USA: U.S. stocks slip as Fed rate-cut euphoria fades.
Reuters English News Service, 11-07-07
USA: Commodities traders keep the faith in Enron.
Reuters English News Service, 11-07-01
Enron Calls Emergency Meeting With Banks Friday -FT
Dow Jones Energy Service, 11-07-01
US Power, Gas Companies Restrict Dealings With Enron
Dow Jones Energy Service, 11-07-07
IN THE MONEY: The 'D' Word Could Bite Enron. Others Too?
Dow Jones News Service, 11-07-01
USA: Dynegy may invest $2 bln in Enron-WSJ.com.
Reuters English News Service, 11-07-01
USA: UPDATE 1-Enron shares plunge in new tumble, touch $7.
Reuters English News Service, 11-07-01
Dynegy Weighs $2 Billion Investment in Enron in Possible Step Toward Merger
Dow Jones Business News, 11-07-01
Enron Corp. Cut to `Sell' at A.G. Edwards
Bloomberg, 11-07-01

Dynegy in Talks to Buy Enron With ChevronTexaco Cash
Bloomberg, 11-07-01

Legal Group to Sue Over California Power Contracts (Update1)
Bloomberg, 11-07-07

Enron to Meet With Lenders on Merger, Possible Yield Increase
Bloomberg, 11-07-01

Enron Shares Fall on Concern About Finding Investors (Update3)
Bloomberg, 11-07-01

Enron calls emergency meeting with banks
Financial Times.com, 11-07-01

The Night Watch: Enron Ticks Higher in Extended Trading
TheStreet.com, 11-07-07

Some Glamour Stocks That Are Ugly Down Deep
RealMoney.com, 11-07-01

Fundie Firing Comes Better Late Than Never
RealMoney.com, 11-07-01





USA: U.S. stocks slip as Fed rate-cut euphoria fades.
By Elizabeth Lazarowitz

11/07/2001
Reuters English News Service
(C) Reuters Limited 2001.
NEW YORK, Nov 7 (Reuters) - Stocks slipped on Wednesday, eroding the previous session's sharp gains, as worries about the gloomy economic environment overshadowed hopes the Federal Reserve's rate cuts can help spur a rebound. 
"You get these fights with the bulls and the bears," said James Volk, co-director of institutional trading at D.A. Davidson & Co. "There are a number of people that are bullish about the economy turning around ... and there's another group that think there's no reason for this buoyancy in the market because it's still way, way premature."
The market initially built on Tuesday's rally when the Fed's 10th interest-rate cut this year sent stocks soaring to their highest levels in about two months. But momentum faded toward the end of Wednesday's session. 
"We had a big run up yesterday after the Fed announcement," said Peter Coolidge, senior equity trader at Brean Murray & Co. "The announcement was expected, but the run-up wasn't, so we're just giving up a little bit of ground on that." 
The technology-laced Nasdaq Composite, buffeted early in the session by disappointing results and a discouraging forecast from wireless telecommunications firm Qualcomm Inc., finished with a gain of 2.45 points, or 0.13 percent, at 1,837.53. 
The Dow Jones industrial average slipped 36.75 points, or 0.38 percent, to 9,554.37. At its session high of 9,644.12, the blue-chip index had erased all of its post-Sept. 11 losses. 
The broader Standard & Poor's 500 Index fell 3.06 points, or 0.27 percent, to 1,115.80. 
Shares of Hewlett-Packard Co. dragged on the Dow after HP and Compaq Computer Corp. stood firm on their plans for a $21 billion merger, even as pressure mounted from Hewlett and Packard family members to cancel the deal. 
Hewlett shares slipped 63 cents to $19.18. The stock gained more than 17 percent on Tuesday after the founding Hewlett family, which has a stake of more than 5 percent in Hewlett-Packard, said it would vote against the deal. Compaq's stock sagged 51 cents to $7.99. 
Energy trader Enron Corp. was badly beaten yet again, plunging to a 10-year low of $7 amid concerns about its ability to raise cash. Late in the day it got a boost from a Wall Street Journal report that rival Dynegy Inc. is in talks to infuse about $2 billion into the struggling company. Enron ended down 62 cents at $9.05. 
Interest-rate-sensitive financial stocks like J.P. Morgan Chase, up $1.05 at $38.59, and American Express Co., up $1.12 at $31.68, underpinned the blue-chip Dow. 
Stocks have surged in recent weeks as investors put aside their current economic woes, hopeful that the Fed's rate reductions and a hefty fiscal stimulus package can help the economy spring back by the middle of next year. 
Investors got encouragement from the latest key economic report, which showed productivity rose more strongly than expected in the third quarter as firms cut workers' hours at the fastest pace in 10 years. The government data suggested companies are adjusting to the slowdown in economic growth. 
"Any time productivity is up, that's good news for the market," said Robert Baur, chief economist for Invista Capital Management, which oversees $24 billion in equities. 
Wireless-related stocks were buffeted after Qualcomm, which holds the patent for a popular cellular technology, reported earnings that missed forecasts. It also said profits for the current fiscal year would be at the low end of already reduced estimates, citing the global economic slowdown. 
Nevertheless, Qualcomm still managed to erase its early loss to gain 38 cents to $55.11. The American-traded shares of Swedish mobile phone giant Ericsson slipped 16 cents to $4.73, while the shares of Finnish rival Nokia dropped 86 cents to $22.20. 
Heavyweights like networking giant Cisco Systems also underpinned the Nasdaq market. Cisco gained 46 cents to $18.93. 
The market will likely remain rangebound in the very near future as investors search for solid evidence that a recovery is at hand, analysts said. 
"It's usually a time when traders tend to take their gains, because there's nothing left for the short term to look forward to," said A.C. Moore, chief investment strategist at Dunvegan Associates. 
One bright spot was America's No. 1 trash hauler Waste Management Inc., which posted a net profit, due in part to lower costs and interest expenses, even after taking a charge to settle the last of a series of class-action lawsuits. It jumped $1.63 to $26.98. 
Shares of Lands' End Inc. were also hot, racing up almost 18 percent, or $6.41 to $42.15, after the Internet and catalog retailer posted quarterly results that handily beat Wall Street forecasts on effective cost controls and solid sales of full-priced merchandise.



