Message-ID: <22741062.1075840920151.JavaMail.evans@thyme> Date: Mon, 26 Nov 2001 06:16:00 -0800 (PST) From: m..schmidt@enron.com Subject: Enron Mentions - 11/24/01 - 11/25/01 Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Schmidt, Ann M. X-To: X-cc: X-bcc: X-Folder: \ExMerge - Kitchen, Louise\'Americas\SEC media X-Origin: KITCHEN-L X-FileName: louise kitchen 2-7-02.pst Accounting Peer Review Gets More Scrutiny The New York Times, 11/25/01 An Alternate Reality The New York Times, 11/25/01 Will New York Be Told, Once Again, to Drop Dead? The New York Times, 11/25/01 Dot-Com Is Dot-Gone, And the Dream With It The New York Times, 11/25/01 California Wary of Dynegy Bid to Buy Out Enron Energy: Both companies are p= rominent players in the state's power market. The move to combine their str= ength is raising some concerns. Los Angeles Times, 11/25/01 Enron's Troubles Could Spur Securities Reforms Los Angeles Times, 11/25/01 Enron Says It's Still in Talks With Possible Investors for Cash Bloomberg, 11/25/01 Enron Money Woes Raise Concerns Los Angeles Times, 11/25/01 Hooked On a Fast- Growth Habit; CEOs Reach for Double-Digit Results Despite= Downturn, and Some Are Making Costly Mistakes The Washington Post, 11/25/01 USA: Enron employees sue as pension savings evaporate. Reuters English News Service, 11/25/01 INDIA PRESS: Aditya Birla May Buy Enron's Dabhol Stake Dow Jones International News, 11/25/01 COMPANIES & FINANCE UK - Enron seeks survival pact to aid Dynegy's $9bn res= cue. Financial Times, 11/24/01 EQUITY MARKETS - Power companies pack more punches - WALL STREET. Financial Times, 11/24/01 WORLD STOCK MARKETS - Wall St loses shine off its blue chip rise. Financial Times, 11/24/01 Wait Until Dark The New York Times, 11/24/01 Heartened by Holiday Shopping, Shares Rise in Quiet Day The New York Times, 11/24/01 Dynegy Scrambles to Save Enron Deal Energy: Shares of the acquisition targe= t have fallen 45% since the merger was announced. Analysts say the companie= s might renegotiate. Los Angeles Times, 11/24/01 Lawsuit Slows MSN Broadband Roll-Out Internet: The action by partner Enron = hurts sales during important holiday season, analysts say. The service has = reached only 33 of the 45 targeted markets. Los Angeles Times, 11/24/01 Review could alter terms of Enron sale to Dynegy Chicago Tribune, 11/24/01 Business & Finance: Enron's dizzy fall from grace threatens disruption in U= S energy markets - Shares in the US's biggest electricity trader, Enron, ar= e down from dollars 90 to dollars 5 and it is under federal investigation. = How did it all go so wrong? Co Irish Times, 11/24/01 Enron price slides amid fear for rescue bid The Times of London, 11/24/01 Market Report: Investors fret over Barclays' exposure to troubled Enron The Independent - London, 11/24/01 Dynegy could renegotiate Enron bid --- Target stock sags to less than half = of offer's value The Toronto Star, 11/24/01 Enron's stock slump could mean deal is renegotiated: Shares off 45% National Post, 11/24/01 Dynegy may renegotiate deal Firms to finish examining Enron's books The Globe and Mail, 11/24/01 INVESTORS RETURN STUFFED AND READY TO BUY; BLUE CHIPS TURN IN A STRONG DAY,= REVERSING PROFIT-TAKING SESSIONS San Jose Mercury News, 11/24/01 DYNEGY, ADVISERS PORE OVER ENRON DETAILS; DEAL San Jose Mercury News, 11/24/01 WORKERS, NEST EGGS DEVASTATED Portland Oregonian, 11/24/01 Analysis: Travails of the Enron Corporation NPR: Weekend Edition - Saturday, 11/24/01 Dynegy's Right to Enron Pipeline May Be Disputed, Barron's Says Bloomberg, 11/24/01 Deal still on as Enron shares drop 6% Houston Chronicle, 11/24/01 Money and Business/Financial Desk; Section 3 INVESTING: DIARY Accounting Peer Review Gets More Scrutiny Compiled by Jeff Sommer 11/25/2001 The New York Times Page 8, Column 1 c. 2001 New York Times Company The accounting industry's watchdog group is examining the industry's ''peer= review'' process in light of enormous accounting problems at the Enron Cor= poration.=20 The group, called the Public Oversight Board, will meet next week to consid= er whether reviews of audits being conducted by accounting firms adequately= safeguard the public interest, according to its chairman, Charles Bowsher.= The session comes after revelations by Enron that it had overstated earnin= gs by nearly $600 million over four years and that it had inflated sharehol= der equity by $1.2 billion because of ''an accounting error.'' Arthur Andersen has been Enron's outside auditor for more than a decade, an= d its work has been submitted periodically to Deloitte & Touche for ''peer = reviewing.'' One such review is being conducted now.=20 Representative John Dingell, a Michigan Democrat, said in a letter to Mr. B= owsher that no Big Five accounting firm had ever issued a negative report a= fter a peer review. Mr. Bowsher told Bloomberg News that the Oversight Boar= d would ask: ''How can you have peer reviews and still have these kinds of = failures?'' Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Editorial Desk; Section 4 Reckonings An Alternate Reality By PAUL KRUGMAN 11/25/2001 The New York Times Page 11, Column 1 c. 2001 New York Times Company Most Americans get their news from TV. And what they see is heartwarming --= a picture of a nation behaving well in a time of crisis. Indeed, the vast = majority of Americans have been both resolute and generous.=20 But that's not the whole story, and the images TV doesn't show are anything= but heartwarming. A full picture would show politicians and businessmen be= having badly, with this bad behavior made possible -- and made worse -- by = the fact that these days selfishness comes tightly wrapped in the flag. If = you pay attention to the whole picture, you start to feel that you are livi= ng in a different reality from the one on TV. The alternate reality isn't deeply hidden. It's available to anyone with a = modem, and some of it makes it into quality newspapers. Often you can find = the best reporting on what's really going on in the business section, becau= se business reporters and commentators are not expected to view the world t= hrough rose-colored glasses.=20 From an economist's point of view, the most revealing indicator of what's r= eally happening is the post-Sept. 11 fondness of politicians for ''lump-sum= transfers.'' That's economese for payments that aren't contingent on the r= ecipient's actions, and which therefore give no incentive for changed behav= ior. That's good if the transfer is meant to help someone in need, without = reducing his motivation to work. It's bad if the alleged purpose of the tra= nsfer is to get the recipient to do something useful, like invest or hire m= ore workers.=20 So it tells you something when Congress votes $15 billion in aid and loan g= uarantees for airline companies but not a penny for laid-off airline worker= s. It tells you even more when the House passes a ''stimulus'' bill that co= ntains almost nothing for the unemployed but includes $25 billion in retroa= ctive corporate tax cuts -- that is, pure lump-sum transfers to corporation= s, most of them highly profitable.=20 Most political reporting about the stimulus debate describes it as a confli= ct of ideologies. But ideology has nothing to do with it. No economic doctr= ine I'm aware of, right or left, says that an $800 million lump-sum transfe= r to General Motors will lead to more investment when the company is alread= y sitting on $8 billion in cash.=20 As Jonathan Chait points out, there used to be some question about the true= motives of people like Dick Armey and Tom DeLay. Did they really believe i= n free markets, or did they just want to take from the poor and give to the= rich? Now we know.=20 Of course, it's not all about lump-sum transfers. Since Sept. 11 there has = also been a sustained effort, under cover of the national emergency, to ope= n public lands to oil companies and logging interests. Administration offic= ials claim that it's all for the sake of national security, but when you di= scover that they also intend to reverse rules excluding snowmobiles from Ye= llowstone, the truth becomes clear.=20 So what's the real state of the nation? On TV this looks like World War II.= But though our cause is just, for 99.9 percent of Americans this war, wage= d by a small cadre of highly trained professionals, is a spectator event. A= nd the home front looks not like wartime but like a postwar aftermath, in w= hich the normal instincts of a nation at war -- to rally round the flag and= place trust in our leaders -- are all too easily exploited.=20 Indeed, current events bear an almost eerie resemblance to the period just = after World War I. John Ashcroft is re-enacting the Palmer raids, which swe= pt up thousands of immigrants suspected of radicalism; the vast majority tu= rned out to be innocent of any wrongdoing, and some turned out to be U.S. c= itizens. Executives at Enron seem to have been channeling the spirit of Cha= rles Ponzi. And the push to open public lands to private exploitation sound= s like Teapot Dome, which also involved oil drilling on public land. Presum= ably this time there have been no outright bribes, but the giveaways to cor= porations are actually much larger.=20 What this country needs is a return to normalcy. And I don't mean the selec= tive normalcy the Bush administration wants, in which everyone goes shoppin= g but the media continue to report only inspiring stories and war news. It'= s time to give the American people the whole picture. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Money and Business/Financial Desk; Section 3 MARKET WATCH Will New York Be Told, Once Again, to Drop Dead? By ALEX BERENSON 11/25/2001 The New York Times Page 1, Column 2 c. 2001 New York Times Company NEARLY 11 weeks after the worst terrorist attack in history, New York is di= scovering just how much the rest of the United States cares about the natio= n's business and financial center.=20 Not much. Early hopes that the nation would rally to help the city overcome the devas= tating economic impact of Sept. 11 appear to have been misplaced. Not only = is Gov. George E. Pataki's ill-advised pitch for $54 billion in federal aid= all but dead, apparently the city will struggle to get the $20 billion tha= t President Bush promised.