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Enron Mail |
Enron CEO Skilling resigns, replaced by chairman Lay
Associated Press Newswires, 08/14/01 USA: CORRECTED - UPDATE 1-Enron says CEO Skilling resigns. Reuters English News Service, 08/14/01 Enron CEO Skilling Resigns 'for Personal Reasons' (Update 1) Bloomberg, 08/14/01 Enron Pres, CEO Skilling Resigns Dow Jones News Service, 08/14/01 UK: UPDATE 1-Enron prepares to restart UK Teesside power plant. Reuters English News Service, 08/14/01 TALES OF THE TAPE: Some Still Buy The Power Growth Story Dow Jones News Service, 08/14/01 UK: UK forward electricity prices show gentle weakness. Reuters English News Service, 08/14/01 INDIA: Indian panel finalises bill for power reforms. Reuters English News Service, 08/14/01 Enron CEO Skilling resigns, replaced by chairman Lay By BRAD FOSS AP Business Writer 08/14/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. NEW YORK (AP) - After less than a year at the helm of energy giant Enron Corp., president and chief executive Jeffrey K. Skilling unexpectedly resigned Tuesday, citing personal reasons. Chairman Kenneth Lay will take over both positions, the Houston-based company said in a statement. "I am resigning for personal reasons. I want to thank Ken Lay for his understanding of this purely personal decision, and I want to thank the board and all of my colleagues at Enron," said Skilling, who replaced Lay as CEO in February. "We regret Jeff's decision to resign, as he has been a big part of our success for over eleven years," said Lay. Enron, which earned dlrs 979 million on revenue of dlrs 100.79 billion in 2000, owns a 25,000-mile (40,000-kilometer) gas pipeline and merchant power plants in the United States and abroad producing 9,000 megawatts of electricity. The company has shed many energy assets, including the unit devoted to natural gas and crude oil drilling, now called EOG Resources Inc., to pursue its goal of becoming the industry's premier middleman, bringing together buyers and sellers of energy products. The company also trades metals, paper and fiber-optic bandwidth. Skilling will continue to work as a consultant for the Houston-based natural gas and power marketing company. Lay, who was Enron's CEO from 1985 until Feburary 2001, has also agreed to continue working for the company through 2005. Shares of Enron were off dlrs 2.43, or 5 percent, to dlrs 40.50, in after-hours trading after finishing the regular session on the New York Stock Exchange up 78 cents to dlrs 42.93. --- On the Net: http://www.enron.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: CORRECTED - UPDATE 1-Enron says CEO Skilling resigns. 08/14/2001 Reuters English News Service (C) Reuters Limited 2001. In HOUSTON story headlined "UPDATE 1-Enron says CEO Skilling resigns", please read first paragraph as "Energy giant Enron Corp. said on Tuesday that Chief Executive Officer and President Jeffrey K. Skilling had resigned for personal reasons.", correcting from "...had resigned for personal reasons following months of weakness in the company's stock price and several high-profile missteps." (Corrects to clarify that company made no reference to stock price or Skilling's performance as reasons for his departure). A corrected version follows. (Adds byline, details, recasts throughout) By C. Bryson Hull HOUSTON, Aug 14 (Reuters) - Energy giant Enron Corp. said on Tuesday that Chief Executive Officer and President Jeffrey K. Skilling had resigned for personal reasons Enron Chairman Kenneth Lay will assume the additional responsibilities of president and CEO at the wholesale energy marketer and trader, positions he held for 15 years until Skilling took over in February, the company said in a press release. Lay has extended his employment agreement with Enron through 2005. "I am resigning for personal reasons. I want to thank Ken Lay for his understanding of this purely personal decision, and I want to thank the board and all of my colleagues at Enron," Skilling said in a statement. Skilling was instrumental in creating Enron's core business in natural gas marketing and trading, helping create the industry's first forward markets when he joined Enron in 1990 after a stint as management consultant with McKinsey and Co. But Skilling's tenure in the No. 2 position has been marred by the underperformance of the company's much-ballyhooed broadband business, a massive and costly payment fight with the Indian government over Enron's $3 billion Dabhol power plant project and the breakup of a marquee video on-demand broadband Internet deal with Blockbuster Inc. earlier this year. All that has weighed heavily on Enron's stock price since mid-March, when it began an extended period of weakness. In the past year, Enron's stock has fallen from its all-time high of $90.56 reached on Aug. 23, 2000, to less than half that. Over recent weeks it has hovered near its 52-week low of $42. It closed at $42.15 on the New York Stock Exchange Tuesday. "We regret Jeff's decision to resign, as he has been a big part of our success for over 11 years," Lay said in a statement. "But, we have the strongest and deepest talent we have ever had in the organization, our business is extremely strong, and our growth prospects have never been better." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron CEO Skilling Resigns `for Personal Reasons' (Update1) 2001-08-14 17:33 (New York) Enron CEO Skilling Resigns `for Personal Reasons' (Update1) Houston, Aug. 14 (Bloomberg) -- Enron's Jeffrey Skilling, who became the company's chief executive in February, resigned for personal reasons, the company said. Skilling, who joined the company in August 1990, was president of the company when he was named chief executive in December. He took over as CEO, replacing Kenneth Lay, in February. Lay, now Enron's chairman, will assume Skilling's duties, Enron said in a statement. Lay's employment contract will be extended until 2005. The company didn't immediately comment on what led Skilling to quit. ``We regret Jeff's decision to resign, as he has been a big part of our success for over 11 years,'' Lay said in a statement. ``But we have the strongest and deepest talent we have ever had in the organization, our business is extremely strong and our growth prospects have never been better.'' Lay and Skilling transformed Enron from a natural-gas pipeline company into the largest competitor in energy trading, a business made possible by deregulation of gas and electricity markets in the mid and late 1990s. Skilling has predicted that Enron will surpass $200 billion revenue this year, making it the second-biggest U.S. energy company behind ExxonMobil Corp. Though revenues have surged, profit margins have been weak and the company hasn't been popular with investors, analysts say. ``If you look at the stock perform since he's taken over, it's been pretty dismal,'' said Andre Meade, analyst with Commerzbank Capital Markets. ``I assume he's been under some pressure just based on share performance.'' Enron will find it difficult to find someone who can take over for Skilling, analysts said. ``My hunch is there is no immediate, capable, hands-on replacement for the likes of Jeffrey Skilling,'' said Bob Christensen, an analyst with First Albany Corp. Enron announced Skilling's departure after the close of stock market trading. Shares of the Houston-based company rose 78 cents to $42.93. Enron Pres, CEO Skilling Resigns By Christina Cheddar Of DOW JONES NEWSWIRES 08/14/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Enron Corp. (ENE) President and Chief Executive Jeffrey Skilling resigned Tuesday for personal reasons. Skilling, who assumed the top post of the Houston energy trading company in February, will continue as a consultant. Enron Chairman Kenneth Lay will take on the additional responsibilities of president and chief executive. Lay, who was Skilling's predecessor, agreed to extend his employment agreement through the end of 2005. "I am resigning for personal reasons," Skilling said in a press release announcing his resignation. "I want to thank Ken Lay for his understanding of this purely personal decision." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. UK: UPDATE 1-Enron prepares to restart UK Teesside power plant. 08/14/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, Aug 14 (Reuters) - U.S. energy group Enron said on Tuesday it will prepare over the weekend to restart its Teesside power station. "Over the weekend the power station will be prepared for restart", the company said in a statement. The 1,875 megawatt gas-fired power station was shut down last Wednesday after an explosion and fire killed three workers. Enron said that as a mark of respect to its the three employees and to allow for repairs the power station will not start operations until after their funerals which will take place over the next two days. Enron said an investigation into the blast by Britain's safety watchdog, the Health and Safety Executive (HSE), has been completed sufficiently to allow power generation to begin. The HSE investigation is expected to continue off site for several more days, Enron said. The Teesside power station was commissioned in 1992 and when at full capacity can supply about six percent of Britain's low summer electricity demand. News last week of the accident and plant closure pushed up wholesale electricity prices by six percent as the market scrambled to cover the expected output shortfall. The plant was thought to be producing 800-900 megawatts at the time of the explosion. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. TALES OF THE TAPE: Some Still Buy The Power Growth Story By Christina Cheddar Of DOW JONES NEWSWIRES 08/14/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- For years, production levels at Alcoa Inc.'s (AA) Badin, N.C., aluminum smelting facility were at the mercy of Mother Nature. If rainfall was steady, turbines would hum at a hydroelectric facility the Pittsburgh aluminum company built to supply the smelter's energy needs. By generating power itself, the company kept its costs low, and gave its rivals a run for their money. But if the skies stayed sunny for too long, water levels would drop, reducing the amount of power the plant produced. Then, Alcoa's managers would need to make a tough choice: buy electricity from the wholesale power market and assume the higher manufacturing costs, or slow production at the smelter. Those days are now over. In January, Alcoa signed a five-year contract with Aquila Inc. (ILA), of Kansas City, Mo. Under the arrangement, Aquila manages Alcoa's power plant and ensures that there is enough power 24 hours a day, seven days a week. Aquila buys power when the power plant's supply falls short, and sells power back to the wholesale market when there is a surplus. This type of contract is one way wholesale energy marketing and trading companies like Aquila expect to offset falling profits from energy sales and trading activities. New power plants are being constructed around the nation, and are expected to lead to lower power prices and less trading activity. If this occurs, trading companies could realize narrower profit margins on each trade they execute. Aquila and its competitors also provide other services that will cushion declines in trading profits. These businesses range from selling long-term power contracts to managing other forms of risk, including even placing bets on the weather. Still, investors are shying away from energy marketing and trading companies, and power producers like NRG Energy Inc. (NRG), Calpine Corp. (CPN), and AES Corp. (AES). Many investors have grown so used to the sector reporting profits that have tripled year-over-year that they now appear to be either unsatisfied with double-digit growth, or are skeptical that the companies can report profits without massive levels of wholesale energy trading activity. Share prices of Aquila and its competitors - which include Enron Corp. (ENE), Mirant Corp. (MIR), Dynegy Inc. (DYN), Duke Energy Corp. (DUK), among others - have all fallen between about 10% to above 20%. Power producers have fared even worse because investors have viewed the companies' long position in power and heavy-asset exposure as a liability. NRG, Calpine and AES are down between 20% to 40% in the last three months. "You kind of have to say to yourself, if investors are willing to give you a present of a growth stock at a value price, you have to take it," said Basu Mullick, portfolio manager of the Neuberger Berman Partners fund. Industry Optimistic About Growth Prospects Ultimately, what will make the difference is how well a company's management can predict the energy market's next move because when it comes down to it, electricity is a commodity, subject to booms and busts. Duke Energy North America President and Chief Executive James Donnell said he sees the current market activity as a part of the maturation process of the sector. "The players are shaking out who are the market participants," he said. During second-quarter conference calls, the industry did its best to show that it continues to be optimistic about its growth prospects. Aquila, for example, said its second-quarter earnings, which more than tripled year-over-year, would have grown more than 80% even without the growth at its trading business. Looking ahead, Aquila expects to see its earnings grow by 25% a year. "The 25% growth goal is very, very achievable," Stamm said. "We don't need $3,000 power prices to keep the industry growing." However, with Aquila shares in the mid-$20s, the stock is down almost 30% from its 52-week high of $35. Goldman Sachs' Jonathan Raleigh said Aquila shares could reach the mid-$30s in the near term with the potential to climb to $38 to $40 a share or more within the next 12 months. Larry Alberts, an electric utilities buy-side analyst at American Express Financial Advisors, said much of the selling unwarranted. He said he blames much of the activity on momentum investors and other newcomers to the group who never gained "the intimate knowledge needed to truly understand the businesses." Price-To-Earnings Ratios Attracting Value Players The selling has created a negative sentiment, which may discourage other investors from increasing the amount of stock they own or purchasing shares in a new company in the sector, said Merrill Lynch analyst Elizabeth Parrella. However, with the sector's average price-to-earnings ratio around 15 times 2001 earnings estimates and 12.7 times 2002 estimates, Parrella said she thinks the sector should see some initial interest from value investors. Those ratios "are only a modest premium to utility valuations and well below the market P/E, despite considerably higher growth rates for this sector," she said. "Several (power producers) are at less than 12-times 2002 estimates." Neuberger's Mullick finds many of the valuations in sector compelling, and is moving to an overweight position in the energy convergence area. Dynegy, of Houston, and Calpine, of San Jose, Calif., are Mullick's favorites. Dynegy is one of the most energy-price neutral companies in the sector, according to Mullick. Meanwhile, he calls Calpine's story "sheer growth by the megawatt hour." -By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. UK: UK forward electricity prices show gentle weakness. 