INTERVIEW: New Enron CFO On Ambitions In Forest Products
Dow Jones Commodities Service, 10/30/01

Enron Shares Fall a Day After Moody's Lowers Rating (Update1)
Bloomberg, 10/30/01

Enron Bond Default Insurance Doubles on Credit Woes (Update1)
Bloomberg, 10/30/01

USA: UPDATE 1-Enron shares renew plunge, drop to eight-year lows.
Reuters English News Service, 10/30/01

USA: Enron shares continue slide.
Reuters English News Service, 10/30/01
STOCKWATCH Enron falls 18 pct on concerns about co's credit worthiness
AFX News, 10/30/01
USA: U.S. stocks slump on big drop in consumer confidence.
Reuters English News Service, 10/30/01
Analyst Report
CNNfn: Before Hours, 10/30/01
Waiting for Enron's Bottom
RealMoney.com, 10/30/01

GERMANY: German watchdog may sue firms over power charges.
Reuters English News Service, 10/30/01




INTERVIEW: New Enron CFO On Ambitions In Forest Products
By Zahida Hafeez
Of DOW JONES NEWSWIRES

10/30/2001
Dow Jones Commodities Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

CHICAGO -(Dow Jones)- While Enron Industrial Markets' trading of forest products has grown at a steady pace, Jeff McMahon, the new chief financial officer of Enron Corp. (ENE), said one of the "biggest obstacles" to the unit's even better performance remains strong publisher-producer relationships. 
In an interview with Dow Jones Newswires on Oct. 23, when he was chief executive of Enron Industrial Markets and before his appointment as Enron CFO, McMahon said "we may end up changing that relationship" between producers and consumers. That may seem like a tall order in an industry which functions on decades-long ties, though sometimes ties based on a love-hate relationship.
However, judging from the steady growth so far in Enron's newsprint trading as well as expectations for growth by the end of 2001, Enron is making headway in the physical trading of forest products. 
The volume of newsprint Enron bought and sold jumped from less than 5,000 metric tons in January to 60,000 tons in July. And by the end of the year, Enron officials expect their monthly newsprint transactions volume will have doubled July's levels to reach 120,000 tons. 
However, even with such expectations for growth in the monthly transactions volume, becoming a major player in the forest products industry may take a while for Enron to achieve. 
Enron's projected volumes for newsprint sales and purchases form a small portion of the total annual sales estimated at roughly 15 million tons for the North American region. 
"In three years, will we look like an Abitibi? No, that's not our goal," said McMahon, referring to Abitibi-Consolidated Inc. (ABY), the world's largest newsprint-maker. "Our goal is to be (one of) the largest marketers of newsprint in North America...to fundamentally change the way newsprint is bought and sold in North America, in giving consumers and producers additional ways to manage their risks," he said. 
The way the forest products industry currently manages price fluctuations - undesirable from both the producer and publisher standpoint - hasn't worked, whether it's through producers asking customers to trust them or through supply management, McMahon argued. 
Referring to a graph of price fluctuations superimposed on inventory levels, McMahon said, "I wonder if inventory levels are a leader or follower of price change? It's the which-came-first-the-chicken-or-the-egg question." 
"(The price volatility) has been around for 100 years, why will it be fixed in 2002?" he asked. 
The best way to diminish price gyrations, McMahon said, is to lock in long-term prices through Enron's financial hedging tools. Even the company's physical trading end ultimately serves to promote a market for its hedging products. 

Other Hurdles In Growing Newsprint Trading Volumes 

For now, McMahon concedes that Enron Industrial Market's forest products operations have to overcome some hurdles. One other major hindrance has been the fact that Enron's message has been a hard sell to production managers at printing presses. 
Some purchasing managers and production managers at U.S. publishers argue that their printing presses are very sensitive to the quality of newsprint and fear that Enron's newsprint may not be up to the mark. 
Such thinking is misguided, Enron officials counter, because a majority of publishers across the country use printing presses made by the same maker, and yet, those who have tried Enron's newsprint are happy with its quality. 
In any case, when more production managers start to get convinced of Enron's ability to provide product that will satisfy their printing presses' specifications, "That's where the evolution starts to happen," said McMahon. 
Another way McMahon believes his company can accomplish its goals is to create a pricing benchmark. 
Though the various qualities and grades of newsprint will still exist, "physical newsprint can price off that benchmark once that (standard) is achieved," he explained. 