=20 Yes, many of the city's economic problems are self-inflicted. With a munici= pal work force of 250,000, New York employs one-seventh as many people as t= he federal government, excluding the armed forces. To support that bureaucr= acy, the city has the highest taxes of any local government in America. Dev= elopment is absurdly difficult, even outside Manhattan. Roads and bridges a= re a mess.=20 But all of that was true before Sept. 11, and New York somehow made do. In = fact, a record number of new jobs were created here in 2000, according to S= teven Malanga, senior fellow at the Manhattan Institute, a conservative pol= icy group. ''In the last seven or eight years, the city's economy has rebou= nded in a way that's very encouraging,'' he said.=20 The attacks changed all that. By discouraging people from coming to crowded= places like Times Square, terrorism strikes at the heart of New York, said= Mitchell Moss, director of the Taub Urban Research Center at New York Univ= ersity. ''New York's economy is built on interaction,'' he said. The indust= ries that have suffered most severely are New York's most important employe= rs: tourism, media, advertising and financial services, which was due for c= uts even before the attacks.=20 Last month, the city lost 79,000 jobs, a record. The slowdown has blown a h= ole in city and state budgets, which are precariously balanced at the best = of times. The Citizens Budget Commission, a nonpartisan fiscal watchdog org= anization, predicts that the city will face a budget deficit of $4 billion = next year.=20 Mayor Rudolph W. Giuliani has asked city agencies to cut their budgets by 1= 5 percent. More cuts are coming. Libraries will close earlier. Parks will b= e dirtier. And city workers, who had been asking for big raises, will have = to accept layoffs or pay cuts.=20 Even so, the city cannot get out of this hole alone. With taxes already too= high, it cannot reach much deeper into its citizens' pockets. And there ar= e limits to how much it can cut services. A little federal help would go a = long way toward righting the city's budget gap and restoring confidence in = New York.=20 Mr. Moss suggests the federal government take two steps to show its commitm= ent to the city. First, it should help create a hub in Lower Manhattan that= would connect transit lines from New Jersey and Long Island with the subwa= y. Second, it should support ''security zones'' where high-profile securiti= es firms and media companies could congregate if they wished.=20 For now, at least, it appears that Washington will let New York sink or swi= m on its own. That decision is foolish for both economic and symbolic reaso= ns.=20 If New York cannot right itself, the securities firms that are among its mo= st important employers are as likely to move jobs to London or Hong Kong as= Chicago or Atlanta. And if New York's streets grow dirty and its crime rat= e soars, other countries may question Washington's promises of aid to those= that try to deter terrorism. Will a government that does not bother to aid= its largest city in the wake of the worst terror attack in history really = do much for Islamabad or Cairo?=20 ''What do we have a federal government for if it's not to give aid to state= and local governments, at the level people live and get most of their gove= rnment services?'' asks James A. Parrot, an economist at the Fiscal Policy = Institute, a labor-backed research organization.=20 It is worse than unseemly that lawmakers are offering to pass a tax bill th= at will give billions of dollars to companies like Enron and I.B.M. while r= efusing to send New York money that that city has already been promised. It= is (whisper this word) unpatriotic. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Style Desk; Section 9 Dot-Com Is Dot-Gone, And the Dream With It By JOHN SCHWARTZ 11/25/2001 The New York Times Page 1, Column 2 c. 2001 New York Times Company MARK LEIBOVICH recalled the day in 1999 when he showed up early for an appo= intment at a Washington dot-com. Mr. Leibovich, a reporter for The Washingt= on Post, was there to interview the company's executives. ''I got there jus= t in time to see the C.E.O. himself wheeling a foosball table into the lobb= y'' to give the impression that the high-tech firm possessed the desired qu= antum of wackiness that its Silicon Valley counterparts are famous for.=20 That is so over, and so much more over, even, than before. The popular obse= ssion with the dot-com revolution, fading for more than a year, seems to ha= ve simply winked out since mid-September, as firemen and warriors have beco= me the new heroes, and e-commerce's whiz kids are consigned to the cultural= boneyard. Not much more than a year ago, boosters of the New Economy and their true b= elievers in the press were claiming to have changed all the rules. Not just= in tech-fetish magazines like Wired, but in self-styled cultural arbiters = like New York magazine, which declared the 1990's the ''e-Decade.'' In a 19= 99 cover story, the essayist Michael Wolff -- himself a failed dot-com exec= utive -- announced a brave new world. ''There is, at the elusive center of = the e-experience, the fantasy that we might become free of economic laws,''= he wrote. ''All it takes to make otherworldly riches is the will and desir= e.'' It wasn't enough to make money. They had to make history.=20 Now they themselves are history. Each day, the old idols seem to fade furth= er into the dim past, barely recollected in a country where the languages o= f ''revolution'' and ''warfare'' are no longer just business metaphors. Thi= s is the next step after the bursting of the dot-com economic bubble -- the= bursting of the cultural bubble, the end of the nerd as a crossover hit, o= f the I.P.O. zillionaire as role model to college students.=20 The changing of the guard can be seen in little things. Like Henry Blodget,= the industry analyst who became famous for predicting early that Amazon.co= m would reach $400 a share, announcing that he is taking a buyout and leavi= ng Merrill Lynch at the grand old age of 35.=20 Like the growing wave of books that focus not on the dot-com path to riches= but on the wild plunge into the abyss. Having failed to sell their dreams,= they are now attempting to sell their failure. A documentary of the rise a= nd fall of a Silicon Alley company was chronicled in ''Startup.Com'' by Seb= astian Nokes, released last winter. Books by former dot-com executives are = arriving in stores. Two of the first are ''A Very Public Offering: A Rebel'= s Story of Business Excess, Success, and Reckoning'' by Stephan Paternot, f= ounder of Theglobe.com, and ''Dot.bomb: My Days and Nights at an Internet G= oliath,'' by J. David Kuo. Another is coming soon: ''Boo Hoo,'' the chronic= le of the spectacular failure of Boo.com, the luxury fashion site that burn= ed through $185 million of its investors' cash and had an online life of ju= st six months, told by its profligate founders.=20 Did we mention that Mr. Blodget is writing a book?=20 For the most part, however, the flood of dot-com failure stories is being m= et with a national yawn. The tell-all books have bounced around the Amazon.= com rankings without making inroads into best-seller territory. And why not= ? Because former idols have feet of clay. In ''A Very Public Offering,'' a = book written as amateurishly as the company was run, did we need the image = of Mr. Paternot dancing the night away in plastic pants?=20 Ellen DeGeneres's new sitcom, ''The Ellen Show,'' is built around the notio= n of an executive returning to her hometown after the collapse of her dot-c= om, but the show sits at the miserable ranking of 93rd for the season -- be= hind ''Emeril,'' the celebrity chef comedy -- despite Ms. DeGeneres's own c= onsiderable appeal.=20 To Amitai Etzioni, a sociologist at George Washington University, the count= ry is experiencing an abrupt cultural shift away from the libertarian, indi= vidualistic values that were expressed in the celebration of the New Econom= y and toward more old-fashioned values in the wake of the terrorist attacks= , when government is not The Problem and people are not The Market. ''There= 's been a sea change,'' he said. The surge in charitable giving and blood d= onations after Sept. 11, he said, underscores ''the sense that you're willi= ng to give priority to the common good, to public safety and public health.= ''=20 Paulina Borsook, the author of ''Cyberselfish,'' a critical look at dot-com= values published last year, said: ''People really crave a reminder of huma= n bonds that have to do with sacrifice and fellowship and getting to know e= ach other over time. It's not about changing jobs every six months and gett= ing stock options.''=20 In the 90's, college students hoping to emulate Marc Andreessen of Netscape= and other geek stars migrated to Silicon Valley or New York's Silicon Alle= y with thin resumes and visions of Testarossas dancing in their heads. That= 's all changing, said Thomas T. Field, director of the Center for the Human= ities at the University of Maryland, Baltimore County. ''Many of the young = adults that I see coming to campus now say they want fulfilling jobs, not j= ust ways of earning money,'' he said. ''Sounds awfully familiar, when you c= ome from the 60's generation.''=20 Professor Field suggested that protests over globalism, and the sense of se= curity that flourished during the boom, made young people more willing to q= uestion the status quo and to take chances. During the I.P.O. frenzy, he sa= id, students could not wait to get out of school and begin earning. This ye= ar, many of his students have chosen to study abroad in China, Nepal, India= and Egypt.=20 The country is in dot-com denial, Ms. Borsook said, adding, ''No one wants = to admit that they were caught up in it,'' an attitude she calls ''I don't = want to think that I drank the Kool-Aid.''=20 Good riddance, said Thomas Frank, the author of ''One Market Under God: Ext= reme Capitalism, Market Populism and the End of Economic Democracy.'' The b= ook is a withering attack on the ideas underlying the selling of the New Ec= onomy, which he says co-opted hipness and the language of populism to serve= greed and gain. The book has come out in paperback with a new afterword. '= 'It's going to take some time for it to sink in,'' Mr. Frank said. ''The Do= w isn't going to go to 36,000, and the dot-coms aren't going to come back -= - and a lot of people lost a lot of money.''