Message-ID: <17007550.1075844200394.JavaMail.evans@thyme> Date: Mon, 23 Apr 2001 01:45:00 -0700 (PDT) From: lara.leibman@enron.com To: sue.nord@enron.com, mona.petrochko@enron.com, eric.benson@enron.com, john.neslage@enron.com, margo.reyna@enron.com, carmen.perez@enron.com, stephen.burns@enron.com, allison.navin@enron.com, marchris.robinson@enron.com, barbara.hueter@enron.com, kerry.stroup@enron.com, jeff.dasovich@enron.com Subject: Organizational Changes from the EBS Office of the Chairman Cc: richard.shapiro@enron.com, linda.robertson@enron.com, scott.bolton@enron.com, karen.huang@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable Bcc: richard.shapiro@enron.com, linda.robertson@enron.com, scott.bolton@enron.com, karen.huang@enron.com X-From: Lara Leibman X-To: Sue Nord, Mona L Petrochko, Eric Benson, John Neslage, Margo Reyna, Carmen Perez, Stephen D Burns, Allison Navin, Marchris Robinson, Barbara A Hueter, Kerry Stroup, Jeff Dasovich X-cc: Richard Shapiro, Linda Robertson, Scott Bolton, Karen Huang X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\All documents X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf ----- Forwarded by Lara Leibman/Enron Communications on 04/23/01 08:52 AM= =20 ----- =09EBS Connected Newsletter =0904/20/01 05:21 PM =09=09=20 =09=09 To: All EBS Employees Worldwide =09=09 cc:=20 =09=09 Subject: Organizational Changes from the EBS Office of the Chairman =20 =20 Market Close 4/20/01=20 59.99 -1.17 Bandwidth Intermediation (through 4/13/01) YTD Transactions 679 Counterparties 69 =20 LTD Transactions 988 Counterparties 128 = =20 Numbers above include Long Haul, Local Loop, IP, Storage, Advertisting, DRA= M=20 and Satellite for North America, Europe and Asia. =20 = =20 April 20,=20 2001 =20 UPDATE FROM EBS OFFICE OF THE CHAIRMAN Since its inception just two years ago, Enron Broadband Services has made= =20 significant progress toward achieving our ambitious goals of being the=20 leading=20 provider of premium broadband content and the largest buyer and seller of= =20 bandwidth on a global basis. We are extremely proud of the company=01,s=20 accomplishments and equally optimistic about the future of EBS. The market for bandwidth intermediation and risk management is developing= =20 more quickly than anticipated =01) faster than the markets for natural gas = or=20 even=20 electricity had developed. Global Trading and Risk Management has already= =20 executed more than 600 transactions this year, far exceeding the 321 total= =20 transactions executed in 2000. The Enron Intelligent Network (EIN), with its first-of-a-kind pooling point infrastructure, is in place to provide th= e=20 physical=20 backbone and switching platform to support EBS=01, emerging bandwidth and= =20 related trading operations. Likewise, EBS has developed a superior technical and commercial platform to= =20 digitally deliver entertainment on-demand. While we have terminated our=20 relationship with Blockbuster because of their inability to secure content,= =20 we=20 remain confident that EBS will be successful in independently acquiring=20 content=20 commitments and developing distribution partnerships for this exciting new= =20 business. EBS will continue to evolve as we build upon our presence in the bandwidth = and network services market. While the market for broadband services in the U.= S.=20 and globally has undergone significant change in recent months, the demand= =20 for=20 broadband services continues to grow dramatically and EBS has the skills an= d=20 strategy required to be successful long term. To better focus our efforts and respond to the market, we have made some=20 organizational changes to enable us to effectively execute our strategy and= =20 efficiently grow EBS. These changes are outlined below and a current=20 organizational chart is attached. David Cox, formerly Managing Director of Content Origination, has been name= d=20 Chief Commercial Officer, reporting to the EBS office of the chair. This n= ew=20 role=20 will enable David to share his broad origination expertise with the various= =20 EBS=20 commercial teams. Digital Content Services, formerly Content Origination, is now led by Frank= =20 Bay=20 with Rich DiMichele and Ed Smida. Rich will focus on the development of th= e=20 content risk management business. Stewart Seeligson is now leading an expanded Wholesale Origination unit=20 combining=20 media transport opportunities that Stewart has been developing in the=20 broadcast=20 industry and opportunities that Ted