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Sierra Pacific Suspends Dividend Because of Energy Crisis in Western States
The Wall Street Journal, 04/16/01 Wind Farms May Reap Profit as Britain Looks to Add Renewable Energy Sources --- Seek Profits Out of Thin Air As Britain Pursues Renewable Energy The Wall Street Journal, 04/16/01 Internet Rumor Mill Changes Layoff Process --- Companies Scramble to Keep Their Plans Off the Web The Wall Street Journal, 04/16/01 Time Seems Bright for Solar Power / Big companies bring financial clout to field The San Francisco Chronicle, 04/16/01 Small Tech Rally Precedes Earnings Reports from Silicon Valley San Jose Mercury News - California, 04/16/01 A REBUKE FROM ENRON'S BOSS Business Week, 04/16/01 BUSH TAPS DEFENSE INC. AGAIN Business Week, 04/16/01 Godbole panel report a boost for MSEB The Times of India, 04/16/01 TUs gear up for April 25 Maharashtra bandh The Times of India, 04/16/01 It happens only in Indiya Business Standard, 04/16/01 NAPSTER-LIKE THREAT PUTS MOVIE INDUSTRY ON GUARD DIVX LETS USERS COPY AND TRADE FILMS ONLINE Chicago Tribune, 04/16/01 Enron Restarts MTBE Plant. The Oil Daily, 04/16/01 Panel Suggests Enron Solutions. The Oil Daily, 04/16/01 Sierra Pacific Suspends Dividend Because of Energy Crisis in Western States By Rhonda L. Rundle Staff Reporter of The Wall Street Journal 04/16/2001 The Wall Street Journal B4 (Copyright © 2001, Dow Jones & Company, Inc.) Sierra Pacific Resources, which owns two Nevada utilities, said it suspended its quarterly dividend, citing high power costs and other fallout from the energy crisis afflicting the Western part of the U.S. The utility holding company said it still hopes to complete a $2 billion agreement to purchase Enron Corp.'s Portland General Electric unit. The transaction, which will also include the assumption of $1 billion in debt, has been delayed partly because of a new California law that has blocked Sierra Pacific from raising funds through planned sales of certain power-generating assets. Sierra Pacific has paid a quarterly dividend of 25 cents in recent quarters. Suspension of the payout will save "less than $20 million -- but every dollar counts at times like this," said Mark Ruelle, senior vice president and chief financial officer. The dividend policy will be reviewed again at the next board meeting, set for May 21, the company said. Sierra Pacific, based in Las Vegas, said it is continuing several cost-control programs that were recently undertaken to reduce expenses. The cutbacks are mainly in the area of administrative expenses and include elimination this year of incentive pay for executive staff. Sierra Pacific, like utility owners in other Western states, has been hit by rising energy costs. Sierra Pacific has said it incurred an unanticipated expense of $889 million in 2000 to purchase fuel and electricity on the open market. That produced a full-year 2000 loss of $39.8 million, or 51 cents a share. "There is no question that both our utilities in Las Vegas and the Tahoe region are exposed to the same general market conditions as all of the western U.S.," Mr. Ruelle said. The impact on Sierra Pacific has been moderated somewhat by power contracts that were secured before the latest runup in prices. "Our contracted prices for fuel and purchased power are favorable compared to current prices, but still above what we can recover through utility rates," he said. Sierra Pacific got some relief in February when the Nevada Public Utilities Commission approved a 17% rate increase, equal to about $300 million of additional revenue. Now the Nevada legislature is considering a proposed new law that would restore stability to the state's electricity markets, Mr. Ruelle said. The measure would reinstate an old regulatory provision that assures utilities of eventual recovery of any fuel and power purchase costs that exceed current rates. Sierra Pacific's agreement to purchase Portland General Electric from Enron was reached in November 1999. Enron's chief executive, Jeffrey Skilling, said last month that there is only a "5% probability" that the sale will go through. But Mr. Ruelle said Friday that Sierra Pacific is "continuing to work toward the deal and to address the difficulty in securing necessary regulatory approvals given the underlying dislocations in the markets." Sierra Pacific has agreements to sell seven of its nine power plants, and related assets, to various power generators for an aggregate of $1.8 billion. The sales have been blocked partly by the new California law, which prohibits the sale of power plants that serve California customers. Sierra Pacific's Sierra Pacific Power Co. unit has a small service territory in the Lake Tahoe area of California. The parent company's "financial profile" looks much different without the sale of those plants, Mr. Ruelle said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Wind Farms May Reap Profit as Britain Looks to Add Renewable Energy Sources --- Seek Profits Out of Thin Air As Britain Pursues Renewable Energy By Geoffrey T. Smith Dow Jones Newswires 04/16/2001 The Wall Street Journal (Copyright © 2001, Dow Jones & Company, Inc.) Ten years ago, Peter Edwards, a dairy farmer in Cornwall, sold his cattle to raise money to establish the United Kingdom's first wind farm intended to produce electricity. It wasn't competitive and did nothing to lessen the country's dependence on fossil fuels -- not the most encouraging vision of the future. Today, many farmers might willingly change places with him. As livestock farming staggers from crisis to crisis, wind farming is showing strength. Last week, in a landmark move, the Crown Estates, which holds the U.K. seabed in trust for the country, issued seabed leases for 13 offshore wind-farm projects to companies traditionally associated with fossil-fuel energy. The projects, which could attract up to GBP 1.6 billion ($2.3 billion) of investments, according to the British Wind Energy Association, will allow for the installation of 1,500 megawatts of generation capacity along Britain's coast by 2004. That would meet the electricity needs of 1.1 million households, according to BWEA estimates. The projects -- seven in the Irish Sea and six in the North Sea -- are the first concerted effort in the U.K. to raise the contribution of renewable power sources, other than hydropower, to the energy mix. For the wind industry, going offshore is a test of technology and viability. Larger numbers of more-powerful turbines, driven by higher wind speeds, could yield economies of scale. Offshore