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

USA: Commodities traders keep the faith in Enron.

11/07/2001
Reuters English News Service
(C) Reuters Limited 2001.
NEW YORK, Nov 7 (Reuters) - Enron Corp. may have lost its luster in the financial markets but trading partners in North America's natural gas and power arenas are supremely confident that their largest trading entity will not go under. 
"We are not changing anything about our credit arrangements with Enron. They are still paying their bills," said one electricity trader.
"Credit-wise, they are okay but people are watching. People are probably a little more wary in the forwards market. They may think twice before going into a five-year deal," he added. 
As a matter of fact, transactions on the Houston-based company's power trading system EnronOnline were higher over the past 30 days, averaging some $3 billion to $4 billion, up from $2.5 billion in the earlier period, making EnronOnline by far the biggest trader of electricity. 
Traders played down reports Wednesday of New York Mercantile Exchange clearing firms raising margin requirements for Enron's trades on natural gas futures markets. 
"It would be a normal procedure after the credit downgrades," said a trader with a major Midwest gas and power trader. 
Despite the fears that increased credit margins might cause a crunch for the embattled energy giant, many traders still say it is business as usual. 
"They have plenty of credit with us. They are still a viable trading partner," said a natural gas trader with one of Enron's largest natural gas trading partners. 
Enron's share price has gone into a tailspin in recent weeks after the company reported its first quarterly loss in more than four years and as concerns about its complex finances led to a probe by the Securities and Exchange Commission and a series of downgrades by the major credit ratings agencies. 
Ratings agencies like Standard & Poor's said it would consider cutting Enron's rating again if it saw a change in behavior in Enron's trading partners. 
Janet McGurty, New York Equities, +1 646 223 6093 janet.mcgurty@reuters.com <mailto:janet.mcgurty@reuters.com>)).



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

Enron Calls Emergency Meeting With Banks Friday -FT

11/07/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
NEW YORK -(Dow Jones)- Enron Corp. (ENE) has called an emergency meeting of its banks which will be held Friday, The Financial Times reported on its Web site Wednesday. 
Banks with about $3.3 billion of exposure to Enron described the meeting, scheduled to take place at Enron's headquarters in Houston, Texas, as "make or break," The Financial Times reported.
The Financial Times quoted an unnamed bank executive as saying, " This is a pivotal meeting. There are lots of credit lines due in the next six months and we need to talk." 
If Enron fails to complete a deal with another company before Friday's meeting, it will need to persuade the banks to extend credit lines, The Financial Times reported. 
The banks with the greatest exposure to Enron include Credit Suisse, Deutsche Bank, Citigroup and Barclays, The Financial Times reported.



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

US Power, Gas Companies Restrict Dealings With Enron
By Jon Kamp, Kristen McNamara and Mark Golden
Of DOW JONES NEWSWIRES

11/07/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
NEW YORK -(Dow Jones)- Trading companies in Enron Corp.'s (ENE) key North American power and gas markets are restricting their dealings with the ailing Houston-based giant, people at those companies said Wednesday. 
Concerns have mounted because Enron, which accounts for about a quarter of the trade in the country's power and gas markets and which makes a market for those commodities on its Internet-based system EnronOnline, has seen its share price fall by about 75% and its credit ratings downgraded since mid-October due to uncertainties about its extremely complex financial structure.
"We've restricted our business with them," said Mike Smith, chief financial officer for Mirant Corp. (MIR) unit Mirant Americas Group, a Top 10 trader of power and gas in the U.S. 
Smith wouldn't be more specific, but his comments echoed those of others in the business. 
"Our exposure to Enron is insignificant compared with the previous exposure," said Al Butkus, spokesman for Aquila Inc. (ILA), a Top 5 U.S. power and gas trader. 
Tractebel Energy Marketing, the North American subsidiary of the Belgian company Tractebel S.A., has limited the term of transactions with Enron to three years or less, a person at the company said. And a power broker said some medium-sized western utilities have stopped trading with Enron even for near-term delivery. 
Enron didn't return calls seeking comment. 
Enron's ability to transact in its core markets - North American wholesale gas and power - is essential if the company maintain the earnings and cash flow needed to emerge from its current credit crisis, Wall Street analysts and ratings agencies have said. Standard & Poor's and Moody's Investors Service downgraded Enron's credit
to within two steps of junk-bond status last week and have it on watch for
further downgrade. Enron still has its supporters. Exelon Corp. (EXC) is
monitoring its own risk management, but hasn't changed its relationship with 
Enron, Chief Financial Officer Ruth Ann M. Gillis said. 

