth L. Lay, Enron's chairman and chief executive officer.
In August, president and chief executive Jeffrey Skilling unexpectly resigned, citing family reasons, and his duties were taken over by Lay. Enron's stock had tumbled to a 52-week low as company proclamations that it remains on solid footing were met with skepticism on Wall Street.
Lay said Tuesday earnings from its ongoing energy and gas pipeline businesses were strong.
"The continued excellent prospects in these businesses and Enron's leading market position make us very confident in our strong earnings outlook," he said.
For the first nine months of the year, Enron earned $211 million, or 19 cents a share, down from $919 million, or $1.07 a share, a year ago. Revenue for the nine months climbed to $139.6 billion from $60.4 billion a year ago.
In trading Tuesday on the New York Stock Exchange, Enron shares rose 67 cents to $33.84.
---
On the Net:
Enron site: http://www.enron.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron long-term debt ratings on review for possible downgrade - Moody's

10/16/2001
AFX News
(c) 2001 by AFP-Extel News Ltd

NEW YORK (AFX) - Moody's Investors Service said it placed all the long-term debt obligations of Enron Corp on review for downgrade following the announcement by the company of significant write-downs and charges, reflecting substantially reduced valuations in several of its businesses.
These actions affect Enron's broadband operations, its merchant portfolio and the Azurix water company holdings.
In a statement, Moody's, however, has confirmed the company's Prime-2 rating for commercial paper.
The ratings agency has previously commented on the challenges impacting a number of Enron's businesses but the magnitude of the announced charges will reduce the company's equity base and increase nominal financial leverage to somewhat over 50.0 pct while materially impacting earnings.
In its review, Moody's will focus on Enron's strategic direction and in particular on the earnings and cash flow outlook for its core gas and power wholesale businesses.
gc For more information and to contact AFX: www.afxnews.com and www.afxpress.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Business
Enron - Chmn. & CEO
Rhonda Schaffler

10/16/2001
CNNfn: Market Coverage - Morning
(c) Copyright Federal Document Clearing House. All Rights Reserved.

RHONDA SCHAFFLER, CNNfn ANCHOR, MARKET CALL: Enron (URL: http://.www.enron.com/) out with its third-quarter results this morning. The energy trader earning 43 cents a share, that takes out items. It was in-line with estimates. And 9 cents better than a year ago. Enron expects to earn 45 cents per share in Q4, that`s slightly below Wall Street`s forecast. It says earnings for this year and next per share earnings are on track to beat expectations. Shares of Enron have fallen from the highs in the 80s, bouncing off a low of 24, trading around the 30s. Joining us from Houston, Texas, to talk about the latest quarter and what`s next, Kenneth Lay, chairman and CEO at Enron.
Thanks for joining us. Good to have you back on CNNfn.
KENNETH LAY, CHMN. & CEO, ENRON: It`s nice to be on CNNfn, thank you.
SCHAFFLER: I guess we should ask for an explanation first because there were some charges in this earnings report that Wall Street`s still trying to get a handle on. Explain to us why the charges were made and how that`s impacting most importantly, fourth quarter.
LAY: Well, first of all, as to the charges, they related primarily to the Zurich`s water business, our broadband business, and the new power company where we have investments and assets and those businesses. And we try to clean all those up in this quarter since they seemed to be providing quite a bit of distraction to the real quality and strong growth of our core businesses.
SCHAFFLER: And let`s talk about the core businesses going forward, because for so long we talked about the broadband component of the business. What`s key now? what`s most important? what`s driving future growth?
LAY: Well, primarily our wholesale business, which is growing very strong, in this most recent quarter, our physical volume deliveries in our wholesale business was up about 65 percent. Our earnings were up about 35 percent. Strong growth in our retail business we`re - in fact, we`re the only company providing nationwide energy services. And again, that had a strong quarter also, adding about 12,000 new customers. We currently have about 40,000 facilities where we manage the energy activity for these customers and about 4 billion square feet of space. And then, of course, finally, our pipeline group, which is always just really strong and can get cash flow and earnings.
SCHAFFLER: You have not held your position for that long. There has been a change at Enron that occurred over the summer. What`s been the toughest challenge for you as you sit down and try to figure out which way the company`s heading next?
LAY: Well, Rhonda, as you know, I held this position for over 15 years before Jeff Skilling became CEO in February this year. So I`m basically just kind of reassuming that position when Jeff decided he had to leave for personal and family reasons. So I really have not been out of this chair very long. But I think the main thing is just to continue to grow these very solid, core businesses which in the third quarter this year provided about 35 percent increase in net income, to about $400 million and about 26 percent increase in earnings per share. And you`re right, I mean, we reconfirmed our earnings for 19 - or 2001 at $1.80, which is what the Street expects, and 2.15 for next year. So it will be one more year of about 20 percent growth in earnings per share. And we`ve been doing that for the last three or four years.
SCHAFFLER: It`s decent growth, especially at a time when the economy, the experts tell us, is in recession, any worries on your part?
LAY: Not really, I`d like to see a stronger economy. And certainly I believe the fiscal stimulus package you just discussed on your program is part of that. But by the same token, we find that we could continue to perform at very strong rates even in this somewhat slower economy that we experience right now.
SCHAFFLER: And very quickly, because we`re almost out of time, any prediction on the energy markets going forward, it is a tough business when we talk about commodities?
LAY: Well, I think they`ll probably continue to be volatile, just like they have been. Certainly the winter weather will determine in large part what happens to natural gas prices here over the next couple of months. Beyond that, of course, we`ve got a very soft economy worldwide, which is really impacting the oil markets. So I expect it will remain a little sluggish for a while unless we have a major supply interruption.
SCHAFFLER: Kenneth Lay, chairman and CEO at Enron, great to have you back on, good to see you again.
LAY: Thank you, Rhonda.
SCHAFFLER: Congrats on the quarter.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Business
Enron CEO - Interview
Neil Cavuto