winds also are more constant than those onshore, which could help offset wind power's major drawback: unpredictability. Such projects no longer are the preserve of companies on the fringe of the energy sector. Among those awarded leases were units of Innogy PLC, Powergen PLC, Scottish Power PLC, Enron Corp. and TXU Europe. Under terms of the government's Renewables Obligation, all public electricity suppliers must get some of their power from renewable generation sources by 2003. The amount will probably start at 5% or more, rising to 10% by 2010. Via a system of tradable "green certificates," companies can trade surplus renewable power on the open market with suppliers who can't meet the obligation by themselves. The emphasis of U.K. policy-makers for the past 10 years has been on bringing prices down, rather than encouraging green energy to become competitive. As a result, the role of wind in the U.K. has been restricted to blowing the emissions of coal and gas-fired plants across the North Sea, forcing Norway and Germany to cope with the environmental impact. In countries with more government subsidies, more wind farms have flourished. Germany and Denmark had installed capacity bases of almost 5,500 megawatts and 2,280 megawatts, respectively, by the end of 2000, according to estimates by investment bank Dresdner Kleinwort Wasserstein. Crown Estates and the BWEA are in talks concerning a second round of licenses for larger sites. Alison Hill, communications manager at the BWEA, says the generation costs of existing onshore facilities have fallen to between 1.9 pence and 3.5 pence (between 2.7 cents and five cents) a kilowatt-hour today from about 11 pence a kilowatt-hour for first-generation technology. That makes some prices for wind-generated electricity competitive in Britain, where the market is deregulated. A pilot project off Blyth in northeast England is generating at between five pence and six pence per kilowatt-hour, Ms. Hill says. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Internet Rumor Mill Changes Layoff Process --- Companies Scramble to Keep Their Plans Off the Web By Stephanie Miles WSJ.com 04/16/2001 The Wall Street Journal B3E (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -- When British technology publisher Future Network PLC announced a broad restructuring that would result in 350 layoffs, few employees were surprised. For a week, workers had been glued to an industry-gossip site. "Everybody was waiting, expecting to be fired," says Scott Laine, who was laid off from a job in sales for Revolution magazine, published by Future's U.S. subsidiary Imagine Media. Managers were watching the message boards, too. So, when Future announced the restructuring in February, it sent a short companywide e-mail with the press release attached. The company also sent out two more detailed letters, from Future's chairman and chief executive respectively, explaining the circumstances surrounding the layoffs. But instead of beaming them electronically, the U.S. unit printed out color paper copies and placed them on employees' desks, in an effort to keep the note from being quickly posted online or cleanly photocopied. "Why make it easy?" says Nancy O'Neill, then president of Imagine Media. Ms. O'Neill stepped down as president at the end of March. Leaks are nothing new. But the "post once, read anywhere" nature of Internet rumors has forced companies to make much quicker decisions about when to release information about layoffs to employees and the public, and what exactly to say. Companies, for a variety of reasons, are often stuck saying "no comment," only to confirm the layoff rumors later on. Worse, a scramble to respond to investor and press inquiries can sometimes result in embarrassing reversals. The Web-consulting industry is among the most closely scrutinized sectors on Web rumor boards, and companies are under constant pressure to respond. After rumors popped up online, consulting firm Razorfish Inc. confirmed to several press groups that it was offering a "voluntary termination plan" to an undisclosed number of employees. But a little more than a week after the reports of the voluntary plan, postings on Vault.com message boards were abuzz with reports of early morning wake-up calls. "Woke me from a sound sleep," wrote one anonymous poster at noon on a Saturday. "Anybody else get jousted out of bed?" Other cryptic notes followed, and a note on Sunday spelled it out: "They didn't get as many people to volunteer as they wanted to, so from now on it's involuntary." Melissa Kramer, a Razorfish spokeswoman, confirmed that the company called an undisclosed number of employees at home Saturday to tell them they no longer had jobs, and sent them packages confirming their involuntary termination. She says the voluntary plan hadn't drawn as many people as hoped. Ms. Kramer says the activity on the message boards had no effect on how layoffs were carried out, either in terms of how affected employees were notified or the timing of the announcement. In general, companies have latitude in deciding what information to release. Aside from releasing quarterly earnings reports, public companies are required to disclose news that is material to their operations. But when it comes to layoffs, the requirements laid out by the Securities and Exchange Commission are fuzzy. "It's a fact-specific situation," says John Heine, an SEC spokesman, explaining that the SEC expects companies to report any material changes in the company's outlook in its quarterly and annual reports. Severance pay and other layoff-related expenses will show up in quarterly reports as restructuring charges, but "There isn't a specific rule that I can point you to that deals with layoffs," Mr. Heine says. Unless the job cuts are so large that local or federal authorities are required to be notified under plant-closure or other laws, publicly held companies are generally under no obligation to confirm the number of layoffs, specific firings, or other work-force changes, experts say. Disclosing job cuts is often "less of a legal determination than it is a business decision," says Richard Rowe, a corporate attorney and partner with Proskauer & Rose LLC in Washington, D.C. Another issue is timing. Some companies issue a press release announcing cuts right away; others wait to release the news with their quarterly earnings reports, while others refuse to even comment. The decision depends often on how the company thinks layoffs will play with investors and surviving employees. For Old Economy industrial firms, cuts