Enron Prepares To Become Easier to Read
The Wall Street Journal, 08/28/01
The State PG&E's Power Bill May Go Up Energy: The PUC wants to shift some of the state's cost of buying electricity away from Edison. It also proposes a 12% rate hike for SDG&E.
Los Angeles Times, 08/28/01

Enron Names Whalley, Frevert to Chairman's Office (Update1)
Bloomberg, 08/28/01

USA: Enron names Greg Whalley president, COO.
Reuters English News Service, 08/28/01
Enron Names Greg Whalley President, Oper Chief
Dow Jones News Service, 08/28/01
INDIA PRESS: Fincl Cos Look For Enron Stake Buyers
Dow Jones Asian Equities Report, 08/28/01
Enron denies seeking sanctions over Dabhol
The Times of India, 08/28/01
Markets / Your Money Stocks Ease After Friday's Big Gains Markets: NYSE trading is light. Among commodities, natural gas prices see 18-month lows.
Los Angeles Times, 08/28/01
Vignette Rises as eBay, Yahoo Fall Amid Seesaw Day for Tech Stocks
The Wall Street Journal, 08/28/01
Enron works to shore up confidence
Houston Chronicle, 08/28/01





Heard on the Street
Enron Prepares To Become Easier to Read
By Rebecca Smith and John Emshwiller
Staff Reporters of The Wall Street Journal