08/14/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, Aug 14 (Reuters) - British forward electricity prices eased by about 10 pence a megawatt hour on Tuesday with winter 01 attracting most trading activity. Traders said volume at been respectable with winter 01 baseload trading between 20.75/20.80 pounds per megawatt hour with summer 02 baseload going through around 17.75 pounds, off about 10 pence. Winter 02 baseload was also modestly easier at 20.77 pounds, off again about 10 pence. The front months saw September baseload slipping to 18.05 pounds from 18.10 pounds while October baseload also dropped about 10 pence. November baseload was seen done around 20.8 pounds and December around 21.5 pounds. Enron said on Tuesday it will prepare over the weekend to restart its Teesside power station. The 1,875 megawatt gas-fired plant was shut down last Wednesday after an explosion and fire killed three workers. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Indian panel finalises bill for power reforms. 08/14/2001 Reuters English News Service (C) Reuters Limited 2001. NEW DELHI, Aug 14 (Reuters) - A new electricity bill which seeks to reform India's bankrupt state utilties, encourage private investment and end shortages has been approved by a panel of federal ministers, a government official said. The bill proposes to cut red tape, push for private investment in transmission and distribution, cut back on subsidies and allow states to tailor the reforms for their specific needs, the official told Reuters on Tuesday. "The group of ministers has cleared the bill. It will now be sent for the cabinet's approval," an official spokesman said. The new law would be introduced during parliament's monsoon session that ends on August 31, a power ministry official said. It would provide one comprehensive legislation to replace three outdated laws - the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948, and the Electricity Regulatory Commissions Act 1998. The new law will allow firms to set up power plants without seeking the approval of the Central Electricity Authority, but transmission firms would need a licence, the official said. It will also provide a legal framework to split monolithic state electricity boards into smaller firms dealing with generation, transmission or distribution, but this would not be compulsory, he said. The state power boards, which have a monopoly in power distribution in almost every part of India, are likely to report combined losses of $5.1 billion this year because of large-scale theft and free or subsidised supplies of power. He said the new bill would end the practice of charging high tariffs to industrial users to subsidise farmers. It will allow subsidies only if states provide for it from their own budget. India produces about 100,000 megawatts of power, which is 12 percent less than demand. The federal power ministry wants to double the capacity by 2012, but analysts say this needs an investment of $200 billion including large contributions from domestic and foreign firms. Government officials said they expected the new electricity bill to pave the way for increased investment after a decade-old attempt to woo private firms failed. India began its power sector reforms in the early 1990s by inviting foreign firms to set up plants. U.S. firm, Enron Corp took the lead by investing in a $2.9-billion project - India's largest direct foreign investment - at Dabhol, south of Bombay along India's west coast. But it became embroiled in a payment dispute with a utility and said recently that it wanted to sell its 65-percent stake in the Dabhol Power Co. India's utility reforms were pioneered by the eastern state of Orissa, which split its electricity board and gave equity in a generating company and a distribution firm to AES Corp . But AES also got mired in a payment schedule and said it might sell its stake in the distribution firm. Several other foreign firms also reviewed their plans to invest in India. These include Cogentrix, which walked out of a project to build a 1,000 MW plant in souther India last October, and Electricite de France, which scrapped plans to take a 15-percent stake in a project in western India. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.
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