=20 Though dot-com executives might seem irrelevant these days, the technologie= s they sold, by and large, are not, pointed out Paul Saffo, an analyst at t= he Institute for the Future in Menlo Park, Calif. ''People haven't stopped = using the Internet,'' he said. ''The fact is that it is changing the world,= and it has changed the world.'' People now expect to be able to buy a book= or make an airline reservation in the middle of the night, ''and it's wash= ed into the rest of their lives.''=20 Kevin Kelly, who as a longtime editor of Wired magazine helped create the h= eroic ethos surrounding dot-com entrepreneurs, acknowledged ''it came tumbl= ing down with the towers.'' But Mr. Kelly insisted that these people would = rise again. The generation of tyro executives who crashed and burned ''got = better business education than they could if they had gotten a Harvard M.B.= A.,'' he said. ''They didn't set out to learn, but, boy, they are much smar= ter now.'' He predicts that the last decade has been the ''layup'' for a tr= ue cultural revolution to come -- he could not be specific, and his words m= ay strike many as more dot-com hyperbole.=20 It takes a special kind of gall for the same people who argued that the ''l= ong boom'' suspended the laws of economics, and even unraveled the cycles o= f history, to fall back now on analysis of historical cycles to support the= ir arguments.=20 But to believe any less goes against the American grain, argued Jason McCab= e Calacanis, the editor of the now-defunct Silicon Alley Reporter. The dot-= commer, seen today as a scam artist, will be reborn, he said, smarter and t= ougher, because he represents optimism itself. ''It's the belief that the f= uture -- the individual's future and the future of the economy -- are going= to be better in five years than they are today.''=20 But still. Take a look at the book ''Radical E'' by Glenn Rifkin and Joel K= urtzman, which offers ''Lessons on How to Rule the Web'' after the bust. It= extols companies that truly understand how to marry the World Wide Web to = business. ''After five tumultuous years of hype and hysteria,'' the authors= promise, ''the real advent of the Web and e-business is now.''=20 One of the book's chief examples of a company that does it right, Enron, ha= s been in the news a lot lately, though not because of astute exploitation = of e-commerce. No, Enron -- which trades energy via the Web -- has seen its= stock collapse 90 percent. Photos: The giants of e-commerce, who walked among us, are culturally extin= ct now with a war on. (Reuters)(pg. 1); NO SURE THING -- Ellen DeGeneres, l= eft, with Cloris Leachman, in a sitcom about a dot-commer who has moved bac= k home. The show ranks 93rd. (Monty Brinton/CBS)(pg. 4)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business; Financial Desk California Wary of Dynegy Bid to Buy Out Enron Energy: Both companies are p= rominent players in the state's power market. The move to combine their str= ength is raising some concerns. NANCY RIVERA BROOKS TIMES STAFF WRITER 11/25/2001 Los Angeles Times Home Edition C-1 Copyright 2001 / The Times Mirror Company Dynegy Inc. of Houston has been hailed as a hero on Wall Street, as it ride= s to deliver cross-town rival Enron Corp. from its self-inflicted ills and = save energy markets from serious distress through its proposed $9-billion b= uyout of the world's largest energy trader.=20 But in California, Dynegy has a different image. Dynegy, co-owner of several Southern California power plants, has been the = quietest member of the "Big Five" group of energy producers commonly portra= yed as villains by California politicians and regulators. Gov. Gray Davis a= nd others have called Dynegy and its fellow energy suppliers "gougers" and = "pirates" who manipulated the market and charged too much for electricity, = precipitating California's blackout-studded energy crisis.=20 Partly because of the heightened political sensitivities to all things surr= ounding California's energy problems, the state is expected to play a centr= al role in the proposed merger between Dynegy and Enron, antitrust experts = and others say. The state's Attorney General's office already has begun scr= utinizing the proposed combination.=20 If it merges with Enron, another favorite Davis target, Dynegy would be a p= owerhouse in energy trading, electricity generation and natural gas transmi= ssion. And the combined firm would have a strong presence in California, wh= ich some find troubling.=20 "I would hope that the people who look at the antitrust implications would = consider this one carefully," said state Sen. Steve Peace (D-El Cajon), one= of the architects of California's failed foray into electricity deregulati= on, who became a fierce critic of power producers and resellers. "If anythi= ng, Dynegy would be in an even stronger position to be able to manipulate m= arkets than it was before."=20 Dynegy agreed on Nov. 9 to buy Enron through a stock swap valued at about $= 9 billion and to inject $2.5 billion into crumbling Enron provided by cash-= rich ChevronTexaco Corp., the San Francisco-based oil company that owns nea= rly 27% of Dynegy. But a continuing trickle of disturbing financial disclos= ures keep slamming Enron's stock price, indicating that investors have thei= r doubts that the deal will be completed as negotiated.=20 The Enron purchase would hurl Dynegy, which is about a quarter of Enron's s= ize, into the top ranks of energy merchants.=20 In California's energy world, Dynegy already is a key company. At every sig= nificant twist in the state energy crisis, Dynegy was there, although not a= s visibly as some of the other power-plant owners and electricity resellers= .=20 Enron and Reliant Energy Inc., also of Houston, and Duke Energy Corp. of Ch= arlotte, N.C., drew particular fire from politicians and consumer advocates= during the last 18 months as energy leaped higher. But Dynegy also was acc= used by the state's grid operator of reaping excessive profit through its e= lectricity bidding practices and, to a lesser extent, by holding back some = electricity from its Southern California power plants.=20 In addition, Dynegy signed long-term electricity contracts with the state t= hat have been singled out by critics for containing potentially lucrative c= lauses requiring that the state pay emissions costs and other costs.=20 The California Independent System Operator, which runs the long-distance po= wer transmission grid serving much of the state, has asked federal regulato= rs to ban Dynegy from selling power at market prices. Cal-ISO has made the = same request concerning the other major power plant owners: Duke, Reliant, = Atlanta-based Mirant Inc. and AES Corp. of Arlington, Va., which markets it= s power through an agreement with Williams Cos. of Tulsa, Okla.=20 "Dynegy has sort of slid by under the radar," said Doug Heller of the Found= ation for Taxpayer & Consumer Rights, a consumer activist group.=20 "Not only did Dynegy do very well, but particularly its trading and marketi= ng division did very well over the course of the last two years. It profite= d wildly."=20 For its part, Dynegy rejects accusations of market manipulation, saying it = has played a constructive role in the California marketplace, stepping forw= ard to be one of the first companies to sign long-term contracts with the s= tate when its need was greatest despite an electricity debt of $300 million= owed the company by the state and its utilities.=20 "Dynegy has acted ethically and responsibly in California," said Dynegy spo= kesman John Sousa. "The fundamental problem in California is that supply di= d not keep up with demand."=20 "Dynamic Energy"=20 Accused of Overcharging=20 Dynegy was created in 1984 as a natural gas trading operation known as Natu= ral Gas Clearinghouse to take advantage of the deregulation of natural gas = prices. Under Chief Executive Chuck Watson, the company has expanded into n= atural gas processing and distribution and electricity generation, changing= its name along the way to Dynegy, a word created by combining "dynamic" an= d "energy."=20 In California, Dynegy owns power plants capable of generating 2,800 megawat= ts of electricity through a partnership with NRG Energy Inc. of Minneapolis= . (A megawatt can supply about 750 average homes with electricity.)=20 The state's big investor-owned utilities were required to sell some of thei= r power plants by the landmark 1996 deregulation legislation. By the end of= 1998, the Dynegy/NRG partnership had purchased three large power plants in= Long Beach, El Segundo and San Diego and a collection of 17 small "peaker"= plants from Southern California Edison Co. and San Diego Gas & Electric Co= .=20 Under the arrangement between the partnership, NRG operates the power plant= s and Dynegy markets the electricity from them. It is Dynegy's bidding prac= tices in selling that power into state markets that put it, along with othe= r energy producers, on the wrong side of the state grid operator and federa= l energy regulators.=20 Among the allegations:=20 * In a report released in March, Cal-ISO accused energy producers and resel= lers, including Dynegy, of overcharging Californians by $6.7 billion betwee= n May 2000 and March 2001. Power suppliers have denied the allegations. The= report also found that Dynegy reaped about $32 million in "monopoly rents"= between May and November of last year, or profits beyond what a competitiv= e market would bear. That was the fourth-highest total for any company note= d in the report. Enron was ranked sixth, taking $27.9 million in such profi= ts.=20 * Cal-ISO said Dynegy maximized profits primarily through a practice known = as "economic withholding," or bidding electricity at prices so high that th= ey would be rejected, thereby pushing up the price charged for the remainin= g generation sold into the market. Dynegy also did some "physical withholdi= ng," Cal-ISO said, meaning that the company withheld electricity supplies t= o drive up the price.