08/28/2001
The Wall Street Journal
C1
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Can a humbler, more-informative Enron refuel investor enthusiasm? 
That's the hope of Kenneth Lay, founder and chairman as well as the once and once-again chief executive of this Houston energy and trading company. Enron has been regarded as one of the nation's most innovative -- though bedevilingly complicated -- companies. Mr. Lay acknowledges that Enron, which grew into a colossus over the past decade with a hard-charging, in-your-face management style, has "lost some credibility" with the investment community.
"I want to make sure we restore that credibility," he said in an interview last week. 
He promises fuller disclosures, and Enron has a lot riding on whether investors find them sufficient -- and soothing. Last summer, the company's stock price hit $90 a share, giving Enron a dazzling price-to-earnings ratio exceeding 60. As of 4 p.m. in composite trading yesterday on the New York Stock Exchange, Enron was at $37.76, up $1.41, sporting a more-conventional P/E ratio of about 21 times this year's expected earnings. 
The stock slide has multiple causes, including uncertainty about trading profits, due to the slower economy and a drop in energy prices as well as mounting concerns about the difficulty that investors face in figuring out how the company's extremely complex operations make money. 
Layer on management turnover. Earlier this month, Enron lost its chief executive when Jeffrey Skilling, Mr. Lay's longtime lieutenant and handpicked successor, unexpectedly resigned after only about six months in the top job. The 47-year-old Mr. Skilling was widely credited with helping to build Enron into the nation's leading energy trader and personified the company's brash manner. During an investor conference call in April, for example, when a caller criticized Enron's schedule for releasing financial information, Mr. Skilling responded by calling him an "ah." Mr. Skilling, who is on a river rafting trip, couldn't be reached for comment but others at the company, including Mr. Lay, say it was an unfortunate word choice that continues to haunt the company. At the time, Mr. Skilling said he regretted if anyone was offended by his remark. 
Though Mr. Skilling initially said his resignation was strictly for personal reasons, he added in a later interview that his own feelings of failure over the plummeting stock price had contributed greatly to his early departure. The 59-year-old Mr. Lay resumed the chief executive's job that he had previously held for 15 years. 
Jeff Dietert, an analyst from Simmons & Co. International in Houston, figures that Enron's P/E is likely to be permanently lower, though still somewhat higher than the average for its peer group. Mr. Dietert views Dynegy as the premium energy stock, which will fetch the highest trading multiple. 
While Mr. Lay insists that Enron's overall operating and financial condition is very strong, the unexpected exit of Mr. Skilling has some wondering if "there isn't another shoe about to drop," says Carol Coale, an analyst at Prudential Securities. 
To lessen such concerns, Mr. Lay promises to address the longtime analyst and investor complaint that Enron doesn't provide enough information about its extremely complex operations, which include not only construction of natural-gas pipelines and power plants but the trading of an ever-expanding array of commodities. Nowadays, Enron trades everything from telecommunications capacity to weather-linked derivative contracts. 
"I truly do not understand all their financial arrangements, and I've sent information on their deals to accountant friends and they don't understand them either," says Rebecca Followill, an analyst at Howard Weil, who refers to Enron's accounting methods as a "black box." 
Yet analysts long put out buy recommendations on Enron stock, in large part because the company has issued consistently strong earnings. In 2000, for example, the company reported net income rose 10% to $979 million on revenue that more than doubled to $100 billion. Assets over the past five years more than quadrupled to about $65 billion. 
"When the stock price and earnings were going up so quickly, less attention was paid to the quality of earnings," says Zach Wagner, an analyst at Edward Jones in St. Louis. With the stock price down, "Enron has to show that they do have quality earnings. The only way to do that is to open up the books," he says. 
Mr. Lay says Enron will start putting out more detailed information on individual business segments and "give a better idea of the profitability of various businesses" such as its wholesale-services category where a lot of business activities gets lumped. 
In another bow to criticism, Chief Financial Officer Andrew Fastow as of July 31 quietly ended his ownership and management ties with certain limited partnerships. Over the past two years, Enron has placed billions of dollars of assets and millions of shares of its stock into complex transactions with these partnerships. Enron executives say the transactions were perfectly proper and that the company asked Mr. Fastow to take part in the deals, which were done to reduce the risk of fluctuating market prices. An Enron spokesman says Mr. Fastow has no comment on the matter. 
Yet some analysts say they have been concerned about having Enron's top financial executive in a fiduciary position at entities that, at least potentially, stood to gain if the company lost in the transactions -- and vice versa. Mr. Lay says the transactions involving Mr. Fastow had become a "lightning rod" for criticism so "we're better off not doing it." 
Of course, it's still a challenge trying to make sense of these transactions. Consider the following snippet from Enron's second-quarter report concerning some Fastow-related deals: "Enron has entered into agreements with entities formed in 2000, which included the obligation to deliver 12 million shares of Enron common stock in March 2005 and entered into derivative instruments which eliminated the contingent nature of existing restricted forward contracts executed in 2000. . . . In exchange, Enron received notes receivable from the Entities totaling approximately $827.6 million. In addition, Enron entered into share settled costless collar arrangements with the Entities on the 12 million shares of Enron common stock. Such transactions will be accounted for as equity transactions when settled. Enron received a $6.5 million note receivable from the Entities to terminate share-settled options on 7.1 million shares of Enron common stock. The transactions resulted in noncash increases to noncurrent assets and equity." 
Reading Enron's financial statements can make "you kind of step back and say, `What?'" says Jeff Dietert, the analyst at Simmons. 
Enron faces challenges beyond just financial opaqueness. It is owed $500 million for power delivered to California's troubled utilities -- a much bigger unpaid tab than analysts originally believed. In India, Enron is having difficulty getting paid for electricity from its 65%-owned, $3-billion Dabhol power project because of a dispute with government officials over power prices. Mr. Lay says Dabhol is among the approximately $5 billion in overseas assets that Enron plans to sell over the next three years while keeping $4 billion in such holdings. 
Mr. Lay also must create a post-Skilling succession plan. He says he will soon recommend to the board the names of one or two executives to join him in the office of chairman. 
When all is said and done, will the world really see a softer side of Enron? "I'm not sure that Enron is exactly humbled," says UBS Warburg analyst Ron Barone. "But they're certainly under a new kind of pressure."

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

California; Metro Desk
The State PG&E's Power Bill May Go Up Energy: The PUC wants to shift some of the state's cost of buying electricity away from Edison. It also proposes a 12% rate hike for SDG&E.
NANCY VOGEL; TIM REITERMAN
TIMES STAFF WRITERS

08/28/2001
Los Angeles Times
Home Edition
B-8
Copyright 2001 / The Times Mirror Company