Former CFO Imbroglio Doesn't Affect Forest Pdts Arm 

McMahon replaced Andrew Fastow as CFO last week amid an informal investigation by the Securities and Exchange Commission into the company's finances as well as talk of losses stemming from partnerships managed by Fastow and the subsequent plunge in Enron's stock price. 
The energy giant said Monday it was lobbying banks for a new credit line as Enron struggles to bounce back from a disappointing third-quarter and the Fastow-related transactions. 
Although McMahon was unavailable for an updated comment, Karen Denne, vice president of communications, said Enron Industrial Markets venture in forest products will stay on the same course without any pullback in capital despite the company's current struggles. 
Enron began its physical trading of newsprint and other forest products more than a year ago, while it has been offering financial hedging tools in the sector for the past five years. 
-By Zahida Hafeez, Dow Jones Newswires; 
312-750-4132; zahida.hafeez@dowjones.com

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



Enron Shares Fall a Day After Moody's Lowers Rating (Update1)
2001-10-30 13:19 (New York)

Enron Shares Fall a Day After Moody's Lowers Rating (Update1)

     (Updates with comment from AEP, Exelon and Northeast
Utilities on trading business starting in sixth paragraph.)

     Houston, Oct. 30 (Bloomberg) -- Enron Corp. shares fell as
much as 20 percent a day after Moody's Investors Service placed
the largest energy trader's rating for commercial paper on review
for downgrade and lowered its long-term debt to two notches above
junk status.

     Shares of Enron fell $2.60, or 19 percent, to $11.21 in early
afternoon trading. Earlier, they touched $11, the lowest price
since January 1993. The stock, down for the 10th day in a row, had
dropped 83 percent this year.

     Moody's lowered Enron's long-term credit rating to ``Baa2''
from ``Baa1'' yesterday. It also placed the company's ``P-2''
rating for commercial paper on review for possible downgrade.

     ``I think investors would have loved to have no downgrade or
a more stable outlook for the company,'' Commerzbank Securities
analyst Andre Meade said. ``Moody's left some uncertainty.''
     Meade doesn't own Enron shares and rates the company
``accumulate.''

     Executives from Exelon Corp., American Electric Power Co. and
Northeast Utilities said they still are trading with Enron.

                        `Watching Closely'

     ``Nervous is probably not the right word, but we are watching
very closely,'' AEP Chief Executive Officer Linn Draper said at an
energy conference in New Orleans. ``We are focusing our new deals
with them in the short term, November and December,''

     Columbus, Ohio-based AEP is the biggest U.S. electricity
generator. Traders often buy and sell power for delivery the next
day or for over a week, month, quarter or calendar year. The
Bloomberg Energy Service is quoting power prices for as far ahead
as September 2003.

     ``We are keeping a close eye on our exposure,'' Exelon Corp.
Co-Chief Executive Officer John Rowe said at the conference. ``We
are keeping a tight dollar limit on trades.'' He declined to
provide specifics.

     Chicago-based Exelon is the biggest U.S. nuclear-power
producer.

     ``Three weeks ago, we started monitoring our position with
Enron,'' Northeast Chief Financial Officer John Forsgren said at
the conference. ``Right now, we have a net payable to them, so
there's no exposure on our side, and we'll probably keep it that
way.''

     Northeast, based in Berlin, Connecticut, will continue to
trade with Enron as long as its debt ratings remain investment
grade, Forsgren said. Northeast is New England's biggest utility
owner.

                            SEC Inquiry

     The Wall Street Journal reported that a U.S. Security and
Exchange Commission inquiry into Enron's financial dealings with
affiliates, run by the company's former chief financial officer
Andrew Fastow, has moved to Washington, signaling the
investigation has become more serious.

      Investors say they are worried about $3.3 billion in
liabilities from the affiliates, which were formed to buy and sell
Enron assets. Houston-based Enron ousted Fastow on Wednesday amid
the SEC inquiry into the partnerships he ran that cost the company
at least $35 million.

     Other energy stocks also fell today as the price of natural
gas on the New York Mercantile Exchange dropped as much as 3.7
percent. The Standard & Poor's 500 Index as much as 2.3 percent as
consumer confidence in the U.S. economy dropped in October to the
lowest level in more than 7 1/2 years.

