Enron Names Special Committee To Examine Transactions
Dow Jones News Service, 10/31/01

Enron says SEC opens formal inquiry into related-party transactions
AFX News, 10/31/01


Enron Says SEC Informal Inquiry Now a Formal Investigation
Bloomberg, 10/31/01

Key Enron Employees Aren't Jumping Ship, Recruiters Say
Dow Jones Energy Service, 10/31/01

Houston, We Have A Problem: How Much Is Enron Worth?
Dow Jones News Service, 10/31/01
Enron's stock jumps amid takeover speculation
Associated Press Newswires, 10/31/01
USA: Few signs of domino effect among Enron's peers.
Reuters English News Service, 10/31/01

Waste Management Will Start Pulp And Paper Trading Tomorrow
Bloomberg, 10/31/01

Enron ends 10-day skid with 25% jump
CBSMarketWatch.com, 10/31/01

Enron's stock jumps amid takeover speculation
Associated Press Newswires, 10/31/01
Class Action Lawsuit Commenced Against Enron Corp. By The Law Offices of Marc S. Henzel
PR Newswire, 10/31/01
Some Enron Trading Customers Tighten Credit Reins, Cut Trades
Bloomberg, 10/31/01

USA: Enron rebounds, but investors seek more disclosure.
Reuters English News Service, 10/31/01

Waiting for Balance Sheets Amid Enron's Debacle: David Wilson
Bloomberg, 10/31/01

Enron Shares Rise, Rebounding From Nine-Year Low (Update3)
Bloomberg, 10/31/01




Enron Names Special Committee To Examine Transactions

10/31/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

HOUSTON -(Dow Jones)- Enron Corp. (ENE) created a Special Committee to examine deals related to the Security and Exchange Commission investigation into transactions involving Enron's former chief financial officer, which has now turned into a formal investigation. 
The energy-trading company also named William Powers Jr. to its board, making him in charge of the Special Committee, the company said in a press release Wednesday.


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



Enron says SEC opens formal inquiry into related-party transactions

10/31/2001
AFX News
(c) 2001 by AFP-Extel News Ltd

HOUSTON (AFX) - Enron Corp said the Securities and Exchange Commission has opened a formal inquiry into the company's transactions with entities connected with related parties. 
In a statement, Enron said "the SEC has opened a formal investigation into certain of the matters that were the subject of recent press reports and that previously were the subject of its informal inquiry."
Earlier this month, Enron announced a charge of 1.01 bln usd, or 1.11 usd per share, and an incremental 1.2 bln usd reduction in stockholders' equity, related to the unwinding of investments with the related LJM partnership. 
The SEC requested the company provide information on these related-party transactions days later, and the company dismissed its chief financial officer, Andrew Fastow, for his involvement in running the LJM partnerships. 
In today's statement, the company announced the election of William Powers Jr to the board, effective immediately. 
Powers, who is dean of the University of Texas School of Law, will chair a Special Committee to examine and take any appropriate actions with respect to transactions between Enron and entities connected to related parties, it said. 
In addition to reviewing the transactions in question, the Special Committee is charged with communicating with the SEC and recommending any other actions it deems appropriate. 
"I have asked the Board to take this action to address fully and forthrightly investors' questions and concerns," said Enron chairman and chief executive officer Kenneth Lay. 
"Responding to the SEC offers us an additional opportunity to achieve this same goal for investors, and we will cooperate fully. We will also make every appropriate public disclosure during the course of the SEC's investigation." 
pav/

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




Enron Says SEC Informal Inquiry Now a Formal Investigation
2001-10-31 17:37 (New York)

Enron Says SEC Informal Inquiry Now a Formal Investigation

     Houston, Oct. 31 (Bloomberg) -- Enron Corp. said an informal
inquiry by the Securities and Exchange Commission is now a formal
investigation, and the Houston-based company's board is appointing
a special committee to address allegations related to partnerships
run by its former chief financial officer.

     William Powers Jr., dean of the University of Texas law
school, will chair a committee to handle the SEC's requests for
information about the partnership, Enron said.

--Andy Pratt in the Princeton newsroom at (609) 750-4657 or

Key Enron Employees Aren't Jumping Ship, Recruiters Say
By Michael Rieke
Of DOW JONES NEWSWIRES