SACRAMENTO -- California regulators plan to shift roughly $250 million a year of the cost of buying power for the state away from financially troubled Southern California Edison to Pacific Gas & Electric, which already is in bankruptcy. 
The move, part of a draft decision issued Monday by Loretta M. Lynch, president of the state Public Utilities Commission, is a step toward completing plans for repaying the state treasury for money spent buying electricity on behalf of the state's three major private utilities--Edison, PG&E and San Diego Gas & Electric.
The PUC also issued a draft decision that would increase the electricity rates of San Diego customers by an average of 12%. 
Another draft decision would suspend the ability of electricity customers statewide to choose their own power provider. That decision was a blow to electricity-generating firms, such as Enron and AES NewEnergy, which had lobbied hard to maintain the ability to sell directly to customers--mostly large businesses--that have chosen not to buy power from the local utility. 
The five-member commission will vote on the measures Sept. 6. 
The proposals are designed to assure a flow of revenue to the state Department of Water Resources, which has been buying power for utility customers most of this year. The state's power crisis saddled the utilities with so much debt that earlier this year they became financially unable to buy power on behalf of their customers. 
The Department of Water Resources has been paying for power out of the state treasury. To reimburse the treasury, the state plans to float a $12.5-billion bond issue. Those bonds would be paid off by customers of the three utilities. 
One of the issues before the PUC has been how much of the cost of those bonds should be carried by each of the three utility companies. 
The Department of Water Resources had proposed charging each utility the same amount per customer. But the PUC's proposed order calls for splitting the cost among the utilities according to how much it costs the department to provide power to each of them. "The utilities argued that it was discriminatory to have their customers subsidizing other customers' costs," Lynch told a news conference. "And we agreed." 
"Instead of giving all utilities the same allocation of cost equally," she said, "we instead dig down behind the numbers to determine how much it actually costs" to serve each of the utility's customers. 
The PUC's analysis determined that the cost of serving Edison is lower than the cost of serving PG&E. The resulting decision shifts $500 million in payments from Edison to PG&E over the next two years. 
Edison customers, however, will not see a drop in their electricity bills. Whatever money is left over after the Department of Water Resources takes its share can be used by Edison to cover the costs of its own power production and purchases. The PUC is now holding hearings to determine just how much of what is left over should go to Edison. 
Whether the rates paid by PG&E customers would actually go up under the PUC proposal remains unclear. But PG&E officials condemned the shift as unfair. 
"If adopted by the [PUC] this would lock our customers into 40% to 55% higher rates for DWR power over the next 10 years, compared to customers of Southern California Edison and SDG&E," the company said in a statement. "This massive cost shift was not proposed by DWR, discriminates against PG&E's customers, and has not been subject to public review, due process, or cost justification by DWR or the [PUC]." 
The PUC's actions are intended to convince Wall Street that the state will be able to repay the bond issue. In general, the draft orders issued Monday mirror an earlier proposed agreement that essentially insulates the Department of Water Resources from PUC reviews of electricity rate increases. But the decision by the PUC to alter the way the department's power-buying costs are allocated among the major utilities was a significant change. 
Steve Maviglio, Gov. Gray Davis' press secretary, said the fact that the PUC was putting in place the legal machinery necessary for the bond sale is "a positive step in moving the ball forward." 
Maviglio denied that PG&E was being punished for choosing bankruptcy earlier this year rather than cooperate with the Davis administration on a possible rescue plan. "It's all based on numbers and math; politics is not in the equation," he said. 
Spokesmen for Edison and SDG&E said they needed to study the draft decisions before commenting. The PUC will require the Department of Water Resources to give it an updated revenue requirement in February, spelling out the agency's actual expenditure for the last year. That information will be used by the PUC to decide whether to adjust the electricity rates of utility customers up or down. Any changes would show up in customers' bills next June, Lynch said. 
If approved by the full PUC, the proposed agreement would mean that the Department of Water Resources, which has entered into $43 billion in long-term contracts for power, will not be subject to PUC reviews. Lynch said state legislation gives the department the responsibility to review its own costs. 
That lack of independent review worried consumer advocate Lenny Goldberg, a lobbyist for the Utility Reform Network. "Just accepting DWR at whole cloth is an abdication of how ratepayers ought to be treated," he said. 
Goldberg said he hopes the Legislature passes a bill by Sen. John Burton (D-San Francisco) that would give the PUC authority to scrutinize the water agency's costs. 
But Davis' advisors say such scrutiny could frighten Wall Street investors and hurt the state's ability to sell bonds at a favorable price. The proposed PUC order raising electricity rates for many of SDG&E's 1.2 million customers would become effective no later than Oct. 1. Rates for PG&E and Edison customers were increased earlier this year. The average rate hike for SDG&E customers amounts to 1.4 cents per kilowatt-hour--less than half of the rate hike approved for utility customers elsewhere. 
Lynch said the proposed increase for SDG&E is lower because its customers bore the full cost of electricity in California's haywire electricity market last summer. While Edison and PG&E customers were protected by a rate freeze, SDG&E customers saw their bills double and in some cases triple before the Legislature stepped in to cap rates last September. 
To encourage conservation, the San Diego rate hike is structured so that residential customers who use no more than 130% of a baseline amount would not experience any increase. Baseline is the number of kilowatt-hours that supposedly meets the minimum needs of an average household in a particular region. The average increases would be 18% for small commercial customers and 19% for industrial firms. 
The move to suspend the right of consumers to buy power directly from generators would put an end to one of the major selling points for the state's failed 1998 deregulation plan. Supporters of direct access, as the consumer-choice provision is known, were especially dismayed that the PUC said it would suspend choice retroactive to July 1. Some companies, including AES NewEnergy, had pushed in recent weeks to sign up new customers before the option was eliminated. Those contracts would appear to be invalid if the PUC adopts the draft decision. 
Enron spokeswoman Karen Denne said the suspension of the so-called direct access program "is incredible bad news for business." 
"It appears the only way to escape the California energy debacle is to escape California," she said. 
State officials have said they could not allow direct access in order to ensure that all customers pay their share of the cost of reimbursing the state for its power purchases. 
* 
Times Staff Writer Nancy Rivera Brooks contributed to this story.