are often seen as an effective way to slash overhead costs. But in the beleaguered Internet sector, layoffs often are viewed as a harbinger of future troubles. For example, defunct e-tailers eToys Inc. and Garden.com Inc., which traded on the Nasdaq Stock Market, both disclosed broad layoffs about three months before the companies shut down altogether. If the jobs cuts "are enhancing shareholder value, that's really good news for a publicly traded company," says John Kroen, executive vice president at investor-relations firm Dresner Corporate Services. "As long as it doesn't signal the end." Adding to the pressure on companies facing layoffs are new rules about disclosure. While the Internet has loosened companies' control of information, the new Regulation FD, which prohibits selective disclosure of information, largely limits companies' dissemination options. News can't be filtered through analysts or large investors as in the past, so for the most part, companies have to either make a public statement or stay mum. When EMC Corp. fired several hundred workers in February as part of an annual review, word leaked out on investor message boards run by Yahoo! Inc. Although the storage maker maintains that the job cuts were a routine course of business, the company's shares fell as rumors hit the Internet. In years past, EMC didn't publicly disclose what it termed performance-based firings, according to Mark Fredrickson, vice president of corporate communications. This time, however, the company decided to confirm the firings in the press to make clear that the job cuts weren't related to the state of the economy or the technology sector. "I think it attracted attention because of" the environment," he says, adding that the company didn't consider the cuts, of roughly 3% of EMC's 24,000 employees, of material importance to investors. "Two years ago, in the midst of the high growth which we were enjoying, this would not be news." But sometimes, being active in the face of rumors can help change the tone of coverage. "It's better to put your words out there yourself then have them cut and pasted back at you," says Elliot Sloane, president of Sloane PR, a public- and investor-relations firm. Last month, for instance, energy company Enron Corp. publicly denied rumors that it was planning layoffs in its broadband Internet unit, rumors that had helped to send its stock to a 52-week low. The company had recently terminated a video-on-demand partnership with Blockbuster Inc. But in a conference call that reiterated the company's 2001 earnings outlook, the company explained that third-party contracts for broadband capacity had eliminated some of the need to build its own network. An undisclosed number of employees had been redeployed as a result, the company said, but the rumors of layoffs were false. The stock rallied, reaching $59.40 as of 4 p.m. that Friday, up from a low of $51.51 Thursday morning. Still, many executives resist issuing any comment on layoffs or work-force shifts. "The majority of the CEOs I've dealt with want to keep it as much in-house as possible," says Dresner's Mr. Kroen. "It's rare that you find a CEO who wants to tell as much as possible. They have to be pushed to air their dirty laundry." While top executives huddle to put the final touches on layoff plans and discuss how much information to release publicly, employees can face days or weeks of waiting for the ax to fall. Message boards can get very crowded. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. NEWS Time Seems Bright for Solar Power / Big companies bring financial clout to field Jim Doyle Chronicle Staff Writer 04/16/2001 The San Francisco Chronicle FINAL A.13 (Copyright 2001) On the sun-bleached floor of the Mojave Desert, solar-thermal plants are producing electricity to fulfill a long-term contract with Southern California Edison Co. Rows of parabolic mirrors focus the sun's rays into a high-energy beam that heats an element to make steam, which turns an electrical turbine. In all, nine solar-thermal units near Barstow generate enough daytime power for 350,000 homes. "This technology has been around for 15 years," said Bob Cable, manager of KJC Operating Co., which runs five of the solar-thermal units for investors that include East Coast utilities and insurance firms. "It's very reliable. And with today's high fuel prices, we're a bargain. "There's really nothing like us in the world," Cable said. And for renewable energy advocates, that's the problem. Solar-thermal is just one of several renewable forms of energy that have languished for years. No new plants have been built in a decade, mainly because power produced using low-cost fossil fuels made alternative energy look pricey. But now that the price of natural gas has shot up, solar, wind and geothermal are more attractive to big energy suppliers. "There's a lot of consolidation in the field now. Big players are coming in and setting up divisions for solar and wind energy," said Dave Renee, a research analyst for the National Renewable Energy Laboratory in Golden, Colo., a division of the U.S. Department of Energy. Even before the power crisis, oil and gas companies were increasing their stake in renewables and buying up smaller energy firms because of rising fuel costs and tighter environmental restrictions on fossil fuel plants. Sharp, the Japanese electronics company, last year became the world's largest producer of photovoltaic solar cells, which convert sunlight directly into electricity. At the Sydney Olympics, BP Solar - - a division of British Petroleum's energy-producing empire -- powered a solar suburb of 650 homes to house the athletes. A year ago, Shell Oil created its Shell Renewables division, which formed a joint venture with Siemens Solar, another leading manufacturer of solar cells. Shell predicts that by 2050 half the U.S. energy mix will be renewable. Enron, the Texas supplier of natural gas, has bought Zond, a major wind power company. The oil companies have also invested in hydrogen fuel cell technology, which may soon be used to power cars, homes, offices and factories. "We think the new technologies are going to get better, and prices will come down," said George Douglas, a spokesman for the National Renewable Energy Laboratory. "And we think the price of conventional power plants, whatever fuel they're using, is going to come up." 12 PERCENT RENEWABLE POWER Today, only 12 percent of California's power comes from renewables, but advocates envision a future electrical grid with a diverse mix of nonpolluting energy