=20 * Dynegy was accused last April in hearings before state legislators of hoa= rding space on a key natural gas pipeline into California in 1998 and 1999,= causing natural gas prices to soar. Dynegy executives testified that the c= harge was untrue.=20 * When federal regulators ordered $125 million in potential refunds for the= first four months of the year, Dynegy's portion was the largest among the = power sellers named, representing slightly more than one third. Dynegy said= its prices were justified by high natural gas prices, emissions costs and = other factors.=20 Dynegy President Stephen Bergstrom said in April that the company was "unfa= irly and inaccurately accused of withholding power from the California mark= et."=20 "As we have repeatedly communicated to California policymakers and regulato= rs and to industry officials, we remain ready and willing to generate and s= ell power to any and all buyers at fair and reasonable prices when they are= able to provide appropriate assurances that they will fulfill their obliga= tion to pay for those purchases."=20 A recent report by the state Department of Water Resources backs up Dynegy'= s assertions that its prices have been in line with the rest of the market.= =20 During the first three months of this year, after sky-high prices pushed Ed= ison and PG&E so close to insolvency that the state had to step in and buy = power for their customers, Dynegy sold power to the DWR at an average price= of $239.63 per megawatt-hour for electricity. That was slightly below the = average of $268.90 per megawatt-hour charged by all sellers.=20 Dynegy portrays itself as a minor player in the California market, represen= ting about 4% of the state's generation.=20 But Cal-ISO, in asking federal regulators to revoke Dynegy's authority to s= ell power at market rates, said "Dynegy has profited systematically from th= e exercise of market power to the significant harm of California's electric= consumers and economy." A decision is pending.=20 Officials reviewing the Dynegy-Enron merger will closely review the compani= es' operations in California.=20 Although Enron owns no power plants in California, it is believed to have l= ong-term contracts with some generators, although spokesman Eric Thode refu= sed to detail them.=20 In addition, Enron has a hand in 25% of the energy trades around the nation= , with a significant portion of that in California. Thode would not detail = California operations, citing company policy.=20 Finally, Enron controls an undetermined amount of natural gas, which is use= d to generate about one-third of the state's electricity, through its trans= western pipeline, which crosses into California, and through natural gas ma= rketing and trading arrangements.=20 It is those largely unregulated energy trading operations that have many en= ergy watchdogs worried. They say that middlemen such as Enron and Dynegy ca= n drive up the price of power by reselling it at higher prices each time.= =20 A lawsuit filed in May against the Big Five generators by Lt. Gov. Cruz Bus= tamante, acting as a private citizen, described it this way: "The Dynegy tr= ading floor, working with the trading floors operated by Williams, Mirant, = Reliant and Duke Energy is one of the principal tools the defendants used t= o inflate the price of electricity within their respective markets, as well= as throughout the state of California."=20 "These defendants engaged in trading of electricity futures, forwards, opti= ons and other risk products that had the effect of manipulating and inflati= ng the price of electricity within their respective markets," the suit char= ged.=20 "These defendants engaged in 'megawatt laundering,' in which they made trad= es with the primary purpose of inflating the costs of electricity within th= eir respective markets."=20 State Is Examining Proposed Merger=20 California Atty. Gen. Bill Lockyer has begun examining what effects such a = merger would have on California, spokeswoman Sandra Michioku said. The Fede= ral Trade Commission and the Federal Energy Regulatory Commission also will= scrutinize the merger in a process that Dynegy and Enron expect will take = no more than nine months.=20 Senate Energy Committee Chairwoman Debra Bowen (D-Marina del Rey) said she = plans to urge FERC to look beyond traditional measurements of how much the = companies own in the market to examine "inputs" into the market such as gas= pipeline capacity controlled by the companies and gas trading by Dynegy an= d Enron.=20 "It really raises many questions about how the market works," Bowen said.= =20 Opposition by California could be a severe hindrance to the merger, said Ga= rret Rasmussen, a lawyer with Patton Boggs in Washington, D.C., and formerl= y a Federal Trade Commission antitrust investigator.=20 The state, if it chooses, could play as pivotal a role as it has in negotia= tions over the antitrust settlement between the federal government and Micr= osoft Corp., he said.=20 "While this administration has been quite tolerant of mergers ... an action= by the California attorney general could have a significant chance of succ= ess," Rasmussen said.=20 Merger Might Reopen Contract Negotiation=20 The proposed merger might give California leverage to renegotiate its power= contract with Dynegy, which contains the unusual provision that the state = would pay for any emission costs that the company incurred, said V. John Wh= ite, director of the Center for Energy Efficiency & Renewable Technologies = in Sacramento. Dynegy's large San Diego plant lacks crucial pollution contr= ol equipment, he said.=20 "The California attorney general needs to carefully examine Dynegy's enviro= nmental stewardship activities and renegotiate that provision in the long-t= erm contract," White said. "Dynegy has a Texas, the-least-we-can-do attitud= e as far as the environment is concerned."=20 David Freemen, the former Los Angeles Department of Water & Power general m= anager who helped negotiate Dynegy's and other long-term contracts, said th= at while opportunities to renegotiate may present themselves, the agreement= s, now maligned as too expensive, were key to stabilizing the electricity m= arket. Freeman praised Dynegy for its part in that process.=20 "There's a difference between companies that bargained hard with us and rea= ched agreement--like Dynegy, Calpine and Williams--and those that were reac= hing for the moon and we didn't reach agreement," Freeman said. "Dynegy kne= w that they wanted to do business in California, and do it in a businesslik= e manner." PHOTO: Enron chairman and chief executive Kenneth Lay, left, and to Chuck W= atson, chairman and chief executive of Dynegy, announce the companies' prop= osed merger during a news conference in Houston.; ; PHOTOGRAPHER: Associate= d Press=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business; Financial Desk JAMES FLANAGAN Enron's Troubles Could Spur Securities Reforms James Flanigan 11/25/2001 Los Angeles Times Home Edition C-1 Copyright 2001 / The Times Mirror Company Ultimately, the fall of Enron Corp., the onetime rising star of the energy = industry, may be remembered as a landmark in the annals of securities law a= nd shareholder rights.=20 The firm's practices are under investigation by the Securities and Exchange= Commission. Enron is the focus of numerous shareholder lawsuits that seek = to recover damages from the $60-billion plunge in the company's value in th= e last year. The Enron case could result in new securities laws, experts say. It also co= uld result in massive damage awards because of the extent of stockholder lo= sses. Shares sold at more than $84 apiece a year ago, and at $36 a month ag= o before the emergence of hidden losses sent the price reeling downward to = current levels below $5 a share. (The stock closed Friday at $4.71 on the N= ew York Stock Exchange.)=20 Significantly, two suits against Enron charge that the firm's top executive= s breached their fiduciary duty of loyalty and prudence by failing to infor= m Enron employees of dangers to the company's finances while those employee= s held Enron stock in their 401(k) retirement plans.=20 The firm's troubles raise fundamental questions of what a company owes shar= eholders in the management and understandable disclosure of its accounts.= =20 But Enron's predicament also goes to the heart of the U.S. financial system= , says former SEC Chairman Arthur Levitt. Enron "represents a lack of the k= ind of disclosure that is fundamental to maintaining confidence in U.S. pub= lic markets," Levitt says.=20 Enron, technically speaking, disclosed in annual reports and proxy statemen= ts for 1999 and 2000 the existence of partnerships that in some cases "acqu= ired debt and certain equity securities of certain Enron subsidiaries." But= it did not disclose the significance of the partnerships, nor did it conso= lidate their transactions in its reports to shareholders and the SEC.=20 Its references to the partnerships were in footnotes to financial statement= s, written in the arcane legal language typical of such documents. For exam= ple, disclosure of one partnership, LJM Cayman, read in part: "LJM received= 6.8 million shares of Enron common stock, subject to certain restrictions = and Enron received a note receivable and certain financial instruments hedg= ing an investment held by Enron."=20 Enron entered into at least 33 partnerships, attracting investments from pe= nsion funds and other investors in return for pledges of Enron stock at a g= uaranteed value. One partnership held 12 million Enron shares, which at one= point were worth more than $1 billion.=20 Yet until this year, Enron treated the partnerships as insignificant to its= overall business, and so they were not required to be included in its over= all accounts.=20 By treating its partnerships as non-consolidated subsidiaries, Enron could = report lower debt burdens than it actually had, thus strengthening its cred= it and enabling itself to grow into the largest energy trader in the world.= =20 Enron became a pioneer of energy trading, a way of using financial techniqu= es of trading forward commitments in natural gas and electricity to establi= sh future prices on long-term supply contracts. As the business boomed, Enr= on's revenue soared, from $20 billion in 1997 to $100 billion in 2000. Thro= ugh three quarters of this year, the firm was on course to exceed $200 bill= ion in revenue.