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Forbes, 11-12-01 Enron Shares Rise, Rebounding From Nine-Year Low (Update1) 2001-10-31 11:56 (New York) Enron Shares Rise as Analysts Cite Bargain-Hunting, Financing Speculation Dow Jones Business News, 10/31/01 Enron trades higher after heavy losses CBS.MarketWatch.com, 10/31/01 USA: U.S. tech stocks up, blue chips shed gains. Reuters English News Service, 10/31/01 US West Pwr Lower On New-Month Positions Despite Gas Rise Dow Jones Energy Service, 10/31/01 UK: Enron close to exiting Indian LNG shipping deal. Reuters English News Service, 10/31/01 Mariner Energy to Sell Stake in Aconcagua Field for $51 Million Bloomberg, 10/31/01 Blowback Daniel Fisher, Forbes Magazine </forbes<, 11.12.01 Did Enron use partnerships to artificially boost earnings? Lawyers are rubbing their hands. If the truth sets you free, the top echelon at Enron Corp., present and past, should be feeling positively footloose these days. Just in time to get shackled by a slew of shareholder suits. Private securities lawyers and the Securities & Exchange Commission are looking into the Houston energy trading firm's complex relationships with outside partnerships it used to hedge against fluctuations in the value of its investments. Where Enron sees 21st-century financial engineering, lawyers see possible earnings inflation. (Chairman Kenneth Lay says Enron is cooperating with the SEC inquiry.) One partnership, run by Enron Chief Financial Officer Andrew Fastow, added $236 million in revenue in the first quarter of 2001, boosting Enron's $425 million in net income in that period. The partnership's contribution plunged to $5 million in the second quarter ended June 30, but investors only found out Aug. 14--when Enron filed its quarterly 10-Q with the SEC. Oddly enough, that was the day Chief Executive Jeffrey Skilling unexpectedly resigned. Expect class-action lawyers to go after the profits Skilling and other insiders made by selling $660 million in stock when shares were flying high. (They're down 78% from August 2000.) Since Skilling left, Enron has taken a $1.2 billion hit to shareholders' equity to unwind partnerships. "They certainly misled the market as to the size of [partnership losses]," says Thomas Shapiro, one of several lawyers filing shareholder suits against Enron. Who knows what will emerge from some of the other partnerships? Enron Shares Rise, Rebounding From Nine-Year Low (Update1) 2001-10-31 11:56 (New York) Enron Shares Rise, Rebounding From Nine-Year Low (Update1) (Adds analyst comment in sixth paragraph.) Houston, Oct. 31 (Bloomberg) -- Enron Corp. shares rose as much as 19 percent, one day after falling to their lowest level in more than nine years, amid speculation the company may be a takeover target. Shares of the top energy trader rose $1.58, or 14 percent, to $12.74 in midday trading of 19.9 million shares, compared with the three-month daily average of 10.4 million shares. Earlier, the shares hit $13.25. Shares of Houston-based Enron have fallen 84 percent this year. They have lost more than half their value this month amid a U.S. Securities and Exchange Commission inquiry into partnerships headed by Andrew Fastow, Enron's former chief financial officer. Fastow was ousted last week in an attempt to restore confidence in the stock. ``There are rumors out there that they are a potential takeover target, but I think it's very unlikely that anyone will buy them out at this point,'' said Zach Wagner, an analyst at Edward Jones & Co. ``There are too many uncertainties.'' Enron is more likely to get a large cash infusion from an investor, Wagner said. He has a ``reduce'' rating on Enron shares. He doesn't own the stock. The Wall Street Journal today said General Electric Co.'s GE Capital, Warren Buffett's Berkshire Hathaway Inc. and Royal Dutch Petroleum Co. are ``among the names bandied about'' as potential buyers for all or part of Enron. --Margot Habiby in the Dallas newsroom (214) 954-9452 Enron Shares Rise as Analysts Cite Bargain-Hunting, Financing Speculation By Christina Cheddar 10/31/2001 Dow Jones Business News (Copyright © 2001, Dow Jones & Company, Inc.) Dow Jones Newswires NEW YORK -- After losing nearly two-thirds of their value over the past two weeks, Enron Corp. shares regained some lost ground Wednesday. Bargain-hunting and speculation were said to be behind the buying, with some suggesting that Enron is nearing a deal for additional financing, while others are said to be mulling the possibility the company may be acquired. In afternoon trading on New York Stock Exchange, Enron shares (ENE) were up $1.49, or 13%, to $12.65 on volume of 24.9 million shares. Earlier, the stock traded as high as $13.25. Enron, which typically trades an average of 10 million shares a day, was again one of the most actively traded stocks on the Big Board. On Tuesday, Enron shares set a 52-week low of $10.90, which was the stock's lowest level in a decade. Commerzbank Securities analyst Andre Meade attributed the jump in Enron's stock to investors