sources, large and small. "California should be much more aggressive in pursuing the renewable energy options," said Dick Swanson, president of SunPower Corp., a Silicon Valley company that has developed new solar technology being used in power plants in Australia and Arizona. "We are leaving the state too vulnerable if we are too dependent on natural gas." Gov. Gray Davis wants to rush 5,000 megawatts of capacity into service by July through construction of large and small power plants. Renewable energy advocates say Californians should carefully consider which kind. "The investments we make this year and next year will stay with us for the next 30 years," said Kari Smith, a regulatory affairs manager for Powerlight, which makes photovoltaic systems for factories and office parks. "We need to promote as much renewable energy as possible so that we're not stuck again with a fossil fuel economy." Sixteen percent of the new 5,000 megawatts will come from renewables -- mainly from wind power, but also from biomass, energy created from organic waste. The California Energy Commission's $202 million subsidy program for renewable plants offers financing incentives of as much as 1.5 cents per kilowatt hour, or up to one quarter of cost, to help these systems compete. ECONOMIC INCENTIVES Environmentalists want more economic incentives for renewables, and also taxes on fossil fuel power plants to offset the pollution they cause. Since the 1970s, most government subsidies for renewable technologies have gone to solar power, although it accounts for less than 1 percent of the state's electricity -- less than geothermal (5 percent), wind (2 percent), small hydro plants (3 percent) and biomass (2 percent). Solar has proved costly to develop, but appears to be on the verge of paying off. "In the last 20 years the cost of producing electricity from solar cells has dropped tenfold," Douglas said. "We can expect it to drop at a similar rate over the next 20 years by raising efficiencies of solar cells and decreasing the manufacturing costs." The U.S. market for solar energy has grown steadily in recent years, but more than 70 percent of photovoltaic systems are exported to developing countries. Solar panels, used since the late 1950s on orbiting satellites, are only now becoming affordable. A household unit can cost $10,000 to $30,000, though in California, state rebates can reduce the cost by half. In December, the state Energy Commission received 50 applications from homes and businesses for its "buy down" program, which offers rebates of up to 50 percent for the cost of solar panels and small wind generators. In January, there were 250. In February, there were 245. WAIT LIST FOR HOME SYSTEMS In Sacramento, the local utility district sells solar panels to residential customers at reduced rates. The utility, which also installs the panels, has a waiting list of 700 homeowners for a total of 100 solar units available this year. "We foresee the day in the next five or 10 years when photovoltaics will compete with fossil fuel-generated power price- wise without subsidies," said Vince Schwent, who runs the Sacramento Municipal Utility District's solar energy program. "At that point, the market for solar will explode. Mass production will lead to lower prices." Independents that have tried to break into California's power market, however, have had difficulty obtaining investors and loans for unconventional technologies. "The investment market and engineers have been focused on the creation of large power plants," said Richard Harkrader, a North Carolina energy consultant. "How do you persuade people to make the higher investment in return for no emissions and (ending the uncertainty of) fuel costs?" But solar research scientist Jim Augustyn, a contractor for the U.S. Department of Energy, cautions against the federal or state governments pushing too hard for alternative energy systems. "The government could do more, but they have to be careful about how they do it," Augustyn said. "You can't just throw a lot of money at the technology and expect it to grow fast. You have to build this whole infrastructure. There are people who can install a photovoltaic system on your roof, but there are not a lot of them." Scientists disagree on how much fossil fuel the Earth holds. But few think this year's energy crisis will be the last. "I think that we should view this century as a transition away from fossil fuels," SunPower's Swanson said. "If we wait too long, it's just going to be that much more painful." ----------------------------------------Energy EconomicsWith tax credits and rebates, wind power is already competitive in price with conventional energy sources, and solar power is fast becoming more affordable..The cost of building a natural gas boiler runs about $1 million per megawatt of capacity. Wind generators cost about the same to build. Solar thermal units cost more than twice as much. But the fluctuating price of fuel must be factored into the cost of making electricity from natural gas. PHOTO (3); Caption: (1) Rows of parabolic reflectors bounced the sun's rays onto a steam generator at this KJC Operating Co. power plant in the Mojave Desert. / Photos by Kendra Luck/The Chronicle, (2) Brandon Banks monitored the power output at the KJC Operating Co.'s desert solar thermal plant., (3) Bob Cable, manager of the KJC Operating Co. plant, walked among the solar reflectors, which pivot on their stands to keep sunlight focused on the steam generator. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Small Tech Rally Precedes Earnings Reports from Silicon Valley David A. Sylvester 04/16/2001 KRTBN Knight-Ridder Tribune Business News: San Jose Mercury News - California Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM) The stock market looks like it's following that old cliche that it takes more muscles to frown than to smile. As if tired of the effort required by persistent pessimism, investors gave into optimism last week and started buying tech stocks with little apparent reason. As a result, the Nasdaq composite index had its largest weekly rise in 10 months, rising 14 percent during the four-day week and closing Thursday at 1961.43. Only the week before, it was scraping along the bottom by coming near the one-year low it had hit on April 4. The overall market did well, too. The Dow Jones industrial average closed above 10,000, and Standard & Poor's 500, a broader gauge of the market, rose nearly 5 percent for the week. Yet the surge of buying came along with bad news. The economic reports last week showed