=20 But in October, Enron announced that it had lost more than $600 million in = the third quarter and that it needed to reduce shareholder equity by more t= han $1 billion due to transactions with one of its partnerships.=20 Then on Nov. 8, Enron restated its accounts back to 1997, acknowledging tha= t some of its partnerships should have been included in company accounts al= l along. The restatement resulted in a reduction of reported profit by more= than $500 million. Enron's board of directors and auditors had ordered the= restatement, the firm said.=20 The stock price fell further, lawsuits ensued and Enron sought refuge in a = merger with Dynegy Inc. Enron's financial position and stock price have wea= kened since the merger announcement Nov. 9., so the Dynegy deal may go thro= ugh at a reduced price, says analyst Stanley Foster Reed, who runs MergerCe= ntral.com, an online information service.=20 But the question remains of how such a large, significant company could col= lapse with so little advance notice.=20 Enron was a prominent company, not least because of Chairman Kenneth Lay's = connections to the White House as formal energy advisor to the first Bush a= dministration and as informal advisor to the current Bush administration.= =20 The firm had more than 20,000 employees before recent layoffs, and it had m= illions of investors through the holdings of pension funds such as the Cali= fornia Public Employees' Retirement System, the college teachers retirement= plan TIAA-CREF and major mutual funds. Yet for all its prominence, Enron's= disclosures about its business were inadequate. "Disclosure" sounds like a= technical term, but it is the principle behind the laws passed in 1933 and= subsequent years to regulate securities markets and protect the public.=20 Companies issuing stock to raise financing from public investors are requir= ed to disclose accurate and complete information about their business and t= o have accounts certified by independent public accounting firms. The SEC, = created in 1933, could not stop a company from issuing stock, but it could = make it disclose all relevant facts about risks in its business.=20 The laws were written in the midst of the Great Depression, which followed = the 1929 stock market crash. They were designed to remedy abuses such as th= e case of Charles Mitchell, head of City National Bank (a predecessor firm = of today's Citgroup), who sold his own company's shares short--that is, he = bet on their price declining--just before the crash, without informing othe= r shareholders. Before securities laws, Mitchell had no legal requirement t= o disclose his activities; once the laws were passed, all top managers and = directors of public companies had such legal, fiduciary duty.=20 The Enron case probably will lead to new laws regulating investments in sub= sidiaries, experts say. The SEC staff has contemplated such regulations in = the past but never made them law.=20 And the fallout from Enron could lead to tighter restrictions on firms putt= ing their stock in employee retirement accounts. Also, it could lead to tig= hter regulations on statements by top managers on the condition of the busi= ness.=20 "This will be a case, with major issues of concealment from shareholders," = says San Francisco attorney Steven Siderman, who is preparing a class-actio= n lawsuit against Enron and Arthur Andersen, Enron's accounting firm.=20 Enron executives gave no indication of the company's troubles as late as Au= gust, when Jeffrey Skilling, president and chief executive for only six mon= ths, abruptly resigned. In response to questions of trouble in the company,= Skilling said, "There's nothing to disclose. The company's in great shape.= "=20 Lay, who stepped back into the top post, told employees in August that Enro= n's business was strong. "We've got a lot of great stuff going on and we're= not getting credit for it in the marketplace, but we will," Lay said.=20 However, both Lay and Skilling had been selling Enron stock for more than a= year at that point, Lay cashing out more than $140 million in stock option= s and Skilling more than $60 million in options.=20 Meanwhile, employee 401(k) accounts, heavily laden with Enron stock, were f= rozen this year because the firm changed account managers. Employees were s= tuck as the stock plummeted.=20 The principle behind securities laws is that management of a public company= , with so many employees, pensioners and other institutions depending on it= , is a public trust.=20 The charge in the lawsuits being filed against Enron is that the firm, its = executives and directors betrayed that trust.=20 Everyone is entitled to a fair trial, and Enron and its executives will sur= ely have many days in court in the months and years to come in which to def= end against the charge of betrayal of shareholders and employees.=20 The Enron case will be a landmark.=20 *=20 James Flanigan can be reached at jim.flanigan@latimes.com. GRAPHIC: Restated and Mostly Reduced, Los Angeles Times;=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Says It's Still in Talks With Possible Investors for Cash 2001-11-25 17:36 (New York) Enron Says It's Still in Talks With Possible Investors for Cash Houston, Nov. 25 (Bloomberg) -- Enron Corp. said talks are continuing with potential investors for an infusion of as much as $1 billion, as the biggest energy trader tries to avoid a collapse of its planned purchase by Dynegy Inc. An investment would ease concern that Enron's weakened finances may prompt Dynegy to pull out of or renegotiate the terms of the transaction, which is valued at $23 billion in stock and assumed debt. Enron is seeking an additional $500 million to $1 billion in cash but wouldn't divulge details. ``We are not going to discuss the particulars of who we are talking to,'' said Enron spokeswoman Karen Denne. Shares of the Houston company fell by 48 percent in the past three trading sessions. At Friday's closing price of $4.71, the stock sells for less than half the $10.85 that Dynegy is slated to pay in the acquisition. That's a sign investors are skeptical the transaction will go through as planned. Enron is likely to have approached Kohlberg, Kravis Roberts & Co., the Blackstone Group and the Carlyle Group for a private equity investment, said industry analyst David Snow of PrivateEquityCentral.Net. The firms have declined to comment. On a conference call Nov. 14 Enron Chief Financial Officer Jeffrey McMahon said the company is in talks with several private investors and expects to receive $500 million to $1 billion from these sources. On Wednesday, Enron got a three-week reprieve from lenders on a $690 million note due this week, giving the company more time to restructure its finances. Dynegy Chief Executive Chuck Watson said he was ``encouraged'' by the commitment to extend the note payment, as well as the closing of a $450 million credit facility. He said Dynegy remained committed to the purchase. Enron already received $1.5 billion in cash Nov. 13 from ChevronTexaco Inc. as part of the Dynegy buyout agreement. In return, Dynegy will acquire preferred stock and other rights in an Enron unit that owns the Northern Natural Gas pipeline. Barron's reported over the weekend that Dynegy may have a difficult time walking away from the deal because its right to the pipeline might be challenged by J.P. Morgan Chase & Co. and Salomon Smith Barney Inc., who accepted the asset as collateral for $1 billion in loans to Enron. Dynegy spokesman John Sousa declined to comment on Enron's attempts to secure financing or whether more cash for Enron is a condition of keeping the merger alive. Enron's dealings with affiliated partnerships have led to a federal investigation of the company, which restated its earnings and saw its credit ratings cut. The company said in a Securities and Exchange filing a week ago that it has less than $2 billion in cash and credit lines left. --Mark Johnson in the Princeton newsroom (609) 750-4662 Business; Financial Desk Enron Money Woes Raise Concerns 11/25/2001 Los Angeles Times Home Edition C-5 Copyright 2001 / The Times Mirror Company How fitting that the sanctimonious Kenneth Lay, who arrogantly lectured Cal= ifornia's electricity consumers this past spring on the "realities" of the = deregulated 21st-century energy environment, has seen his company fall prey= to that very same arrogance ["A Visionary Fallen From Grace," James Flanig= an, Nov. 10].=20 While Californians allow themselves a wry smile over such news, the U.S. Ju= stice Department should be building a case to "escort" Lay and his cohort J= effrey Skilling to a prison cell for pocketing some $200 million from conve= rting stock options at prices vastly over-inflated by their "cooking the bo= oks" at Enron over the last five years. Noel Johnson=20 Glendale=20 *=20 California taxpayers are out of billions of dollars due to a failed concept= that deregulating the electric industry would save us money by bringing us= the "benefits" of a free market managed by private enterprise.=20 Enron, one of the free market energy companies which we were supposed to de= pend on to give us electricity at a reasonable cost, has apparently just "l= ost" $1.2 billion in equity along with an "unexpected" loss of $618 million= ["Enron in Takeover Talks With Dynegy," Nov. 8]. The implications are clea= r--Californians have been gouged and one of the companies receiving the new= found wealth has amazingly "lost" it.=20 Clearly, private industry is not the panacea. How about going back to a reg= ulated monopoly?=20 Stephen Rynas=20 Duarte Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Financial Hooked On a Fast- Growth Habit; CEOs Reach for Double-Digit Results Despite= Downturn, and Some Are Making Costly Mistakes Steven Pearlstein Washington Post Staff Writer 11/25/2001 The Washington Post FINAL H01 Copyright 2001, The Washington Post Co. All Rights Reserved At this point, they almost can't help themselves -- it's become an addictio= n for the top executives of Corporate America.