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

Enron Names Whalley, Frevert to Chairman's Office (Update1)
2001-08-28 08:13 (New York)

Enron Names Whalley, Frevert to Chairman's Office (Update1)

     (Adds background on the executives in second paragraph.)

     Houston, Aug. 28 (Bloomberg) -- Enron Corp., the largest
energy trader, named company executives Greg Whalley and Mark
Frevert to the office of the chairman, two weeks after the
resignation of Jeffrey Skilling as chief executive.

     Whalley, 39 years old, was also named president and chief
operating officer. He previously held those titles for Enron
Wholesale Services, the energy- and commodity-trading unit that
accounted for almost all of the company's $50.1 billion in second-
quarter revenue. Frevert, 46, was chairman and chief executive of
Wholesale Services. He was named vice chairman, Enron said.

     Skilling, Enron's CEO since February, and Chairman Kenneth
Lay were the only executives in the office of the chairman, which
decides company strategy. Lay, who preceded Skilling as CEO, took
back that job after Skilling resigned. Lay's contract has been
extended to 2005.

     Skilling said Aug. 14 he resigned for personal and family
reasons, though he later said the recent drop in Enron's stock
price contributed to his decision. Shares of Houston-based Enron
have fallen 55 percent this year.

     The stock rose $1.41 to $37.76 yesterday.


USA: Enron names Greg Whalley president, COO.

08/28/2001
Reuters English News Service
(C) Reuters Limited 2001.

HOUSTON,, Aug 28 (Reuters) - U.S. energy giant Enron Corp. on Tuesday named Greg Whalley as president and chief operating officer, continuing a management shake-up that started earlier this month. 
Whalley, 39, was most recently president and chief operating officer of Enron Wholesale services.
On August 14, Jeffrey Skilling resigned as Enron chief executive and president, and Chairman Kenneth Lay resumed his duties as president and CEO at the wholesale energy marketer and trader. 
Also on Tuesday, Enron named Mark Frevert, 46, as vice chairman.

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


Enron Names Greg Whalley President, Oper Chief

08/28/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

HOUSTON -(Dow Jones)- Enron Corp. (ENE) named Greg Whalley president and chief operating officer, and Mark Frevert vice chairman. Both men will join Kenneth Lay in the office of the chairman. 
The appointments come two weeks after Jeffrey Skilling resigned as president and chief executive after serving only six months at the job. Shortly afterward, Lay, who preceded Skillings, returned to the helm of the utilities company and announced plans to recommend his next level of succession.
Since Skilling's resignation, Enron's stock dropped sharply. On Aug. 13, a day before the news hit, the company's stock closed at $42.16. It closed Monday at $37.76, up $1.41, or 3.9%, on the New York Stock Exchange. 

Whalley, 39, most recently was president and chief operating officer of Enron Wholesale Services. 
Frevert, 46, was chairman and chief executive of the same unit. 
-Maria P. Vallejo; Dow Jones Newswires; 201-938-5400

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

INDIA PRESS: Fincl Cos Look For Enron Stake Buyers

08/28/2001
Dow Jones Asian Equities Report
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- The search for a buyer for U.S. energy company Enron Corp.'s (ENE) stake in Dabhol Power Co., its Indian unit, has started with financial institutions initiating discussions with potential buyers, reports the Economic Times. 
"FIs (Financial Institutions) have been told to work out details about the prices that each of the interested buyers can offer for the Dabhol project," said the newspaper, quoting India's Finance Secretary Ajit Kumar.
Enron has a controlling 65% stake in Dabhol Power Co., located in the western Indian state of Maharashtra. The project's first phase, a 740-megawatt power plant, hasn't been in operation since May 29. DPC's sole buyer, the Maharashtra State Electricity Board, stopped drawing electricity as it said the company's tariffs were "exorbitant and unaffordable." 
Work on DPC's second phase, a 1,444-megawatt power plant which is around 95% complete, has also stopped due to DPC's financial difficulties. 
Enron has put a $1.1 billion price tag for its stake in DPC, according to local media reports. 
Costing $2.9 billion, DPC is the single largest foreign investment in India to date. 
Web site: www.economictimes.com 
-By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com