10/31/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

HOUSTON -(Dow Jones)- Enron Corp.'s (ENE) current problems aren't sending its key employees running for the door, according to two executive recruiters. 
While employees at Enron's underperforming units are shopping around for new jobs, those working for its core wholesale energy trading and retail energy units seem content, the recruiters told Dow Jones Newswires.
"We've been getting resumes from their international group over the last year," said Bruce Peterson, managing director for Korn Ferry in Houston. "But its been a very well-known fact that they're getting out of those businesses." 
Another Houston recruiter, who didn't want to be identified, said he has gotten "a flood" of resumes from employees at Enron's natural gas and power assets in South America. 
Employees at Enron's broadband unit are also sending out resumes, said the recruiter. That business has brought the company losses of more than $100 million this year despite hundreds of layoffs. Enron continues to cut costs in its telecom business. 
Neither recruiter has seen many resumes from Enron's big moneymakers - the wholesale energy trading group and the retail energy services group. 
Some of the lower-level employees of those units have sent out resumes but Peterson said he hasn't seen higher-level executives in the job market. However, he attached a caveat to that statement. 
"Quite a few of the senior people at Enron have left over the last 6-12 months," he said. 
When Enron's share price was flying high last year and early this year, some of Enron's top executives cashed out their stock options and left the company. 
Those executives included Cliff Baxter, former vice chairman and chief strategy officer; Ken Rice, former head of Enron Capital and Trade as well as former chief executive of Enron Broadband Services; Kevin Hannon, former president of Enron Broadband Services; and Lou Pai, former chairman and chief executive of Enron Energy Services. 
The lure of cashing out lucrative stock options won't cost Enron any more employees any time soon. The company's share price has fallen too far too quickly, leaving the options underwater. 
The company's shares traded as high as $80 early this year. By July the price had dropped to around $50, leaving employees with options that were virtually worthless. So Enron told employees it would issue new options in August. 
But the company's share price continued to fall as more and more bad news came out. The new options issued in August, when the share prices were around $40, are now underwater also. 
Now that the options are out of the money, Enron employees are more vulnerable to the lure of other companies, Peterson said. 
Enron could face another problem in keeping key people. Its employees work under two-year contracts. If they leave Enron before their contracts expires, a noncompete clause could prevent them for working for a competitor. 
Some of those contracts will expire at the end of the year. Without the incentive of lucrative stock options, Enron might have a difficult time getting employees to agree to new contracts with a noncompete clause, Peterson said. 
An Enron spokeswoman said the company isn't planning to issue more new options to employees. 
-By Michael Rieke, Dow Jones Newswires; 713-547-9207; michael.rieke@dowjones.com

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



Houston, We Have A Problem: How Much Is Enron Worth?
By Christina Cheddar
Of DOW JONES NEWSWIRES

10/31/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW YORK -(Dow Jones)- With billions of dollars shaved off of the market capitalization of Enron Corp. (ENE) in the past two weeks, the stock is trading at about its book value, begging the question: so how much is it worth anyway? 
The answer is far from easy.
Ever since Enron metamorphosed from a stodgy gas pipeline company into what was seen by many as a dynamic energy trading firm, the company has become increasingly more difficult to understand. 
Just a glance at the wide-range of Wall Street analysts who follow the company illustrates the point. In the mix are analysts who track natural gas and the pipeline industry as well as those who follow electric utilities. 
One enticing prospect is that the assets in its portfolio are valuable in and of themselves and could be seen by some as worthwhile acquisition targets. 
By Enron's own definition, the company houses four main divisions: Enron Wholesale Services, Enron Energy Services, Enron Transportation Services, and Enron Broadband Services. 
Wholesale Services houses the company's energy marketing business and EnronOnline. This segment accounts for the bulk of Enron's profits, and has become synonymous with what Enron means to most people today. 
Not only does Enron trade gas, oil and coal, but it also trades commodities such as pulp and paper, petrochemicals, lumber, plastics and even weather risk. 
Enron Energy Services is the company's retail arm. The company provides electricity, gas and commodity risk management services through this division. 
Enron Transportation Services operates four natural gas pipelines that span about 25,000 miles and have a peak capacity of 9.8 billion cubic feet per day. Through these pipelines the company says it transports about 15% of the natural gas the U.S. needs. The segment also includes Portland General, a Oregon utility company Enron is selling to Northwest Natural Gas Co. (NWN) for $1.9 billion in cash and stock. 
In addition, the company provides bandwidth and network services through its Enron Broadband services division. 
But Enron's reach is even wider than this list suggests. The company also has a number of other corporate investments, including its stake in the Azurix water business, Enron Renewable Energy Corp. as well as methanol and MTBE plants. 
Through Enron's unconsolidated affiliates, the company also has investments in additional water assets, a power plant in India and a natural gas pipeline in Argentina among other things. 
What makes any valuation of Enron difficult is what remains unknown about the company's financial structure. 
Enron has yet to file a balance sheet for the third quarter, and doesn't expect to do so until Nov. 15, when balance sheets must be filed under Securities and Exchange Commission regulations. 
Without the balance sheet, some of the details needed for calculating a company's value are missing. 
Also, much still remains unknown about the company's obligations to its off-balance sheet financing vehicles. 