=20 Delivering double-digit earnings growth year after year is no longer simply= what corporate re-engineers call a "stretch goal" for an organization, or = a rare achievement to be celebrated. It's become a mandate, a benchmark, a = test of corporate manhood, an expectation hard-wired into the corporate cul= ture -- a narcotic that company leaders reach for the way most people reach= for an aspirin. Never mind that the economy is contracting, or that prices are falling and = profit margins are getting squeezed, or that most industries are unlikely t= o grow more than 5 percent a year even after the recovery is here. The name= of the game these days is boosting the stock price, and the surest way to = do that is to promise -- and deliver -- double-digit profit growth to Wall = Street's cadre of analysts and money managers.=20 It's not just in the tech and telecom sectors, where the inflated growth ex= pectations first took root. The addiction to double-digit growth has spread= across the corporate landscape to firms in older, mature industries desper= ate for the "growth company" moniker that qualifies them for Wall Street's = highest reward: a stock price equal to 20, 30, even 40 times their expected= annual earnings.=20 In the 1990s, "we went through a period of extraordinary high growth in pro= fitability, and both managers and stock analysts have unthinkingly come to = the conclusion that that was the norm," said Michael Jensen, a professor of= finance at the Harvard Business School. "Top-level management came to beli= eve they could get a big company to grow 20, 30, 40 percent year after year= -- it was insanity. And in the process of trying to make that real, rather= than acknowledging it was a transitory phenomenon, more than a few wound u= p destroying shareholder value rather than enhancing it."=20 Jensen said that it is now common for Wall Street earnings expectations to = be the starting point for corporate budgeting and strategy-setting rather t= han the result of it. "Nothing could be more irresponsible," he said.=20 James Paulsen, chief investment strategist at Wells Capital Management in M= inneapolis, says this fascination with high growth rates peaked in 1999, at= the height of the stock market boom, when only 50 stocks in the Standard &= Poor's 500-stock index -- the hottest 50 growth companies -- actually went= up in value. In fact, these nifty 50 went up so much so that they lifted t= he overall market indexes with them. The other 450 stocks declined.=20 "At that point, investors were only paying for growth," Paulsen said. "Divi= dends, good cash flow, reliability -- they all meant nothing."=20 "If you were just growing at a stodgy 8 or 9 percent a year, you were negle= cted, ignored," said Jeremy Siegel, finance professor at the Wharton School= of Management at the University of Pennsylvania. "You couldn't get good va= luations."=20 In desperation, boring old electric utilities refashioned themselves into "= merchant energy companies," while highly profitable pork producers added ne= w product lines in order to be viewed as ready-to-eat food companies. And p= erfectly good retail companies threw millions of dollars into misguided Web= ventures.=20 With the dot-com bust and the broader stock market collapse over the past y= ear, many executives, investors and analysts claim to have learned their le= sson and reduced expectations for growth. But according to Siegel, Paulsen = and other experts, expectations remain unreasonably high by historical stan= dards. Many of those executives, investors and analysts believe business to= be in a temporary lull before the "norm" of double-digit growth reasserts = itself sometime next year.=20 "Most people's expectations are still way too optimistic," said Bill Miller= , the legendary manager of Legg Mason's Value Trust, a $12 billion mutual f= und.=20 David Nadler, chairman of Mercer Delta Consulting, says this "tyranny of gr= owth" continues to lead too many companies to expand too quickly, make ill-= advised acquisitions or diversify out of their areas of expertise. "The exp= erience on that is that their shareholders wind up paying dearly for those = mistakes," he said.=20 Indeed, many of the celebrated corporate crackups of the past year -- think= of Conseco Inc.'s costly foray into manufactured-home financing, Providian= Financial Corp.'s debacle with sub-prime credit card lending, Freightliner= LLC's truck glut and the record $50 billion write-off of acquisition costs= by JDS Uniphase Corp. -- came about as a result of companies trying to pus= h earnings growth to the limit.=20 Corporate executives certainly have plenty of incentive to play the growth = game, whether consciously or unconsciously. Most have multimillion-dollar c= ompensation packages that include bonuses, stock and stock options, all tie= d directly to growth in earnings and share price. And a rising stock price = gives them a valuable new currency -- currency that can be used to buy shor= t-term earnings growth through mergers and acquisitions and to offer valuab= le stock options when recruiting top management and technical talent.=20 The stock option has a particularly pernicious impact, according to David M= orrison, vice chairman of Mercer Management Consulting Inc. and co-author o= f "The Profit Zone." Options become more valuable as the price of the compa= ny stock rises above the point at which the options are issued. On the othe= r hand, if things go bad, it doesn't matter how much the price of the stock= goes below the "strike price" -- the value remains zero. As a result of th= is asymmetry between upside potential and downside risk, says Morrison, it = is common for executives to take bigger risks with their companies than the= y otherwise would have.=20 Ego also plays a role. Chief executives who deliver year after year of doub= le-digit earnings growth wind up being lionized in business books, on magaz= ine covers and on cable-TV news shows. They are invited to serve on other c= orporate boards and to speak at investor conferences organized by celebrity= analysts. Their boards of directors give them wide latitude in running the= company.=20 By contrast, CEOs who don't have a good growth story to tell, or can't deli= ver on it, risk finding themselves in early retirement.=20 Jeff Garten, dean of the Yale School of Management, recently interviewed 40= of the leading corporate chief executives for a new book, "The Mind of the= CEO." And more often than not, Garten said, the executives told him off th= e record that while they knew the expectations about earnings growth are of= ten unreasonable and unsustainable, they had no choice but to participate, = or risk being dismissed as someone who simply "doesn't get it."=20 "The system penalized anyone who didn't play the game," Garten said. As a r= esult, executives find themselves on a treadmill -- always in a desperate s= earch for ways to deliver the next increment of growth that will justify th= e unrealistic earnings expectations in which they themselves were complicit= .=20 Analyst William Steele said he has seen it time and again in the consumer p= roducts sector that he follows for Bank of America Securities Inc., as comp= anies that had always been "solid singles hitters" suddenly started swingin= g for the fences.=20 "What you've seen is companies making ill-advised acquisitions, abusing the= ir balance sheets [by taking on too much debt or issuing too much stock] an= d under-investing in their brands," said Steele.=20 Take the case of Freeport, Ill.-based Newell Co., which for more than 30 ye= ars had enjoyed steady earnings growth by buying up underperforming housewa= res companies and "Newellizing" them -- bringing in new management, cutting= costs, scrapping unprofitable products, consolidating distribution and win= ning more space on retail shelves. But by the late 1990s, after 75 acquisit= ions that included Calphalon cookware, Levelor window blinds and Rolodex ca= rd files, the number of good turnaround prospects had dwindled. And with gr= owth in sales of consumer products slowing to single digits, Newell executi= ves needed something that would keep them in double-digit territory.=20 That something, they thought, was Rubbermaid, for years one of the most res= pected companies among executives and investors, but one that had stumbled = badly beginning in 1996. It was far and away Newell's biggest acquisition, = bought with newly issued Newell stock valued at $5.8 billion, a 50 percent = premium over Rubbermaid's market price at the time.=20 The Rubbermaid deal closed in the spring of 1999, and Newell Rubbermaid's f= inancial performance has declined ever since, a reflection not only of the = slowing economy but of problems within the company itself. Total profits fo= r the combined firm are barely higher than they were before the acquisition= , and because of the debt taken on and new shares issued to finance the pur= chase, the best measures of financial performance -- earnings per share and= return on assets -- have both declined. After the company repeatedly faile= d to meet the quarterly sales and growth target it had promised Wall Street= , chief executive John J. McDonough was fired in October of last year.=20 Given that history, the current economic uncertainty and continued weakness= in quarterly earnings, one might think that Newell's new executive team wo= uld steer clear of making grand promises to Wall Street. But in June, after= barely six months on the job, the new chief executive, Joseph Galli Jr., t= old Wall Street analysts that a restructuring program he had instituted wou= ld allow the company to post a 15 percent earnings increase in 2002. At $26= , analysts say the stock price now reflects an expectation that Newell Rubb= ermaid will meet this double-digit growth target.=20 In an interview last week, William T. Alldredge, Newell's chief financial o= fficer, explained that the 15 percent growth target for next year was reaso= nable because the company's profits this year, against which next year's wi= ll be compared, are so depressed. Going forward, however, he acknowledged t= hat growth rates would be closer to 10 percent than 15 percent, and they wo= uld come from squeezing more profit out of existing brands rather than thro= ugh acquisitions.=20 "I'm not sure we see the enormous upside potential that we once did," said = Alldredge, who insisted, nonetheless, that Wall Street should continue to v= alue Newell Rubbermaid as a "growth company."