     Shares of Duke Energy Corp. fell $1.33 to $37.81. Dynegy Inc.
dropped $2.23, or 5.7 percent, to $36.70. El Paso Corp. fell
$1.44, or 2.8 percent, to $49.30. Exxon Mobil Corp. fell $1.15 to
$39.53.

--Mark Johnson in the Princeton newsroom, (609) 750-4662 


Enron Bond Default Insurance Doubles on Credit Woes (Update1)
2001-10-30 12:58 (New York)

Enron Bond Default Insurance Doubles on Credit Woes (Update1)

     (Adds background on asset write-offs in seventh paragraph.)

     New York, Oct. 30 (Bloomberg) -- Insurance premiums have
doubled for Enron Corp. bondholders as investors seek protection
amid questions about whether Enron will pay its debts and keep its
investment-grade credit rating.

     A contract to protect against a default for the next 18
months has increased to an annual fee of between 13.5 and 16.5
percent of face value, up from 6.5 to 7.5 percent a week earlier,
according to CreditSights Inc.

     Enron shares fell as much as $2.74, or 20 percent, to $11.07.
The stock has lost 65 percent of its value since Oct. 17. Enron's
6.4 percent coupon bonds due in 2006 were bid at 74 cents on the
dollar, traders said, down as much as 6 cents from yesterday's
price of 80 cents. The debt now yields 14.1 percent, up from 12.1
percent yesterday and 10.8 percent on Friday.

     Banks are ``scrambling to hedge their exposure in the credit
protection market,'' said Peter Petas, a debt analyst at
CreditSights.

     John Tompkins, a trader at CreditTrade, a credit derivatives
brokerage, said there's interest among buyers, though not sellers
of Enron default swaps. He said there are bids for Enron credit
default swaps at 7 to 8 percent annually for five years'
protection and 12 percent annually on the three years' contract --
with no offers.

     ``Enron is atrocious today,'' he said.

                            Undisclosed

     The largest energy trader's troubles began two weeks ago when
it reported $1.01 billion in losses, including more than $544
million written off on a competitive energy supplier business and
a bandwidth trading business. Enron formed at least 18 affiliated
companies to buy and sell company assets, according to records
from the Texas secretary of state. Some of those affiliates
profited from buying or selling assets to Enron.

     The Houston-based company losses included $35 million from
partnerships set up by Chief Financial Officer Andrew Fastow.
Fastow was later fired and the U.S. Securities and Exchange
Commission has asked for information about the transactions.

     The disclosure has set off concern among investors about how
little is known about Enron's balance sheet and caused ratings
companies to examine the company.

     ``Investors are nervous about this name,'' said Freda Lam, a
credit strategist at J.P. Morgan Chase & Co. in New York.

                        Investor Relations

     Enron's long-term debt rating was cut yesterday to ``Baa2,''
two levels above junk, from ``Baa1.'' Moody's also placed the
Houston-based company's ``P-2'' rating for commercial paper --
borrowing for nine-months or less -- on review for downgrade.
Enron has been shut off from the commercial paper market since the
ratings agencies began the review.

     The lack of access to money markets makes it more difficult
for Enron to borrow the short-term cash needed to run its trading
businesses. Ahead of a potential cut, Enron took out bank lines to
repay $2 billion in commercial paper last week.

     Still, most of Wall Street expects Enron's bonds to be paid
and its stock price to bounce back.

     ``We suspect that Enron's share price will not likely recover
in the near term,'' Lam said. ``We ultimately expect this company
to be successful. But it needs to improve its investor relations
and its disclosure.''

--Tom Kohn in the London newsroom (44-20) 7330 7929 

 
USA: UPDATE 1-Enron shares renew plunge, drop to eight-year lows.

