Enron Q4 profit rises 32 percent
Strong business mix pushes energy firm past estimates 

MONDAY, JANUARY 22, 2001 11:19:00 AM EST 
By Andrew Kelly
HOUSTON, Jan 22 (Reuters) - Enron Corp., North America's biggest buyer and 
seller of electricity and natural gas, on Monday reported a sharp rise in 
fourth-quarter operating earnings, surpassing expectations, as online trading 
drove strong growth at its core wholesale energy operations.
Enron said it took a net non-recurring after-tax charge of $287 million in 
the fourth quarter related to its troubled water affiliate Azurix Corp. AZX 
</quotes/quotes.asp?symb=AZX&source=>. Enron announced plans last year to 
finance a buyout that would take Azurix private.
Earnings before non-recurring items rose 34 percent, to $347 million, or 41 
cents a share, from $259 million or 31 cents a share a year earlier.
Wall Street analysts had expected earnings of 35 cents a share, according to 
First Call/Thomson Financial.
In early Monday trading on the New York Stock Exchange, Enron's shares were 
up $3-1/8, or 4.41 percent, at $74.
Fourth-quarter net income including the Azurix charge was $60 million, or 5 
cents per share.
The company's fourth-quarter revenues rose 271 percent from a year earlier, 
to $40.8 billion.
"The impressive thing is the overall growth that they experienced," said 
Merrill Lynch analyst Donato Eassey. "I think it had been in most people's 
forecasts that they would have to do something to clean up Azurix."
ANALYST MAINTAINS BUY RATING
Eassey said he was retaining a "buy" rating on Enron's stock and considered 
the company one of his top picks.
"I think that they will sustain a higher growth rate on average for the next 
several years going forward, as they have for the past 10 years, because of 
their innovation and their way of attacking the markets," he said.
Analysts pointed to the strong volume growth in Enron's core energy business 
and played down the significance of the charge for Azurix.
Enron, which has branched out beyond energy into fields such as broadband 
telecommunications and metals trading, saw its stock rise 87 percent in 2000, 
outpacing a 54 percent gain for the Standard & Poor's utilities index  
</quotes/quotes.asp?symb=&source=>.
Electricity and natural gas stocks were boosted by safe-haven buying in 2000 
as investors lost faith in other sectors.
So far this year, Enron's stock is down 12 percent, broadly in line with the 
S&P utilities index, which has fallen as investors have cashed in some of 
last year's gains. Concern about possible fallout from California's power 
crisis has also hurt the index.
Enron President and Chief Operating Officer Jeff Skilling said in a 
conference call that the company's fourth-quarter earnings were not 
significantly impacted by the power crisis in California, where rolling 
electricity blackouts were imposed last week and the state's top two 
utilities are close to bankruptcy as they face soaring wholesale electricity 
costs.
"We do not expect the California situation to have any significant effect on 
Enron's financial outlook, specifically our ability to hit 2001 targets," he 
added.
Meanwhile, Enron said its physical wholesale gas and power deliveries rose 90 
percent in the fourth quarter from year-earlier levels, with strong growth 
both in North America and Europe.
EnronOnline, the company's Web-based trading system, completed its first full 
year of operation in 2000, executing 548,000 transactions with a gross value 
of $336 billion.
Besides gas and power, Enron uses the online system to make markets in 
commodities such as pulp and paper, petrochemicals, metals and broadband 
capacity, also known as bandwidth.
ORIGINS AS PIPELINE COMPANY
Originally a natural gas pipeline operator, Enron has pursued opportunities 
created by deregulation to become North America's biggest wholesale gas and 
electricity marketer. It is building a similar business in Europe, where 
energy markets are also gradually opening up to competition.
Enron regards its knowledge of volatile energy and commodity markets as its 
key strength, allowing it to profit from price swings while saving money for 
its customers and managing their exposure to potentially costly movements in 
prices.
Fourth-quarter earnings before interest and taxes at Enron's wholesale energy 
business almost tripled from a year earlier, to $777 million.
Enron Energy Services, which helps business customers reduce their energy 
costs, posted earnings before interest and taxes of $33 million, up from $7 
million in the fourth quarter of 1999.
On Friday Enron Energy Services said it had signed an energy management 
agreement with Owens-Illinois Inc. OI </quotes/quotes.asp?symb=OI&source=> 
worth $2 billion over 10 years, its biggest deal to date.
Enron said its broadband telecommunications business, which was launched last 
year and is still in the start-up phase, posted a loss of $32 million on 
revenues of $63 million for the fourth quarter. Enron has said it will take a 
few years for the business to become profitable.
The company sells bandwidth on its own fiber optic network and is also 
pioneering the development of standardized tradable bandwidth contracts.