Using what is known about Enron's finances, several analysts have arrived at their own conclusions about valuation. 
Merrill Lynch & Co. analyst Donato Eassey said Wednesday he puts Enron's net asset value at between $16 to $24 a share. The calculation assumes Enron has 850 million diluted shares outstanding. 
Eassey valued Enron's on-balance sheet assets at nearly $11 billion, and the off-balance sheet assets at $1.1 billion. He has valued the company's trading business at between six-to-eight-times its 2001 earnings before interest, taxes, depreciation and amortization, or about $19 billion to $26.5 billion, based on his EBITDA estimate of $3.3 billion for this year. 
"Thus, our total asset value stands in the $32 (billion) to $38.6 billion area," Eassey said. 
The analyst then deducted $13.8 billion in total balance sheet debt, and estimated off-balance sheet debt at about $3.4 billion. The estimates bring total debt to $17.2 billion, including $1 billion in preferred stock, he said. 
Importantly, Eassey's estimate doesn't include any cash balances or the value of its current trading position. 
At the end of June, Enron had $847 million in cash and was in a net positive trading position of $306 million, Eassey said. 
Last Thursday, Dain Rauscher Wessels analyst Mark Easterbrook arrived at a net asset valuation of between $27 to $35 a share. 
Easterbrook's calculation assumes added writedowns and equity adjustments. 
The lower half of the range assumes Enron doesn't complete any asset sales, and assumes equity funding dilutes the shares outstanding by 24%, the analyst said. 
The higher end of the range assumes asset sales of $3.5 billion, debt reduction of $1 billion from the Portland General sale and no equity financing, he said. 
The view doesn't take into consideration the short-term liquidity crunch ongoing at the company, Easterbrook said. In addition, he added, the estimate assumes all of Enron's partnerships and investments no longer have any residual value. 
Early this year, John S. Herold came up with a "rough cut" valuation of Enron of "plus or minus something in the $30 range" using appraised net worth methodology, said John Parry, an analyst at the firm. However, he said, the firm never published the estimate because it felt it didn't have enough information from Enron about the off-balance sheet financing vehicles to make a complete assessment. 
At the time, Enron's stock was trading in the $70's, Parry said. So, he cut the stock's rating to sell. 
"I never imaged it would fall this low," he said. 
Enron shares closed Wednesday at $13.90, up $2.74, or 24.6%. 
-By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar@dowjones.com

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

Enron's stock jumps amid takeover speculation
By JUAN. A. LOZANO
Associated Press Writer

10/31/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

HOUSTON (AP) - After plummeting to a nine-year low following recent economic losses and an investigation by federal securities regulators, shares of Enron Corp. jumped nearly 25 percent Wednesday amid speculation the company was ripe for takeover. 
Shares of Enron, the nation's largest natural gas and power marketer, rose $2.74 to close at $13.90 Wednesday on the New York Stock Exchange. Shares though are still down 69 percent since the company reported third quarter earnings just over two weeks ago.
Carol Coale, an analyst with Prudential Securities Inc. in Houston, said Wednesday's surge was likely a reaction to a The Wall Street Journal report that Enron's beaten-down stock price has stirred rumors of a possible takeover. 
Others may be buying figuring the stock has hit bottom, she said. 
On Tuesday, Enron's stock closed at $11.16, its lowest level since 1992. 
Enron shares began their steady fall in the middle of October, when the company reported a net loss of $638 million in the third quarter, taking a one-time charge of $1.01 billion attributed to investment losses, troubled assets and unit restructurings. 
Some of these losses have been tied to partnerships managed by Enron's former chief financial officer, Andrew Fastow, who was ousted last week. 
The potential conflict of interest has prompted an inquiry by the Securities and Exchange Commission. 
Earlier this week, Moody's Investors Service downgraded the company's long-term debt and warned of possible further downgrades. 
Potential buyers include General Electric's GE Capital unit, Warren Buffett's Berkshire Hathaway and Royal Dutch Shell, the Journal said. 
Duane Grubert, an analyst with Sanford C. Bernstein and Co. in New York, said Shell, which has a small presence in energy marketing, would be a good fit. 
"Shell tried to be in the merchant energy arena and didn't really succeed," he said. "To buy into an established franchise must be attractive to Shell." 
Enron officials did not immediately return telephone calls from The Associated Press on Wednesday. 
While Enron's stock price has made it attractive, Coale said the energy marketer's problems present a substantial drawback. 
"I would fault a company for acquiring Enron with all of this hanging over it," she said. "There are too many uncertainties." 
Grubert said he believes Enron has the ability "to weather the storm and restore their enterprise on their own." 
Since reporting its disappointing third quarter losses, Enron has been negotiating with banks to establish new credit lines. The company last week decided to cash in about $3 billion in revolving credit it has with various banks to shore up investor confidence. 
--- 
On the Net: 
http://www.enron.com

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

USA: Few signs of domino effect among Enron's peers.
By Andrew Kelly

10/31/2001
Reuters English News Service
(C) Reuters Limited 2001.