=20 To this day, "old-fashioned" chief executives such as Warren Buffett remain= puzzled as to why executives still can't resist the urge to promise invest= ors any particular level of earnings growth, given all the uncertainties of= running a business. In the annual report to shareholders of his Berkshire = Hathaway Inc. in February, he noted that only a handful of companies have e= ver been able to sustain 15 percent earnings growth for more than a decade.= Such promises, he said, not only spread "unwarranted optimism" among inves= tors, he said, but "corrode" behavior by top executives -- in some cases be= havior so corrosive that it spills over into deceptive accounting. As it tu= rns out, the chief executives of Sunbeam, Xerox, Waste Management and Enron= all lost their jobs in recent years after major-league earnings overstatem= ents were uncovered during their watch.=20 (Buffett's Berkshire Hathaway is a significant investor in The Washington P= ost Co., which, like Berkshire, provides no earnings guidance to Wall Stree= t investors.)=20 James Johnson, the former chairman of Fannie Mae, has heard all these criti= cisms, and can even add a few of his own. But he said that for every compan= y that overpromised and overreached, there were others where the focus on e= arnings growth has led to breakthrough innovations, successful new corporat= e strategies and big gains in productivity.=20 "It's what makes American capitalism so unique -- and so successful," said = Johnson, whose ability to deliver on a promise of double-digit earnings gro= wth in every year but one led to a dramatic increase in Fannie Mae's stock = price during his tenure. It also made Johnson a very rich man.=20 "It's a tricky balance," said David Winters, president and chief investment= officer of Mutual Series Fund Inc., a New Jersey-based mutual fund. "You d= on't want companies to be sleepy, or set the bar so low that they can easil= y step over it. But you don't want companies that overpromise and underdeli= ver."=20 Certainly no chief executive took the goal of posting double-digit earnings= growth each year more seriously than John F. Welch Jr., who recently retir= ed as chairman of General Electric Co. On Jack Welch's watch, division mana= gers who failed to contribute to the corporate goal were routinely fired or= had their divisions sold off. And critics have charged that the unrelentin= g pressure led, on occasion, to accounting gimmicks and questionable busine= ss practices -- a charge Welch repeatedly denied.=20 Yet according to Noel Tichy, a professor at the University of Michigan Busi= ness School, it was the demand for double-digit earnings growth year after = year that forced managers of GE's old-line manufacturing divisions to get i= nto the growing and profitable business of servicing and financing the turb= ines and medical equipment they made.=20 "I don't know when it would ever be the right decision not to try to grow f= ast," said Tichy, co-author of a book titled "Every Business Is a Growth Bu= siness." And even while acknowledging that companies have been known to do = dumb things in the pursuit of earnings growth, the good ones don't.=20 "If you don't have goals that force executives to stretch themselves and th= eir organization, you don't optimize performance," Tichy said.=20 Business guru James Collins disagrees. In a new book, "Good to Great," Coll= ins argues that the companies that sustain really high growth rates over lo= ng periods of time are those that don't set growth as an explicit goal. Rat= her, Collins says, the best companies operate less out of some corporate br= avado than a determination to understand their business and their success a= nd to capitalize on that understanding.=20 "Great companies don't come about because the CEO wants to be a celebrity o= r please the share-flippers, and certainly not because he or she wants to h= it the top targets on the compensation plan," Collins said last week. "The = common thread among the CEOs of the truly great companies is that their amb= ition is to build something that can outlast themselves. The growth comes a= s a byproduct of that."=20 Harvard's Jensen said that the only way to lick Corporate America's growth = addiction is for more executives to muster the courage to stand up to Wall = Street and begin setting realistic expectations for their companies. Such a= strategy might occasionally require a CEO to tell investors that his compa= ny's stock is overvalued -- a truly novel idea in today's environment, wher= e executives almost reflexively complain that their share price is too low.= And it might require executives at some companies to make clear that their= stock may be inappropriate for growth funds and hedge-fund managers.=20 "Companies generally get the shareholders they deserve," said Miller, Legg = Mason's money manager.=20 But Norman Augustine, the retired chairman of Lockheed Martin Corp., warns = that "standing up to Wall Street" may not be as easy as it sounds.=20 "We all sit around complaining about the short-term mentality on Wall Stree= t and the fund managers who say they'll dump our stocks if we don't show do= uble-digit earnings growth every quarter," Augustine said. "And then the ma= nager of our own corporate pension fund comes in and says, 'We have two fun= ds that didn't do well for us this quarter, so I dumped them.'=20 "And there it is," Augustine said. "We have met the enemy, and it is us!" http://www.washingtonpost.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron employees sue as pension savings evaporate. By Andrew Kelly 11/25/2001 Reuters English News Service (C) Reuters Limited 2001. HOUSTON, Nov 25 (Reuters) - After climbing utility poles in all kinds of we= ather for 35 years, Roy Rinard was hoping to retire in a few years, but tha= t was before the collapse in Enron Corp.'s stock price devoured his retirem= ent savings.=20 "I'm basically wiped out," said Rinard, 54, who works for Portland General = Electric, an Oregon utility company acquired by the Houston-based energy tr= ading giant in 1997. "I'm right back to ground zero and I'll have to go on working as long as I = can," said Rinard, who suffers from arthritis and a lung condition that lea= ves him short of breath.=20 Encouraged by Enron's then-strong performance and the company's bullish vie= w of its future prospects, Rinard moved all of the money invested in his 40= 1(k) retirement account into Enron stock earlier this year.=20 But it proved to be a costly decision as the value of his account fell from= $470,000 a year ago to around $40,000 today.=20 Rinard now hopes a lawsuit filed in U.S. District Court in Houston will rec= over at least some of his money.=20 The suit, filed on behalf of Enron employees by Seattle-based law firm Hage= ns Berman, alleges that Enron breached its fiduciary duty by encouraging it= s employees to invest heavily in Enron stock without warning them of the ri= sks of doing so.=20 Enron's stock, which peaked at $90 in August 2000, closed at $4.74 on Frida= y, after falling sharply in recent weeks amid a series of damaging financia= l disclosures.=20 A broadly similar suit filed by the Keller Rohrback law firm, also Seattle = based, alleges that another Enron employee, Pamela Tittle, lost $140,000 on= Enron stock held in her retirement account.=20 According to that suit, the Enron retirement savings plan had assets worth = $2.1 billion at the end of last year, including $1.3 billion, or 62 percent= of the total, in Enron stock.=20 DOUBTS EMERGE ABOUT DYNEGY DEAL=20 Enron, a former Wall Street favorite, agreed to be bought out earlier this = month by smaller energy trading rival Dynegy Inc., but continuing problems = at Enron have caused some analysts to question whether the deal will be com= pleted.=20 Doubts have also been expressed about a planned sale of Portland General to= Northwest Natural Gas .=20 Hagens Berman plans to seek class-action status for its suit and says 21,00= 0 Enron employees could be eligible to join it.=20 The suit alleges that Enron "locked down" 401(k) retirement accounts on Oct= . 17, preventing employees from changing the investments they held in their= accounts until Nov. 19.=20 During that period Enron reported its first quarterly loss in four years an= d took a charge of $1.2 billion against stockholders' equity as a result of= off-balance-sheet deals that would later come under investigation by U.S. = regulators.=20 In that time, Enron shares fell from $30.72 at the close of trading Oct. 16= to $11.69 on Nov. 19.=20 Enron spokeswoman Karen Denne said employees' access to the accounts was bl= ocked as part of a previously planned change in the administration of the r= etirement plan and that the measure was in effect from Oct. 26. to Nov. 19.= =20 Steve Lacey, a 45-year-old emergency repair dispatcher who has worked for P= ortland General Electric for 21 years, said the measure came at a time when= bad news about Enron was flying thick and fast, driving the stock price do= wn at a dizzying pace.=20 "We couldn't take our money out of Enron stock into another portfolio. Basi= cally they had us locked down to where we had no say over our own future," = he said.=20 Lacey declined to quantify his own losses but said he and many of his colle= agues had invested most of their retirement funds in Enron stock because it= had performed better in the past than the other investments available unde= r the Enron plan.=20 Denne said Enron employees were normally able to choose among 18 different = investment options, but Enron's matching contributions were always made in = the form of its own stock.=20 Lacey said he felt sorry for older colleagues at Portland General who had s= uffered a heavy financial blow just before they were due to retire, adding = that he was only beginning to realize how serious the consequences could be= for himself.=20 "My goal was to have an extremely comfortable retirement and that may be a = little clouded now," he said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 INDIA PRESS: Aditya Birla May Buy Enron's Dabhol Stake 11/25/2001 Dow Jones International News (Copyright (c) 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- India's Aditya Birla group is considering acquiring= Enron Corp.'s (ENE) stake in Dabhol Power Co., reports the Economic Times.