Seitz has been pursuing with traditiona= l=20 carriers,=20 ISPs, and network service providers. This new origination team will focus = on=20 executing highly structured transactions with significant value in the=20 wholesale market. John Echols now leads the Enterprise Origination unit with Jim Crowder, Mat= t=20 Harris,=20 and Brad Nebergall. Bryan Burnett also has joined the Enterprise team from= =20 Enron=20 North America=01,s Industrial Markets group. John=01,s group will focus on= =20 intermediation=20 opportunities with technology, financial, and corporate customers. Dale Surbey has joined EBS from Enron North America to lead the Structuring= =20 group. =20 Brad Richter will move to Jeff Donahue=01,s Corporate Development team to p= ursue=20 M&A and large, structured transaction opportunities. Joe Edwards is leading the newly formed North American middle markets group= ,=20 reporting to Paul Racicot. Daryl Dunbar has joined EBS as a vice president in Engineering focusing on = IP=20 engineering. David Leatherwood and his team have moved to Enron Energy=20 Services to develop outsourcing opportunities related to network engineerin= g=20 and construction. We have established an impressive foundation from which to build our=20 business,=20 and look forward to executing on the tremendous opportunities we see in thi= s=20 rapidly evolving market. Click here to see the new organizational chart. =20 FLOOR MEETING WITH SKILLING Join Jeff Skilling at an EBS floor meeting next Tuesday as he answers=20 questions about our business and=20 discusses Enron's strategy. The floor meeting is designed to encourage op= en=20 communication and an=20 exchange of ideas. Date: Tuesday, April 24 Time: 1:30 p.m. Place: Near EB4423D If you wish to submit questions in advance, send them directly to Jeff by= =20 email or fax at 713-646-8381. THANK YOU, EBS EMPLOYEES To show EBS employees their appreciation for all the hard work put forth th= is=20 quarter, Ken and Kevin=20 invite you to an afternoon of entertainment and recreation at Jillian's nex= t=20 Tuesday. Please join them at the=20 entertainment complex for fun, food and activities on April 24. Date: Tuesday, April 24 Time: 3:00 p.m.- 6:00 p.m. Place: Jillian's, 7620 Katy Freeway at Silber For those interested, a shuttle will be available. You can catch the shutt= le=20 to Jillian's outside the Enron=20 building on Andrews Street beginning at 2:30 p.m. If you have any question= s,=20 please contact Eddie Sera=20 at 3-0480. EBS MARKET INTELLIGENCE ADDS NEW TOOLS Market Intelligence is pleased to announce the addition of Faulkner to the= =20 EBS family of research products=20 available to all EBS employees via wEBSource. Faulkner FACCTs is a fully= =20 searchable information service=20 that covers technology in the IT and communications industry segment. FACC= Ts=20 provides select vendor=20 company profiles, company timelines, market trends, product and service=20 profiles, standards information,=20 and company contact information. The Telecom Weekly, a part of FACCTs, is = an=20 outline of the week's=20 news and events shaping the telecom marketplace with "hot" web links. FACC= Ts=20 can be accessed by=20 selecting Faulkner from the Research menu of wEBSource. Click here to visi= t=20 the site now. INTRODUCING IMPLEMENTATION LOGISTICS The Operations and Implementation group, formerly known as Customer=20 Engineering, has changed its name to=20 Implementation Logistics. "Our function and focus have not changed, just o= ur=20 name," said David Rollins, a=20 director of engineering in the group, "the name Implementation Logistics mo= re=20 clearly identifies the mission=20 and function of the group within Operations and Implementation." In addition to the name change, the EC Reference - Customer Eng. database= =20 used for implementation=20 packages and AS-BUILT drawings is now known as EBS Implementation Logistics= . =20 New database: EBS Implementation Logistics >>=20 Click here to read more. EBS WELCOMES NEW EMPLOYEES Please welcome the following new employees to EBS: David Kaplan April 9, 2001 Starcom voices interest, though industry remains skeptical=20 Enron Media Services has piqued the interest of Starcom North America with= =20 its plans to=20 create a futures market for buying and selling media time and space. In a recent letter to Starcom's clients, CEO Renetta McCann said the=20 Chicago-based media=20 company was in talks with Enron to examine the possibility of a deal. "Despite what has been a negative reaction thus