HOUSTON, Oct 31 (Reuters) - U.S. energy traders such as Dynegy Inc. and Aquila Inc. have taken a knock as a result of Enron Corp's recent woes, but analysts do not expect a broad loss of investor confidence in the sector to trigger massive losses in stock prices like Enron has suffered. 
"The issues impacting Enron are pretty much specific to that company," said Credit Lyonnais Securities analyst Gordon Howald. "I don't believe that a lot of its peers have the same type of potential negative impact," he said.
Enron's widespread use of complex off-balance-sheet financing deals and its reluctance to disclose details about them are a key reason why investors have dumped the company's stock, causing it to fall more than 60 percent in the last two weeks. 
And while other natural gas and electricity marketers use similar techniques to avoid overloading their balance sheets with debt, nobody does so to the same extent as Enron, analysts said. 
"Enron is a unique case in the magnitude of off-balance sheet transactions," said Prudential Securities analyst Carole Coale. 
UNCOMFORTABLE WITH DISCLOSURE 
Coale said she was not comfortable with the level of disclosure provided by many of Enron's peers about such deals, but she said this was less of a problem at other companies because they have less exposure to the risky energy trading and marketing business which contributes about 80 percent of Enron's profits. 
El Paso Corp., for example is channeling over $1 billion in off-balance-sheet financing into its Project Electron venture which was set up to acquire and manage power plants. 
Analysts say they are reasonably pleased with the information that El Paso has provided to them about Electron. 
El Paso's stock has fallen a relatively modest 5 percent over the last two weeks and analysts attribute this in large part to the fact that marketing and trading operations generate only about one quarter of the company's earnings. 
Dynegy's stock is down some 17 percent over the last two weeks and analysts said this was linked to Dynegy's assumption of a leadership role among U.S. energy marketers in many investors' eyes as Enron began to fall out of favor and as Dynegy attained a correspondingly high price-earnings ratio. 
Asked about Dynegy's use of off-balance-sheet financing, spokesman John Sousa drew a contrast between his own company and Enron, saying Dynegy had no financing that was backed by issuance of stock, nor any "related party transactions". 
FORMER HIGH-FLIERS SHUNNED 
Analysts said that in the current uncertain investment climate, investors are shunning trading-oriented companies' whose stocks had previously commanded high price-earnings multiples and seeking out more modestly valued companies which own physical assets such as power plants and natural gas pipelines. 
In terms of recent stock price performance this trend has punished a marketer-trader like Aquila, whose shares are down 27 percent over the last two weeks. 
On the other hand it has been relatively kind to companies such as Williams Cos. and Duke Energy Corp. , which until recently were treated with scorn by Enron executives who aggressively propounded an "asset-light" philosophy. 
Williams' stock has fallen about 5 percent over the last fortnight while Duke's shares are down less than 1 percent and have outperformed the broader U.S. stock market. 
J.P. Morgan analyst Anatol Feygin said Enron had fallen victim to its unique taste for sophisticated financing techniques and its failure to explain them when doubts started to surface. 
"Enron took it to an extreme in terms of financial engineering, but it didn't disclose enough information about what is behind all of these structures," he said. 
Credit Lyonnais Securities' Howald had a simpler explanation, saying that as the euphoria which surrounded Enron last year subsided, people began to see Enron for what it was. 
"Trading companies have always had a history of winning big and losing big," he said. "I think the days of the big valuations are over," he added.

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



Waste Management Will Start Pulp And Paper Trading Tomorrow
2001-10-31 16:52 (New York)

Waste Management Will Start Pulp And Paper Trading Tomorrow

     Houston, Oct. 31 (Bloomberg) -- Waste Management Inc., North
America's largest trash hauler, will start trading paper and pulp
tomorrow to limit the effects of price fluctuations of recycled
materials and offer a service its biggest rivals don't provide.

     In the past three years, Waste Management has reduced its
exposure to price swings by placing 75 percent of its recycled-
commodity sales under long-term, fixed-price contracts. Still, the
company's revenue from recycling fell 38 percent to $154 million
in the second quarter.

     Chief Executive Officer Maurice Myers is hoping the trading
business will help stabilize recycling revenue even when prices
for cardboard, newspaper and aluminum cans fall. Trading allows
Waste Management to further limit its own exposure to prices, as
well as offer contracts to customers who want to lock in prices.

     ``What Waste Management is doing is going to reduce the
company's risk and their customer's risk,'' said Thomas Leritz, an
analyst at Banc of America Capital Management, which owns more
than 1 million shares of Waste Management. ``I think it's a smart
move. It's a reflection of the new management team.''

     Myers joined the company in November 1999 as it struggled to
track costs from acquisitions. He has put new financial-systems
software in place and made other efforts to cut costs. The company
has also raised prices where it's the dominant hauler.

     Myers's efforts, along with the sale of overseas businesses,
have helped the company regain regard among investors. The shares
have risen 22 percent in the past year.

                          Pulp and Paper

     Most of Waste Management's solid-waste customers produce or
consume pulp and paper. Waste Management collects, processes and
sells more than five million tons a year of paper, plastic, glass,
aluminum and other metals.

     Recycled-cardboard prices fell 62 percent to $48 a ton in the
second quarter from $125 a year earlier, and the price for
recycled newsprint fell to $55 a ton from $90, Myers said in
August. Prices were little changed from the second quarter to the
third quarter, said Steve Ragiel, Waste Management's vice
president of recycling.

     Waste Management, which will report third-quarter results
next week, had expected to begin trading in the third quarter. Its
plans were delayed because it took longer than expected to find
people to run the operation, Raigel said.

     Jeff Harbert, formerly of Enron Corp., is heading the
operation along with two other Enron traders. Enron, also based in
Houston, has created the largest business of trading commodities
including electricity, natural gas, pulp and paper.

                          Risk Management

     Waste Management's initial focus in the trading business will
be on managing its own price risk. It probably only will complete
five to 10 trades in each of the first few months, Raigel said.

     The company hopes to set fixed prices for the commodities it
picks up, then sell those commodities to a third company, such as
a paper producer, at a higher set price.

     ``We'll get with a counter party such as a paper mill or a
consumer-products company and cut a deal,'' Raigel said. ``We can
find a paper mill that wants to lock in a fixed price on what they
buy and what they sell. They get a minimum return on their
investment and greater control on their raw material costs.''