"We haven't changed our relationship," Gillis said. 
Enron is a very important factor in the vitality of the wholesale energy markets, she said. They're still the "largest, best" of the companies out there, she said. 
Likewise, a trading floor manager at one energy company said Enron called earlier in the week and asked that the company increase its trading on EnronOnline. The company's EOL volumes had fallen, but it honored Enron's request out of respect for Enron's still market-making power. 
PPL Corp. (PPL), however, moved to mitigate its exposure to Enron following the downgrades, said a person in the company's energy marketing operation, PPL EnergyPlus LLC. 
"Enron would not be a first choice to do long-term transactions," the person said. "For shorter-terms, deals, they wouldn't be considered equally with everyone else. There's just too much risk there." 

(Corrected 2151GMT) 
(In an item that ran around 16:36 EST (2136 GMT), Exelon Corp.'s name was misspelled.) 

2151GMT



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

IN THE MONEY: The 'D' Word Could Bite Enron. Others Too?
By Carol S. Remond

11/07/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
A Dow Jones Newswires Column 

NEW YORK -(Dow Jones)- With Enron Corp. (ENE), what you don't see is what could hurt you.
And that's what has many on Wall Street worried today. 
Hidden from investors by off-balance sheet transactions are billions of dollars of derivative contracts that Enron has entered into with banks and investment firms as well as other energy companies. Some are hedging transactions while others are contracts to sell a commodity at a specific price at some time in the future. 
As Enron's credit situation continues to deteriorate, investors are scrambling to figure out who could be affected by the fallout and how widespread it could be. By its own account as of December 2000, Enron was a party in roughly $20 billion of derivative contracts on which it owed its counterparts. The current size of its total derivative exposure isn't known. 
Confidence in the company has fallen dramatically. Talk on Wall Street Wednesday is that firms are dumping Enron's bonds as well as its stock. The stock was off almost 25% at one point, in part tied to concerns that some of its biggest customers are moving business elsewhere because of Enron's worsening credit quality. 
This all comes against the backdrop that Enron has been trying to secure an up to $2 billion equity infusion. The Wall Street Journal reported Wednesday afternoon on Dow Jones Newswires that Dynegy Inc. (DYN) was in advanced talks to infuse that amount into Enron in a deal that could lead to an acquisition. Enron stock rebounded from its $7 a share low on the report and was off but 5% at $9.20. (Dynegy investors clearly aren't happy about a prospective deal - they knocked the stock down 8%, in part over worries about what Dynegy could be getting itself into.) 
For an indication of how severely Wall Street views the situation, you need to look no further than the derivatives market itself, where the cost of protecting the business you have done with Enron is skyrocketing and money is being demanded up front. 
Traders say companies that today have unhedged forward purchase contracts with Enron are paying dearly for insurance. Here's how it works: Let's say you are company that has agreed to buy a certain amount of energy from Enron at a fixed price in five years. You pay Enron money up front for that contract. To hedge yourself against a volatile market, you turn around and buy a financial futures contract that minimizes your risk. 
Before the recent problems at Enron, that offsetting financial contract would cost about 1.5% to 2% of the value of the contract with premiums paid on a quarterly or semi-annual basis. Today, that financial contract will cost 15% to 25% in a very illiquid derivatives market. And given the perceived high probability of an Enron default, those willing to sell Enron protection are now demanding to be paid that percentage upfront. (The cost of hedging Enron's credit risk is now close to what some investors paid shortly after the Sept. 11 attacks to protect themselves against exposure to airline companies.) 
Another way companies who do business with Enron might look to protect themselves is by curtailing trading activities with Enron. So far, few have been willing to admit publicly that they're seriously worried about their credit exposure to Enron. But some have begun to address the potential credit risk associated to Enron's unraveling. 
On Wednesday, Apache Corp. said it unwound nearly all of its hedges on gas prices. An Apache spokesman said the unwinding was caused by "concerns about ripple effects of Enron's predicaments through the market." The spokesman said Apache was now looking to unwind one hedging transaction with Enron. Other companies are said to have cut their exposure to Enron as well. 
Even if most firms aren't admitting to a net reduction of their transactions with Enron, people familiar with the situation said those companies had now adopted a `neutral" stance, only entering a transaction when they can directly offset it with other one. 
Energy companies aren't likely to be the only ones worrying about Enron worsening woes. 
Giant Wall Street firms active in the $63 trillion worldwide derivative market could also be on the hook for some of the contracts in which Enron is a counterpart. 
Credit derivative contracts and other hedging instruments allow investors to transfer at least some of the credit risk associated with a transaction to someone willing to take on that risk, much like an insurance policy. 
Securities firms are often acting as middlemen, selling protection to one counterpart, while selling offsetting exposure to another. That brings about the so-call counterpart risk. 
Somewhere, someone is long Enron counterpart risk and if Enron isn't able to pay up on its part of the bargain (at least $20 billion as of Dec. 31, 2000), then the middlemen could be left holding the bag. 
"There is no question that there is Enron risk out there. The question is whether it's well distributed across the market or whether it's concentrated in a few (derivative) houses," an official at a large derivative house said. 
According to a report by the Office of the Comptroller of the Currency, Chase Manhattan Bank, Morgan Guarantee Trust Company, Bank of America and Citibank dominated the derivative market in the second quarter, accounting for almost $43 trillion of the $47.5 trillion in nominal amount of derivative contracts written by and outstanding at U.S. commercial banks. Investment banks like Goldman Sachs and Morgan Stanley are also big players in the derivative markets, having issued and outstanding about $5 trillion and $4 trillion respectively at the end of 2000. 
Carol S. Remond; 201-938-2074; Dow Jones Newswires 
carol.remond@dowjones.com <mailto:carol.remond@dowjones.com>



