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Enron Mail |
Enron's Ken Lay
Investor's Business Daily, 12/12/00 Enron CFO Sold 52,080 Company Shares In November Dow Jones News Service, 12/12/00 Team Management Approach Improves Wachovia Funds' Rank Dow Jones News Service, 12/12/00 Stocks mixed Tuesday as investors wary about earnings, election Associated Press Newswires, 12/12/00 Leaders & Success Tuesday, December 12, 2000 Enron's Ken Lay=20 Focus On Finding The Best People Helps Keep His Energy Company At The Top= =20 By David Saito-Chung Investor's Business Daily Many good chief executives put large amounts of trust in their employees. B= ut=20 few go as far as Houston-based Enron Corp.'s Ken Lay. Louise Kitchen, the top natural gas trader at the energy marketer's London= =20 office, had an idea: Rather than trade energy commodities over the phone, w= hy=20 not do it online? In early 1999, Kitchen and her co-workers started to build an Internet=20 marketplace. A few months later, the team grew to more than 300 people spre= ad=20 across many countries. The project had cost millions of dollars. A possible= =20 problem: No one had told the top brass about it yet. Chairman and CEO Lay and President Jeff Skilling were briefed on EnronOnlin= e=20 five months into the project. They saw the risks, but liked its potential a= nd=20 gave the green light. The site went live in November 1999, and growth has been nonstop. The globa= l=20 platform logs on average $2.5 billion to $3 billion in transactions a day i= n=20 products ranging from natural gas supply deals to financial instruments tha= t=20 let snowmobile makers hedge against warm winters. The system keeps growing= =20 because it cuts transaction costs, improves price transparency and expands= =20 liquidity. Kitchen is now chief executive of Enron's networks group and a member of=20 Enron's Executive Committee. "EnronOnline came from the bottom up," said Lay, 58. "There wasn't any=20 planning, no decision made at the top. The good news is we didn't stop it." When Lay joined Enron as CEO in 1986, most of its revenue came from its=20 natural gas pipeline. Today, it continues to pioneer new markets, not only = in=20 natural gas but also in wholesale trading, energy services and risk=20 management products. Sales have grown from $5.6 billion in 1991 to $40.1=20 billion last year. Over the same period, earnings have grown from 54 cents = a=20 share to $1.16 a share. How does Lay spur a strong spirit of innovation inside a global company of= =20 18,000 employees? He tries to get the best talent around the world. In 1990, Enron formed the associate analyst pool to attract new MBAs from t= op=20 business schools, going head-to-head against big banks and consulting firms= .=20 But Enron was the only energy firm with such a program. The strategy has worked. When Greg Whalley came across Enron's job posting = at=20 Stanford Business School back in 1992, he did a double take. How could a ga= s=20 pipeline firm, he thought, offer such opportunities? Recruiters told him he= =20 would have the chance to begin a new business within the company. After several interviews, he landed in Houston with 10 other analysts. Ther= e,=20 he rotated from the finance group to derivatives marketing and finally to t= he=20 gas trading floor. "It was an interesting place to be =01) in a company that's ready to recogn= ize=20 and promote people that (are) brought in at relatively junior levels,"=20 Whalley said. At 38, he's now president and chief operating officer of Enro= n=20 Wholesale Services, a major profit center. Despite the tight labor market, the associate analyst program now brings in= =20 300 to 400 new MBAs every year. Enron has also achieved an employee attriti= on=20 rate of just 4% the past few years. "Getting the best and brightest people is in fact the key to any successful= =20 company," Lay said. "It's a matter of creating a culture where they feel li= ke=20 they do have a lot of authority and flexibility in how they do their jobs, = as=20 long as they do them well. I also think bright, creative people like to be= =20 around bright, creative people." Lay's success also stems from his belief in the power of markets. When the= =20 Missouri native went to work as an economist at the Federal Energy Regulato= ry=20 Commission in the 1970s, he battled against a system that fixed prices at= =20 artificially high levels and restricted pipelines from sending natural gas = to=20 places that actually needed it. At Transco Energy Co. in the 1980s, he helped pioneer the spot market for= =20 natural gas. As the natural gas industry began to deregulate in the 1980s, prices fell= =20 fast. But Lay and Skilling took advantage of the changes by creating a=20 wholesale market to buy and sell natural gas across the nation's pipeline= =20 network. Lay expects co-workers to do the same in other markets. To spread the=20 message, every elevator inside Enron's office tower has TV screens that=20 stream announcements, live news and slogans to encourage employees, such as= : "Join the fight against innovation's greatest obstacle: SILENCE."=20 "Your name doesn't have to be Catherine or Alexander to achieve greatness." "EVERYONE is the next CEO until proven otherwise." Many have taken the words to heart. David Cox, who once worked in the offic= e=20 basement as a $5-an-hour graphics clerk, developed a financial product so= =20 that newspaper publishers could hedge against volatile paper prices. It's n= ow=20 a multi-billion-dollar market. Another employee pioneered a market for=20 utilities to trade pollution rights. But when a team fails on a new project, Lay avoids punishment. Instead, he= =20 dares team members to try again and again until they succeed. In 1997, Enron bought Portland, Ore.