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

Enron denies seeking sanctions over Dabhol
Sanjay Dutta

08/28/2001
The Times of India
Copyright (C) 2001 The Times of India; Source: World Reporter (TM)

NEW DELHI: US energy trading major Enron Corp has denied approaching Washington seeking sanctions against India over the dispute with the Maharashtra government over the $2.9 billion Dabhol power project, even as domestic financial institutions hinted at increasing their exposure in the project by about $483 million (Rs 2,270 crore) for its completion. 
In a letter to Prime Minister Atal Bihari Vajpayee on Saturday, a copy of which was available with The Times of India, Enron CEO Kenneth said: "A recent story in the Financial Times, which mischaracterised discussions with me, appears to have caused significant, unintended concern. Counter to the impression given in the story, I have not asked anyone in the US government to consider imposing sanctions."
Lay said in his letter that Enron's approach was to settle the issue amicably by selling its stake. "Furthermore, I did not say that the Dabhol power plant had been expropriated. Upon questioning from the publicator (publisher) I did factually explained the several possible options available, including how one might get to expropriation and about the US laws in place to protect its businesses. However, that is far from suggesting that we have decided to pursue these mechanisms," Lay said. 
"Our preferred approach approach continues to be to resolve this issue amicably by selling our stake to Indian governmental and financial institutions," Lay said. 
However, Lay tempered his conciliatory stand by adding, "Without agreement on that, we have little choice but to follow the termination procedures jointly agreed under the power purchase agreement." 
Lay also sent copies of the letter to finance minister Yashwant Sinha and power minister Suresh Prabhu. 
PTI ADDS: The IDBI-led FIs' consortium may increase their exposure to enable the project to be completed and negotiate Daphol Power Company's equity at a 25 per cent discount to its face value. 
The FIs are exploring a possibility of taking out offshore equity by investment institutions and utilities after 12-18 months from Phase-II completion, the report said. 
If this proposal was accepted by the joint committee of the FIs, then IDBI's revised exposure would be at Rs 2,742 crore from existing Rs 2,121 crore, ICICI Rs 1,904 crore from Rs 1,473 crore, SBI Rs 2,261 crore from Rs 1,749 crore, IFCI Rs 587 crore from Rs 454 crore and Canara Bank Rs 526 crore from Rs 407 crore. 
"Even in the best case, the exposure requirements from domestic institutions exceed the prudential exposure norms," the report quoted FI sources as saying. Subsequent participation by all other FIs and banks like IDFC, PFC, PNB, Union Bank, Bank of India among others would be accrued through syndication. 
FIs may also seek a guarantee from the Centre as a backup for their exposure, the report quoted the sources as saying. 
Last week, the FIs had made a presentation to the finance ministry on a possible bailout package for Dabhol. The proposals envisage concessions from stakeholders, around 22.38 per cent concessional duty on the energy major's liquefied natural gas plant, a mega power project status and offset of custom duties on LNG supply.

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

Business; Financial Desk
Markets / Your Money Stocks Ease After Friday's Big Gains Markets: NYSE trading is light. Among commodities, natural gas prices see 18-month lows.
From Times Staff and Wire Reports

08/28/2001
Los Angeles Times
Home Edition
C-4
Copyright 2001 / The Times Mirror Company