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

USA: Dynegy may invest $2 bln in Enron-WSJ.com.

11/07/2001
Reuters English News Service
(C) Reuters Limited 2001.
NEW YORK, Nov 7 (Reuters) - Energy company Dynegy Inc. . is considering investing $2 billion in rival Enron Corp. in a transaction that may lead to a merger of the companies, the Wall Street Journal reported on its online edition on Wednesday. 
The Journal said a formal announcement of the transaction could be made as soon as Thursday. It didn't cite the source of its information.
Enron and Dynegy, both Houston-based, declined to comment.



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

USA: UPDATE 1-Enron shares plunge in new tumble, touch $7.

11/07/2001
Reuters English News Service
(C) Reuters Limited 2001.
(Updates share price, report Enron has approached Warren Buffett in paragraph 4, Enron discussed merger with Dynegy in paragraph 6, El Paso comments in paragraphs 11-14) 
NEW YORK, Nov 7 (Reuters) - Shares of Enron Corp. plunged in a new round of selling on Wednesday, touching a 10-year low, as concerns linger about the energy trading giant's ability to raise cash and restore investor confidence.
The company's stock slid more than 27 percent in intraday trade on the New York Stock Exchange, before paring losses to trade down $1.47, or 15.2 percent, to $8.20 in the afternoon. The stock briefly touched $7, a price last seen in May 1991. 
Enron was the most active stock in NYSE trading, and the second-largest loser in percentage terms. The stock is down almost 78 percent since the company released its earnings results on Oct. 16, which set off the recent tumble. 
Representatives of Enron have approached Warren Buffett, the chairman of Berkshire Hathaway Inc., about taking a stake in the energy trader, The New York Times reported Tuesday. 
"We have been exploring all of our options to strengthen our balance sheet and increase investors' confidence," said Enron spokesman Mark Palmer, who declined to go into further detail or discuss specific companies. 
CNBC reported Enron and Dynegy Inc. have held talks about a range of options, including a merger. The network cited sources close to the talks. 
Enron and Dynegy said they do not comment on speculation. A spokeswoman for Berkshire Hathaway said Buffett was traveling and could not be reached. 
The issues that have plagued the Houston-based company over the past three weeks continue to weigh on it, according to Jeff Dietert, an analyst at Simmons and Co. 
"It's a bit of a vicious cycle," he said. "The stock price declines, credit concerns go up, counterparties attempt to reduce their exposure and the earnings power of the company deteriorates." 
He added the nation's largest trader of natural gas and electricity needs to "get all its ducks in a row" so it can meet with its stock and bond holders to discuss Enron's capitalization and plans for strengthening its balance sheet. 
Already, at least one of Enron's rivals is benefiting from the company's woes. 
El Paso Corp., which also runs an energy marketing and trading business, said on Wednesday it has gained market share in the past few weeks as a result of reluctance on the part of companies to do business with Enron. 
But Ralph Eads, who heads El Paso's merchant energy business, said he does not expect Enron to file for bankruptcy and said El Paso has not scaled back its business dealings with the company. 
He also said he does not expect Enron's problems to lead to reduced liquidity in U.S. electricity and natural gas markets, a scenario that has troubled some analysts and investors. 
Enron is under attack over investor unease about its off-balance sheet transactions that led to a $1.2 billion write-down of shareholder equity. 
The deals, conducted with partnerships run by ousted Chief Financial Officer Andrew Fastow, are under investigation by the U.S. Securities and Exchange Commission.



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

Dynegy Weighs $2 Billion Investment in Enron in Possible Step Toward Merger
By Robin Sidel

11/07/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)
Staff Reporter of The Wall Street Journal 
Dynegy Inc. is in advanced discussions to infuse about $2 billion into Enron Corp. in a transaction that may lead to a full-blown merger between the two companies, people familiar with the matter said.
A formal transaction could be unveiled as early as Thursday, these people said. The situation is very fluid and is subject to change, these people noted. 
Enron (ENE) has been rocked by last month's disclosure of a $1.2 billion reduction in its equity base partly tied to financial dealings with company partnerships headed by Enron's former chief financial officer. Last month, it reported a third-quarter loss of $618 million. The Securities and Exchange Commission has launched a formal investigation into the matter. Last week, Enron secured $1 billion in new credit lines, using gas-pipeline assets as collateral. 
Enron needs the infusion in part because its previously announced plans to raise cash through the sale of power assets is going more slowly than expected. Mostly, though, it needs to restore its credibility with Wall Street at a time when its access to the financing markets is drying up. 
Enron declined to comment and Dynegy couldn't be reached for comment. 
News of the Dynegy discussions was first reported on CNBC. 
Dynegy (DYN) is a Houston-based power producer and trader. 
Write to Robin Sidel at robin.sidel@wsj.com <mailto:robin.sidel@wsj.com> 
Copyright (c) 2001 Dow Jones & Company, Inc. 
All Rights Reserved.



