We'll get pointed questions related to Europe and broadband thanks to Steve Bergstrom.  Suggest we answer that we feel confident that the first mover advantage will give us superior returns in the long run.

USA: INTERVIEW-Dynegy feels gradual approach in Europe vindicated.
By Andrew Kelly

10/15/2001
Reuters English News Service
(C) Reuters Limited 2001.

HOUSTON, Oct 15 (Reuters) - Natural gas and power marketer Dynegy Inc. said on Monday it felt vindicated in its step-by-step approach to building a business in Europe in view of recent retrenchments by rival Houston-based companies. 
Dynegy recently opened an office in Madrid to market natural gas, electricity and derivatives. Spain is the fifth country in continental Europe where Dynegy has set up an office since it started up its European operations in Britain in 1994.
By contrast Enron Corp. has recently announced plans to cut staffing at its European operations by 5 percent to 10 percent amid concerns about slow and piecemeal progress toward deregulation of European natural gas and electricity markets. 
"Enron threw 800 bodies at it and tried to do it in a hurry. We've been going at it much more slowly because we thought it would take some time," Dynegy President and Chief Operating Officer Steve Bergstrom told Reuters in an interview. 
Another Dynegy rival, Reliant Resources Inc., said last month it was considering a possible sale of its electricity generation business in the Netherlands. 
"Reliant bought one utility in one country and realized that's not really the way to enter the market in Europe," Bergstrom said of the move which cost Reliant $2.4 billion. 
Bergstrom said his own company differed with Enron and Reliant in the execution of its entry into the European market, rather than in its assessment of the market's potential. 
"We've gone at this much more cautiously. We've made sure that we staff it appropriately for the market timing and we think we've done it the right way," he said. 
Bergstrom said there were similar differences between Dynegy and Enron's approach to the broadband telecommunications market where Enron has also cut jobs after admitting that it probably overestimated the market's short-term potential. 
"They're having to retrench, but you're not hearing them give up on the telecommunications business. Our cost structure is so much less than theirs, that's why we're a lot more optimistic, because they have to go through cutting a bunch of costs whereas we never added those costs," he said. 
Dynegy reported on Monday its third-quarter net earnings rose 62 percent as its wholesale energy business nearly doubled its returns. 
Dynegy has said it expects its broadband business, created late last year, to generate a positive net income next year. The business posted a $15 million loss in the third quarter of 2001. 
Dynegy's Chief Executive Officer Chuck Watson told analysts in a conference call on Monday that the unit's revenues had doubled in the latest quarter to $8 million. 
"We believe the industry touched the bottom in this communications market in the third quarter, with bandwidth demand picking up sharply in the foreseeable future," Watson said.

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