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Enron Mail |
Move over Carly Fiorina... :-)
-----Original Message----- From: Jaffry, Adil Sent: Thursday, October 04, 2001 9:32 AM To: Jafry, Rahil Subject: FW: A Positive Note about Enron. fyi... From CBS.MarketWatch.com, online at: http://www.marketwatch.com/news/story.asp?siteID=yhoo&;guid=%7B76418AE7%2DC15A%2D442C%2DB883%2DA6700C723722%7D ATTACKS HIGHLIGHT ENRON'S VALUE By Lisa Sanders 3:02 AM ET Oct 4, 2001 HOUSTON (CBS.MW) -- In the wake of the Sept. 11 terrorist attacks, one of the few places to buy or sell jet fuel was an online market maintained by Enron. The attacks highlighted the Houston company's strength as a manager of risk during periods of heightened uncertainty. Through its trading centers, the company gives customers a way to hedge against volatility in oil, natural gas, and electricity markets, as well as other commodities. Although the company lost one employee aboard one of the hijacked planes and closed its operations on the day of the attacks, its trading activity resumed the next day. By coming back online so fast, "we made the decision to provide some stability in the market," said Vance Meyer, an Enron spokesman. "The customers really appreciated the fact that we were there, providing a place for them to maintain and adjust their positions in the market." In a financial sense, Enron (ENE) didn't suffer, Meyer said. But employees at the Enron Building in downtown Houston were badly shaken. Nick Humber, who worked for Enron's wind energy business, died aboard a Los Angeles bound flight that crashed into the World Trade Center. "We have offices in Washington and New York, and people who had friends that died or were affected in some way," Meyer said "We also had traders who were on the phone with people in the World Trade Center when the planes hit." The decision to temporarily halt commodity trading on the New York Mercantile Exchange in the wake of the attacks "may have increased volatility, a boon to the group," said Bob Christensen, analyst at FAC/Equities. Companies that can defray volatility by helping customers manage their energy costs should be seeing a lot of business, he said. Managing risk is what Enron does best, market players say. And that strength should help the company going forward as U.S. businesses try to recover from the impact of September 11. Through its EnronOnline platform, the company buys and sells commodities at volumes totaling about $3 billion a day, Meyer said. "The world at large has become more risk averse, and Enron, which is in the business of risk mitigation, should benefit from that," said Glen Hilton, senior analyst and portfolio manager for the Montgomery New Power Fund, which has a stake in Enron. "With energy risk and prices potentially going up, they'll be the first number on many CFOs' speed dial." Other companies do what Enron does, but it's the best positioned to succeed because of its status as the leader in natural gas and power trading, measured in terms of volume. Duke Energy (DUK) is the next-largest competitor, but it has one-third of Enron's volume. High profile departure _______________________________________________________________________ That's a good place to be for a company whose stock price has been on the skids since last year, though it grew 151 percent on the top line in 2000. Other problems notwithstanding, including its money-losing broadband business and its failure to sell the Oregon utility Portland General Electric, Enron's largest black eye came in mid-August when Jeffrey Skilling, chief executive since February, resigned abruptly. John Hammerschmidt, senior portfolio manager of the Turner New Energy and Power Technology Fund, said he "freaked out" when Skilling left and managers immediately divested the Turner large-cap portfolios of Enron holdings. Despite its status as a growth player, Turner had re-entered the stock in June after a long absence because of valuation. At the time, Enron was trading in the mid to high $40s. "This is a premier company and a premier industry," he said, adding that he believed then that the market had priced rumors into the stock. One of the rumors was that Enron was about to take a big loss from being long on power when power prices were collapsing, Hammerschmidt said. That has not materialized. Whatever the problems were, Hammerschmidt said, he felt them to be manageable. When Skilling walked out, Hammerschmidt began to believe some of the rumors might be true. "In our experience, when somebody in power leaves for no reason, there's uncertainty and uncertainty makes growth guys real nervous," he said. Management continuity _______________________________________________________________________ Now he's looking to get back in. Enron, he said, works in both down and up markets. "Enron's earnings are more solid today than they've ever been...and they're valuable because we're becoming a digital economy," he said. "We need high-quality power, and local power plants have trouble providing reliability. Enron is focused on guaranteeing people quality power in times of stress on the system." Of course there's still the issue about trusting management. After Skilling left, Enron promoted Greg Whalley to president and chief operating officer and Mark Frevert to vice chairman. "You cannot expect (Whalley and Frevert) to articulate the Enron vision the way Jeffrey did," Christensen said. "They may grow into it." On the upside, Skilling predecessor Ken Lay, who Wall Street credits with building Enron into a powerhouse, is back at the helm, and he has promised to remain at the post until a solid succession plan is in place. "We have a great deal of confidence in Mr. Ken Lay as he was the original architect of ENE's (and for that matter the entire industry's) tremendous transformation for the past decade," Merrill Lynch stated in a research report the day after Skilling left Enron. What's more: "Ken Lay has promised more transparency at Enron, more insight into how the company makes money, which will help," Hilton said. "Trying to forecast Enron's earnings is difficult." Christensen said that a "lack of data and clarity in regard" to Enron's wholesale operations has been an issue in the past. Enron has promised to provide more information when it reports its third-quarter results on October 16. Ultimately, only time will assuage investors' concerns. But with the prospects that Enron has, the stock is a deal right now, Hammerschmidt said. "I don't know what gets people back, but buy Enron at $25, and in a year, you're making money," he said. "I can see the stock getting back to $50 in a blink."
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