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

Enron Corp. Cut to `Sell' at A.G. Edwards
2001-11-07 16:04 (New York)

     Princeton, New Jersey, Nov. 7 (Bloomberg Data) -- Enron Corp. (ENE US)
was downgraded to ``sell'' from ``hold'' by analyst Michael C Heim at A.G.
Edwards & Sons Inc.



Dynegy in Talks to Buy Enron With ChevronTexaco Cash (Update2)
2001-11-07 16:08 (New York)

Dynegy in Talks to Buy Enron With ChevronTexaco Cash (Update2)

     (Updates with closing share prices.)

      Houston, Nov. 7 (Bloomberg) -- Dynegy Inc. is in talks to
buy Enron Corp. as Enron faces a cash crunch and loss of investor
confidence over its dealings with partnerships controlled by a top
executive, people familiar with the situation said.

      ChevronTexaco Corp., which owns about 27 percent of Dynegy,
is considering adding $1.5 billion to the deal to help Enron,
whose stock and credit ratings declined in the wake of a
Securities and Exchange Commission investigation into the
partnerships, the people said.

      The boards of the three companies were meeting today on the
proposed transaction, the people said. Dynegy and Enron, rival
Houston energy trading firms, haven't agreed on a price, the
people said. Dynegy is proposing a stock swap with a modest
premium while Enron is holding out for more, the people said.

     ``If history is any guide, Dynegy is stingy when it comes to
acquisitions, so I don't expect them to do anything stupid'' such
as overpaying for Enron, said UBS Warburg LLC analyst James
Yanello. ``A deal could provide Dynegy with tremendous
opportunity.''

     Dynegy would gain an established wholesale energy business,
the leading energy manager for commercial and small-industrial
customers, and the largest Internet energy trading operation, many
times larger than Dynegy's, he said. Yanello rates Dynegy ``strong
buy'' and doesn't own shares of either company.

     Shares of Dynegy, the fifth-largest U.S. natural gas
marketer, fell $3 to $33. Enron, whose stock has plunged 89
percent this year, fell 62 cents to $9.05 in trading of 111
million shares, almost eight times the daily average for the past
three months. ChevronTexaco shares rose 48 cents to $87.28.

     The companies agreed on a breakup fee providing Dynegy with
about $400 million if Enron accepts a higher offer, one person
said.

                         Partnership Probe

     ChevronTexaco spokesman Fred Gorell declined to comment.
Enron spokesman Mark Palmer and Dynegy spokesman Steve Stengel
also declined to comment.

     ``We would be very surprised if Dynegy buys the whole
company,'' said Tim Ghriskey, president of Ghriskey Capital
Partners, which doesn't own Enron or Dynegy shares.

     ``All the (Dynegy) board has to do is look at what's
happening to their stock price today, and you'd wonder why they
would want to do it in the face of what's happening with the
stock.''

     The talks were previously reported by the Wall Street Journal
and financial news network CNBC.

     Enron also set to meet with J.P. Morgan Chase & Co.,
Citigroup Inc. and other lenders on Friday to discuss merger plans
and a possible increase on the amount the company pays for
existing credit lines, according to bankers familiar with the
matter.

     The company has invited more than 300 creditors to its
offices in Houston to listen to presentations by Enron's financial
team, led by its new Chief Financial Officer, Jeffrey McMahon, the
people said.

     The SEC is investigating Enron partnerships run by the
company's former chief financial Officer. The entities bought and
sold Enron shares and assets in trades that cost Enron $35
million. The company also lost $1.2 billion in shareholder equity.



Legal Group to Sue Over California Power Contracts (Update1)
2001-11-07 15:39 (New York)

Legal Group to Sue Over California Power Contracts (Update1)

     (Adds background on group in eighth paragraph and DWR
response in ninth paragraph.)

     Escondido, California, Nov. 7 (Bloomberg) -- A conservative
legal foundation said it will file a lawsuit tomorrow to void long-
term contracts California signed with power generators, claiming
they put an unfair burden on taxpayers.

     The United States Justice Foundation intends to sue in
Sacramento County Superior Court, said Richard D. Ackerman, lead
counsel on the case for the group. The USJF wants a court to
terminate the long-term power contracts and require money already
paid to the generators to be returned to the state.

     The USJF proposes a class action to represent California
taxpayers and alleges violations of the state's business and open-
meeting laws. Ackerman said his group may need to forge new law to
succeed in the case.

     ``You're gonna have some serious legal battles that may go to
the appeals level in this case,'' Ackerman said.

     California officials last spring signed about $43 billion in
long-term power contracts after two investor-owned utilities
became insolvent. Governor Gray Davis has said the contracts were
needed to bring stability to California's energy market. Since
then, the cost of power has dropped, leaving California with
contracts to buy electricity above spot-market prices.