     The company hasn't said how much it expects to make from
trading. Analysts aren't expecting the business to contribute
significantly to Waste Management's earnings.

     ``They are looking at it as a good time to get in on trading
but I don't see it as a major contributor to their business,''
said Stewart Scharf, an analyst with Standard & Poor's Equity
Group. He rates Waste Management ``accumulate'' and doesn't own
shares.

     Republic Services Group Inc., the No. 3 U.S. waste company,
contracts with individual mills to supply recycled commodities at
fixed prices, but hasn't started a trading operation, spokesman
Will Flower said.

     Allied Waste Industries Inc., the second-largest trash hauler
in North America, said it has no plans to get into trading.

     ``We'll leave trading to people like Enron,'' Allied Waste
spokesman Michael Burnett said.

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


Enron ends 10-day skid with 25% jump 
Lisa Sanders
CBSMarketWatch.com
October 31, 2001
HOUSTON (CBS.MW) -- Shares of Enron, which had lost about 66 percent of their value over the past 10 sessions, spiked Wednesday after a report that pegged the beleaguered company as a takeover target.
Enron added 25 percent, or $2.74, to close at $13.90. More than 43 million shares changed hands, making the stock the most actively traded on the New York Stock Exchange.
A.G. Edwards' analyst Michael Heim warned Wednesday against buying Enron shares. He noted that Enron's troubles could be hurting its trading operations, the company's strength.
"People interested in betting on ENE should ask themselves this -- If a person offered to double your money when a coin lands heads and take away half your money when it is tails, would you take the bet? What if the person flipping the coin is a magician you don't trust?" 
A Wall Street Journal report Wednesday speculated on Enron's potential as an acquisition for a more stable company. An Enron spokesman said the company doesn't comment on such matters.
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.
John Olson, an analyst at Sanders Morris Harris, 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.
Olson pointed out that Enron's heavy losses 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."
Taking bets
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 Capital or Royal Dutch Shell 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 and Citigroup 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.


Enron's stock jumps amid takeover speculation
By JUAN. A. LOZANO
Associated Press Writer

10/31/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

HOUSTON (AP) - After plummeting to a nine-year low following recent economic losses and an investigation by federal securities regulators, shares of Enron Corp. jumped nearly 25 percent Wednesday amid speculation the company was ripe for takeover. 
Shares of Enron, the largest U.S. natural gas and power marketer, rose dlrs 2.74 to close at dlrs 13.90 Wednesday on the New York Stock Exchange. Though still down 69 percent since the company reported third quarter earnings just over two weeks ago.
Carol Coale, an analyst with Prudential Securities Inc. in Houston, said Wednesday's surge was likely a reaction to a The Wall Street Journal report that Enron's beaten-down stock price has stirred rumors of a possible takeover. 
Others may be buying figuring the stock has hit bottom, she said. 
On Tuesday, Enron's stock closed at dlrs 11.16, its lowest level since 1992. 
Enron shares began their steady fall in the middle of October, when the company reported a net loss of dlrs 638 million in the third quarter, taking a one-time charge of dlrs 1.01 billion attributed to investment losses, troubled assets and unit restructurings. 
Some of these losses have been tied to partnerships managed by Enron's former chief financial officer, Andrew Fastow, who was ousted last week. 
The potential conflict of interest has prompted an inquiry by the Securities and Exchange Commission. 
Earlier this week, Moody's Investors Service downgraded the company's long-term debt and warned of possible further downgrades. 
Potential buyers include General Electric's GE Capital unit, Warren Buffett's Berkshire Hathaway and Royal Dutch Shell, the Journal said. 
Duane Grubert, an analyst with Sanford C. Bernstein and Co. in New York, said Shell, which has a small presence in energy marketing, would be a good fit. 
"Shell tried to be in the merchant energy arena and didn't really succeed," he said. "To buy into an established franchise must be attractive to Shell." 
While Enron's stock price has made it attractive, Coale said the energy marketer's problems present a substantial drawback. 
"I would fault a company for acquiring Enron with all of this hanging over it," she said. "There are too many uncertainties."

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



Class Action Lawsuit Commenced Against Enron Corp. By The Law Offices of Marc S. Henzel

10/31/2001
PR Newswire
(Copyright (c) 2001, PR Newswire)