-based power distributor Portland Gener= al=20 Electric in hopes of selling power to residential customers in the=20 deregulated California market. But the Enron Energy Services team's strateg= y=20 didn't work, and Enron has put PGE up for sale, a move Lay admitted was=20 highly embarrassing. No one got fired. Lay asked team members to apply their strategy to somethi= ng=20 else. The team worked on selling power to manufacturers and commercial firms. It= =20 also came up with an idea to promise customers lower energy costs by=20 providing a 100% outsourcing service. Enron would be willing to buy a=20 company's energy assets, absorb employees and make new investments. The=20 strategy worked. Today, the energy-outsourcing concept produces the majorit= y=20 of Enron's new contracts. "(Energy Services) took what was initially a strategy that failed and turne= d=20 it into a different strategy which succeeded, which led to still a differen= t=20 strategy that appears to be just a great success," Lay said. Enron CFO Sold 52,080 Company Shares In November 12/12/2000 Dow Jones News Service (Copyright © 2000, Dow Jones & Company, Inc.) WASHINGTON -(Dow Jones)- Enron Corp. (ENE) Executive Vice President and Chi= ef=20 Financial Officer Andrew S. Fastow sold a total of 52,080 shares of the=20 company's common stock last month, according to a Form 4 released by the=20 Securities and Exchange Commission.=20 Fastow sold the shares from Nov. 1 to Nov. 7 for $83 a share. At the end of= =20 the month he directly held 29,336 shares and indirectly held a total of=20 9,123.46 shares. Enron's shares recently traded at $77.13 a share.=20 Houston-based Enron is a utilities and communications company.=20 -By Marc A. Wojno; Federal Filings Business News; 202-628-9792 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.=20 Team Management Approach Improves Wachovia Funds' Rank By Christiane Bird Of DOW JONES NEWSWIRES 12/12/2000 Dow Jones News Service (Copyright © 2000, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Switching to a team management approach has helped= =20 Wachovia Funds outperform its peers, its managers say.=20 In 1997, the company's flagship fund, the large-cap Wachovia Equity Fund,= =20 returned 25.1% - a respectable enough number, but in that high-flying year = it=20 placed the fund in only the 74th percentile among its peers, according to= =20 Morningstar Inc. This year, although the fund has returned a mere 1.72% through Dec. 11, it= =20 has risen into the 19th percentile slot.=20 Chalk up the improvement, the company says, to a switch from the traditiona= l=20 senior manager/junior analyst portfolio structure to one in which managers= =20 and analysts work together on an equal footing in cooperative teams.=20 "Our 1997 performance was not superlative and so we took a look at our core= =20 equity product, and found that there was just too much information for one= =20 manager to get his mind around," said Timothy Swanson, head of equities for= =20 Wachovia Funds. "The fruit that came out of that was a new management=20 structure" instituted in mid-1998.=20 The Wachovia fund now uses a six-team system, with each team covering one= =20 segment of the market -- technology, finance, industrials, health care,=20 resources-oriented companies and consumer staples and telecommunications. T= he=20 teams work primarily on the Wachovia Equity Fund, but their research is=20 applied to the company's nine other equity funds as well.=20 Coordinating the teams is Swanson, and overseeing all the Wachovia funds is= =20 Steven Reynolds, the company's chief investment officer.=20 "They've clearly been doing something right -- they've been in the right=20 places," said Catherine Hickey, an analyst at Morningstar, who follows the= =20 Wachovia Balanced Fund and the Wachovia Special Values Fund. Both funds wer= e=20 up in 1998 and 1999, she noted, but are not performing so well this year.= =20 Wachovia's new structure allows managers and analysts to develop greater=20 expertise in their respective sectors and come up with better ideas, its=20 managers claim. "The stock selection process is where this structure has it= s=20 competitive edge," said Swanson.=20 The team approach also works well in different types of markets, he noted.= =20 Last year, when technology stocks were skyrocketing, the fund returned=20 26.15%, placing it in the 21st percentile among its peers, according to=20 Morningstar. And in this year's volatile marketplace, the fund has done wel= l=20 because it no longer relies on just one manager. "It's as if we have six=20 different funds," Swanson said. "Over time, each team plays a hot hand and = we=20 have more hot hands than any one manager could."=20 To develop its six teams, Wachovia used existing personnel but made its=20 overall organization more sector-focused. There was some resistance among= =20 various managers and analysts at first, but "almost out of the starting gat= e=20 we saw a meaningful improvement in performance," Reynolds said.=20 When looking at companies, the Wachovia teams take a bottom-up approach. Th= ey=20 seek out firms that are in the top half of their respective sector and pull= =20 back if the company falls into the bottom half.