attracted by its low price. Those buyers, he said, are hoping not to be hit by the "double swords" hanging over the Houston energy trader -- a Securities and Exchange Commission investigation of the financial dealings of its former Chief Financial Officer Andrew Fastow, with an off-balance sheet financing vehicle and the possibility of another credit-rating downgrade by Moody's, which could trigger the need to issue additional stock and thereby dilute the holdings of existing investors. In addition, there is speculation "through the Houston circuit" that Enron may be close to securing additional financing, said Prudential Securities analyst Carol Coale. If the speculation proves true, the financing would help Enron to shore up its financial condition and improve confidence among investors as well as its business partners. Investors also may be placing their bets on the belief that Enron shares have eroded enough in value to make the company a takeover candidate. A report in The Wall Street Journal Wednesday said several companies including General Electric Co.'s (GE) GE Capital unit, Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB) and Royal Dutch/Shell Group (RD) have been named as potential buyers for Enron. Ms. Coale said the takeover speculation was "unwarranted" and has surfaced each time Enron shares faltered. "It would be very unusual ... for a company to be interested in a takeover (of Enron) given the uncertainty of the SEC inquiry. Why add that uncertainty to your portfolio?" she said. Furthermore, Ms. Coale said, it might be difficult for a company such as Shell to clear regulatory hurdles because it already operates a substantial energy trading business. Commerzbank's Mr. Meade also discounted the takeover speculation. He likened such a deal to the acquisition of a financial-service company. "You are buying a human-capital-based business. You have to make sure you're not going to loose all your people," he said. "It's a trickier acquisition." But not everyone thinks the takeover speculation is implausible. Roger Hamilton, an analyst at John Hancock Value Funds, said Shell and Enron are "neighbors", and Shell has looked at Enron "on and off." Still, he said that if there is a buyer for Enron, the company would want to do it sooner rather than later in order not to risk damaging Enron's leading market position. Some marketwatchers said at least some of the pressure on Enron shares in recent trading sessions has come from mutual funds liquidating their positions to avoid having the company's name appear among their holdings in their annual reports. Despite the rise in Enron shares Wednesday, there remains a significant amount of uncertainty about the stock. In addition to the pending SEC inquiry and the lingering credit concerns, attention also is being paid to their effect on Enron's trading business. While several trading counterparties have said that they are watching the situation closely, at least one, Entergy Corp. (ETR), is said to be trimming its exposure to Enron. The New York Mercantile Exchange also plans to use Enron's weakness to recapture part of the over-the-counter energy derivative market by offering its own clearing services and trading tools for the natural gas market. Write to Christina Cheddar at christina.cheddar@dowjones.com Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron trades higher after heavy losses By Lisa Sanders, CBS.MarketWatch.com Last Update: 1:27 PM ET Oct. 31, 2001 HOUSTON (CBS.MW) -- Shares of Enron, which had lost about 66 percent of their value over the past 10 sessions, spiked in Wednesday trading after a report that pegged the beleaguered company as a takeover target. Enron (ENE: news, chart, profile) added 13 percent, or $1.46, to $12.62 in recent dealings. Volume was heavy at 25 million shares. John Olson, an analyst at Sanders Morris Harris in Houston, pointed out that the heavy losses Enron sustained over the last 10 sessions partly reflects the end of the tax year for mutual funds. The calendar year for funds ends at the close of business Wednesday. "Mutual funds who own Enron stock have been trying to offset other gains by selling off Enron," he said. "Mutual funds have to register all their gains or losses and offset them by selling or buying stock by the close today." A Wall Street Journal report Wednesday speculated on Enron's potential as an acquisition for a more stable company. Enron has been under pressure for more than two weeks, beginning when the energy merchant reported a $1 billion charge in its third-quarter earnings. A Securities and Exchange Commission probe into two of the company's limited partnerships and a rating downgrade by Moody's Investors Service haven't helped. Olson said he thought an Enron takeover unlikely at this point. "However, if the stock were to keep coming down, and their financial difficulties were extended, the odds would increase," he said. Art Smith, chairman and chief executive of the research firm John S. Herold, said he'd be surprised if Enron was not entertaining