far from the industry, we= =20 find Enron's plan=20 intriguing," McCann wrote. "Clearly, Enron proposes breaking the rules of h= ow=20 media can be=20 bought and sold." Last year, Enron Corp., the $30 billion financial risk management company= =20 previously associated=20 with the energy industry, created EMS to market "price-risk management" pla= ns=20 to advertisers=20 and media-service companies. In addition, Houston-based Enron seeks to=20 execute $1 billion in media=20 buys by year's end, though a representative declined to release information= =20 about any possible deals. In this volatile economy, marketers and media agencies could use Enron's=20 ability to hedge the risk=20 of media costs as far as five years ahead, said Edward Ondarza, a vp for EM= S.=20 Up to this point, the only way marketers could cushion risk is by "buying= =20 forward" via the upfront,=20 he added. "We want to create a year-round upfront by developing a media=20 exchange [between=20 advertisers, media agencies and networks]," he said. Despite Enron's pitch, Starcom has received little feedback to the letter= =20 from its clients, said Kevin=20 Gallagher, vp and director of local investments for Starcom, which claims= =20 $4.3 billion in billings=20 and has clients such as General Motors and Kraft. "We're always open to new= =20 ways of doing=20 business, and we wanted to keep our clients apprised of what's going on," h= e=20 said. "But we are=20 not engaged in any business with Enron. It was and remains merely=20 exploratory." Many industry insiders remain skeptical of Enron's business model, because = of=20 possible legal issues=20 and the novelty of the concept. But they acknowledge that eventually Enron'= s=20 approach will become=20 commonplace. "In theory it's great, but the practice is more difficult," said Jon Mandel= ,=20 MediaCom chief negotiating=20 officer. "There are some big issues that need to be worked out." Click here to see the article in Adweek. Platts In the first quarter, Enron Broadband Services transacted seven times the= =20 amount of bandwidth than it had in=20 the previous quarter, the unit of energy giant Enron Corp. announced=20 Tuesday. =20 The subsidiary showed a loss of $35-million in the quarter on revenues of= =20 $83-million, the results being=20 attributed to the buildout of its fiber network and pooling points. President and CEO Jeffrey Skilling said the broadband unit closed 580=20 transactions in the quarter, more than=20 double the level of the previous quarter. More impressive was the seven-fol= d=20 increase in transacted bandwidth=20 this quarter: 43,400 Terabytes versus 6,005 Terabytes in the fourth quarter= . =20 Enron is =01&making excellent=20 progress in creating a commodity market,=018 Skilling said. =20 Seventy new broadband customers were added in the quarter, for a total of= =20 120. Of that number 70%=20 of the customers are carriers or network service providers, a spokeswoman= =20 told BMR, adding that half of=20 the deals done in the quarter were with that group. Bandwidth intermediation/trading was the other key driver, with 580=20 transactions posted during the=20 quarter, a significant ramp-up from 232 reported 4Q:00 and 320 for all of= =20 2000. In our view, we are=20 way past the question =01&Can bandwidth be commoditized?=018 and are enteri= ng the=20 period of rapid=20 growth in commodity volumes which precedes the all-important emergence of= =20 profitability. In the=20 energy commodity markets, particularly natural gas and power in both the=20 United States and=20 Europe, the commodity volume growth phase lasted 1-3 years before=20 profitability emerged. We=20 see no reason for the bandwidth commodity market, which from a commodity=20 perspective =01&looks,=20 acts and feels=018 like electricity and natural gas, to perform any differe= ntly=20 from these commodities.=20 We are entering Year 2 of the period of rapid volume growth. The next=20 catalyst in our view, will=20 be for Enron to announce a reasonably =01&date certain=018 for profitabilit= y, much=20 in the same manner=20 as they did for Enron Energy Services several years ago. We think that date= =20 could be late 2002=20 or early 2003. By Ted Jackson April 1, 2001=20 Excerpts: ...Enron's vice president and broadband trader, Paul Racicot, says Enron=20 alone could enter into 2,000=20 trades this year, but some analysts don't expect volumes to reach much more= =20 than that in the entire market.