FYI - hope you're doing well. Had a good customer run all last week.

R

Rahil Jafry
E-Mail: Rahil.Jafry@enron.com
Work: 713.853.3206
Cell:  281.704.1060

-----Original Message-----
From: djcustomclips@djinteractive.com <djcustomclips@djinteractive.com>
To: 168842@mailman.enron.com <168842@mailman.enron.com>
Sent: Mon Oct 15 15:46:51 2001
Subject: Rahil Jafry: USA:   UPDATE 4-Dynegy hits upper end of Q3 earnings targets.

USA:
UPDATE 4-Dynegy hits upper end of Q3 earnings targets.

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

HOUSTON, Oct 15 (Reuters) - Natural gas and power marketer and trader Dynegy
Inc. said on Monday that third-quarter net earnings rose 62 percent, as its
backbone wholesale energy business nearly doubled its returns.

The Houston-based company said earnings rose to $286 million, or 85 cents per
diluted share, from $177 million, or 55 cents per diluted share, for the same
period of 2000.
Companywide operating revenues rose to $8.51 billion in the third quarter of
2001, versus $8.36 billion in the similar year-ago period.

Analysts polled by Thomson Financial/First Call expected earnings in a range
of 77 cents to 85 cents a share, with a mean estimate of 82 cents.

Dynegy also said it raised its earnings estimate for the 2001 year to a range
of $2.09 to $2.10 per diluted share from the $2.07 target set on Oct. 1. It
maintained a fourth-quarter forecast of 40 cents to 41 cents a share and a
2002 forecast of $2.50 to $2.60 share. All are in line with analysts'
estimates.

Chief Financial Officer Robert Doty said that the company was on track to
achieve 20 percent to 25 percent earnings growth next year.

"Our long-term strategy to focus on marketing and trading around physical
assets supports earnings sustainability," Chairman and Chief Executive Officer
Chuck Watson said in a statement.

"I would say the company's ability to continuously post strong earnings growth
illustrates their ability to successfully navigate through wildly various
operating environments," UBS Warburg analyst Jay Yannello said. "This company
has rapidly emerged as the leading player in its field."

While stocks in its sector have been hammered sharply over the past six
months, Dynegy has been a better performer than similar companies. Dynegy's
stock this year has fallen some 15 percent, outperforming the Standard &
Poor's utilities index, which has lost 21 percent.

Despite the strong earnings growth, shares of Dynegy were down $1.02, or 2.34
percent, to $42.63 in Monday afternoon trading. Analysts cited rumors that the
California Public Utilities Commission (CPUC) wants to renegotiate the power
purchase contracts that the California Department of Water Resources holds
with companies like Dynegy, Calpine Corp., Mirant Corp. and Williams Cos.
Inc..

A spokesman for the Department of Water Resources, however, said it doesn't
plan to renegotiate the deals.

"These companies renegotiate contracts all the time. The question is, do they
maintain value in the contracts or do they lose value in the contracts?" said
analyst Jeff Dietert of Simmons and Co. "And I think the assumption that the
market is making is that Dynegy and others would lose value in their
contracts."

Dynegy still has an accounts receivable balance of about $320 to $325 million
for power it produced for cash-challenged California utilities. "We're not out
of the woods yet," said President and Chief Operating Officer Stephen
Bergstrom on a conference call.

But he noted there could be some resolution by the second or third quarter of
next year. After all, PG&E Corp.'s Pacific and Gas Electric utility sought
bankruptcy in April and filed a reorganization plan on Sept. 20. Edison
International's Southern California Edison utility plans to pay off its
creditors by March, under a settlement it reached with the CPUC.

WHOLESALE INCOME NEARLY DOUBLES

Dynegy Marketing and Trade, the company's main wholesale business, reported an
85 percent year-over-year increase in recurring net income, taking in $263
million this year compared with $142 million in the comparable quarter in
2000.

Among other things, Dynegy trades wholesale natural gas, power, coal, emission
allowances and weather derivatives.

The company attributed part of its improved performance this quarter to better
results in European and Canadian operations, including increased gas marketing
in Canada.

North American natural gas volumes grew 12 percent to 11.0 billion cubic feet
per day (Bcf/d) in the quarter, rising from 9.8 Bcf/d in the year-earlier
period. Total physical power sales increased 86 percent to 90.5 million
megawatt hours (MWh) in the 2001 third quarter, compared with 48.7 million MWh
in the same quarter a year ago.

Dynegydirect, the company's online trading platform for more than 750 products
and services, recorded nearly $10 billion in transactions in the third
quarter, the company said. Since its birth in November 2000, Dynegydirect has
recorded $33 billion in transactions.

Dynegy recently expanded the platform, its answer to hometown rival Enron
Corp.'s wildly successful EnronOnline trading platform, into British energy
markets.

One nominally lower performer this year was Illinois Power, Dynegy's regulated
transmission and distribution subsidiary. It reported recurring net income of
$26 million versus $27 million a year earlier. Dynegy attributed the smaller
figure to a reduced industrial load.

The company's new communications segment took a $15 million loss for the
quarter, mostly from costs associated with developing its 16,000-mile network.
The network reaches 44 U.S. cities and is expected to be completed in the
fourth quarter.

Dynegy expects that segment to record a fourth-quarter loss of nil to 3 cents
a share and a full-year loss of 13 cents to 16 cents a share. For 2002, the
company expects the unit to be at breakeven by the end of the year.
(additional reporting by Carolyn Koo, New York Newsroom).



Folder Name: Rahil Jafry
Relevance Score on Scale of 100: 83

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