offers. "It's one of the ways that Enron gets the genie back in the bottle." On the other hand, Smith said, it would take a potential acquirer time to become comfortable with the valuation of the business. "It's doubtful that a potential acquirer can resolve all the valuation issues quickly," Smith said. He said it's likely that any sort of purchase agreement would contain what he called a "look-back provision," which would protect the acquirer from being strapped to a fixed value. Smith said he could see either General Electric's (GE: news, chart, profile) GE Capital or Royal Dutch Shell (RD: news, chart, profile) making a bid. Both were mentioned in the Journal report. "GE Capital is big enough that if it didn't work out it won't cripple GE, and they've been opportunistic on things like this," Smith said. "And Shell always keeps us guessing." Olson also included AIG (AIG: news, chart, profile) and Citigroup (C: news, chart, profile) as potential acquirers. "Enron has certainly had some appeal to people that are used to an aggressive trading culture," he said. Smith said that even without Enron, the energy marketing and trading business would continue to thrive. "Even if Enron went away, it would not change what has developed into a healthy market for commodity forward markets and hedging," he said. Lisa Sanders is a Dallas-based reporter for CBS.MarketWatch.com. USA: U.S. tech stocks up, blue chips shed gains. By Haitham Haddadin 10/31/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Oct 31 (Reuters) - Technology stocks held gains in early afternoon trading on Wednesday after the U.S. economy shrank less than Wall Street feared in the third quarter, but blue chips dipped as an early rally faded on worries the worst is yet to come. "You will need a lot of fortitude to see the mountaintop when we are in the depths of the valley," said Jay Mueller, economist and portfolio manager at Strong Capital Management Inc., which oversees $42 billion. The economy suffered its worst contraction since the first quarter of 1991, the government said in its "advance" or early estimate of gross domestic product. GDP, the broadest measure of U.S. economic health, shrank 0.4 percent in the third quarter. The number still managed to beat economists' projected 1 percent drop and helped spark an early rally. Wall Street still faces a heavy economic calendar this week and is girding for readings on the manufacturing sector and job market. Some economists expect the U.S. economy will give an even worse performance in the fourth quarter as the Sept. 11 attacks haunt the nation. The technology-laced Nasdaq Composite Index advanced 28.65 points, or 1.72 percent, to 1,696.06, after snagging a gain of more than 3 percent earlier in the day. Sun Microsystems Inc. jumped 77 cents to $10.31, or 8 percent, after the network computer maker said orders were tracking higher this quarter than they were this time last quarter. The Dow Jones industrial average was off 6.23 points, or 0.07 percent, at 9,115.75, after climbing more than 1 percent. Eastman Kodak Co., down $2.69 to $25.11, or 9.7 percent, pressured the blue-chip gauge after Moody's cut its debt rating and warned it may lower the long-term rating again amid falling profits. The broader Standard & Poor's 500 Index rose 4.03 points, or 0.38 percent, at 1,063.82. The stock market had sold off in the last two days after rallying last week. Wall Street widely expects the economy to slip into a recession. But investors are hoping more tax cuts and lower interest rates will lift the economy by 2002. President George W. Bush urged Congress to pass a stimulus package by the end of November in a speech at the White House. Most economists expect the economic contraction to last at least to the end of the year and if it does, the third quarter would mark the start of the first U.S. recession in 10 years. A recession is loosely defined as at least two straight quarters of falling GDP. In other economic news, the National Association of Purchasing Management-Chicago said its October index slipped to 46.2 from 46.6 in September, but this beat economists' estimates of a drop to 43.0. The October index that showed less weakness than expected suggests regional manufacturing could bottom fairly soon, but does not necessarily mean Thursday's national survey by NAPM will follow suit, analysts said. "What it's showing is that the economy, although it's slowing now, is slowing at a gradual pace as opposed to rapidly plunging off a cliff," said John Herrmann, chief economist at IDEAglobal. "We think the NAPM index falls a little bit more than this because NAPM will capture corporations in New York and outside the region of Chicago." The October National Association of Purchasing Management (NAPM) index, due shortly after the open on Thursday, is forecast on average slipping to 44.3 from 47.0 in September. Intel Corp., a Dow member and Nasdaq heavyweight, added 63 cents to $24.17, or 2.6 percent. The world's largest chip maker sounded a bullish note for long-term growth, saying