=20 And while liquidity on such major routes as Los Angeles/New York and New=20 York/Miami will improve=20 substantially, 2001 will likely be remembered as the year progress was made= =20 on issues whose resolution=20 was critical to the long-term health of the market. ...Probably the best-known proposal to promote network connectivity in the= =20 context of the emerging=20 broadband trading market is Enron's =01&pooling points=018 initiative. Thes= e=20 pooling points, or switching and=20 interconnection facilities through which connections between buyers and=20 sellers can be established, have=20 become so controversial that Enron seems almost apologetic about its plans = to=20 add 14 new points this year. =01&We plan on expanding the number of pooling points from 21 to 35 this ye= ar,=018=20 says Paul Racicot, vice=20 president of bandwidth trading at Enron. =01&But we'll trade anywhere, thou= gh,=018=20 he added. Racicot is sensitive to criticism that behind Enron's pooling points is an= =20 effort to control the broadband=20 market information flow. =01&Enron's goal is to promote connectivity, not = to=20 use pooling points as means=20 of gaining access to information about trading flows,=018 he says. =01&The = purpose=20 of pooling points is to improve=20 market liquidity for broadband trading. The importance of this cannot be=20 overstated. A very high degree of=20 connectivity will be needed for a deep and liquid broadband-trading market = to=20 be established.=018 According to Racicot, connectivity will develop rapidly this year =01* spur= red=20 not just by Enron, but also by third-party developers. Click here to read full text. By Brian Santo April 2, 2001 ...Since the market is not becoming liquid quickly enough, Enron is wheelin= g=20 and dealing to spark the=20 growth of bandwidth-eating applications. That was a major impetus behind th= e=20 company's ill-fated=20 deal with Blockbuster to provide video-on-demand services, and it is part o= f=20 the rationale behind=20 a recent agreement with EBWorld.com, the online subsidiary of computer-game= =20 retailer Electronics=20 Boutique Holdings. EBWorld.com will soon deliver computer games on-demand from its Web site,= =20 using streaming technology=20 from Into Networks, Enron's preferred vendor of streaming technology. =01&We're trying to drive growth of bandwidth to the home to increase overa= ll=20 bandwidth use,=018 says=20 Michael Harris, Enron's commercial manager of software-on-demand and video= =20 games. Enron's activities put cable operators who offer broadband connectivity in= =20 the fortuitous and fortunate=20 position of having someone else promoting a market for one of their service= s=20 without doing anything=20 to promote that market themselves. Harris says Enron is talking with =01&a number of broadband service provide= rs=018=20 under non-disclosure agreements. Click here to read more. UPCOMING TRAINING Applied Corporate Finance and Transaction Structuring Participants will develop an understanding of deal components and how value= =20 is extracted from the=20 deal structure. Dimensions of deal structures are explored in detail=20 including off balance sheet financing,=20 how to account for revenue from deals, economic justification of projects a= nd=20 the unique challenges of=20 international deals. In addition, the participants learn about risk=20 assessment and quantification as well as=20 credit issues and how they are managed. Financial leverage is discussed;= =20 both the upside potential and=20 the downside risks. Mastery of the seminar material is achieved through th= e=20 application of the financial=20 principals presented in the course to a number of relevant, industry-specif= ic=20 case studies.=20 Dates: May 2-3, 2001 (1 1/2 days) May 12-13, 2001 (1 1/2 days) Location: Houston, Shepherd facility Time: 8:00 a.m. - 5:00 p.m. Registration Link: >>=20 Introduction to Bandwidth Risk Management Fundamentals This one day course covers the basic risk management fundamentals in EBS=20 bandwidth, commercial=20 origination and deal structuring. It is designed as an introduction to ris= k=20 management fundamentals,=20 and would be appropriate for individuals who do not have a comprehensive=20 understanding of these=20 principles. Dates: May 8, 2001 Location: Houston, Shepherd facility Time: 8:00 a.m. - 5:00 p.m. Registration Link: >>=20 If you have any questions regarding the above courses, please contact Rita= =20 Ramirez. We want your ideas and feedback on EBS Connected. =20 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09 =09