10/30/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Oct 30 (Reuters) - Shares of Enron Corp. on Tuesday dropped to eight-year lows, a day after the energy giant said it is seeking fresh credit and a rating agency cut some of the company's debt to two notches above junk status. 
Enron's stock plunged $2.56, or more than 18 percent, to $11.25 in morning trading on the New York Stock Exchange. The shares have tumbled every day since Oct. 16, when North America's biggest marketer and trader of natural gas and power reported its first quarterly loss in more than four years.
The last time the shares traded below $12 was in January 1993. 
After cutting Enron's senior unsecured debt rating on Monday, Moody's Investors Service warned it could lower the rating even further, as well as cut Enron's short-term debt status. 
Also on Monday, Enron confirmed that it was seeking additional credit lines after tapping its $3.3 billion credit lines last week. However, the company declined to say how much it was asking its banks to extend. 
Houston-based Enron has lost more than $15 billion in market capitalization in the past two weeks amid a series of disclosures about off-balance-sheet deals with partnerships run by a former chief financial officer. 
Shares have plummeted amid concerns about the transactions the Securities and Exchange Commission said it was looking in to. In a move to bolster investor confidence, Enron last week ousted the CFO linked to the transactions and named a new one. 
When Enron released its financial results two weeks ago, the company a day later said it was writing down shareholders' equity by $1.2 billion, a move that surprised investors.

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

USA: Enron shares continue slide.

10/30/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Oct 30 (Reuters) - Shares of Enron Corp. on Tuesday dropped to their lowest level in more than eight years, a day after the energy giant said it was lobbying banks for a new credit line and a rating agency downgraded the company's senior unsecured debt to two notches above junk status. 
Enron's stock was down $1.06, or 7.68 percent, to $12.75, nearly an eight-year low, in early trading on the New York Stock Exchange. The last time the shares fell below $13 was in February 1993.
After cutting Enron's rating, Moody's Investors Service warned that it could lower the rating even further, as well as cut Enron's short-term debt status. 
Houston-based Enron has lost about $15 billion in market capitalization amid a series of negative disclosures about off-balance-sheet deals with two partnerships. Investors looking for answers have abandoned Enron, which has firmly declined to provide details.

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


STOCKWATCH Enron falls 18 pct on concerns about co's credit worthiness

10/30/2001
AFX News
(c) 2001 by AFP-Extel News Ltd

NEW YORK (AFX) - Shares of Enron Corp were sharply lower in afternoon trade, losing over 18 pct, on concern over the company's credit worthiness, a day after it said it is negotiating with banks for a new credit line and Moody's Investor Service cut the company's senior unsecured long-term debt ratings, dealers said. 
At 1.37 pm, shares of Enron were trading 2.47 usd lower, or 18.18 pct, at 11.34.
The DJIA fell 144.75 points to 9,124.75, the S&P 500 lost 17.57 points to 1,060.83, while the Nasdaq composite declined 33.72 points to 1,665.75. 
On Monday, Moody's said it has lowered the senior unsecured long-term debt ratings of Enron Corp to Baa2 from Baa1 following a deterioration in the company's financial flexibility since it announced significant writedowns as well as equity charges in previously undisclosed partnership investments. 
The long-term debt ratings remain on review for further downgrade, Moody's said. 
In its third-quarter results two weeks ago, Enron announced a charge of 1.01 bln usd, or 1.11 usd per share, and an incremental 1.2 bln usd reduction stockholders' equity, related to the unwinding of investments with the LJM partnerships. 
The Securities and Exchange Commission requested the company to provide information on these related-party transactions days later. Many analysts responded by cutting the shares ratings on concerns that dealings with the related LJM partnership, connected to its then chief financial officer, Andrew Fastow, may affect future earnings. 
Fastow was dismissed by Enron's board last Thursday for his involvement in running the LJM partnerships, in which Enron had invested. 
Enron's heavy investments in water, broadband and international energy have come under significant pressure in the wake of the current economic deterioration. 
Following the company's third-quarter results, investors have been abandoning the stock in droves, worried that the valuation and credibility of Enron's core business, merchant energy, is at risk. "The Big Bets that Enron took on water and broadband were designed to overcome future limits to growth in its very successful energy merchant business and propel Enron into a new league of company. 
"The Bets turned out to be too big, and regrouping after they failed is the root of the current confusion over Enron's forward prospects," said Duane Grubert, an analyst at Bernstein. 
While Enron can survive on its own, its reputation and branding has been damaged, said Grubert, noting that a partnership might be the best long term solution for the energy trader. 
The major issue for the company is maintaining its credit worthiness on long-term investment grade rating of its debt. 
"If that rating is lost, the merchant business will not be able to transact with its normal addressable market, and income is likely to shrink quickly." 
blms/lj For more information and to contact AFX: www.afxnews.com and www.afxpress.com