10/16/2001
Fox News: Your World
(c) Copyright Federal Document Clearing House. All Rights Reserved.

NEIL CAVUTO, HOST: Tell me what you think is wrong with this picture: Bombs dropping, oil prices dropping. The oil prices dropping part is the strange thing. True enough, but in case you`re thinking things stay that way, the chairman of energy giant Enron (URL: http://.www.enron.com/) has a warning for you: Don`t necessarily count on it.
I caught up with Kenneth Lay earlier today and got his take on where we go from here.
(BEGIN VIDEOTAPE)
KENNETH LAY, CHAIRMAN & CEO, ENRON: Well, I think what`s primarily happening there, of course, is the economy. I mean, the economy worldwide -- the worldwide economy is so weak that we`re seeing demand off quite a bit, and of course, in the U.S. you`re seeing a lot less travel by, probably the U.S. and elsewhere, but a lot less travel.
So I think unless you have an interruption or a major curtailment by the OPEC producers oil prices could stay kind of soft for a while.
CAVUTO: So you don`t see that curtailment happening, or even, for example, something more orchestrated, like a production cut?
LAY: No, I think that could happen, but I think it would take something like that to turn it around just because of the demand situation.
CAVUTO: Do you find it, though, surprising, before we get to your earnings, that this is happening as bombs are falling over there? Normally just the opposite occurs.
LAY: Yeah, but the bombs thus far are not calling where the oil is. Now, that would change it enormously if the bombs started falling somewhere close to some major production.
CAVUTO: All right. Let`s talk a little bit about, you know, you beat Street estimates, some of these numbers. You managed a rebound in your stock from where we were when Jeff Skilling left. But there are a lot of concerns out there as to whether you ever revisit those heady days of 84, 85 dollars a share. What say you?
LAY: Well, I think we will, but it`ll take a little bit of time. I mean, I think, at the same token that we may not see 80 to 90 dollar prices for a while, I think by most valuation techniques, why, we`re certainly still worth a lot more than 33, 34 dollars when we have the kind of strong earnings growth we`ve been demonstrating in our core businesses
CAVUTO: Does it bug you, Ken, that no one makes a big deal of it when your stock is in the dumper, but everyone was coming after you and demanding energy roll-backs and that sort of thing when you were sky-high?
LAY: That`s true. Of course, I guess you`re speaking primarily on the California situation.
CAVUTO: Right.
LAY: And certainly, our shareholders -- and Enron, too -- would have been a lot better off had the California situation never occurred. And we did our best to try to help them solve that problem, but at least back in the early days of the problem, why, there didn`t seem much interest in trying to solve it. They just wanted to find somebody to blame it on.
CAVUTO: You know, a lot of the power trading activity in this country was cut off right after the September 11th attacks. I don`t remember, in the case of Enron, for how long. But can you update us on that?
LAY: Well, as a matter of fact, we did close down early on September 11th, but our people were back working the next morning at 7 o`clock. I think, that first day, we only stayed in business or at least kept Enron online and in business for about half a day, but by the day after that, we were back into full business. And so we -- we`ve really had very little interruption because of September the 11th.
CAVUTO: Now, I know you`re very close to the Bush administration and to the President Bush himself, and the president, of course, is trying to sell the American people on the notion that this could be a multi-year effort. Is the corporate community on board with that?
LAY: Oh, I think we are. I think right now virtually all Americans are on board for that. And I think the main reason is that we understand the alternative. I mean, we just cannot continue to live in fear of these terrorist attacks.
CAVUTO: But do you worry that as a major oil player yourself that the boomerang, at least from the Middle East, is on you guys, that you look to be in the hip pocket of the administration, so bash those guys, penalize those guys, make life difficult for those guys?
LAY: There may be some of that, but certainly we don`t see that having any -- any adverse impact on our businesses, and as you know, Neil, we`re much, much larger in natural gas and electricity in Europe and North America than we are oil out of the Middle East.
CAVUTO: And we should stress that with the 6 percent increase in natural gas bonds, a 77 percent surge in power lines, this is a very different story.
Having said that, though, the recession word is constantly banded about. It`s something that stays with us a while. What do you say?
LAY: I -- I think we`ll come out of it next year. I can`t say if it`s going to be the second quarter or their quarter or maybe even fourth quarter, although I`d probably pick one of the earlier quarters versus the later quarters.
But again, we -- we`ve shown, this most recent quarter, where the economy was very soft, gas and electricity prices were pretty low, that, in fact, we can still make very good money even in a slow economy.
CAVUTO: All right. Now, when Jeff Skilling left after only six months on the job as your president and CEO, your (UNINTELLIGIBLE) successor, they brought you back. As I was joking before we came on here, bring back Yoda. But there`s a concern that there isn`t much depth after you, Ken. I don`t mean to besmirch your lieutenants. But there is a concern that after you it is slim pickings. How can you assure Wall Street that`s not the case?
LAY: Well, it`s really quite the contrary. I will say, Neil, that I have the strongest management team now than I`ve ever had at Enron, and I`ve had some pretty strong teams, as you know. Going back over 15 years, I`ve never had the bench strength or depth that I have right now.
(END VIDEOTAPE)
CAVUTO: All right. Kenneth Lay of Enron.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Business
Enron Corp. CHMN. & CEO - Interview
Bob Pisanti (?)

