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Enron Mail |
RadioWallStreet Tuesday, October 17 Enron Wholesale & Retail Business Hits Record Level Enron beat the Street as earnings climbed 31% thanks to online energy trading. Third quarter revenue soared 154% to $30 billion. Enron Pres/COO Jeffrey Skilling tells RadioWallStreet.com he believes crude oil prices will begin to fall in 2001. (ENE) http://www.radiowallstreet.com/NASApp/RWS/Index?Accept=C Energy Trading, EnronOnline Help Enron Top 3rd Quarter Estimates By Christina Cheddar Of DOW JONES NEWSWIRES 10/17/2000 Dow Jones News Service (Copyright © 2000, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- After once again helping Enron Corp. (ENE) to top Wall Street's expectations, the importance of Enron's energy trading operations was further cemented in the third quarter. Enron's third-quarter earnings rose 31% to $292 million, or 34 cents a share, from $223 million, or 27 cents a share, before items, a year ago. Third-quarter revenue rose 154% to $30 billion from $11.84 billion. In the year-ago period, Enron's net income was $290 million, or 35 cents a share, after a gain of $345 million, or 44 cents a share, on the sale of its stake in Enron Oil & Gas Co. (EOG), and a charge of $278 million, or 36 cents a share, on its MTBE asset. According to First Call/Thomson Financial, analysts were expecting Enron to earn 32 cents a share in the latest third quarter. The key driver of the company's performance was its wholesale business, which includes EnronOnline and commodity sales, and which has transformed Enron from a gas pipeline company to the world's largest energy trader. In the third quarter, the wholesale business just had "a stunning quarter," said Enron President Jeff Skilling. Revenue from Enron's wholesale energy operations and services unit, which includes EnronOnline and commodity sales, more than doubled to $28.15 billion from $11.06 billion. Income before interest, minority interest and taxes, or IBIT, in the third quarter rose 66% to $627 million from $378 million a year ago. During the latest period, physical deliveries of energy commodities grew 64% to 53.5 trillion British thermal units, Enron said. EnronOnline, the company's Internet-based transaction system, is driving the growth of the wholesale segment, said Raymond Niles, an analyst at Salomon Smith Barney. Currently, more than 60% of the Enron's wholesale business occurs through EnronOnline. As of Oct. 11, EnronOnline had executed more than 350,000 transactions online, totaling $183 billion of gross value since its inception in late 1999. EnronOnline, which initially bought and sold natural gas, electricity, petrochemicals, and bandwidth, has expanded to other commodity areas such as metals and pulp and paper. J.P. Morgan analyst Anatol Feygin supports Enron's decision to expand to other commodities. "The only limit (to expanding to other commodities) is intellectual capital," Feygin said. He estimates that the North American steel business is a $35 billion business, while pulp and paper is about $150 billion. At least part of the success that Enron had during the third quarter was the result of price volatility in California's deregulated energy market. However, the company wouldn't specify what it earned in the state. During the third quarter, utilities in the Golden State paid near-record rates for electricity as higher demand pushed the power grid to the brink. "The uncertainty and the volatility that we have been seeing in the electricity and the gas market has been beneficial to Enron," said Enron's Skilling. California's situation is rather unique, he said. Skilling expects Californian electricity markets will improve as supply and demand fall into balance and other technical market questions are resolved. Although Enron posted strong earnings across the board, it is getting clearer that the company will look to divest itself of some of its international assets. According to a source familiar with the company, Enron recently completed an analysis of its assets with the intent of identifying underperforming assets and improving capital efficiency. As a result of the analysis, some assets were marked for sale. Skilling admitted the company would like to monetize some of its international assets, but he wouldn't say which assets are on the auction block. However, it is unlikely Enron will sell its international gas pipelines because the assets receive a solid rate of return, Skilling said. One asset that could be divested is Enron's Dabhol Power Project in Maharashtra, India, said analysts. Other power plants in Italy and Turkey also seem like logical candidates for sale. "I think it makes a lot of sense for Enron," said Salomon's Niles. "Enron is moving into markets where they are relying on intellectual capital rather than physical capital," he said. Following this logic, assets such as the India power plant don't make as much sense as they once did. In some cases, the international assets are in countries that didn't open to competition as expected, explained Zach Wagner, an analyst at Edward Jones. Since deregulation has been fueling Enron's growth, it only makes sense that the company concentrate on open markets. Furthermore, Wagner believes the money Enron will raise in the asset sales could be re-deployed to fund projects such as the company's venture with Blockbuster Inc. (BBI) to provide movies on demand via high-speed telephone lines. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Nick Utton Joins The New Power Company as Managing Director and Chief Marketing Officer 10/17/2000 PR Newswire (Copyright © 2000, PR Newswire) GREENWICH, Conn., Oct. 17 /PRNewswire/ -- The New Power Company(TM) (NYSE: NPW), the first national residential and small business energy provider, today announced that Nick Utton has joined the Company as Managing Director, Chief Marketing Officer, reporting to the President and Chief Executive Officer, H. Eugene Lockhart. Prior to joining The New Power Company, Mr. Utton, 43, was Chief Marketing Officer of MasterCard International. Mr. Utton joined MasterCard in 1996 and played an integral role in the creation and development of MasterCard's successful "Priceless" advertising campaign. He was responsible for brand building initiatives and marketing integration that included overseeing global advertising, product development programs and sponsorships and promotions. James Badum, 40, who had served as Chief Marketing Officer prior to Mr. Utton's arrival, is assuming the role of Managing Director, Strategic Planning. During