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


USA: U.S. stocks slump on big drop in consumer confidence.
By Denise Duclaux

10/30/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Oct 30 (Reuters) - Stocks were rooted in negative ground at midday on Tuesday as consumer confidence in October tumbled to its worst level in more than seven years after the deadly Sept. 11 attacks left the nation reeling. 
Fragile consumer sentiment added just one more layer of apprehension to Wall Street. Stocks began on a weak note amid dour outlooks from companies like software provider Openwave Systems Inc. , concern that Argentina will default on its $132 billion debt load and fear of more deadly attacks on the United States.
"The very weak consumer confidence numbers threw fuel on the fire, the market had already been sliding back from what had been fairly substantial gains," said Rick Meckler, president of investment firm LibertyView, which oversees $1 billion. "It just encouraged those people who had profits at all to take their profits now before the market is considerably lower." 
The blue-chip Dow Jones industrial average slumped 120.62 points, or 1.3 percent, to 9,148.88, after falling 2 percent earlier. McDonald's Corp. , off $1.58 at $25.70, dragged on the Dow after the world's largest fast-food restaurant company projected 2002 earnings below Wall Street's forecasts. 
The tech-laced Nasdaq Composite Index fell 27.04 points, or 1.59 percent, to 1,672.48, after dropping 3 percent. Juniper Networks Inc. lost 27 cents to $23.73 after Merrill Lynch cut its rating on the network equipment maker after its shares more than doubled in the last month. 
The broader Standard & Poor's 500 Index lost 14.77 points, or 1.37 percent, at 1,063.53. On Monday, stocks suffered their steepest drop since the week after the Sept. 11 attacks. 
Adding pressure to Wall Street, U.S. Attorney General John Ashcroft warned militants may be plotting new attacks on the United States at home and abroad in the next week. 
Stocks sank on Monday after a rally last week stoked by hopes that lower interest rates and more tax cuts will revive the economy by 2002. Many economists are betting on an economic bounce next year, but they warn of grim news in the meantime. 
"We are waiting for the economic news to indicate that the unprecedented levels of fiscal and monetary stimulus will have their desired impact, but it's going to be months before that can happen," said Tony Dwyer, chief market strategist at Kirlin Securities. "It's going to be choppy." 
Losers trounced winners on the New York Stock Exchange by a ratio of 5 to 2 and 7 to 3 on Nasdaq. More than 630 million shares changed hands on the Big Board, and more than 930 million on Nasdaq. 
U.S. consumer confidence plummeted in October to its lowest in more than seven years as growing numbers of Americans lost their jobs, according to a survey conducted after the Sept. 11 attacks on the United States. 
The Conference Board, a private business research group, said its index of consumer confidence plunged for a fourth straight month to 85.5 in October, its lowest since February 1994. 
The report, which was much worse than Wall Street expectations for a fall to 95.6, said a rebound in confidence was not likely any time soon. Fading consumer confidence could undermine consumer spending, which drives two-thirds of activity in an economy most believe is already in recession. 
The third-quarter earnings reporting season is winding down, but Wall Street is girding for this week's heavy load of economic data. The data will include reports on jobs, manufacturing and third-quarter growth, which could point to a recession. 
"The premise has been that sometime in the spring there will be an economic recovery, but now it's October and you can't play that game every day," said Larry Wachtel, senior vice president at Prudential Securities. "All the news continues to be bad. When we were oversold, we were able to get over it. But now we are overbought and it's a struggle every day." 
Ford Motor Co. , the world's second largest auto maker, shed 3 cent to $16.18. The company ousted President and Chief Executive Jacques Nasser after more than a year of mounting troubles and will replace him with Chairman William Clay Ford Jr. 
Openwave Systems Inc. sank more than 21 percent, or $1.89, to $7.10. The communications software provider warned of disappointing results and was restructuring and slashing jobs. 
Enron Corp. lost $2.57 to $11.24, dipping below $12 for the first time since January 1993. The energy giant is lobbying banks for a new credit line and a rating agency chopped Enron's senior unsecured debt to two notches above junk status. 
Philip Morris Cos. Inc. , the world's largest tobacco company, dropped $1.87 to $47.81. Investment house Goldman Sachs removed the Dow component from its recommended list, saying profit growth is likely to slow at its domestic and international tobacco operations. 
The stock of Health insurer Anthem Inc. rose $4.56 to $40.56 in its debut on the NYSE, boosting hopes for a recovery in the moribund market for initial public offerings.