The stock market posted modest losses Monday after Friday's big rally, as trading volume slowed to a crawl. 
In commodity trading, natural gas prices plunged to 18-month lows amid an expected drop in demand from electricity generators this week.
On Wall Street the Dow industrials eased 40.82 points, or 0.4%, to 10,382.35 while the Nasdaq composite slipped 4.39 points, or 0.2%, to 1,912.41. 
On Friday the Dow soared 194.02 points and Nasdaq jumped 73.83 points after Cisco Systems said its sales so far this quarter are meeting expectations. The report raised fresh hopes that the technology sector is bottoming. 
But the bulls couldn't keep the momentum going Monday. Losers outnumbered winners by 17 to 13 on the New York Stock Exchange and by 20 to 16 on Nasdaq. 
A weak report Monday on existing-home sales in July may have weighed on investor sentiment. 
NYSE volume was anemic; it was the fourth-slowest full-day session this year. 
"For the market to make a convincing case that we've ended the decline, it's going to have to put together a few days in a row of advances or people are going to look upon up days as an isolated situation," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. 
Still, some analysts argued that the lack of heavy profit taking Monday was a good sign. 
"I would have thought that . . . we would have given back half of Friday's gains, and we didn't," said Larry Wachtel, market analyst for Prudential Securities. 
In the bond market, long-term yields were marginally higher. 
Commodity trading was dominated by the action in natural gas prices. Near-term futures in New York fell 16.2 cents to $2.54 per million British thermal units, an 18-month low. 
Traders said cooler weather in much of the country this week is expected to cut demand for electricity to run air conditioners. Many power plants use natural gas to generate electricity, so gas demand could slide. 
Among Monday's highlights: 
* In the tech sector, Cisco slipped 24 cents to $18.01, Compaq lost 38 cents to $13.27 and Veritas Software was off 66 cents to $34.83. 
But Microsoft added 26 cents to $62.31 and Intel was up 7 cents to $29.15. 
In the telecom sector, Verizon Communications fell 76 cents to $51.35 while Sprint FON edged up 27 cents to $22.72. 
* Energy stocks were mixed despite the plunge in natural gas prices. Enron gained $1.41 to $37.76 and El Paso rose 89 cents to $51.91, but Unocal lost 31 cents to $35.87 and Chevron fell 70 cents to $92.10. 
* Blockbuster sank $1.60 to $20.35. The video chain's growth may be threatened by a film-studio joint venture that would deliver movies over the Internet, Barron's magazine said. 
* The July home-sales report may have hurt online home-listing site Homestore.com, which tumbled $2.98 to $18.60. 
* Bank and thrift stocks were weak. Comerica fell $1.15 to $61.01, FleetBoston lost 96 cents to $38.05 and City National eased 53 cents to $48.01. 
* Some health-maintenance organization stocks resumed their recent rally. WellPoint Health gained $1.56 to $108.54 and Oxford Health was up 92 cents to $30.50. But Aetna fell $1.23 to $28.77. 
In foreign trading, Japan's Nikkei-225 index rose nearly 1%. Germany's main index added 0.4%. The Mexican market slipped 0.3%. 
Market Roundup, C11, C12

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

Abreast of the Market
Vignette Rises as eBay, Yahoo Fall Amid Seesaw Day for Tech Stocks
By Karen Talley
Dow Jones Newswires