10/16/2001
CNBC/Dow Jones Business Video
(c) Copyright Federal Document Clearing House. All Rights Reserved.

BOB PISANTI, CNBC ANCHOR, MARKET WATCH: Lets take a look at shares of energy trader Enron. They were trading lower the last I checked. Let`s see what it is. Yes, off $0.18. But you could see it was higher early going but then sold off at $32.91 now. Profits for the third quarter came in before the bell, $0.43 a share. That was in line with estimates. As of this morning, there were 18 analysts covering it. Thirteen say it`s a "strong buy," three a "moderate buy," two a "hold." Nobody is selling it.
And joining us now from his company headquarters in Houston is Kenneth Lay. He`s Chairman and CEO of Enron. Good morning, sir.
KENNETH LAY, CHAIRMAN & CEO, ENRON CORP.: Good morning, Bob.
PISANTI: Tell me what your feel is on the numbers. You sold off a little bit today and there is also something I want that get to regarding, from Moody`s. But what`s your feel of the lay of the land, if you will?
LAY: Well, first of all, we had a very strong third quarter. Our overall net income was up about 35 percent, so just a little bit less than $400 million after tax. Our earnings per share were up about 26 percent. Of course right on the Street`s expectations. We had very strong growth in volumes, about 65 percent. Our retail business showed a very strong quarter with income before interest and taxes up about three and a half fold. So we had a good strong quarter. Now, we did take some write-offs to kind of clean up some balance sheet items and I am sure that that`s being evaluated. But overall we`re very pleased with it, particularly given the current economy.
KPISANTI: Tell me about, for folks that aren`t familiar with it, you trade energy, explain how that works.
LAY: Well, basically we buy and sell energy but it`s even more than that, Bob. We buy and sell natural gas and electricity primarily, but we also arrange physical delivery of the product. So it`s not just a matter of making markets in the commodity, but it`s also delivering the commodity to the wholesale or retail customer. And, of course, we also provide risk management services. We provide long term contracts. We have a lot of structured financings that we provide for our customers. So it`s really kind of a whole portfolio of services, energy services and financial services, that we provide for our customers.
PISANTI: Your stock has been higher over the past 12 months. It is trading closer to its lows. Is there a reflection there as far as what has gone on with the California market?
LAY: Well, I think the California market and all of the noise or publicity that came out of that certainly didn`t help us at all. Probably also broadband. We have a fairly significant broad -- we had a fairly significant broadband activity where we had a lot of value in the stock was attributed to that. And I think you and everybody else knows what`s happened to the broadband business this year. But certainly all the negative comments out in California didn`t help us. Now that problem is beginning to work itself out and, indeed, we think it will work itself out over the next few months.
PISANTI: Now Moody`s this morning is placing your long term debt obligations on review for downgrade. They`re concerned about a number of things. Without going into a great deal of detail, I think they are basically concerned, number one, the exposure to the California energy market, as well as some of the areas where maybe it`s not as energy focused and you`re getting into some areas maybe it`s not your expertise. What`s your response to them?
LAY: well, I think first of all, as far as California, we think we`re more than adequately reserved for California. As I said, the regulatory decisions out in California as well as Washington are beginning to kind of solve that problem. So I think that problem will be resolved fairly soon. Now, let me say Moody`s did, in fact, put us on review, but also Standard & Poor`s and Fitch did not. They`ve maintained the credit ratings right where they are and said stable outlook. So you have some disagreement here among the rating agencies. But I think even the Moody`s pointed out that with the closing of our Portland General transaction, our balance sheet will be back even in stronger shape than it is, or was before the write-offs.
PISANTI: How does the next year look for you, sir?
LAY: Next year looks good. We did reconfirm in our earnings release this morning that we expect to hit the fourth quarter numbers that we have been projecting and $1.80 for this year and $2.15 next year. So, again, about another 20 percent growth in earnings per share for next year.
PISANTI: well, good luck to you, sir.
LAY: Thank you very much.
PISANTI : Thanks for being with us. This is Ken Lay. He`s Chairman and CEO of Enron.
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.