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

Business
Analyst Report
David Haffenreffer

10/30/2001
CNNfn: Before Hours
(c) Copyright Federal Document Clearing House. All Rights Reserved.

DAVID HAFFENREFFER, CNNfn ANCHOR, BEFORE HOURS: Welcome back. Investors are watching for the next move from the nation`s largest natural gas and power marketing company, Enron (URL: http://.www.enron.com/) . The battered energy trader attempting to establish credit lines. And Moody`s downgraded the company`s credit rating to just a couple of notches above junk status. Enron`s stock, take a look at this, plunged more than 10 percent, that was just yesterday. It has lost about 50 percent over the past two weeks. 
How are Enron`s woes affecting the natural gas market? Joining us now is Robert Collins, the president of the New York Mercantile Exchange. And welcome back to the program.
J. ROBERT COLLINS, PRESIDENT, NYMEX: Thank you. 
HAFFENREFFER: Certainly Enron is very much involved in the trading of natural gas. And this has got to where which trades on the NYMEX. How have the levels, the of high levels, of certainty surrounding this companies current problems affected that? 
COLLINS: Well, any time that a company goes through a short term period of troubles, the industry surrounding that, that has an intricate layer of credit relationships, is concerned about their ability to be paid. 
HAFFENREFFER: But for people who don`t know what Enron does, what role do they play in the trading of natural gas futures? 
COLLINS: Well, they are a major counter-party in the natural gas industry in trading, selling and distributing natural gas. And so, they have an extensive network of credit relationship with virtually every natural gas company in the North American industry. 
HAFFENREFFER: Are they involved, in some way, with almost every trade having to do with natural gas? Are they that big? 
COLLINS: No. I wouldn`t say that they`re involved with every trade. They`re involved in a substantial amount of trading through their electronic market making system. But, no, they`re only a component of the market, and only do, perhaps, a percentage of what trades on the NYMEX. 
HAFFENREFFER: So when trading takes place, and it`s very fast, there`s a lot of money changing hands all the time. There`s a lot of credit given to people trading and when a company like Enron has got some liquidity problems, or just even fears of liquidity problems, that can affect people who do trades with them. 
COLLINS: Yes. Absolutely. It can cause people to retract from trading. It can cause disruptions in the natural flow of trading. It`s not unlike the financial markets at all. When you have a serious credit concern. 
HAFFENREFFER: As result, the NYMEX is working at a faster clip to get a clearing service set up. Is that right? And explain what role will that have in easing people`s fears. 
COLLINS: Well, last night, the board approved offering a new service called over-the-counter clearing. We`re extending it initially on our primary natural gas contract, the Henry Hub Natural Gas Futures. What that does is allow counter-parties that perhaps may question each other`s credit worthiness to place the trade on the exchange clearing mechanism. That`s a network of 50 financial institutions and has AA credit standard. 
HAFFENREFFER: Real quick. It`s been about a month and a half since September 11th. 
COLLINS: Yes. 
HAFFENREFFER: Are things back to normal? 
COLLINS: I wouldn`t say that they`re back to normal. Although every day gets a little better. 
HAFFENREFFER: All right. Good to see you. 
COLLINS: Thank you. 
HAFFENREFFER: Bob Collins, NYMEX president. 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Waiting for Enron's Bottom
By James J. Cramer <mailto:jjcletters@thestreet.com>

RealMoney.com
10/30/2001 09:17 AM EST
URL: <http://www.thestreet.com/p/rmoney/jamesjcramer/10003209.html>

