|
|
Enron Mail |
Mime-Version: 1.0
Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Lenhart, Matthew </O=ENRON/OU=NA/CN=RECIPIENTS/CN=MLENHAR< X-To: Grigsby, Mike </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mgrigsb< X-cc: X-bcc: X-Folder: \MLENHAR (Non-Privileged)\Lenhart, Matthew\Sent Items X-Origin: Lenhart-M X-FileName: MLENHAR (Non-Privileged).pst -----Original Message----- From: Landry, Chad Sent: Thursday, November 08, 2001 2:01 PM To: Lenhart, Matthew Subject: FW: Dynegy Inc.: IN THE MONEY: Enron Transparency Not Transparent Enough -----Original Message----- From: djcustomclips@djinteractive.com@ENRON Sent: Thursday, November 08, 2001 12:57 PM To: 5193@WCTOPICS.djnr.com Subject: Dynegy Inc.: IN THE MONEY: Enron Transparency Not Transparent Enough IN THE MONEY: Enron Transparency Not Transparent Enough By Michael Rapoport 11/08/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) A Dow Jones Newswires Column NEW YORK -(Dow Jones)- So Enron Corp. (ENE) says it wants to be more transparent - to make its impenetrable financial results and corporate structure easier for investors and analysts to understand. Based on its announcements Thursday, however, it still has a heck of a long way to go. With Enron's restatement Thursday of nearly five years' worth of earnings and additional information about the maze of off-balance-sheet deals related to it, we now have a lot more information about the mess at Enron than we had 24 hours ago. But we're not much closer to understanding just what HAPPENED to leave Enron in such a mess - and that's because the company's explanations of all this continue to be dense, confusing and next to impossible to grasp. Try this tidbit, from the Form 8-K Enron filed about the restatements Thursday with the Securities and Exchange Commission: "In addition, Enron's net income is reduced for specific JEDI revenues previously allocated to Chewco, relating to the appreciation in value of Enron stock, which eliminate upon consolidation. This, in effect, reduces Enron's share of JEDI's earnings." Huh? And no, it doesn't help you to know that "Chewco" is an entity that wasn't included in Enron's financial results but which Enron now admits should have been. Or that "JEDI" isn't a "Star Wars" reference but a limited partnership in which both Enron and Chewco had invested. It's still impenetrable. Then there are the times when Enron just plain doesn't give enough information. The company says its decision that Chewco should be included in its results after all "is based on current information that Chewco did not meet the accounting criteria to qualify as ... unconsolidated..." Uh - okay. WHY didn't it meet the criteria, and why did Enron previously believe that it did? Enron doesn't say. Finally, Enron makes some assertions that just make you scratch your head. The company says part of the restatement of its earnings stems from unspecified "prior-year proposed audit adjustments and reclassifications which were determined to be immaterial in the year originally proposed." Hmmm. Beyond the fact that Enron doesn't elaborate on the nature of these "audit adjustments and reclassifications," or why they were originally considered immaterial, consider that according to Enron's own figures in the 8-K, they add up to a negative earnings impact of $87 million since 1997. That amount doesn't sound like any definition of "immaterial" I've ever heard. An Enron spokesman couldn't immediately be reached for comment. In fairness, this lack of clarity may be all but inevitable given Enron's Byzantine structure, which involves dealings with outside but related entities that also have third parties involved, which in one case have a subsidiary that allowed Enron to hedge the risks of an investment, and in another case is selling assets purchased from Enron to OTHER entities in order to finish paying Enron for the original transaction, and ... you get the idea. It's next to impossible to make clear because Enron's structure is just too baroque to understand in the first place. The market is plenty puzzled by all this, even in the wake of Enron's attempt to clarify things. Take a look at the company's drunken-sailor stock chart from Thursday. After news of the restatements hit, Enron stock first jumped higher, going as high as $10 a share, then soon dropped back, to as low as $8.40, as investors started to digest the details of the news. Then up again to about $9.25, then down again to its current level of around $8.50. There's no reason investors should be confused like this. There is absolutely no reason that a reasonably intelligent layman, with an elementary working knowledge of corporate finance, should be unable to understand the regulatory filings, structure, earnings and balance sheet of any public company. If that's happens, it's the company's fault, not the investor's - either because the company hasn't explained things well enough or because its structure is needlessly complicated to begin with. If Enron wants to get back the market's confidence, fixing that problem, one way or the other, would be a good place to start. -By Michael Rapoport, Dow Jones Newswires; 201-938-5976; michael.rapoport@dowjones.com Folder Name: Dynegy Inc. Relevance Score on Scale of 100: 100 ______________________________________________________________________ To review or revise your folder, visit http://www.djinteractive.com or contact Dow Jones Customer Service by e-mail at custom.news@bis.dowjones.com or by phone at 800-369-7466. (Outside the U.S. and Canada, call 609-452-1511 or contact your local sales representative.) ______________________________________________________________________ Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved
|