I'm thinking about seeing them tomorrow - lettin' em chill.

I'm going to try to make the Thursday 4:00PM appointment.


Tana,

Aether Systems have asked that we review and sign copies of their NDA.  See
instructions below.   Please can you make sure this is forwarded to the
appropriate individuals.

Thanks

-Teresa
---------------------- Forwarded by Teresa Smith/Corp/Enron on 06/29/2000
09:47 AM ---------------------------

Ron Sullivan <rsullivan@aethersystems.com> on 06/28/2000 05:30:08 PM
To: "'teresa.smith@enron.com'" <teresa.smith@enron.com>
cc: Joseph Gatto <jgatto@aethersystems.com>, "'makantor@aethersoftware.com'"
<makantor@aethersoftware.com>

Subject: Enron MOU

Hello Teresa:

Pursuant to our recent conversations, attached please find a Memorandum of
Understanding.  The MOU includes the list of questions upon which Aether
would like clarification.  I am also including a copy of our Standard
Non-disclosure Agreement.  Please have a look at both and let me know what
you think.  Please note that the MOU lists Louise Kitchen as a cc'd party.
I did not cc her myself.  I will leave that to you.

As for the NDA, can you please have 2 copies signed by the appropriate
parties and mail them to the attention of:

David Buehler
General Counsel
Aether Systems, Inc.
11460 Cronridge Drive
Owings Mills, Maryland 21117
410-654-6400

We will execute both and return one signed copy to you.

Lets try and talk late tomorrow.  I can be reached at the number below, but
I will be working a Trade Show most of the day, so please leave a message if
you don't get me.  Otherwise, I will try you after the show breaks around
4:00PM ET.

Thank you.

Ron
 <<MOU 6.28.00.doc>>   <<NDA.draftdoc.doc>>
Ron Sullivan - Regional Sales Manager
Aether Systems, Inc. (AETH)
Phone:  443-621-5391
Fax: 301 9511731
Email: rsullivan@aethersystems.com
Pager: ronsullivan@bellsouthips.com

 - MOU 6.28.00.doc
 - NDA.draftdoc.doc


Did you make it to work ok this morning?  I am extremely because somebody
kept me up late last night. Not that I am complaining.  Probably not going to
do some of my finest work today.

Seriously, I had a great time last night.

Gerald


Good email Kate.
Nice work. Way to get after "it"!

B

 -----Original Message-----
From: 	Symes, Kate
Sent:	Tuesday, September 04, 2001 6:24 PM
To:	Reyes, Jim; Cavanaugh, Darren
Cc:	Williams III, Bill
Subject:	FW: iso revenue/expenses true up for August 01'

Jim & Darren -

It looks as though the only ISO true-up information Risk received was regarding our July variance of $86,743. This does not take into account the August variances totalling approx. $42,000 in revenue we did not receive throughout the month. Fran has informed me that as soon as she has this information she can account for the credit to the Short Term West Hourly book; but as you can see by the attached e-mail, Risk has only accounted for July variances, not August, in this PMA.

I did go over the Month End Variance report Jim gave me, and I have some questions about the totals listed in it - in particular having to do with charges 253, 405, 111, and 112. Let me know when one or both of you has a moment and I think we can clear this up.

Again, I think the only variances we still have out there for the WHOURLY book are the four that occurred in August, which are as follows:

8/11 - $990
8/16 - $37,787.25
8/18 - ($6,764.68)
8/22 - $9.495.25

As long as we're all aware of the ISO charges and revenue still unaccounted for - and know they will be in the future - I think we can all sleep soundly. Let me know if you have any questions on this.

Thanks,
Kate

 -----Original Message-----
From: 	Chang, Fran
Sent:	Tuesday, September 04, 2001 5:02 PM
To:	Symes, Kate
Cc:	Williams III, Bill; Reyes, Jim; Cavanaugh, Darren; Postlethwaite, John
Subject:	iso revenue/expenses true up for August 01'

Kate:

Per your request I have double checked Risk's daily record on ISO revenue/expenses for WHOURLY book in August and everything checked out.  Here is the result:

Daily ISO revenue/expenses total (8/1-8/31)	+$629,709 (you can also get this number by adding up the ISO report Risk 							distributed to you every morning along with your P&L )
July ISO true up					+$86,743
=>					total	+$716,452
Month-end August ISO revenue/expenses 	+$716,481 (we got this total from Volume Mgmt)
Variance (i.e. true-up)				+$29

I have communicated this with Volume Management with the above results.  Jim advised that they might have added some items "after fact" during August but those changes were neither included in the daily ISO flash Risk got nor included in the month-end flash, and that's probably why you are expecting more than what Risk gave you.  Jim and Darren will be looking into their records in order to check out with you.

Please let me know if you have any questions.

Thanks,
Fran


Kris,

Please forward this to the appropriate person.