BALA CYNWYD, Oct. 31 /PRNewswire/ -- A class action lawsuit was filed in the United States District Court for the Southern District of Texas, on behalf of purchasers of the common stock of Enron Corp. (NYSE: ENE) between January 18, 2000 and October 17, 2001, inclusive. The action is pending against defendants Enron, Kenneth Lay, Jeffrey K. Skilling and Andrew Fastow. 
The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 18, 2000 and October 17, 2001, thereby artificially inflating the price of Enron common stock. Specifically, the complaint alleges that Enron issued a series of statements concerning its business, financial results and operations which failed to disclose (i) that the Company's Broadband Services Division was experiencing declining demand for bandwidth and the Company's efforts to create a trading market for bandwidth were not meeting with success as many of the market participants were not creditworthy; (ii) that the Company's operating results were materially overstated as result of the Company failing to timely write-down the value of its investments with certain limited partnerships which were managed by the Company's chief financial officer; and (iii) that Enron was failing to write-down impaired assets on a timely basis in accordance with GAAP. On October 16, 2001, Enron surprised the market by announcing that the Company was taking non-recurring charges of $1.01 billion after-tax, or ($1.11) loss per diluted share, in the third quarter of 2001, the period ending September 30, 2001. Subsequently, Enron revealed that a material portion of the charge related to the unwinding of investments with certain limited partnerships which were controlled by Enron's chief financial officer and that the Company would be eliminating more than $1 billion in shareholder equity as a result of its unwinding of the investments. As this news began to be assimilated by the market, the price of Enron common stock dropped significantly. During the Class Period, Enron insiders disposed of over $73 million of their personally held Enron common stock to unsuspecting investors.
Plaintiff is represented by The Law Offices of Marc S. Henzel. If you are a member of the class described above, you have until December 21, 2001, to participate in the case and ask the Court to appoint you as one of the lead plaintiffs for the Class. In order to serve as lead plaintiff, however, you must meet certain legal requirements. You do not need to seek appointment as a lead plaintiff in order to share in any recovery. 
If you have any questions concerning this case or your rights or interests with respect to these matters, please contact: Marc S. Henzel, Esq. of The Law Offices of Marc S. Henzel, 273 Montgomery Ave, Suite 202 Bala Cynwyd, PA 19004-2808, by telephone at (888) 643-6735 or (610) 660-8000, by facsimile at (610) 660-8080, by e-mail at Mhenzel182@aol.com or visit the firm's website at http://members.aol.com/mhenzel182. 
MAKE YOUR OPINION COUNT - Click Here 
http://tbutton.prnewswire.com/prn/11690X40385151


/CONTACT: Marc S. Henzel, Esq. of The Law Offices of Marc S. Henzel, +1-888-643-6735 or +1-610-660-8000, fax: +1-610-660-8080, or Mhenzel182@aol.com/ 16:50 EST 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	


Some Enron Trading Customers Tighten Credit Reins, Cut Trades
2001-10-31 16:05 (New York)

     New York, Oct. 31 (Bloomberg) -- American Electric Power Co.,
Exelon Corp. and Northeast Utilities are among energy companies
restricting business with Enron Corp. as the largest energy trader
negotiates a credit line to keep access to cash.

     ``We are keeping a tight dollar limit on trades,'' said John
Rowe, co-chief executive officer of Exelon, the largest U.S.
nuclear power producer. ``We are keeping a close eye on our
exposures.''

     Enron has said it is seeking new sources of credit as the
company tries to assure trading partners and rating agencies that
it can meet day-to-day obligations and keep its investment-grade
credit rating. Enron, which handles 25 percent of the energy
trading in the U.S., relies on having investment-grade credit to
borrow enough to settle its transactions daily.

     Enron Corp. shares, down 59 percent since Oct. 16, rose 25
percent today to $13.90 from a nine-year low amid speculation the
company may be a takeover target. Still, Enron stock is down 83
percent this year.

     Moody's Investors Service last week lowered Enron's long-term
debt to two notches above junk status and placed Enron's
commercial paper on review for downgrade.

     ``We will be tracking very closely their wholesale volumes,''
said Stephen Moore, a vice president at Moody's. ``That will be
the leading indicator of where the company is going.''

                           Credit People

     Energy trading accounted for about 98 percent of Enron's $773
million in income before interest and taxes last quarter. The
company last week drew down a $3 billion credit line after
surprising investors by writing off $1.2 billion of shareholder
equity. The company also ousted its Chief Financial Officer Andrew
Fastow after it reported that a partnership he set up lost $35
million for the company. The Securities and Exchange Commission
has asked the company questions about partnerships like Fastow's.

     Enron spokeswoman Karen Denne said the company's trades have
not declined in size while natural gas trading volume has dipped
consistent with monthly pattern.

     Some energy executives said yesterday that companies were
limiting Enron trading to reduce credit risks.

     ``Credit people are coming to their traders and saying,
`Enron is on hold for any new positions, and at some point we may
need you (to) trade out of your existing positions,''' said
Charlie Sanchez, an energy markets manager at Houston-based Gelber
& Associates Corp., an energy trading adviser.

                         Watching Closely

     Minneapolis, Minnesota-based Xcel Energy Inc., an electricity
and natural-gas seller, is limiting its business to same-day and
next-day delivery, Chief Executive Officer Wayne Brunetti said at
an energy conference in New Orleans. American Electric Power Chief
Executive Linn Draper said at the same conference that his company
is also making only short-term trades.

     ``We are watching very closely,'' Draper said. ``We are
focusing our new deals with them in the short term, November,
December. We think they'll make it, but it's a serious
situation.''

     Northeast Utilities, based in Berlin, Connecticut, will
continue to trade with Enron as long as its debt ratings remain
investment grade, said Chief Financial Officer John Forsgren, also
at the conference. Northeast is New England's biggest utility
owner.

     ``Three weeks ago, we started monitoring our position with
Enron,'' said Forsgren. ``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.''