the billions it's spending this year will yield profits and market share gains once the high-tech recession abates and growth resumes. Motorola Inc. rose 51 cents to $16.65, or more than 3 percent, after the wireless giant said its global market share rose in the July-September quarter from the second quarter, boosted by sales of new products. Adobe Systems Inc. fell $3.41 to $25.34, or nearly 12 percent. The publishing software vendor said it would cut 150 jobs, or 5 percent of its work force, and lowered its revenue and earnings guidance, citing weakening business after the Sept. 11 attacks. Enron Corp. rose $1.47 to $12.63, bouncing back from 10 consecutive days of losses. The Wall Street Journal said on Wednesday in its influential "Heard On The Street" column that with Enron trading at book value, some Wall Streeters see the beleaguered energy trader as a takeover target. Enron shares on Tuesday dropped 19 percent to hit 1992 levels amid fears of a credit crunch and concerns over management reluctance to discuss its finances. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. US West Pwr Lower On New-Month Positions Despite Gas Rise 10/31/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Prescheduled power prices in the western U.S. fell somewhat despite higher spot natural gas prices in the region, traders said, attributing lower power prices to new market positions in the new month. "I think a lot of people came into November long," one trader said. Western spot gas prices were down about 20 cents. Other power fundamentals were unchanged, with electric space heating demand remaining well below normal for this time of year due to mild weather. One trader said Enron had been aggressively selling down day-ahead power at Palo Verde as it covered a short position in the rest of the month. Later it bought day-ahead Palo Verde power, which drove the daily market back up. The short position at Palo Verde became a concern after rumors spread of a five-day delay in restarting a Palo Verde nuclear power plant unit that has been out for refueling since Sept. 28. The plant operator, Arizona Public Service, said the unit's restart had been delayed a day or two, not five days. On-Peak/MWh One Day Earlier Palo Verde, AZ $37.00-$39.50 $38.50-$41.50 South Path 15, CA 37.00- 39.00 37.00- 40.00 North Path 15, CA 37.00- 39.00 36.00- 39.00 Mid-Columbia, WA 37.50- 39.40 36.00- 39.00 Looking ahead, somewhat warmer temperatures forecast for Friday could cut heating demand in Thursday's prescheduled power market. Western U.S. electric space heating loads Friday are forecast to be 71% of normal for this time of year, compared with 76% of normal Wednesday, according to forecaster Weather Derivatives Inc. -By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. UK: Enron close to exiting Indian LNG shipping deal. 10/31/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, Oct 31 (Reuters) - U.S. Energy major Enron Corp is close to exiting a joint shipping venture linked to its troubled Dabhol power plant in India, shipping sources said. "Enron has pulled out of the Lakshmi (the ship) and has dumped it on its partners in the deal, Mitsui OSK Lines and the Shipping Corporation of India," said one shipping executive. "Essentially it's linked to the collapse of the Dabhol deal," he added. Enron has a 65 percent stake, valued at $1 billion, in the Dabhol power plant, which has been stalled by a long-running payment dispute with its only customer, a local utility. "We have been in discussions about Greenfield Shipping (the ship owning company), but at the moment it is not appropriate to comment on future plans," said a spokesman for Enron in Houston. The shipping source said the ship had been contracted at the above-market price of $223 million from MHI yard in Japan, and would need the high charter rate of $92,000 per day to cover its costs. This would be difficult to acheive. Enron said the ship had been financed through 70 percent debt and 30 percent equity, in which it had a 20 percent stake. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Mariner Energy to Sell Stake in Aconcagua Field for $51 Million 2001-10-31 11:47 (New York) Mariner Energy to Sell Stake in Aconcagua Field for $51 Million Houston, Oct. 31 (Bloomberg) -- Mariner Energy Inc., an oil and gas exploration company, expects to tomorrow complete the sale of its stake in the Aconcagua Field and Canyon Express Pipeline System for $51 million to Nippon Oil Exploration Ltd. and Pioneer Natural Resources Co. The Aconcagua field, about 150 miles southeast of New Orleans, is one of three deepwater natural gas fields being developed as part of the Canyon Express Pipeline. Houston-based Mariner is majority owned by an affiliate of Enron Corp. Nippon Oil Exploration is a unit of Nippon Mitsubishi Oil Corp., Japan's largest oil refiner. Shares of Irving, Texas-based Pioneer Natural Resources rose 4 cents to $17.10 in midday trading. --Amy Hellickson in Princeton (609) 750-4549 or at
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