We are buying gas from Duke at the Trevino Plant on Gulf Energy (Tejas)
Pipeline.  This is a purchase that we obtained with the CES deal.  Duke
(Laura Bates) has called, saying that they have not received payment in 4 or
5 months.  The deal in Sitara is #145125.  Please look into this and let me
know where we stand.

Thanks.

D


For some reason I couldn't get this message to Sherrie Sera.  Please
forward.
Sherrie - see last item below.
----- Forwarded by Steven J Kean/NA/Enron on 02/02/2001 06:09 AM -----

	Karen Denne
	01/31/2001 10:22 PM

		 To: Mark Palmer/Corp/Enron@ENRON, Steven J Kean/NA/Enron@Enron, Vance
Meyer/NA/Enron@ENRON
		 cc:
		 Subject: Editorial Boards

FYI, here is who we'll be meeting with during our California editorial board
tour:

Thursday, Feb. 1
10 a.m.
Sacramento Bee
Howard Weaver, editor of the editorial page
Tom Philip, associate editor for environmental, energy issues
Dan Weintraub, political columnist
Mark Paul, deputy editor of the editorial page

2:30 p.m.
San Francisco Chronicle
David Lazarus, energy reporter
John Diaz, editor of the editorial page
all senior editors

Friday, Feb. 2
11 a.m.
Los Angeles Times
Janet Clayton, editor of editorial pages
Nancy Rivera Brooks, staff writer (energy)
Judy Dugan, deputy editor of editorial pages
Jim Flanigan, senior economics editor and columnist
Henry Fuhrmann, assistant business editor
Miriam Pawel, metropolitan editor
Nick Riccardi, staff writer
Joel Sappell, Metro projects editor
Bill Stall, editorial writer

3 p.m.
San Diego Union-Tribune
Robert Kittle, editorial page editor
Craig Rose, energy reporter
Bill Osborne, senior editor

Also fyi, when Jeff Skilling is in San Francisco next Wednesday, I'm
scheduling an editorial board with the San Jose Mercury News, a meeting with
the Silicon Valley Manufacturing Group, and an informal meeting (drinks) with
eCompany Now editors and reporters.  I'll have the specifics on Monday.  kd


January 30, 2002

The TEXAS EASTERN TRANSMISSION (TE) South Pass system has been nominated
over capacity for gas day Thursday, January 31, 2002.  As a result, TE
has restricted receipts on the South Pass system to the capacity of the
line.  No nomination increases from the physical meters on the South
Pass line will be allowed for gas day 31.

The South Pass meters are listed below:

METER                                    METER
NUMBER  METER NAME                       OPERATOR
------  -------------------------------- ------------
72137   MARATHON - WD 86, LA             MARATHON OIL
72138   MARATHON - SP 89-B, LA           MARATHON OIL
72319   EXXON - SP 93, LA                EXXON CO
72555   D&G ENERGY CORP. - WD 25, LA     D&G ENER COR
72831   MARATHON, BLK 86 - S. PASS, LA   MARATHON OIL
72849   SAMEDAN OIL CORPORATION - 365 MC SAMEDAN OIL
72972   WALTER OIL & GAS - WD 106, LA    SUPERIOR NAT
73027   MARATHON - SP87, LA              MARATHON OIL
73073   SHELL OFFSHORE , WD 143, - LAO   SHELL OFF

Please contact your Operations Account Manager if you have any
questions.

*******************************************************************

NOTE:

Duke Energy Gas Transmission respects your online time and privacy.
You have received this email because you elected to subscribe. To
unsubscribe, login to the E-mail Notification Subscription page at
http://www.link.duke-energy.com/script2/Notification.asp
uncheck the appropriate checkbox, and click the Submit button.


---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 03/14/2001
08:46 AM ---------------------------

VKaminski@aol.com on 03/13/2001 11:58:28 PM
To: vkamins@enron.com
cc: VKaminski@aol.com
Subject: Rice

 - rice0315.ppt


Just got your voice mail at the house this wk end.... We have just moved into
our house and had not checked that # for a couple days.......  I had wondered
why I never got a reply from you on the e-mails I sent......  I guess we know
now!

Update...... if you did'nt already know ,,,, Heather and I are having a baby
boy due in October.... We are both very excited!!!!!

Got to go....stay in touch

MC

perge!


7 Sis is averaging 23,000 M/Day.  Big Cowboy is pretty dead on.  Carol would
like for us to gross up for Saxet based on the number of flow days left so
that the nomination to the plant takes the payback into account.

Mary


Shirley,

Please, register me, Lance and Alex for this event.

Vince

---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 12/22/2000
04:42 PM ---------------------------

"Chris Farrell" <cfarrell@hesinet.com> on 12/22/2000 06:13:50 AM
To: <vkamins@ect.enron.com>
cc:
Subject: Henwood's 2001 ERCOT Symposium: January 23, 2001

Mark Your Calendar-Tuesday January 23, 2001 Downtown Houston Hyatt Hotel

Henwood will be hosting a comprehensive ERCOT Symposium on Tuesday,  January
23, 2001. A team of Henwood regional power market specialists will be
presenting the latest analysis and
information to assist you in preparing for the new ERCOT Restructured Power
Market, in addition to an anlysis of the issues now playing out in the WSCC
markets.   Coffee and registration will
begin at 9:30 AM  and the program will run until 3:00 PM.  Lunch and snacks
will be provided.

