As long as the list is quiet today, I thought that I would repeat some news 
from today's NY Times. 

If you remember, when we last left this subject, Enron (in downtown Houston, 
TX) were the guys who were wearing the black hats in regards to the 
California electricity mess. If you also remember, I mentioned that this 
might be a good time to sell your Enron stock simply because the western 
governors were not going to allow what happened to California happen to them 
too. In that regard, Kenneth Lay, chairman of Enron and a major contributor 
to GW Bush's election campaign, was lamenting the "balkanization" of the 
western power grid. 

In today's episode, the NY Times article reads in part:

=======================================

DALLAS, Aug. 14 — Jeffrey Skilling, the chief executive of the Enron 
Corporation (news/quote), stunned Wall Street today by announcing that he 
would quit after just six months in the job, calling the move a "purely 
personal decision."

But the abruptness of the departure left many analysts questioning whether a 
series of setbacks the company has suffered played a part in the decision.

Kenneth Lay, Enron's 59-year-old chairman, will step back into the position 
he left early this year after 15 years as chief executive.

Mr. Lay, who originally recruited Mr. Skilling to Enron, said tonight that he 
had agreed to stay on through the end of 2005 to "make sure we've got plenty 
of time to work out an orderly succession."

Mr. Skilling, 47, had been at the heart of the transformation of Enron from 
an old- line natural gas pipeline company to the biggest and most aggressive 
of the new breed of unregulated energy traders that buy and sell billions of 
dollars of electricity and other commodities daily.

That strategy helped Enron's stock price soar during the last decade. But 
this year the company's shares have fallen sharply, as Enron has suffered 
from problems with its new broadband telecommunications trading unit, its 
investment in a large power plant in India, and criticism from officials in 
California, who blame Enron and other energy companies for the collapse of 
the state's electricity market.

A former energy consultant at McKinsey & Company who joined Enron in 1990, 
Mr. Skilling built its energy-trading operations into the company's most 
profitable unit, accounting for nearly $1.7 billion — or 85 percent — of 
operating income last year. He became president and chief operating officer 
in 1997, and in February of this year became chief executive.

Nonetheless, the move jolted analysts, who, despite the stock's recent slide 
and the company's other problems, saw Mr. Skilling as the unquestioned leader 
to follow Mr. Lay.

In after-hours trading, shares of Enron fell about 8 percent, to $39.55. That 
fall follows a plunge of almost 50 percent since January in the stock, which 
had closed in regular trading at $42.93, up 78 cents. The news of the 
executive changes came after the market closed.

"I'm surprised and I'm stunned," said Philip K. Verleger, an energy economist 
with the Brattle Group, a consulting firm in Cambridge, Mass. "Skilling was 
the guy who executed the growth in the trading business."

Investors have become increasingly concerned that a surge in new power plant 
construction will lead to a glut of electricity within a few years and lower 
the value of Enron's role as a middleman between plant owners and electricity 
users. In addition, the company's efforts to enter the water business have 
fared poorly, and its broadband trading operation has become a cash drain.

========================================

Wirt Atmar

 

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