                             Overblown

     Many companies say that Enron remains the most economical and
efficient place to trade electricity, and that the company's
credit woes are overblown.

     ``We're still actively trading with them and we believe they
will work their way out of this,'' said Mike Griswold, a trader
with Hafslund Trading Co., a subsidiary of Norwegian energy
company Hafslund ASA. ``They have the best liquidity and the best
prices. They are the premier trading market.''

--David Ward and Bradley Keoun in San Francisco 


USA: Enron rebounds, but investors seek more disclosure.
By Carolyn Koo

10/31/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Oct 31 (Reuters) - Shares of Enron Corp. snapped back from 10 straight days of losses on Wednesday after investors said the deep plunge had made the stock attractive. 
Shares of Houston-based Enron, which lost more than $17 billion in market capitalization during the rout, surged almost 27 percent in heavy trade, making the stock second-most active on the New York Stock Exchange and third-biggest gainer by percentage.
Despite the surge, investors and analysts said they were still dissatisfied with Enron's failure to disclose key information and said the rebound could prove short-lived for the largest trader of natural gas and power in North America. 
"At this level the stock is attracting money. However, the near term is not going to be good," said Tim Ghriskey, president of money managers Ghriskey Capital Partners LLC. 
"We don't own any Enron. We have in the past and sold a while ago. We've been tempted a couple of times during the slide, but the information flow is not that strong, and there is potential for more negative surprises." 
Enron closed up $2.74, or 24.6 percent, to $13.90 on the NYSE. The stock surged to an intraday high of $14.17, recouping the past two days of losses, but is far from $33.84, the closing price for Enron on Oct. 16, the last day before the 10-day tumble began. 
Enron shares have been hammered over the past two weeks amid a series of unwelcome disclosures, including murky off-balance-sheet deals with partnerships once run by Chief Financial Officer Andrew Fastow. 
The disclosures forced Fastow's ouster, led to a Securities and Exchange Commission inquiry into Enron and caused at least one credit rating agency to cut Enron's senior-debt credit status. 
The company said Fastow's removal was aimed at assuaging investor concerns as the almost daily disclosures forced it to draw down about $3 billion from existing credit lines. 
TRYING TO QUANTIFY 'WORST-CASE SCENARIO' 
But that's not enough, say analysts and investors. 
"Enron needs to substantially improve the level of disclosures," said Nitin Khandkar, a portfolio manager with Dubai-based Al Majid Investment Co., which owns Enron stock. "The accounting policies it follows should not be merely legal but should also reflect the company's true profitability." 
As an industry heavyweight, "investors expect Enron to come clean on the controversial issues," he said. 
One issue Enron would do well to address is its partnerships and the liabilities they may have. 
"People are still struggling with trying to quantify what the worst-case scenario could be," said Mike Heim, an analyst with A.G. Edwards & Sons, of the existing partnerships. 
"Instead of dismissing the worst-case scenario, I think it would make sense to mathematically show that 'here's what happens under such a scenario' and then let analysts make their own assessments." 
Enron's refusal to make public its finances with greater transparency is a hallmark of arrogance, noted one academic. 
"The lack of transparency is an arrogance that says, 'I don't have to explain anything because if people don't want to buy my shares, they can just sit and spin,'" said Paul Kedrosky, a professor at the University of British Columbia who sits on the board of Exponentia, a company dedicated to improving communications with shareholders. 
"It's an arrogance that says, 'I do not have to disclose anything until I am forced to,'" Kedrosky said. "The crucial thing is to disclose early and disclose all."

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

Waiting for Balance Sheets Amid Enron's Debacle: David Wilson
2001-10-31 16:39 (New York)


     (Commentary. David Wilson is a columnist for Bloomberg News.
The opinions expressed are his own.)

     Princeton, New Jersey, Oct. 31 (Bloomberg) -- International
Business Machines Corp.'s press release about its third-quarter
results included this statement, attributed to Louis Gerstner,
chairman and chief executive officer:

     ``IBM's balance sheet remains among the strongest in the
technology industry, or any industry.''

     The largest maker of computers and provider of computer
services wasn't the only company to cite its balance sheet, a
statistical summary of what a company owned, what it owed, and
what was left over for shareholders on a specific date.

     General Electric Co., the largest company by stock market
value, and Citigroup Inc., the No. 1 financial-services company,
made similar references in their third-quarter releases.

     None of the companies really showed people what they were
telling them. IBM, General Electric and Citigroup are among 19
members of the Dow Jones Industrial Average whose most recent
quarterly releases didn't include balance sheets.

     The evidence will come only when the companies submit their
quarterly reports to the U.S. Securities and Exchange Commission.
Balance sheets are required in the so-called 10-Q filings, along
with the 10-K filings that cover the full year.

                        Not Much Publicity

     By then, statistics about the companies' assets, liabilities
and shareholders' equity, the accounting terms for what's owned,
what's owed and what's left over, will be rather outdated.

     U.S. companies have 45 days from the end of a fiscal quarter
to submit 10-Q reports, and 90 days from the end of a fiscal year
for 10-K reports.

     These filings usually don't arrive until weeks after the
publication of earnings releases. So it's easy to overlook the
additional information they provide, especially when it doesn't
receive the kind of publicity that the earnings release does.