     Enron Corp., Southern California Edison Company, Pacific Gas
& Electric Company, Green Mountain Energy, San Diego Gas &
Electric Company, Reliant Energy Company, PacifiCorp Power
Marketing, Inc., Alliance Colton LLC, and Calpine Energy Company
have electricity contracts with the state, according to a USJF
press release.

                       `Conservative Voice'

     The USJF said it sent a letter to California officials giving
them notice of its intent to sue. The group, which calls itself
``Your conservative voice in the courts'' on its Web site, is
supported by individual donations, Ackerman said.

     The group has rallied against civil unions for homosexuals
and mandatory student fees the group claimed were illegal taxes on
parents and in favor of prayer in schools and resumption of U.S.
assignations of foreign political figures, according to its Web
site.

     The California Department of Water Resources, the agency
buying power on behalf of some utilities, was unaware of the
lawsuit and therefore couldn't comment, spokesman Oscar Hidalgo
said. A spokesman for Davis wasn't immediately available for
comment.



Enron to Meet With Lenders on Merger, Possible Yield Increase
2001-11-07 15:38 (New York)


     New York, Nov. 7 (Bloomberg) -- Enron Corp. is set to meet
with J.P. Morgan Chase & Co., Citigroup Inc. and other lenders on
Friday to discuss merger plans and a possible increase on the
amount the company pays for existing credit lines, according to
bankers familiar with the matter.

     The company has invited more than 300 creditors to its
offices in Houston to listen to presentations by Enron's financial
team, led by its new Chief Financial Officer, Jeffrey McMahon, the
people said.

     The discussions will focus on a bid by Dynegy Inc. to acquire
the largest energy trader, which is facing a cash crunch because
of falling credit ratings, people familiar with that situation
said.

     Some bankers have also asked Enron to consider an increase to
the yield on the $3 billion of credit lines it drew down last
month. The interest rate of 35 basis points more than the London
interbank offered rate, or Libor, on the loans was set in May
before the company's share price plummeted and its credit ratings
were downgraded.

     For a $1 billion credit line arranged last month by J.P.
Morgan and Citibank, Enron is paying as much as 2.5 percentage
points more than Libor.

     Enron officials declined to comment.




Enron Shares Fall on Concern About Finding Investors (Update3)
2001-11-07 15:35 (New York)

Enron Shares Fall on Concern About Finding Investors (Update3)

     (Adds Standard & Poor's comment in third paragraph.)

     Houston, Nov. 7 (Bloomberg) -- Enron Corp.'s shares fell as
much as 28 percent, to their lowest level in more than a decade,
amid reports that the No. 1 energy trader is struggling to find
investors to help it out of a cash crunch.

     Shares of Enron fell 63 cents, or 6.5 percent, to $9.04 in
late trading. The shares dropped to $7 earlier. At yesterday's
close, they had fallen 88 percent this year.

     ``Their only real access (to cash) now is through the bank
market,'' said Todd Shipman, a Standard & Poor's director who
covers Enron. An equity infusion ``is what we still think would be
an important part of stabilizing the situation.''

     The shares pared some of today's losses after people familiar
with the situation said Enron is discussing a merger with rival
Dynegy Inc. Both companies are based in Houston.
Dynegy shares fell $2.78, or 7.7 percent, to $33.22.

     Berkshire Hathaway Inc. Chairman Warren Buffett decided
against investing in Enron because he wasn't willing to sign a
confidentiality agreement that would keep him from trading Enron's
debt, the New York Times reported today, citing an unidentified
person close to the talks.

     Other companies approached by Enron, including Clayton
Dubilier & Rice, the Blackstone Group and Kohlberg Kravis Roberts
& Co. have also shown little interest, the newspaper said.

     ``Many shrewd investors like Goldman Sachs might find it more
profitable to just pluck off key employees rather than invest in
Enron,'' said Sean Egan, managing director of Egan-Jones Rating
Co.

                         SEC Investigation

     The U.S. Securities and Exchange Commission is investigating
Enron partnerships run by the company's former chief financial
officer. The entities bought and sold Enron shares and assets,
with trades costing Enron $35 million and $1.2 billion in lost
shareholder equity. Enron ousted CFO Andrew Fastow last month.

     Standard & Poor's today reduced its rating on Enron's credit-
linked notes to match its downgrade last week of the company's
unsecured bonds. S&P cut four Enron credit-linked issues valued at
about $1.36 billion combined to ``BBB'' from ``BBB+'' and
indicated it may lower the grades again.

     Shipman said the move isn't an additional downgrade and
should have been made last week when S&P reduced the bond rating.
     Fearing that an Enron collapse might cripple the natural gas-
derivatives market, oil and gas producer Apache Corp. said it
backed out of most of its gas hedges, realizing a $70 million gain
so far.

     ``We have been unwinding our hedge positions because of
uncertainty created by Enron's credit problems,'' Apache spokesman
Bill Mintz said. The company now has only one position with Enron
that it's trying to unwind.

     The Apache news was reported earlier by the Times.

                        `Fragile Business'

     ``Their trading business is a very fragile business,'' Egan
said. ``If partners on either side get concerned, trading volumes
decline, which is what is happening now.''