08/28/2001
The Wall Street Journal
C2
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW YORK -- Technology shares tried, and failed, to buck the negative trend and turn in a positive performance. After spending much of the afternoon in the black, they turned lower during the final minutes of trading. 
Old Economy stocks spent most of the session on the downside and offered up more examples of how employment softness is extending beyond technology.
Traders said it was disappointing that stocks couldn't advance again, but they noted the pullback was modest and hardly canceled out Friday's surge. "I think the market is telling us it doesn't want to go down dramatically from here," Charles Johnson, head of trading at Blaylock & Partners, said. 
Mr. Johnson said the market is moving on sparse volume, indicating an absence of big institutions whose buying power can help create a solid floor. 
The Dow Jones Industrial Average fell 40.82 points, or 0.39%, to 10382.35 and the Nasdaq Composite Index fell 4.39 points, or 0.23%, to 1912.41. 
On the New York Stock Exchange, decliners outpaced advancers 1,760 to 1,360. Volume on the Big Board was 849 million shares, with up volume of 359 million and down volume of 479 million. 
It was a tale of two directions for Internet stocks. Providers of services such as online security were among the session's best-performing groups, with Vignette gaining $1.06, or 15%, to $7.93, Check Point Software adding 91 cents, to 34.79 and CheckFree rising 1.70, or 8%, to 22.75. 
But Internet-commerce stocks were among the session's weakest performers, with eBay declining 2.61, to 56.40, HomeStore.com off 2.98, or 14%, to 18.60 and Yahoo shedding 69 cents, to 13.42. 
Old Economy stocks moved marginally on word that cutbacks were occurring. Deere fell four cents to 43.91 on plans to sell its Homelite consumer-products business and restructure its construction and forestry division -- moves that will result in a pretax charge of as much as $240 million and the elimination of 300 jobs. 
Georgia-Pacific fell 15 cents to 37.02 after saying it will shut four paper machines at its Camas, Wash., mill that are responsible for 11% of white-paper output. The move will eliminate 250 positions. 
J.P. Morgan Chase added 17 cents to 41.10 after a report in the Financial Times that the bank has begun its third round of cost-cutting since merging with Chase Manhattan during the past year. 
Cutbacks in the technology area continued. Hughes Electronics, the General Motors unit that operates DirecTV, tumbled 20 cents, to 19.45 on plans to lay off about 800 employees to cut costs amid a slow economy and several disappointing quarters at its flagship satellite-broadcast unit. 
Savings and loans were the session's worst performers, for a second day, on sentiment that profits won't be as robust now that the Federal Reserve may be close to finishing its interest-rate reductions. Mortgage lenders whose volume benefits from lower rates include Astoria Financial, which dropped 1.22, to 55.85, New York Community Bancorp, which fell 1.97, or 5.1%, to 36.92 and Washington Mutual, down 1.71, to 36.25. The savings and loans still have their champions, including Lehman Brothers analyst Bruce Harting, who called the selling "irrational," and said the stocks have a lot of merit. 
Water and gas utilities were the day's strongest groups, but their gains were lukewarm, illustrating the lack of a breakout by any sector. American Water Works added 1.26, to 34, Enron was up 1.41, to 37.76 and Nicor fell two cents to 38.98. 
Tyco International rose 21 cents to 53.61 after being named to the "Top Picks" list at Deutsche Banc Alex. Brown. Tyco "offers the `complete package' for investors, with growth plus cash flow and acquisition acumen," said analyst Harriet Baldwin, who has a 12-month price target of $81. 
Gilead Sciences rose 1.25, to 61.76 after Germany's Degussa Corp. said it bought the remaining 49% stake of Proligo LLC, a genetics concern, from Gilead for $14.3 million. 
Bergen Brunswig added 1.45, or 6.4%, to 24.10 and AmeriSource Health gained 2.81, to 65 after the Federal Trade Commission ruled the nation's third- and fourth-largest drug wholesalers can proceed with their $7 billion merger. 
NRG Energy gained 84 cents, to 18.24 after Banc of America Securities started coverage of the stock with a buy rating. NRG's expansion plans "offer geographic, functional and fuel diversity," analyst Ali Agha said in a note to clients. 
Williams-Sonoma added 76 cents, to 32.97 after jumping 13% on Friday when the kitchen and bath-products retailer posted second-quarter net income of two cents a diluted share, beating analysts' expectations for break-even results. 
Quest Diagnostics gained 1.12, to 65.86 after Morgan Stanley initiated coverage with an outperform rating. "Baby boomers, price discipline and genomics are driving top-line growth" for the clinical-laboratory operator, Morgan Stanley analyst David Zimbalist said. 
Blockbuster shed 1.60, or 7.3%, to 20.35 and Movie Gallery dropped 3.55, or 11%, to 27.75 after an article in Barron's said Hollywood studios and cable companies pose a threat to video chains. Barron's is published by Dow Jones & Co., which also publishes The Wall Street Journal. Earlier this month, five film studios announced a joint venture to deliver video on demand through the Internet. 
Best Buy was unchanged at 61.23 after showing a loss for most of the day, perhaps as investors followed the advice of Merrill Lynch. "We would use any price weakness as a buying opportunity as this dominant retailer gains market share with its customer-preferred big-box shopping format," Merrill analyst Peter Caruso said in a note to clients. 
Brokerage houses edged lower after Goldman Sachs again cut its full-year outlook for several in the sector. Among stocks mentioned by Goldman, Lehman Brothers shed five cents to 68.30, Morgan Stanley fell 25 cents to 56.35 and Charles Schwab dropped 38 cents, to 13.01. The companies' fundamentals "remain in the doldrums," although the stocks' valuations show some signs of improving, Goldman analyst Richard Strauss said in a note.