the U.S. economy is stumbling: worsening consumer confidence, flat retail sales and sharply rising unemployment claims. And the earnings results weren't great either. Motorola reported its first loss in 16 years, and Juniper Networks warned analysts that its sales and profits would fall below previous forecasts. What gives? "I'd say we're in a correction to a bear market," said Ken Fisher, chairman of the Woodside investment company Fisher Investments. "Sentiment is much too optimistic for the market to bottom yet." This week may give further evidence of whether that's true. Some of the biggest tech companies will report their first-quarter earnings, revealing how much damage the slowdown has caused to profits and sales, the vital signs for the future health of stocks. The list of companies reporting is a Who's Who of Silicon Valley and the tech world: Intel, Sun Microsystems, Apple Computer, IBM, Microsoft, Lucent Technologies. Also coming are results from major banks such as Bank of America and Wells Fargo, airlines such as United Airlines parent company UAL Corp. and independent energy producers such as Duke Energy and Enron. Wall Street is looking not just for the current reports but what companies will say about their expectations for the summer: -- How bad is the slowdown among personal computer makers? Analysts are expecting Microsoft to earn 42 cents a share for the quarter, down slightly from 41 cents a year ago when it had disappointing results. -- What is demand in Europe, the strongest economy in the world right now? Intel was one of the first to blow the whistle on slowing sales in Europe and is expected to report 15 cents a share, half of its 35 cents a year ago. -- Are corporate customers still reducing their purchases of big-ticket computer systems, software and Internet equipment? In the telecommunications world, Juniper indicated last week that its customers among phone and Internet companies were reducing their orders for capital goods. -- Most importantly, what is the outlook for the second half of the year? Will the slowdown persist? Some think so, particularly for tech. "It's going to be a harder quarter for software companies in June than it was in March," says Wendell Laidley, software analyst at Credit Suisse First Boston. The answers to these questions could determine whether the current bear market for technology stocks ends soon or turns into an extended one. Those who believe the bear market has a lot further to go point to trouble. They say the economy is stuck with excess capacity to produce goods, especially in technology, as well as an unstable bubble of credit that paid for the boom. Consumers overspent and undersaved as they went on a spending spree, and businesses bought too much of the tech products. Moreover, a U.S. recession of two quarters of decline in the real Gross Domestic Product appears on the horizon, if not already arrived, in this view. "We haven't had much of a bear market so far," says David Tice, an investment adviser who manages $180 million in the Prudent Bear mutual fund. "People need to remember how seductive bear markets are. They keep investors invested. They keep you hoping." But the bulls believe help is on the way. The Federal Reserve Board is certain to cut interest rates to lower the cost of borrowing, and tax cuts should help stimulate demand. From this point of view, an economic rebound is expected by the end of the year to boost corporate profits. And if the economy improves, stocks may rise sooner, since changes in the market often precede those in the economy. Abby Joseph Cohen, investment strategist and long-time bull at Goldman, Sachs & Co., advised investors in mid-March to put more money into stocks. "The U.S. economy still benefits from favorable secular trends: the world's most productive workforce, well-managed companies, mild inflation and large federal surplus," she wrote in a note to investors on March 7. If it ends now, this current Nasdaq bear market will go down as the sharpest in its 30-year history, but hardly the longest. In fact, Nasdaq has had nine bear markets -- defined as a 20 percent drop in the index -- and three of them were as long or longer. The longest, from Jan. 11, 1973, to October 3, 1974, lasted almost 21 months when the national economy was moving into a recession. But it was a bear of a bear. That one down market was big enough to absorb the next two bull surges -- each one nearly 60 percent -- and bring Nasdaq back to its 1973 peak five and a half years later, on Sept. 13, 1978. In other words, Nasdaq had been basically flat for more than five and a half years. The second longest bear market lasted just more than 15 months, from 1981 to 1982, also in the teeth of a national recession. But this bear market was sandwiched between two others, so that Nasdaq went through three 20 percent declines by 1984. In fact, the bull market for Nasdaq didn't really start until July 25, 1984 -- two years after it started for the Dow Jones industrials. After doubling by 1987, Nasdaq then waffled for two years and nine months, gaining only 0.4 percent in total by May 23, 1990. It punctured the 1990s bull market with another one-year flat spot from March 18, 1994, to March 14, 1995, and hit another six-month pothole in 1999. Fisher, who accurately diagnosed the tech bubble in March 2000, compares its bursting with the drop in energy stocks in the early 1980s. And he has developed a rule of thumb about bear markets: the last two-thirds of the drop comes during the last third of the time spent in a down market. "It's the back end of a bear market that kills you," he said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Washington Outlook: CAPITAL WRAPUP A REBUKE FROM ENRON'S BOSS EDITED BY PAULA DWYER 04/16/2001 Business Week 55 (Copyright 2001 McGraw-Hill, Inc.) Ever since the President backed away from action to prevent global warming, greens have wondered what Enron Chairman Kenneth L. Lay, a pal of George W. and a backer of anti-global warming measures, thought of the decision. Well, at an Apr. 4 Toronto Board of Trade meeting, a questioner put Lay on the spot. Visibly uncomfortable, according to one participant, Lay responded that the Administration team went too far--and that he has already let them know it. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Washington Outlook: CAPITAL WRAPUP BUSH TAPS DEFENSE INC. AGAIN EDITED BY PAULA DWYER 04/16/2001 Business Week 55 (Copyright 2001 McGraw-Hill, Inc.) After picking industry execs as his leading candidates to head the Navy and Air Force, President Bush is following the same pattern for the Army. His expected choice: Enron Corp. executive and retired Brigadier General Thomas E. White Jr. White is expected to be a strong proponent of outsourcing such services as electricity delivery--which could benefit his former company. Enron won a $25 million contract in 1999 to provide power and water to New York's Fort Hamilton. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Godbole panel report a boost for MSEB Vidyadhar Date 04/16/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) MUMBAI: The Madhav Godbole committee report has come as a boost to the Maharashtra State Electricity Board as it has run into a financial crisis because of the high tariff of the Dabhol power project of Enron. Trade unions too are pleased as they have made the Enron issue a focal point in their campaign against globalisation and the proposed Maharashtra bandh for April 25. The committee has observed that even if the MSEB improves its performance, phase II of the Dabhol project will still drag the MSEB into financial sickness. The MSEB has already taken steps to improve its performance and recover dues and reduce losses, board sources said. The MSEB has also told the government a few months ago that it would not be able to cope with phase II of 1490 MW of the power project. The state does not need that much power and does not have the financial capacity to buy it. The board, however, can by improving its own performance withstand the hardships created by phase I. The MSEB has also expressed reservations about using excess power generated by the proposed Bhadrawati and Reliance projects. The Godbole committee has suggested that the MSEB should defer all power purchase agreements reached with independent power producers (IPPs) till such time as it is possible to fully absorb power generation from them. The burden of Dabhol power is nearly Rs 6000 crore per annum, which would rise due to the depreciation of the exchange rate. This could conceivably lead to a drastic cut in budget allocation for the plan and lead to a declaration of a plan holiday, the Godbole committee has observed. Mr Godbole should know since he is a former state finance secretary and former chairperson of the MSEB. The Bhadrawati and Reliance projects will also be a drag on the MSEB since the board will have to buy nearly 90 per cent power produced by them or else pay a higher tariff for purchasing less power as in the case of Enron. A.R. Bapat, a former chief electrical engineer of BEST Undertaking, said the question now was how to force Dabhol to come to the negotiating table. At the same time, he said the MSEB was doing well to impose a fine on Dabhol corporation for its failings. This should drive the point home to Dabhol. P.J. Joglekar, a former professor at IIT, Delhi, and electronics expert, said that even if Dabhol is allowed to sell power directly to other companies, as recommended by the committee, it would not solve the problem. Industrial units are already charged high rates and the MSEB uses the profit to cross subsidise to the weaker sections. The MSEB would be in trouble again if industrial units have to pay more. Even if the Dabhol power was sold to other states, the question is why should people in other states pay a high price for Dabhol. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. TUs gear up for April 25 Maharashtra bandh Vidyadhar Date 04/16/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) MUMBAI: The report that 86,000 workers lost their jobs in the US last March, the biggest loss for a single month in more than nine years, has vindicated the stand of the organisers of the proposed Maharashtra bandh for April 25. ``This is what free market is doing to workers,'' trade union leaders say. The bandh call is against globalisation, the growing power of the free market, increasing unemployment and the adverse impact of WTO on farmers. So far, workers had borne the brunt of the development process, now for the first time farmers are feeling the pinch. That is why farmers from different parts of Maharashtra turned up in large numbers for the rally organised by Left political parties at Shivaji Park recently. The big response has boosted the morale of the organisers. The rally was attended by three Maharashtra ministers, Ganpatrao Deshmukh, Mohan Patil and Meenaxi Patil, all belonging to the Peasants and Workers Party. The news of the protests by employees of the Marks and Spencer group against layoff in Paris last week is also seen by the TU leaders as a vindication of their stand that only progressive policies can help create and retain jobs. The French prime minister, Lionel Jospin, a socialist himself, has protested against the layoffs in France. But his critics say with irony: ``He is neither Marx nor Spencer.'' The job losses in the US have shaken the government and the secretary of labour, Elaine Chao, has said: ``The new unemployment numbers show that the patient isn't getting any better, so it is time to prescribe some medicine.'' Trade union leaders in Maharashtra will also be watching with interest the Shiv Sena's response to the bandh call since the party has suddenly taken an aggressively pro-labour stand. It has strongly criticised the Central government's new policy on labour, globalisation and imports of agricultural commodities. Uddhav Thackeray, Sena leader, gave a call at a rally organised by the party on March 21 for trade unions of all ideologies to come together to oppose the policy of globalisation. Left-wing trade union leaders say they would not be averse to the support of the Sena to the bandh. But they would not share the platform with the Sena leaders. ``We must maintain our separate identity,'' the leaders said. With the unions of state transport and BEST joining the bandh, life in the state will be considerably affected. Efforts would also be made to block suburban trains in Mumbai, a trade union leader said. The news that the government proposed to close down 25 textile mills of the National Textile Corporation in Mumbai and 11 in other parts of the state has strengthened the resolve of the workers to enforce the bandh. The Rashtriya Mill Mazdoor Sangh, the Congress party's recognised union in the textile industry, has already organised a rasta roko on the issue. The high tariff of Enron's Dabhol power plant has also provided a major issue to the Left parties. A number of booklets on the subjects have been brought out. One booklet, written by Ajit Abhyankar and published by the CPM, was eagerly bought at a recent rally along with Dr Ashok Dhawale's book on the Shiv Sena and Krishna Khopkar's on the `post-mortem of the new agricultural policy'. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. It happens only in Indiya T C A SRINIVASA-RAGHAVAN 04/16/2001 Business Standard 11 Copyright © Business Standard Back in the days when Kings used to rule, they would often make mistakes. The more mistakes they made, the more they would be ridiculed, even if only privately. But since it is hard to keep a good fool down, there would come a time when the King became the butt of all jokes. To counter this tendency amongst an ungrateful populace, courtiers came up with the theory of Divine Right. The theory said that Kings, simply because they were Kings, were divinely ordained. As such they could not, by definition, make mistakes. Nor could they be held responsible for any of their actions because they were carrying out God's will. It was a great theory, so great indeed that it has never lost its appeal. Even that 20th century haven of atheism, the Soviet Union, adopted it while typically denying God credit for the implicit divinity of the politbureau. The proletariat substituted God but that was like conversion from one religion to another. The basic notion did not change. The USSR's co-brother-in-law, as they would call China in Chennai, still practises this version of the Divine Right. So does that other model of humane governance, North Korea. Millions may die of starvation but the Supreme Leader, which is Communist for King, is never blamed. Nor are the advisors in the politbureau. Democracies, it was thought, would be different because, for the first time in history, the people would have the right to remove their rulers if they made too many mistakes. This would leave no space for Divine Right and the theory would slowly be discarded in favour of the Right to Remove. And, by and large, that is what has happened. But India, consistent with its genius for assimilating ideas and coming out with a hybrid, has remained an exception. Defined in terms of the Right to Remove, it is a full-fledged democracy. Indeed, we are specialists in removing governments. Everyone here the people through elections, Parliament through no-confidence motions, and even the central government through Article 356 has the right to remove governments. No other country can match this. But if you turn the coin over to see if the Divine Right theory has been rubbed out by the efflux of democratic time, you get a nasty surprise. It hasn't. India's rulers can still never make any mistake and if things go wrong it is always someone else's fault. And the beauty is that this holds for all rulers, irrespective of the party to which they belong. For the level below the elected one, of course, this holds with knobs on because the politician can at least be voted out, this class can only be promoted. There is general as well as specific proof for this. The general proof is provided by the fact that, thanks to gigantic errors of policy since 1947, India is now a truly awful country to live in for everyone except the rulers. Yet, only with a few exceptions, those who made those mistakes are generally revered. The fault is never theirs, always ours for breaking their idiotic rules. This brings up the specific proof, of which the two most recent instances are the Ketan Parekh and Enron affairs. Consider the Parekh affair first. What has he done? Borrowed money? Is that illegal? What have the banks done? Lent him money? Is that illegal? Was it illegal for Mr Parekh to ramp up some shares? Was it illegal for the banks to accept the ramped-up shares as collateral? Those with an axe to grind and I must regretfully include some crusaders from my own tribe may go after Mr Parekh. But it will be interesting to see how the charges stand up in court. Likewise, in the case of Enron, why blame it? It was the government that botched the agreement for whatever reason. Enron simply took advantage of the fact that the people who were negotiating the agreement were either out of their depth or worse. The point is that the MSEB signed the contract. Once you have signed, how can you say I didn't know this and I was not aware of that? Indeed, when you do that, are you not admitting that you are either a fool or a knave? Yet, what we see now is an elaborate attempt to shift the blame from the rulers to Mr Parekh and Enron. What's worse, most people are willing to accept this. They have been conditioned to believe that the government can never be wrong and that if it says someone else is to blame, that must be automatically correct. Amazingly, people are willing to believe that D R Mehta, the Sebi chairman, is guilty of something what, pray? but that the Governor of the RBI is completely blameless. Why? Because the finance minister is yet to say so. It is the Divine Right theory all over again. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Business NAPSTER-LIKE THREAT PUTS MOVIE INDUSTRY ON GUARD DIVX LETS USERS COPY AND TRADE FILMS ONLINE Ron Harris, Associated Press 04/16/2001 Chicago Tribune North Sports Final ; N 7 (Copyright 2001 by the Chicago Tribune) For the movie industry, a small piece of software called DivX holds the same promise and peril that the MP3 audio format presented to the record labels. DivX already has shown the potential to become a de facto Internet standard--and the basis for a California start-up that hopes to make it the compressed digital video format of choice. Thousands of film buffs have discovered that DivX can be a real alternative to paying for movies, just as Napster and MP3 allow music fans to trade millions of songs for free. "Sometimes I rent a DVD at a local rental store, I `rip' it and send it back," said Bruce Heller of Paris. "I know it's illegal, but I think it's better to rent a movie each week than buying a DVD or two each year." DivX compresses full-length movies into sizes small enough to be sent on the Internet and stored on a single compact disc. Using DeCSS software to crack the "content scrambling system" on DVDs, Heller copies movies using DivX onto his own CDs and loans them to friends. "We are only at the beginning of the movie piracy, and it's growing fast," he said. "Who would not be interested in it?" Setting a standard The challenge for Hollywood and technology companies is to create a popular yet secure standard for online video delivery before the movie industry suffers the same losses that record labels have seen. Publicly, Hollywood is enthusiastic about a future in which movies can be delivered directly to