     Other companies mentioned in reports as possible buyers of
all or part of Enron have denied an interest in the idea. General
Electric Co. Chief Executive Officer Jeffrey Immelt told CNN today
that ``Enron's really not on our list right now.'' BP Plc Chief
Executive John Browne said ``no'' at a press conference in London
yesterday when asked whether the London-based company would be
interested in buying Enron or a stake in the company.

     Among shares of other energy traders, Mirant Corp. fell 25
cents to $25.26. Williams Cos. fell 2 cents to $28.99.



Enron calls emergency meeting with banks
Financial Times.com
By William Lewis - Nov 07 2001 19:59:36
Enron has called an emergency meeting of its banks on Friday amid growing concerns on Wall Street that the troubled energy trader will not been able to survive its financial crisis unless it finds a strategic partner. 
Banks with approximately $3.3bn of exposure to Enron are describing the meeting at Enron's headquarters in Houston, Texas as "make or break." One bank executive said "this is a pivotal meeting. There are lots of credit lines due in the next six months and we need to talk." 
With time running out for the company, Enron executives were on Wednesday making frantic efforts to secure a deal with rival energy group Dynegy. Some at the company hoped to be able to announce a deal late on Wednesday. 
Shell-owned Coral Energy has also been approached, and there have also been calls to private equity groups such as Blackstone Group. 
But the efforts have been hampered by the SEC investigation into Enron's dealings with funds associated with former executives of the company. Bankers say that companies that do not already know Enron intimately have been put off entering negotiations because of the uncertainty. 
If the company fails to complete a deal ahead of Friday's crucial meeting, it will need to persuade the banks to extend credit lines, as it battles to shore up confidence among investors and its trading counterparties. 
The banks with the greatest exposure to Enron include Credit Suisse, Deutsche Bank, Citigroup and Barclays. 
Off-balance sheet vehicles affiliated to Enron have $8-$9bn in debt. Enron itself is carrying $12.8bn in debt. 
The company has been under increasing pressure since October 16, when it disclosed a surprise balance sheet adjustment that only exacerbated concerns about a lack of transparency at the energy trading group. 
Enron is the principal in a quarter of all electricity and natural gas trades in the US. On Wednesday, the company did not immediately return calls seeking comment. 
Enron's share price had lost 21.92 per cent of its value by midday on Wednesday, and was trading at $7.55, drastically down from a 52-week high of $84.87. 
"What we have here is a run on the bank by equity investors," said John Olson, vice-president of research at Sanders Morris Harris, an investment banking and securities firm. "And they have done nothing to alleviate it." 
Meanwhile, Enron's competitors have begun taking business away from the US's biggest energy trading company. 
Shahid Malik, president of trading and marketing at Reliant Energy, a big participant in the trading that is central to Enron's business, said: "We're seeing more business come our way because, clearly, some companies are reducing their exposure to Enron." 
He said Reliant had maintained normal relations with Enron, noting it was still credit-worthy. 
But he added: "We are very carefully monitoring the situation." 




The Night Watch: Enron Ticks Higher in Extended Trading
By TSC Staff <<mailto:letters@thestreet.com>>

TheStreet.com
11/07/2001 04:46 PM EST

Enron (ENE:NYSE - news - commentary) was the most active stock on the Instinet platform in the extended session, as investors sent the shares of the energy merchant fractionally higher following rumors that Dynegy (DYN:NYSE - news - commentary) might be considering an investment in the company, or possibly even a merger. 
Enron, whose stock has plunged during the last three weeks as shareholders fretted about the company's relationship with a series of investment partnerships, which has led to a Securities and Exchange Commission probe, ticked up 0.1% to $9.06. 
InfoSpace (INSP:Nasdaq - news - commentary) was also active after the bell, losing 2.5% to $1.59. Intel (INTC:Nasdaq - news - commentary) was tacking on 0.5% to $28.44, and the Nasdaq 100 Tracking Stock (QQQ:Amex - news - commentary) was unchanged at $38.15. 
Hot Topic (HOTT:Nasdaq - news - commentary) was one of the extra session's biggest losers, falling 3.8% to $24.51 after saying October same-store sales fell 4.4% from the same month a year ago. The company also indicated that earnings for the third and fourth quarters could come in a little short of analysts' estimates. 
Cisco (CSCO:Nasdaq - news - commentary) was up 0.3% to $18.99, Sun (SUNW:Nasdaq - news - commentary) was gaining 0.2% to $12.61, and Oracle (ORCL:Nasdaq - news - commentary) was flat at $15.58. 
Bristol-Myers Squibb (BMY:NYSE - news - commentary) rose 2% to $55.32 after hours. Earlier in the day, the company laid out its drug development plans for the next few years. The stock lost 2.7% in regular trading. Sepracor (SEPR:Nasdaq - news - commentary) was losing 8.3% to $47.75 after the close, and Celgene (CELG:Nasdaq - news - commentary) was climbing 2% to $37.02. 