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

Aug. 28, 2001, 2:02AM
Houston Chronicle
Enron works to shore up confidence 
Taking a long view 
By LAURA GOLDBERG 
Copyright 2001 Houston Chronicle 
Even though nothing major appears to be wrong at Enron Corp., investor confidence in the world's largest energy trader remains shaky. 
Wall Street stock analysts agree with Houston-based Enron that its core business in wholesale energy trading and marketing is strong. But investors are concerned over a series of issues that when taken together give them pause about Enron's stock. 
Among them: whether the "real" reason for CEO Jeff Skilling's sudden departure two weeks ago is still to come out; who will replace Skilling; analysts' inability to get a detailed understanding of Enron's financial performance because Enron hasn't given them more detailed and segmented data; and ongoing disputes surrounding a power plant project in India. 
"The first thing they need to do is they need to get investor confidence back," said Carol Coale, a Prudential Securities analyst in Houston who follows Enron. "There's 10 points in the stock related to uncertainty surrounding Skilling's sudden departure." 
It may take a quarter or two for investors to believe that "there was not another shoe to drop related to Skilling's resignation," she said. 
Enron's stock already had taken a beating this year, trading as high as $82 at the end of January and closing just under $43 before Skilling's announcement. 
After Skilling, a key player in Enron's transformation from a pipeline company to a trader of energy and other commodities such as metals and pulp and paper, said he was leaving Enron for personal and family reasons, the stock fell further, closing at $36.25 four trading days after the announcement. 
The stock rose $1.41 to close in regular trading at $37.76 Monday. 
Enron, analysts said, should be able to boost investor confidence by taking a number of steps. 
One -- expected to happen today -- is the naming of potential successors to Skilling. 
But the company also give must analysts the financial data they've been seeking, resolve the India situation, sell off underperforming international assets and turn out positive earnings reports. 
Enron got a fresh round of questions after Skilling left. That was despite assurances from Skilling and Enron Chairman Ken Lay, who stepped back into the chief executive and president roles, that Skilling wasn't fired and no negative disclosures about Enron were on the way. 
Even though many analysts, some of whom met with Lay after Skilling left, generally seem to believe both points are true, investors apparently remain skeptical, especially in light of Enron's stock performance this year. 
The stock took a big hit when Enron's broadband business fell apart as the telecommunications industry melted down. 
Some analysts, though, believe Enron and Skilling oversold the business and that some on Wall Street overvalued it. Based on certain calculations, Enron touted broadband as an enterprise worth as much $40 a share in the stock price. 
Enron's link with telecommunications meant it got caught both on the upside and downside of the bubble, said Raymond Niles, an analyst at Salomon Smith Barney. Before Skilling left, the broadband reaction had already come out of the stock, he said. 
"The fundamentals do not justify the stock drop to the magnitude we've seen this year," said Lay, noting that second-quarter net income rose 40 percent year over year. "Enron has performed incredibly well." 
Lay said attacks by Gov. Gray Davis and others in California on Enron and other out-of-state energy companies also dragged the stock down. But California's energy crisis is on the path to resolution and the "blame game" has tapered off, he said. 
In a blitz of recent meetings with analysts and fund managers, Lay said Enron would respond to requests for more detailed and segmented financial data, but without divulging information that is proprietary or damaging to its competitive position. 
Analysts likely will see some of the new data at the end of the third quarter and even more by year's end, Lay said. Whether what's provided satisfies them remains to be seen. 
"The struggle is it's hard to project Enron earnings," said Jeff Dietert, an analyst with Simmons & Co. International in Houston. "It's hard to develop metrics that you can use to project their earnings. ... There are still questions as to how they make their money." 
Enron, Coale said, tends to group businesses into one sector so "that it is difficult to see the trees that make up the forest. We refer to their earnings as a black box." 
Investors also harbor fears about Enron's cash flow, said Andre Meade, an analyst at Commerzbank Securities. He described it as more of misperception than a problem, as the cash flow can be "fairly lumpy" because of the way Enron's trading business operates. 
When Lay names two Enron executives to join him in the office of the chairman, they will be seen as the probable candidates for chief executive. But other Enron executives not named to the office also may be on the CEO short list, Lay said. 
It could take as long as two or three years to groom a successor, which would also give Wall Street time to become comfortable with the person. 
Names bandied about on Wall Street as possible successors included Mark Frevert, CEO of Enron Wholesale Services; Lawrence "Greg" Whalley, chief operating officer of Enron Wholesale Services; and Dave Delainey, CEO of Enron Energy Services. 
Enron is also working to resolve the disputes surrounding its Dabhol power project in India. 
Enron holds a 65 percent stake in the project, which it's seeking to sell. But Enron says any deal must allow it to recover its approximately $1 billion in costs, which include $875 million of equity investment and unpaid bills for power the plant has supplied. 
Lay also expects to announce some large asset sales in the next 12 to 18 months. 
Enron plans to stay on its current strategic path, which includes broadening its trading into a range of other commodities. 
"We're just going to keep doing what we're doing," Lay said. "The most important thing right now is to continue the strong performance at Enron, and eventually the market will catch up with us."