Agenda topics include:

* What will be the critica-success factors for qualified scheduling entities
operating in ERCOT's new wholesale & retail markets?
* How will market restructuring impact mid to long-term wholesale prices?
* What is the outlook for new generation?
* What are the impacts of upcoming emission regulations on ERCOT's generation
resources?
* What are the new analytical tools available to capture market uncertainty
impacts to your supply contracts and generation assets?
* What are the restructuring lessons learned from the California experience
and the implications to ERCOT?

In conjunction with this Program, Henwood will have a demonstration room
available to present its latest software applications and e-business
solutions. A nominal $75 registration fee is required
to reserve a space in the workshop.

For more information or to reserve your spot, please contact Chris Farrell at
Henwood: cfarrell@hesinet.com or 916/569-0985.

About Henwood: Henwood offers integrated business solutions, strategic
consulting, and innovative e-Business applications to meet the challenges of
the restructured energy markets throughout
North America, Australia, and Europe, serving clients that include eight of
the ten top utilities in North America, in addition to energy services
providers and power marketers.

If you want to be removed from our email list please reply to the sender and
put "REMOVE" in the subject box.


Our consulting agreement with IGS for services related to the CPUC proceeding
expired 12/31/99 but can be continued by mutual agreement of the parties.
Given the upcoming proceedings, I'd recommend that we act on this sooner
rather than later...let me know and I'll draft a brief letter to Mark
Baldwin.


Presentations from the Enron all-employee meeting on Feb. 21 and the Enron Investor Conference on Jan. 25 are now available in the Image Center's Presentation Library.

Click here  to go to the Image Center web site.


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Please approve my authorization request for control over daily and monthly
basis products on enrononline.
I will need these products available for management on my stack manager. I
currently cannot access basis products on my stack manager.  They were
removed to facilitate timely messaging updates between my stack and the
website.
I will be managing monthly and daily  basis products for the East Desk.   I
will also be retaining my management of gas daily products for the east desk.
I will be managing these products as of 10/2/2000.

Please call id there anre any problems

Peter Keavey

713-853-7277


Gentlemen,

Here are some points which require commercial et al input:

Do we intend to include gas transactions in our calculation of profit?

We will be buying electricity to serve their load.  How should be be paid for
those costs?  How often?

Jim Homco questioned whether we should buy the fuel oil.  What do you want to
do?

I've added the definition of Scheduling Equipment Costs.  How should it be
used in the agreement?  Are we limiting our provision of scheduling equipment
to the equipment  listed in the exhibit?

What financial security will be required of them?

Are we attaching Marketing Strategy and Trading/Risk policy, or establishing
a time line?

How do we deal with the possible cost of establishing a control area?  Are we
absorbing it?  Will there be additional infrastructure costs?

Have the exhibits been updated?  If so, could I get the latest version?

Kay


Jim,

CHARM looks more like  a prototype that requires a lot of work to make it
more a
production tool.

We have developed a similar model (without some nice functionalities CHARM
has)
in about two weeks, at request of Rick Jones who joined EES from HSB. Rick
worked on a similar model at his old company  and wanted to have a similar
tool
for his projects with Enron. I can tell you more about it when we meet
(hopefully) later
this week.

I would tell Willis that the model requires more work before Enron can
consider it as commercial product.

Vince

James L Bouillion
04/11/2001 06:52 AM
To: Vince J Kaminski/HOU/ECT@ECT
cc: Jonathan Davis/HOU/ECT@ECT, Vasant Shanbhogue/HOU/ECT@ECT
Subject: Re: CHARM

Vince, what feedback should I give Willis on their CHARM product?
---------------------- Forwarded by James L Bouillion/HOU/ECT on 04/11/2001
06:50 AM ---------------------------

James L Bouillion
04/11/2001 06:50 AM
To: "Bertil Olsson" <olsson_bc@willis.com> @ ENRON
cc:
Subject: Re: CHARM

No word yet.  I will follow up with the attendees.

Thanks for taking thje time to make the presentation.

"Bertil Olsson" <olsson_bc@willis.com> on 04/10/2001 04:07:11 PM
To: James.L.Bouillion@enron.com
cc:
Subject: Re: CHARM

Jim,

Any feed-back on our meeting ? We certainly appreciated the opportunity and
the fact that the meeting was very interactive.

Regards,

Bertil

______________________________________________________________________
The information in this email and in any attachments is confidential and
may be privileged.  If you are not the intended recipient, please destroy
this message, delete any copies held on your systems and notify the sender
immediately.  You should not retain, copy or use this email for any
purpose, nor disclose all or any part of its content to any other person.