     Yet the recent example of Enron Corp. -- another company that
omits balance sheets from press releases -- provides evidence that
investors who forgo the extra effort needed to find them do so at
their own peril.

     Enron, the largest energy trader, reported $1.01 billion in
``non-recurring'' costs in the third quarter from an expansion
into water, telecommunications and retail-energy sales. The
expense contributed to a $618 million loss for the quarter.

     These numbers were part of the Houston-based company's income
statement, a summary of sales, costs and expenses, and profits or
losses during a specified time period. Income statements are the
cornerstone of any company's earnings release.

                      Billion-Dollar Numbers

     The release didn't even mention a larger figure that affected
the balance sheet: a $1.2 billion drop in shareholders' equity
during the quarter resulting from the company's repurchase of 55
million shares from two partnerships, LJM Cayman LP and LJM2 Co-
Investment LP, that helped finance projects. Andrew Fastow, who
ran both partnerships, was ousted from his job as chief financial
officer last week.

     Chairman and CEO Kenneth Lay disclosed the repurchase in a
subsequent conference call.

     Such a one-two punch dealt a blow to investors' fortunes.
Since Oct. 17, the day after the earnings release, Enron's shares
have fallen each day and have lost two-thirds of their value. The
low of $10.90 yesterday was the lowest price since July 1992.

     Enron's third-quarter statement referred only to a loss on
``finance arrangements with a previously disclosed entity'' which
contributed to $544 million of investment losses. The size of that
item was later put at $35 million.

     The latter number amounts to just 3.5 percent of the overall
figure for ``non-recurring'' costs, and less than 1 percent of the
company's $47.6 billion in revenue for the quarter.

                        Growing Debt Burden

     The $1.2 billion figure is considerably larger not only in
dollars, but also in percentage terms. Enron had $11.74 billion of
shareholders' equity as of June 30, according to the balance sheet
in its second-quarter 10-Q filing. The reduction equaled more than
10 percent of that total.

     Among other things, the balance sheet also shows that the
company relied more heavily on debt financing during this year's
first half. Short-term debt, due in one year or less, doubled to
$3.46 billion. Long-term debt, maturing in more than one year,
rose 9.4 percent to $9.36 billion.

     There's even more to the story of Enron's indebtedness. The
company guaranteed $3.3 billion in borrowing by Osprey Trust and
Marlin Water Trust, which bought some of its power plants. Unless
they pay off the debt by reselling the plants, the company may
have to come up with the difference.

     Nevertheless, any summary of a company's financial position
provides a more complete picture than the income statement alone.
This also holds true for companies whose finances are in better
shape -- IBM, General Electric and Citigroup, to name three.

                        Knowing by Showing

     Other members of the Dow industrials that wait until their
filings to provide balance sheets are American Express Co., AT&T
Corp., Boeing Co., Caterpillar Inc., Coca-Cola Co., Walt Disney
Co., DuPont Co., Eastman Kodak Co., Exxon Mobil Corp., General
Motors Corp., Honeywell International Inc., Johnson & Johnson,
McDonald's Corp., Merck & Co., Procter & Gamble Co. and SBC
Communications Inc.

     Companies that include them in releases are Alcoa Inc.,
Hewlett-Packard Co., Home Depot Inc., Intel Corp., International
Paper Co., Microsoft Corp., Minnesota Mining & Manufacturing Co.,
J.P. Morgan Chase & Co., Philip Morris Cos., United Technologies
Corp. and Wal-Mart Stores Inc.

     Citigroup's third-quarter earnings release has this quote
from Sandy Weill, chairman and CEO: ``We have the balance sheet
strength to make timely acquisitions to expand our franchises.''
The New York-based company had more than $85 billion of ``total
equity,'' Weill said in the statement.

     General Electric's release quoted Chairman and CEO Jeffrey
Immelt as saying ``our strong balance sheet, which gives us the
flexibility to pursue strategic opportunities,'' is one of the
Fairfield, Connecticut-based company's ``fundamental strengths.''

     Investors can only take these CEOs at their word for now.
Their companies, and many others, are only telling rather than
showing -- at least in their earnings releases.



Enron Shares Rise, Rebounding From Nine-Year Low (Update3)
2001-10-31 16:20 (New York)

Enron Shares Rise, Rebounding From Nine-Year Low (Update3)

     (Closes shares.)

     Houston, Oct. 31 (Bloomberg) -- Enron Corp. shares jumped 25
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 $2.74 to $13.90 in
trading of 43.4 million shares, more than four times the three-
month daily average of 10.4 million. The shares reached $14.20
earlier in the day.

     Shares of Houston-based Enron have fallen 83 percent this
year. They have dropped 49 percent 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. Wagner 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.

     Merrill Lynch analyst Donato Eassey said in a report issued
today that Enron has a net asset value of $16 to $24 a share. He
based that on a total asset value of $32 billion to $38.6 billion
and total obligations of $18.2 billion.

     Eassey has a ``near-term accumulate'' rating on Enron's
shares. He said Enron should be considered as an investment for
``high-risk profile investors'' because of the uncertainty
attached to the company.

--Margot Habiby in the Dallas newsroom (214) 954-9452