his career Mr. Utton has served as Senior Vice President, International Marketing at Revlon International, Marketing Director for Cadbury Schweppes as well as various product management positions at Bristol-Myers Squibb Company, Richardson-Vicks Inc. and Unilever. Mr. Utton holds a Bachelor of Commerce in Business Administration and Marketing from the University of Natal in South Africa and a Bachelor of Commerce Honors Degree in Business Economics from the University of South Africa. Mr. Utton and his family are residents of Greenwich, Connecticut. The New Power Company was formed in May 2000 to provide electricity and natural gas directly to households and small businesses in the deregulated energy marketplace. The company draws on the expertise, experience and market strength of such industry leaders as IBM, AOL and Enron to bring savings and efficiencies to energy consumers. /CONTACT: Gael Doar, Director of Communications of The New Power Company, 203-531-0400, ext. 658, or gdoar@newpower.com/ 13:46 EDT Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. BROADCAST TRANSCRIPT Date October 17, 2000 Time 09:30 AM - 10:00 AM Station CNNfn Location Network Program Market Call Alan Chernoff, anchor: And certainly we do have some encouraging numbers this morning from Enron, posting very impressive numbers. The nation's-largest buyer and seller of electricity and natural gas says revenues jumped one hundred fifty-four percent in the third quarter to thirty billion dollars. Enron did earn thirty-four cents a share, beating estimates by two cents and the year ago quarter by seven cents. The company has shed its image as a stodgy utility. It's building a broadband telecom network, as well as beefing up its on-line presence to trade everything from metals to coal. Investors have been responding positively, pushing the stock up as high as ninety. In fact, the stock this morning trading at eighty-two I see, up two points. (Graphic: Enron (ENE) one-year stock chart) And joining us right now from Houston to talk about the latest numbers and tell us what other changes are in store is Jeff Skilling, president and chief operating officer over at Enron. Jeff, congratulations this morning on your earnings report. So much has been made about your move into broadband but that's one area where you are still losing money, twenty million during the last quarter, correct? Jeff Skilling (President, Chief Operating Officer; Enron): Well, David, it's a start-up business so we expect that over the next couple of years we will lose money in our bandwidth business. But we see in two, three years out in the future that that's likely to be a very significant business for us. Chernoff: Mr. Skilling, let me add a question about the Internet business because that is one area where Enron does seem to be doing extremely well. You guys are trading energy right now, you're trading a whole bunch of other products right over the Internet. How's it going and what sort of expansion do you see over there? Skilling: Well, as you mentioned, we had a big, big up-tick in revenues and I think a large portion of that is due to our on-line transaction business. Since we brought it on-line last November--November 29, we've done over a hundred and eighty-five billion dollars of transactions, so it's been a big piece of the activity this year. David Sowerby (Guest Host, Loomis, Sayles): Je--Jeff, the remarkable performance of your stock price in the last year and a half, two years, your price-to-earnings ratio is about--almost sixty times earnings. The average utility is trading at about twenty-five times earnings. What do you tell the investor today who's thinking about adding to Enron with--with such--with such a high P/E ratio relative to your peer group? (Graphic: Enron Corp. *Market Cap: $59.3b *52-week high: 90 *52-week low: 34 7/8) Skilling: Well, a--a big portion of the P/E ratio is the result of our broadband business. If you take out the portion of our--our equity valuation that's related to broadband, which is not generating any earnings, and look at just say our wholesale business, our wholesale business is selling for about a twenty-five to thirty multiple. So, we think, given the growth rates that we're seeing in the energy business and our wholesale business, that we have some significant upside on that valuation which we think will push our stock up overall. (Graphic: Enron ?? Markets and trades: *Electricity *Natural Gas *Other commodities *99 revenues: $40b) Chernoff: Well, Jeff, let's talk about that broadband aspect 'cause as you say, the market certainly is giving you a lot of credit for that but at the same time, over the past few weeks, there's been a debate on Wall Street as to whether we might actually be entering a broadband glut. Is that a fantasy? (Graphic: Enron ?? *No. 1 U.S. buyer/seller of natural gas (Provides energy consulting, construction & engineering services)) Skilling: No, I think that's a very real possibility. (Graphic: Enron ?? *Subsidiary Enron Broadband Services building national fiber-optic network) And, in fact, we've designed our business to take advantage of that. You know, if you--if you look at the history of Enron, we created markets for natural gas and electricity when those markets were in massive over-supply. And we some of the same characteristics in the--in the broadband business which is why we've begun building the capability to transact real time bandwidth so that when the market prices do decline, and I believe they'll decline pretty significantly, we'll be in a position to make that--that lower cost capacity available to our customers. (Graphic: Enron ?? Commodities traded: *Paper *Coal *Chemicals *Fiber-optic bandwidth) Chernoff: And in terms of data storage, I know you're looking at that area. Are you guys pla--planning to go head-to-head with EMC? What's going on over there? (Graphic: Enron ?? *32,000 miles of gas pipeline (Fortune Magazine: Ranked "Most Innovative Co." past 5 yrs)) Skilling: Well, it just seems like more and more businesses are turning into commodity businesses and that's what we do. We create markets for commodities and I--I wouldn't be at all surprised if you see data storage turn into a commodity where you'll be able to buy and sell it just like you buy and sell pork bellies on the--on the Exchange. (Graphic: Enron ?? Top Competitors: *AEP *Duke Energy *UtiliCorp) Chernoff: OK. Jeff Skilling of Enron. Thank you very much and congratulations on a great earnings report. Skilling: Thank you. # # #
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