=20 Since adopting its new management structure, the number of names in the=20 Wachovia fund has dropped to about 75 from 110, while the turnover rate has= =20 dropped to 40% from between 50% to 60%. "The reason for both those drops is= =20 strength of conviction of stock choices," said Swanson.=20 One company that has performed especially well for the fund this year is th= e=20 network-data-storage firm Network Appliance Inc. (NTAP). Wachovia bought=20 Network Appliance back in mid-1999 when it was trading in the low teens, sa= w=20 it rise to $152 and then fall back to $50 after the Nasdaq correction. The= =20 fund sold off some of its position at about $100 when the stock was on the= =20 way up, but still holds the company, which is now trading at about $90.=20 Other companies that have performed well for the fund this year include the= =20 computer-networking firm Cisco Systems Inc. (CSCO), the drugstore company C= VS=20 Corp. (CVS) and utility firms Duke Energy Corp. (DUK) and Enron Corp. (ENE)= .=20 The Wachovia fund bought Enron in August 1998 at about $26 and now holds it= =20 in a 1.3% position, with the stock trading at $82.=20 One company that did not perform so well for Wachovia is the consumer=20 electronics retailer Circuit City Stores Inc. (CC). The fund bought Circuit= =20 City for $44 in January at a 0.3% position and gradually increased that=20 position to 1.2%, before selling off the stock in September for $26.=20 Wachovia plans to introduce two new funds, the Wachovia New Horizons Fund a= nd=20 the Blue Chip Value Fund, on Dec. 20. The two new funds will also utilize t= he=20 team-management system.=20 Wachovia Funds is a unit of Wachovia Asset Management, Alexandria, Va.=20 -By Christiane Bird, Dow Jones Newswires; 201-938-2046;=20 christiane.bird@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.=20 Stocks mixed Tuesday as investors wary about earnings, election By AMY BALDWIN AP Business Writer 12/12/2000 Associated Press Newswires Copyright 2000. The Associated Press. All Rights Reserved. NEW YORK (AP) - Stocks were mixed Tuesday as anxiety about high-tech earnin= gs=20 and the election deadlock resurfaced on Wall Street.=20 Technology issues rose smartly late last week after Federal Reserve Chairma= n=20 Alan Greenspan said he was inclined to lower interest rates early next year= .=20 High-techs also advanced Monday, but investors are too worried about poor= =20 earnings to extend the rally, analysts said. "There was some initial euphoria in the wake of Alan Greenspan's clear=20 message that he is poised to rescue the economy if it heads toward recessio= n,=20 but there are still some concerns especially in the chip sector that earnin= gs=20 will be disappointing," said Alan Skrainka, chief market strategist for A.G= .=20 Edwards & Sons Inc. in St. Louis. "So we are seeing a shift to some of the= =20 defensive, more stable stocks."=20 The Dow Jones industrial average rose 92.91 to 10,818.71.=20 Broader indicators were lower. The Nasdaq composite index was down 39.82 at= =20 2,975.28, and the Standard & Poor's 500 index was off 2.84 at 1,377.36.=20 "Some people feel that 3,000 in the Nasdaq is an important level. So, we ar= e=20 seeing some profit taking," Skrainka said. "Clearly, the short-term is=20 dominated by worries about the political situation and fourth-quarter=20 earnings."=20 Investors awaited a decision expected later in the day from the U.S. Suprem= e=20 Court on whether to allow Florida to recount its election ballots to=20 determine whether Vice President Al Gore or Texas Gov. George W. Bush will = be=20 president.=20 Wall Street considered the protracted political uncertainty as a reason to= =20 sell tech stocks and retreat to blue chips.=20 Chip makers were mixed after Advanced Micro Devices warned Monday that weak= =20 demand for personal computers would lead to lower-than-expected=20 fourth-quarter earnings. AMD inched up 25 cents to trade at $17.56, but=20 Intel, which issued a similar warning last week, tumbled $2.38 to $35.06.= =20 Microsoft slid $2.19 to $55.88. Network equipment maker Cisco fell 50 cents= =20 to $54.31.=20 The Dow saw big price changes and heavy trading in two of its most well-kno= wn=20 components.=20 General Electric was significantly lower despite an upbeat outlook delivere= d=20 Monday by CEO Jack Welch to analysts. GE, which also announced it will take= a=20 $4 billion charge for its acquisition of Honeywell, fell $1.38 to $53.94.= =20 But General Motors rose $2.13 to $53.69 after the automaker announced it wi= ll=20 phase out its Oldsmobile division.=20 So-called defensive buys traded higher. Banker J.P. Morgan soared $3.19 to= =20 $159.94, and drug maker Johnson & Johnson rose $1.25 to $96.88.=20 Energy stocks were mixed after industry economists told the Senate that=20 natural gas and heating-oil prices will be high this winter. They cited=20 soaring demand, low inventories and forecast for colder weather. Enron was= =20 down 81 cents at $75.69, but Exxon Mobile was up 63 cents at $86.38.=20 The Russell 2000 index was down 3.84 at 483.39.=20 Declining issues outnumbered advancers 4 to 3 on the New York Stock Exchang= e=20 where volume was 493.10 million shares, down from Monday's 522.67 million.= =20 ---=20 On the Net:=20 New York Stock Exchange: http://www.nyse.com=20 Nasdaq Stock Market: http://www.nasdaq.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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