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Enron Mail |
=09I know you are getting an impossible volume of advice right now . . . b=
ut that's not going to stop me from piling on a little more. =09I believe everything we have been saying: we have the best business mode= l, we are making great money, we are growing, we are addressing our issues = and we have all of our capabilities intact. We are poised for even greater= growth. Even so, we will not be able to fight off the negatives on our st= ock and on our reputation right now. Our problem is not a problem about ge= tting the message out. =20 =09Part of the problem we can't do anything about: almost all equities hav= e suffered this year. But part of our problem (the part we can do somethin= g about) is that we are faced with too many bad, but true (or at least plau= sible), allegations that we have to deal with every time we try to tell our= story. These current circumstances are not necessarily bad: I think we c= an use them as a great opportunity to drive some overdue changes. But no a= mount of communication or "spin" will work right now. We have to directly = address the issues.=20 =09The difficult allegations we face include: Creative or aggressive accounting (both in reporting and deal structuring); Black box reporting; Over-hyping of the stock or the prospects for unproven businesses; A near mercenary culture which encourages organizations to hide problems (u= ntil those problems have become very big), discourages cooperation and team= work, and drives off people who demand at least a modicum of civility in th= eir work environment. =09I have some answers. First, I would hold our actions to the standard we= apply to everything else: the market standard. We should do the economic= ally rational thing in every transaction and business and let the chips fal= l where they may. Instead of tying ourselves in a knot about managing earn= ings or write downs or avoiding an asset sale because it's on the books for= more than the market, we should just make the rational economic decision. = =20 =09Second, I would open up our reporting. Make it as transparent as the an= alysts want; indeed, set a new standard for transparency and integrity. I = know we are looking at these things and have been for some time. I also re= alize that at some levels of disclosure we risk disclosing positions. I'm = just saying we should drive right up to the edge. =20 =09Third, I think IR should be all about the facts: disclosing facts and co= rrecting misunderstandings. I would not "spin" in this function. Our audi= ence is too sophisticated. If we make the economically rational decisions = over and over, the stock price will come along. We have lost credibility b= y overhyping businesses we haven't proven yet and it's hard to see why we d= o it. To get early credit in the stock price? I'd rather wait. To prove = that we are a growth company? I think a track record of growth and a ratio= nal and circumspect discussion of our opportunities will take care of that.= I want us to be a company which is bold in its business moves, not in its= approach to analysts or in its accounting. The reputation I would like to= have with investors is that we never overstate, we never dissappoint and t= hat we can always be trusted. I am not being critical of our team. We hav= e the best, most organized, hardest working, and most effective IR team in = the business. I am just concerned that we have sent them speeding down the= wrong path. Similarly, I am not critical of our accounting organization. = We have the finest accounting organization in the industry. They need to = be the best in order to get sensible accounting rules and interpretations t= o accurately reflect the results of our unique and innovative business. Th= ey need to minimize our tax exposures etc. I am not arguing that anyone ha= s done anything wrong or ineffectively. I simply believe that it is time t= o reassess how we do these things (and I don't consider my organization to = be exempt from that same reassessment). =09Finally, our culture. As I said the other day, there may be a relativel= y small number of individuals who are commercially successful, well paid, r= egularly promoted who have little or no respect for their coworkers or othe= r human beings in general. When others see them rewarded, it matters not a= t all what we say about our values. Dealing with a few people directly wil= l send a message that spreads like wildfire through the organization. Addi= tionally, compensation structures and a PRC process which explicitly reward= s teamwork (and which includes broader representation than just the commerc= ial groups) will go a very long way toward changing the level of civility i= n the organization. =09I hope it's clear to you that I love this place. I have poured my heart= and soul into it. It is the finest organization I have ever been part of.= Like everyone, I have had some time to reflect lately. I have recommitte= d myself to this place and to your leadership. Part of that recommitment w= ill be my concerted effort to make things even better.
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