You want to know when you can buy Enron (ENE:NYSE - news - commentary) ? It will have nothing to do with the fundamentals. I'm pretty sure that the investment banks will do whatever is necessary to keep this oil and gas version of Long Term Capital Management, the hedge fund that blew up, in business, if only because it was everybody's best client. 
These days, though, when concentration of holdings among mutual funds is still the rage, as idiotic as it is, all you need to know about Enron's bottoming is when Janus is done selling it. Janus' aggressive buying -- the fund owned 50 million shares of this thing not long ago, which is a staggering concentration -- moved the stock up to begin with. 
My sources indicate that Janus has been dumping the stock. I don't think you can possibly make a decision whether to buy it without knowing when Janus is done. That's the key material fact, not whether Enron gets the credit line. 
The game wasn't always like this. Other than Ken Heebner in the '80s, most mutual fund managers didn't try to be bigger than the market. They didn't try to move up stocks by buying. And they certainly didn't wreck stocks on the go out. 
Ah, but the years 2000 and 2001 have brought about a different paradigm. When these mutual funds dump, they dump terribly and really damage the stock, which then damages the company, which then damages the company's credit, which then further damages the stock again. It is a really vicious circle that starts with the selling by the funds that created the darling. 
I wouldn't touch this stock unless I knew that Janus was done selling. Of course, that will be a big secret, because Janus sure isn't going to tell you, and the broker isn't going to tell you. I have had brokers on the sly tell me when these folks have finished, but I fear that Janus will finish with one broker then just go to another, as that is also their "style" of trading. I put quote marks on style because the reality is that a "style" would mean they know how to trade out of a big position, and these folks really don't. 
Of course, what they should have done is gotten a bid for 50 million shares down two or three points rather than play this drib and drab game. But they never did learn to sell at that shop, which is another reason why you can't do business with them now that the market is no longer straight-up. 
So there really will be no way of knowing until you see the volume of this stock rise and the stock itself start going up. For those of you who believe Enron will make it, it's best to miss the first two points just to be sure Janus is done. I will keep my eyes out for you, too. 
We'll spot the bottom, if there is one, together. 
Random musings: Think you are a good trader? Think you can trade with the big boys? Think you want to be able to catch on with a hedge fund? Want to pick up five G's in the interim? OK, then, enter our trading contest. That's right, we have a contest where there's real money on the line once you have entered it, real prize money. This could be the test, the verified test, you need to show guys like Berko, my old partner, that you know how to trade to make money. I can't tell you how valuable that validation can be for your career. 
And you get paid to boot! 
Sign up here for the contest. I do hope you join. 


GERMANY: German watchdog may sue firms over power charges.
By Claire-Louise Isted

10/30/2001
Reuters English News Service
(C) Reuters Limited 2001.

FRANKFURT, Oct 30 (Reuters) - Germany's cartel office said on Tuesday it would take legal action against four utilities if they did not change the way they charge competitors for power used to keep the grid in balance. 
"We have to wait for the reaction of the four companies to see if they will change their accounting system so that they do not hinder other competitiors," cartel office spokesman Stefan Siebert told Reuters.
"If they don't do that, then ultimately we could issue an injunction to force them to do so." 
The competition authority said earlier in a statement it had received complaints that grid operators Bewag (BKLG.DE, EnBW , HEW and Veag that the four firms "charge their competitors unreasonable and partly fictitious costs" for balancing energy. 
German grid operators have sole control over the purchase and sale of such power in their grid areas, which they control by temporarily switching on and off their power plants. This poses a potential threat to other power suppliers. 
"New entrants to the German market, such as London's Enron Capital & Resources and Hamburg's LichtBlick, because of their small customer portfolios, cannot balance unplanned amounts of power withdrawn as well as the big utilitiy groups can," the statement said. 
"Consequently they have a greater need for balancing energy (and) are threatened with the considerable burden of unreasonable prices for it." 
The four utilities have argued that the accounting system they use for balancing energy corresponds to guidelines in the country's association agreement (VV2), which is due to be modified by next year. 
"Illegal cartel conduct cannot be justified through the association agreement," said cartel office president Ulf Boege in the statement. 
"References to the agreement show rather that there is an urgent need for action in VV 2, which is currently being modified, to develop regulations on the accounting of balancing energy that conform with cartel law," he added. 
Utilities RWE and E.ON have introduced an auction system for their balancing energy needs to provide a market to other potential generators, as a condition of their respective mergers last year. 
RWE Net's Regulating Power Manager Klaus Albers said last week that the system it introduced in April, which is based on a cartel office model, had not so far produced the lower prices it was designed to. 
He said he expected all grid operators to introduce a market for their balancing energy needs within two years.

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