personal computers over the Internet. DivX, like other video compression technologies, could provide the answer if coupled with strong security measures, said Jack Valenti, head of the Motion Picture Association of America. "I think the technology is wonderful," Valenti said. "I don't see it as a tool of piracy. I see it as a convenience to consumers who want to [download] legitimate licensed films." DivXNetworks, a small, San Diego-based start-up, hopes to make DivX the format of choice for Hollywood. It wants to negotiate revenue-sharing deals with companies looking to sell content online but hasn't succeeded in cutting any deals with major studios. Jordan Greenhall, the company's chief executive and co-founder, said DivXNetworks' only legitimate customers so far use DivX to deliver video of monster truck contests and Japanese animation shorts. The company faces formidable challenges from Microsoft Corp., which showed the power of the Windows Media format last month by delivering a short film starring John Cleese to a Pittsburgh theater via the Net. RealNetworks Inc. also offers a secure format for "streaming" video content online and can leverage MusicNet, its online music subscription venture with AOL Time Warner Inc. and Bertelsmann AG. Leveraging the Internet Without major backers, DivXNetworks has turned to the power of the Internet, posting the DivX source code online and encouraging programmers to retool and improve it. DivXNetworks hopes DivX will become so popular that Hollywood will decide to make it the standard, in the same way that record labels have grudgingly accepted MP3s as the way to deliver music. But even if DivX becomes as popular as MP3, it faces other challenges. For one thing, although Greenhall says security measures can be incorporated into DivX, the code is loose on the Internet, where unsecured versions may prove devilishly difficult to tame. Also, Microsoft claims DivXNetworks uses technology stolen from Windows Media. "It's our technology, and they've essentially rebranded it," said Michael Aldridge of Microsoft's Digital Media division. "It's like taking a Volkswagen, taking the brand Volkswagen off the hood and putting DivX on it." Greenhall denied that his company lifted Microsoft's code, saying the latest version of the software was programmed from scratch. The notion of piping movies on demand straight to PCs over high- speed Internet connections stalled last month when talks broke off between video-rental giant Blockbuster Inc. and Enron Broadband Services. Downloading woes Robin Diedrich, an entertainment industry analyst with Edward Jones, said eight to 10 years could pass before consumers have full catalogs of movies online, because most consumers still connect to the Net through telephone wires. Downloading a full-length DivX movie using phone wiring could take days, compared with a few hours using high-speed T1 lines or cable modems. Diedrich also said studios would be leery of anything that could reduce revenue from theaters and video rentals. Valenti said online versions likely will appear only after films are delivered to theaters, airlines, home video and pay-per-view. He also said the studios he represents haven't endorsed any particular file format. They only urge that any movies delivered online be encoded with enough security measures to prevent unauthorized copying. But hackers aren't waiting. Both the DivX codec--techie shorthand for a software program used to compress and decompress video and audio data--and DeCSS software are freely available on the Internet. The Hollywood trade group is fighting back, cruising through newsgroups, Web sites and chat rooms for DivX movie traders. Hemanshu Nigam, the MPAA's director of Internet enforcement, expects to send 20,000 cease-and-desist letters this year to people who illegally trade copyrighted movies. That's 10 times the number sent out in 2000. PHOTO; Caption: PHOTO: Jordan Greenhall of DivXNetworks wants to have his company's DivX technology for transferring movies online become the industry standard. The software compresses video files for storage on a CD. AP photo by Denis Poroy. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Restarts MTBE Plant. 04/16/2001 The Oil Daily © 2001 Energy Intelligence Group. All rights reserved. Enron said Thursday that its 15,000 b/d methyl tertiary butyl ether (MTBE) plant in Morgan's Point, Texas, has restarted from scheduled maintenance. The plant came back up "a few days ago," an Enron spokeswoman said Thursday, but a specific date was unavailable. The plant was brought down for a planned turnaround on March 9. The MTBE plant is on the Houston Ship Channel near Baytown, and is Enron's only MTBE plant. The company also owns a plant in La Porte, Texas, which makes 400,000 b/d of methanol, an MTBE ingredient. © Copyright 2001. The Oil Daily Co. For more infomation, call 800-999-2718 (in U.S.) or 202-662-0700 (outside U.S.). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Panel Suggests Enron Solutions. 04/16/2001 The Oil Daily © 2001 Energy Intelligence Group. All rights reserved. A committee set up by the Indian state of Maharashtra to examine US energy giant Enron's controversial power project on Thursday recommended that the supply deal be renegotiated. Enron and the Maharashtra State Electricity Board (MSEB) have been locked in a long-standing dispute over the state utility's unpaid bills. In March, Enron, which owns 65% of Enron's Indian Unit Dabhol Power Co. (DPC), invoked a counterguarantee of the Indian government after MSEB failed to clear its bill of 1.02 billion rupees (US$21.91 million) for December. DPC has come under fire because of the relatively high cost of its power. Critics object to it charging 7.1 rupees/kilowatt hour vs. 1.5 rupees charged by other suppliers. The committee suggested that the tariff be renegotiated to make it lower and to remove the dollar linkage, which resulted in a steep increase each time the rupee fell against the dollar. The report also recommended the financial restructuring of DPC to defer payment obligations for at least five years, with a preference of 15 years. Earlier this week, Enron's Indian unit sent a political force majeure notice to MSEB (OD April10,p7). Such a notice is a contractual clause dissatisfied parties give as a first step toward possibly dissolving a contract. © Copyright 2001. The Oil Daily Co. For more infomation, call 800-999-2718 (in U.S.) or 202-662-0700 (outside U.S.). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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