Kate Symes
Student No. 569430668

1. The invention of the french fry would result in an increased demand for
potatoes - that is, the demand curve for potatoes would shift outward. This
would result in an increase in price, and a corresponding increase in supply.
As the supply curve comes up to meet the new, higher demand curve, we would
actually see an increase in overall demand, supply, AND price. The statement
is wrong in assuming that increased supply equals a lower price.

2. a. The value of one bottle of beer to me between points A and B is 8
bottles of soda.
b. I am therefore indifferent between bundles A and B, because they both
allow me the same frequency of use and same level of satisfaction.
c. Bundle E must include about 216 bottles of soda in order to make me
indifferent between it and bundle D. This follows from the logic that, when I
have 100 bottles of soda, it would take about 8 more to make me give up one
bottle of beer in the bundle. Here I have 200 bottles of soda - I would need
AT LEAST 8 bottles of soda to make me give up one more beer in another bundle
with the same frequency of use.

3. Firstly, this legislation produces a disincentive for parents to travel
with children on an airplane because it increases the already high costs
associated with flying. Add to this the somewhat more relaxed rules of the
highway, and you might find more families taking road trips on their next
vacation. This is a potential secondary effect of the legislation which could
actually increase injuries and fatalities - secondary because it would not be
directly associated with injuries caused in airplane crashes, but because it
would incent people to find other, possibly more dangerous, modes of
transportation.

4. Auto safety legislation puts constraints on auto makers to make cars as
safe as possible while still maintaining a profit. It also narrows consumers'
choice sets when buying a new car. A person buying a car in a country with no
auto safety legislation might make auto safety a priority in their decision.
In a country indoctrinated by Nader's book, the choice between whether to buy
a safe or unsafe car is taken away - all cars are made equally safe. Because
of this, car-buyers have less incentive to drive safely and more leeway to
choose their car for other reasons. Soon, safety in a car becomes a moot
point and the car buyer is only concerned with a good price or other
incentives. Auto accidents increase because there is no longer an incentive
to drive safely - legislation has made cars, in consumers' minds,
indestructible. If cars are indestructible, so then are the people in them.

5. a. My demand curve shows that I would purchase 1 gallon of soda at a price
just under $10. So when I purchase 5 gallons at $5 a gallon, I am better of
by $12.50.
b. I can purchase 3 more gallons of Diet Coke when it is priced at $3 a
gallon than when it's priced at $5. Therefore, I'm better off by $2.50 - a
gain of 3 gallons times a decrease of $2 divided by 2.
c. If Diet Coke was free, I'd consume up to 10 gallons of it before it
wouldn't be worth it for me to consume anymore. My consumer surplus is $50.

6. a. A will sell chairs to B. A can make 5 chairs in the time it takes him
to build 1 table, while B can only build 3 in the time it takes him to build
a table. (A's chair-to-table time ratio is greater than B's - 1/2 to 1/3.)
b. A will buy tables from C. C can make a table in only twice the amount of
time it takes him to build a chair, while A takes five times as long to build
a table than a chair. (A's table-to-chair time ratio is greater than C's - 5
to 2.)
c. B will do neither. Since B can make chairs faster (rate of 1/3 for B to
1/2 for C), B won't buy chairs from C. And because C can make tables faster
(rate of 2 for C to 3 for B), B can't sell tables to C.

7. a. The equilibrium price is $3.96.
 -10 + 50P = 200 - 3P
 53P = 210
 P = 210/53
 $3.96

The quantity is 188 textbooks.
 -10 + (50)(3.96) = 188
 200 - (3)(3.96) = 188
 188

b. The sticker price becomes $6.79.
 -10 + 50(P-3) = 200 - 3P
 -10 + 50P -150 = 200 - 3P
 360 = 53P
 P = 360/53
 $6.79

The market quantity stays at 188 textbooks.

c. The sticker price becomes $3.79.
 -10 + 50P = 200 - 3(P+3)
 -10 + 50P = 200 - 3P - 9
 201 = 53P
 $3.79

Market quantity decreases marginally to 179 textbooks.

d. If the seller pays $3 per book in taxes, the seller charges $6.79 and
receives $3.79 per book. If the buyer pays $3 per book in sales tax, the
buyer pays $3.79 per book. The costs are equal despite which party is paying
the tax.

e. The government collects $564 ($3 tax times 188 books) in tax revenues for
this set of terms.

8. a. The equilibrium price is $42.
 -10 + 5P = 200
 5P = 210
 P = 42

The market quantity is 200.

b. The sticker price becomes $210 - t.
 -10 + 5(P-t) = 200
 -10 + 5P + 5t = 200
 P = 210 - t

c. The government takes in a tax revenue of 200t. There are deadweight costs
associated with this tax because the supply is more elastic than the demand
for insulin. Therefore, consumers will bear more of the burden of the tax.

