Message-ID: <471924.1075851601288.JavaMail.evans@thyme> Date: Wed, 25 Jul 2001 16:12:00 -0700 (PDT) From: karen.denne@enron.com To: susan.mara@enron.com, jeff.dasovich@enron.com, paul.kaufman@enron.com Subject: FW: Enron's Skilling Vows to Meet or Beat Profit Projections Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: 7bit X-From: Karen Denne X-To: Susan J Mara , Jeff Dasovich , Paul Kaufman X-cc: X-bcc: X-Folder: \Dasovich, Jeff (Non-Privileged)\Dasovich, Jeff\Deleted Items X-Origin: DASOVICH-J X-FileName: Dasovich, Jeff (Non-Privileged).pst -----Original Message----- From: Schmidt, Ann M. Sent: Wednesday, July 25, 2001 12:59 PM To: Denne, Karen; Kean, Steven J.; Palmer, Mark A. (PR) Subject: Enron's Skilling Vows to Meet or Beat Profit Projections Enron's Skilling Vows to Meet or Beat Profit Projections 2001-07-25 13:34 (New York) Enron's Skilling Vows to Meet or Beat Profit Projections New York, July 25 (Bloomberg) -- Enron Corp. will meet or beat its profit projections this year and next, Chief Executive Jeffrey Skilling said, criticizing analysts who've recently lowered their forecasts for the largest energy trader. Enron said July 12 that it expects to make $1.80 a share this year and $2.15 in 2002. ``We will hit those numbers, and we will beat those numbers,'' Skilling told a meeting of analysts and investors in New York. Enron shares have fallen about 13 percent since it made the profit forecasts. Skilling blamed the decline on analysts who downgraded U.S. energy companies because of falling prices for power and natural gas. Analysts have also cited concern about unpaid power bills by Enron customers in California and India, and losses by Enron's broadband trading unit, which may hurt Enron's profits. ``All of these are bunk,'' Skilling said. ``These are not issues for this stock.'' The shares of Enron fell 96 cents to $42.33 in early afternoon trading today. Enron makes much of its money from profits from arranging trades of power, gas, oil and other commodities, Skilling said. It returns are based more on the volume of trades and energy contracts than on the prices of the commodities themselves, he said. ``The growth of our sales is not driven by the economy,'' Skilling said. ``It's driven by the growth of markets.'' The refusal of a state government in India to pay $64 million in power bills is not going to hurt Enron's earnings, Skilling said. ``In India, we have government guarantees on the performance of our contract,'' Skilling said. ``We're convinced we'll be paid in full'' for the $875 million the company has invested so far, plus unpaid power bills. Enron owns 65 percent of Dabhol Power Co., which invested about $3 billion in a power plant in India. In California, Enron is owed more than the state's power grid manager has accused the company of overcharging, Skilling said. California is negotiating refunds with energy traders and generators after power prices soared in the state, leaving its two largest utilities so far in debt they could no longer buy electricity for their customers. The state has threatened to sue if power sellers don't agree to $8.9 billion in refunds. Enron will cut its losses as it waits out a ``meltdown'' in broadband communications, Skilling said. The company's plan to trade space on fiber-optic telecommunications network helped its stock rise 87 percent last year. The stock has plunged 49 percent this year as the collapse of Internet companies darkened the outlook for broadband companies, and natural gas prices dropped from record highs in December. Houston-based Enron is selling more power in Europe, and more energy-management contracts to smaller commercial customers in the U.S., company executives said. Energy management contracts are agreements to buy energy for customers and find ways to cut their energy consumption. Enron also is poised to profit from a Bush administration proposal to expand competition for wholesale power, Skilling said. USA: Enron says would not pay California refund. By Timothy Gardner 07/25/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, July 25 (Reuters) - Energy firm Enron Corp. would not pay its "minuscule" portion of the nearly $9 billion California claims energy companies owe the state for overcharges during the Western power crunch, Enron President and Chief Executive Officer Jeff Skilling said on Wednesday. California alleges that electricity generators and marketers owe the state $8.9 billion for overcharging it during the power crisis from mid-2000 to last spring. Governor Gray Davis, a Democrat, said he is prepared to go to court to retrieve the money. But Enron, the No. 1 U.S. natural gas and electricity marketer, does not intend to pay its portion of the alleged overcharges. which Skilling said was "minuscule." "The $9 billion number is bogus to begin with," Skilling told analysts at a meeting about Enron's second-quarter earnings in New York. Skilling said Enron's share of the alleged overcharge is $38.5 million. He said Enron should in fact recover $32 million in net purchases from California. At least one sector of California's electricity regulation system agrees that Enron's involvement was small in the power crisis, in which electricity prices reached records and rolling brownouts darkened many areas. Sales records kept by the California Independent System Operator, which manages most of the state's power grid, show Enron accounted for 0.4 percent of the alleged $9 billion overcharge. The Federal Energy Regulatory Commission is meeting on Wednesday in its biweekly commissioners meeting, in part to consider the refunds after a federal mediator rejected California's claims. On July 12. FERC Chief Administration Judge Curtis Wagner swung the issue back to the commission for further action. Wednesday's meeting is the last scheduled before the commission takes a month-long break. STILL ROUNDS TO BE FOUGHT IN CALIFORNIA Enron's problems in California are far from being settled. A committee of the California Senate investigating suspected price gouging during the power crunch recently found Enron in contempt for refusing to disclose confidential sales and bidding records. The California Senate last used the contempt ruling in 1929 against a cement company, but eventually the state's Supreme Court threw out the ruling, saying the charges were too vague. Just before the California Senate voted to hold Enron in contempt, the Houston-based company sued in a California court on a claim that FERC, not the California Senate, had jurisdiction. "They (California) are making political noise we don't like," said Skilling. He said if the situation got worse the company could reduce its market share there. "We'll walk away from the situation and reserve out," he said. Although Enron claims little involvement in the alleged overcharge, the company says it has learned from the crisis. Skilling said that looking forward, Enron will avoid dealing with intermediaries that the company contends helped lead to the power crunch. "We're focused on retail in California; we're going direct to customers without dealing with an intermediary," said Skilling. Shares in Enron, which reported earnings slightly better than expected on July 12, were down 34 cents to $42.90 in early trade on the New York Stock Exchange. That is down from its peak this year of more than $81, hit in mid-February in the depths of the Western power crunch. - ((Timothy Gardner, New York Energy Desk, +1 646-223-6058; fax +1 646-223-6078, timothy.gardner@reuters.com)). Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.