Some Glamour Stocks That Are Ugly Down Deep
By Brett Messing <<mailto:bmessing@oscarcap.com>>
Special to TheStreet.com
RealMoney.com
11/07/2001 09:51 AM EST

I know it's tempting. I know what you're thinking: If I can catch a big ride on one of these beaten-down stocks, I can get my portfolio back to where it was in March 2000. 
Forget it. Rip up those old statements. Treat them like UFOs. Instead, think singles and doubles instead of homers. While a number of glamour stocks have been decimated, they deserve to be decimated. I am an opportunist. I've looked at all of them. They are a collective disaster, and they are not worth the risk. 
Let's start with Jim Cramer's favorite punching bag, Enron (ENE:NYSE - news - commentary) . As bad as this situation is, it is going to get worse before it is over. And while the Bushies may have been willing to help out Bill Gates with his little Justice Department problem, they will not go near this one with a 10-foot pole. Enron is not an energy company. It is a trading company. Moreover, it appears they are not particularly good traders. 
Instead of Enron, invest your money with the best trading company in the world, Goldman Sachs (GS:NYSE - news - commentary) . These guys have probably been picking Enron's pockets for years. Isn't it interesting that Goldman Sachs was unwilling to participate in the recent short-term loans to Enron, an investment banking client? They might actually know what's behind the curtain. 
I worked at Goldman Sachs for eight years, and I have tremendous respect for them. They know how to trade. They made a ton of money handling Sid Bass' recent 125 million-share block of Walt Disney (DIS:NYSE - news - commentary) stock. Forget about the 6-cent-per-share fee they charged. How about the 10 million to 20 million shares that they kept for themselves? I imagine that Goldman made more than $30 million on this one trade. Not a bad day's work. 
Stay away from Qwest (Q:NYSE - news - commentary) . Taken in the best light, the company is way too aggressive with its accounting; Qwest bullies the analyst community and it overpromises and underdelivers. Qwest has justifiably lost the trust of the investment community. It will take years of execution and fence-mending to earn this trust back. Ask Cendant CEO Henry Silverman. He is still paying for the damage inflicted upon him by former Cendant Chairman Walter Forbes, who has pleaded not guilty to conspiracy and wire fraud charges. 
Go with WorldCom (WCOM:Nasdaq - news - commentary) instead. These guys actually get it. They are among the telecom industry's best operators, and they are the best dealmakers. Like everyone else, they goofed, but they have found religion. This quarter's operating results show some promise. Previously skeptical analysts at Lehman and Merrill had some nice things to say about the company. I think WorldCom is an up stock from here. It is not going back to the $60s, but I could see it above the driving age by year-end. 
I know it's also tempting to think that if the economy rebounds, consumer finance stocks will scream. You are turned on by Providian (PVN:NYSE - news - commentary) and Conseco (CNC:NYSE - news - commentary) . Providian recently hired my pals at Goldman Sachs to help them out. 
Forget this, too. Providian feels like a doughnut to me. Their balance sheet is a mess. We do not know how bad it is. They may not know how bad it is. Moreover, they were not candid with the investment community. 
Conseco announced that Gary Wendt and other senior managers bought a bunch of stock with their own money. While I love to see management buying stock, this one feels too staged to me. Pre-Wendt, Conseco had a long history of management buying stock with loans from the corporate treasury. Moreover, 1 million shares (or $3 million) is not that much money to Wendt. I would like to see him buy $25 million of restricted stock directly from the company. 
Conseco is probably the best speculative bet of the bunch, but I would still pass. It is a very high-risk situation, given the leveraged state of its balance sheet. Wendt is a tremendous manager, and he did a great job with GE Capital. However, he would not be the first guy to have a sequel that bombs at the box office. 
Go with Citigroup (C:NYSE - news - commentary) instead. Citigroup is the biggest and best financial services company in the world. While Wendt is something special, I would draft Weill and Rubin ahead of him in my CEO Rotisserie League. 
The best way to make money is to stay out of trouble. Stick with singles and doubles. Don't be tempted. 



Fundie Firing Comes Better Late Than Never
By James J. Cramer <<mailto:jjcletters@thestreet.com>>

RealMoney.com
11/07/2001 09:17 AM EST

Hallelujah! Someone in mutual-fund land lost his job for crummy performance. Two years ago Merrill Lynch decided to hire a real mutual fund gunner, James McCall, and install him in the Merrill Lynch Focus Twenty and Premier Growth Funds. 
McCall was from PBHG. There, the guy was a total gunner in the true basketball sense: all offense, no d. He came to Merrill and played the same game, buying all of the stocks I have been railing against in these last 18 months. This guy owned them all. 
He proceeded to totally stink up the joint. 
I don't mourn McCall. He represented the worst strain of money manager, the kind who'd never met a high growth stock he didn't like. A man who didn't give a hoot about valuation. His bets on BEA Systems, Juniper, EMC, Sonus, Celestica, ONI Systems and Extreme should have been enough to give him the hook. But he also bit on Enron! 
McCall's funds were dead last in Merrill's fund standing. So he left. That's what should happen. I just wish it had happened sooner. 
This industry made a mess of itself the last few years by picking managers who were reckless in their stock picks and never thought about the downside. 
The industry really let the investors down. 
The departure of McCall is a good sign that things are returning to how they should be, where you sacrifice some upside in order to spare your investors the massive downside that McCall experienced. 
Now, let's hope the other mutual fund families exercise similar discretion. 
Better late than never.