9. a. Affects supply; supply curve will increase; price and quantity
exchanged will increase
b. Affects demand; demand curve will decrease; price and quantity exchanged
will decrease
c. Affects supply: supply curve will decrease: price will and quantity
exchanged will decrease
d. Affects supply: supply curve will increase; price will decrease, quantity
exchanged will decrease
e. Affects supply: supply curve will increase; price will decrease, quantity
exchanged will decrease
f. Affects demand: demand curve will increase; price and quantity exchanged
will increase
g. Affects demand; demand curve will decrease; price and quantity exchanged
will increase
h. Affects supply: supply curve will increase; price will decrease, quantity
exchanged will increase


De nada.

From: Roseann Engeldorf on 12/19/2000 03:59 PM
To: Kay Mann/Corp/Enron@Enron
cc:

Subject: Re:

XXXXXOOOOOO


whassup with this crazee merger and what does it mean
for you? and i actually just wanted to say hi... so.
hi. ha!

__________________________________________________
Do You Yahoo!?
Find the one for you at Yahoo! Personals
http://personals.yahoo.com


Talked to Fielder.  He's willing to meet.  Jeff


Jesus,

Friday, April 28, works for me. I am free between 8:00 - 10:30 to meet with
Aram.
Would you like to meet him for lunch or dinner?

Vince


Gerald,

I found out that the provision that everyone keeps calling a ROFR is actually a shotgun bidding process.  I am interested in reading the relevant provisions of the document relating to this.  Apparently, if either party wants to sell, it must give purchase price to the other partner and then that other partner has the option to either buy or sell its interest at that price.  This provision may be unenforceable under bankruptcy law if the partner is a debtor.  Please have your assistant provide me with a copy of the partnership agreement ASAP.  Thanks very much.

Regards

Stuart


Included is the updated model for the latest curve.  John - new volumes and
prices are on the tab "Financing Assumptions."  Pushkar, the nominal cash
flows are on the tab "Drawdown," Column J.  Sorry for the delay but my
computer had serious problems last night.  Thanks again and we will talk this
morning.

Mike


Lauren,
Please help with who the appropriate person is to complete and submit w-8
forms for ENRON INDIA GDR HOLDINGS LTD.
Thanks. Sheila
---------------------- Forwarded by Sheila Glover/HOU/ECT on 12/13/2000 01:39
PM ---------------------------

Mikki Lee <Mikki.Lee@msdw.com> on 12/13/2000 01:09:32 PM
Please respond to Mikki.Lee@msdw.com
To: sglover@ect.enron.com
cc:
Subject: [Fwd: Missing new w-8 forms

for 038088340 ENRON INDIA GDR HOLDINGS LTD
 - 1441dec5comm.doc


Lorraine, I've been studying the El Paso/Dynegy reservation reduction
mechanism (RRM).  Basically the deal was that Dynegy's minimum-pay obligation
would be reduced by the amount of the fixed cost component of IT revenues
generated by El Paso's transportation of IT volumes above a historical
threshold.  (The parties based the threshold on El Paso's monthly IT volumes
for the 12 months ended 9/30/97.)  The volumes in excess of the threshold
were calculated and a ratio of the volumes in excess of the threshold to the
total volumes was determined; the ratio would then be applied to the fixed
cost component of all IT revenues and the resulting dollar value applied to
Dynegy's monthly reservation charge, to the extent Dynegy had not met its
minimum pay obligation for a particular month.

This provision of course met with heavy opposition; however, FERC allowed
it.  FERC stated that while the RRM had anticompetitive effects because it
created a disincentive for El Paso to discount IT, it was not unduly
discriminatory.  The "unduly discriminatory" conclusion was based on an
analysis on the potential effect on the Cal. gas transportation market -- the
Commission found that due to relatively weak market demand, neither Dynegy
nor El Paso appeared to have been able to influence prices because so much
firm capacity was available.

I assume Russ may be after something similar to the RRM.  We would have to
file it as a negotiated rate but I feel fairly confident that we could get
FERC to accept it.

That's my 2 cents worth on this particular issue...I'll come down around 3:30
to chat with you more about the Duke (I have a conference call with MKM from
1:30 to 3:30, which is why I'm camped out on 47).


Vince,

I just received this message. What do you think? Should I register to attend
it?

Sevil,

---------------------- Forwarded by Sevil Yaman/Corp/Enron on 10/24/2000
02:20 PM ---------------------------

pwpens <pwpens@socrates.Berkeley.EDU> on 10/24/2000 12:16:14 PM
To: (Recipient list suppressed)
cc:

Subject: Electricity Summit at U.C. Berkeley

Register now to attend the

          ELECTRICITY SUMMIT AT U.C. BERKELEY, NOVEMBER 13, 2000

U.C. Berkeley's Goldman School of Public Policy, with additional support
from the U.C. Berkeley's Competition Policy Center and the U.C. Energy
Institute, will host a meeting of industry representatives, policy makers,
consumers representatives, legislators and researchers to discuss the
electricity restructuring experience and potential solutions to the
difficulties that California and other governments have encountered.  The
summit will run from 12:30-6pm with two roundtable discussions that will
include a wide variety of viewpoints.

For registration information and further details, go to
  http://gspp.berkeley.edu/events/electricity_summit_conference.htm