= =20 Dabhol is a 2,184-megawatt joint venture power plant located in the western= Indian state of Maharashtra. It is a unit of U.S.-based energy company Enr= on. The newspaper says the group is exploring the possibility of submitting an = expression of interest with Indian financial institutions to buy Enron's st= ake in Dabhol.=20 Officials from Aditya Birla weren't available for comment, the report says.= =20 Enron holds a controlling 65% stake in Dabhol. Costing $2.9 billion, the po= wer project is the single largest foreign investment in India to date. News= paper Web site: www.economictimes.com=20 -By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dow= jones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 COMPANIES & FINANCE UK - Enron seeks survival pact to aid Dynegy's $9bn res= cue. By ANDREW HILL and SHEILA MCNULTY. 11/24/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved Crisis-hit Enron is seeking to extend its survival pact with its key lender= s long enough to be rescued by Dynegy, the rival energy group.=20 Dynegy said it was "continuing with confirmatory due diligence" for its all= -stock rescue bid. The offer is still worth $9.3bn ( #6.5m), even though En= ron's market capitalisation has halved this week to $3.5bn. Enron's survival is crucial to the smooth running of the electricity and po= wer markets, where it claims to be the principal in 25 per cent of all tran= sactions.=20 Enron sought to allay fears that Dynegy might change the terms of its offer= , or withdraw.=20 Withdrawal of the rescue bid would call into question Enron's credit rating= s, which remain one notch above "junk" status. Ratings agencies held off do= wngrading Enron two weeks ago, because such a decision would trigger repaym= ent of debt issued by off-balance-sheet partnerships that Enron used to sup= port its rapid expansion over the past two to three years.=20 Even so, the terms of recent credit lines extended to Enron suggest lenders= already regard the company as a non-investment grade risk. The bonds are t= rading as though the company is heading for a Chapter 11 bankruptcy filing.= =20 Glen Grabelsky of Fitch, the rating agency, said there were two possible ou= tcomes for Enron: "One is that the transaction goes through; and the other = is that the viability of this company is in question."=20 Enron's shares fell to $4.74, a further 5.4 per cent drop, in a shortened s= ession of trading yesterday morning in New York, as investors continued to = express concern about Dynegy's commitment to the deal.=20 John Olson, vice president of research at Sanders Morris Harris, the Housto= n-based investment banking and securities firm, said: "With Enron trading a= t 4 bucks and change it might make sense for them to go into bankruptcy and= salvage this thing the right way."=20 Observers close to Enron say Wednesday's decision by JP Morgan Chase and Ci= tigroup to finalise a $1bn secured credit line, and the deferral of a $690m= repayment of notes due next Tuesday, have reduced the pressure on the grou= p. If Dynegy were to renegotiate the terms of its deal - and that may depen= d on legal clauses within the original merger agreement - that would not af= fect Enron's financial situation, they say.=20 As well as negotiating with its lenders through the weekend, Enron is also = seeking further investments from JP Morgan Chase, Citigroup and private equ= ity firms in an attempt to shore up confidence. www.ft.com/enron.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 EQUITY MARKETS - Power companies pack more punches - WALL STREET. By ANDREW HILL. 11/24/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved EQUITY MARKETS - Power companies pack more punches - WALL STREET - Another = mega-merger and Enron's sudden decline epitomise a volatile year, says Andr= ew Hill.=20 A short week on Wall Street appeared a very long week for the energy sector= , an industry that has - in everything from oil to electricity - succeeded = in delivering some stinging surprisesto the US economy this year. Last Sunday, Conoco and Phillips Petroleum jolted merger and acquisition sp= ecialists out of their torpor with the year's biggest deal, a $35bn "merger= of equals" to create the third largest integrated energy company in the US= and the sixth largest in the world.=20 Coincidentally, on Monday, ChevronTexaco feted the consummation of its merg= er with a New York analysts' meeting at which David O'Reilly, the combined = group's chief executive, promised annual savings of $1.8bn by 2003, greater= than originally expected.=20 Whether the sector needs another clumsy baptism - the fruit of Sunday's ann= ouncement will, inevitably, be saddled with the name ConocoPhillips - is no= t really at issue. Consolidation that began in the 1990s has left medium-si= zed energy companies such as Conoco and Phillips with little option except = to combine resources for exploration and production in order to compete wit= h "super-majors" such as ExxonMobil.=20 Volatile oil prices - another story of the week - appear to add to the urge= ncy of the combination, although James Mulva, Phillips' chairman and chief = executive, denied that was a prime reason for consolidation. After all, the= industry has learned to live with volatility.=20 These are companies that in the space of just three years have shrugged off= concerns about what would happen if crude oil remained at $10 a barrel, an= d, at the other extreme, worries about the possibility of crude lingering a= bove $30.=20 In the short term, the fate of stock prices in the sector may depend on Ope= c's ability to snatch victory from the jaws of defeat in its confrontation = with Norway and, in particular, Russia over calls for a cut in oil output t= o underpin the world price. Oil stocks, as measured by the Philadelphia Oil= Service index, have had a turbulent time since September 11, plummeting in= itially only to rally back to their levels before the terrorist attacks and= then slump again as the wrangling between Opec and non-Opec oil producers = burst into the open.=20 ChevronTexaco, for one, seemed unperturbed by the stand-off. "If you want a= stable price environment, you don't want to be in this business," O'Reilly= said on Monday. He was talking about the oil price but he might just as ea= sily have been referring to energy stocks.=20 Energy-related industries - from utilities to pipelines - make up six of th= e 10 worst performing sectors over the past month, according to Dow Jones d= ata analysed by CBS Marketwatch.=20 None, however, has fallen as pre-cipitously or as publicly as Enron, the en= ergy trading company. Its share price at the close on Wednesday was $5.01, = down 44 per cent on the week and 94 per cent below its 52-week high of near= ly $85.=20 Remember that this was a company that outperformed the Nasdaq Composite Ind= ex even as the tech-heavy index rose to its March 2000 peak, and Enron stay= ed at stratospheric levels of price and valuation even after the dotcoms - = whose magic dust its online trading operations borrowed - fell to earth. In= the process, its ability to pioneer new trading markets, such as bandwidth= , made it the envy of Wall Street's own broker-dealers, jealous both of its= trading bravado and its share rating.=20 Two of Wall Street's giants - JP Morgan Chase and Citigroup - are helping t= o prop up the group, laid low by its failure to disclose adequately off-bal= ance-sheet transactions that it carried out as part of its rapid expansion.= The banks are advising Enron on a rescue bid from Dynegy, the smaller riva= l energy group part-owned by ChevronTexaco, and backing it with $1bn of cre= dit, secured on pipeline assets.=20 The trigger for this week's sharp decline was Enron's regulatory filing lat= e on Monday, which revealed for the first time to shaken shareholders and b= ondholders that the group would have to repay $690m of notes next Tuesday b= ecause of a downgrade 10 days ago by Standard & Poor's. Wednesday's announc= ement that Enron had managed to postpone that deadline until the middle of = next month seemed to do little to allay the crisis of confidence about the = group's ability to repay its heavy debts.=20 Ahead of the Thanksgiving holiday, few share traders seemed to want to hold= the stock, which fell 28 per cent on Wednesday alone, and electricity and = gas counterparties are also wary of entering long-term contracts in the ver= y markets that Enron helped pioneer. The Enron debacle is a reminder of how= quickly fortunes can change. Earlier this year, the well-connected and pol= itically influential Houston-based group was powerful enough to be accused = by Californians of playing a key role in provoking the electricity crisis o= n the west coast.=20 Now Enron's shares and bonds are trading as though it may go bust. If it do= es, it could drag down other, weaker energy companies, because of its role = as a market-maker, supplying liquidity to the power and gas markets. If the= worst fears of some Wall Street bankers are realised there may even be rep= ercussions for the wider financial markets, where Enron lays off the risk o= f price fluctuations, using derivatives.=20 andrew.hillft.com.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 WORLD STOCK MARKETS - Wall St loses shine off its blue chip rise. By ANDREI POSTELNICU. 11/24/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved Low volumes took the shine of a blue chip rally on Wall Street in a shorten= ed session during which children were allowed their annual visit to the tra= ding floor of the New York Stock Exchange.=20 The Dow Jones Industrial Average put on 125.03 to 9,959.71 by the earlier c= lose, while the S&P 500 index added 13.27 to 1,150.30. The tech-heavy Nasda= q Composite gained 27.96 to 1,903.01. Leading gains in the Dow were Eastman Kodak, up 3.1 per cent at $29.91, Gen= eral Motors, up 3.1 per cent at $47.70, and American Express, up 2.3 per ce= nt at $34.29. Fractional losses for Philip Morris, Caterpillar and Home Dep= ot bucked the positive trend on the benchmark average.=20 Oil stocks were higher despite disappointment over Russia's offer to cut da= ily production by only 50,000 barrels. The prospect of lower crude prices f= ailed to depress the sector, with ChevronTexaco up fractionally to $86.66, = Anadarko up 1.4 per cent at $54.14 and ExxonMobile also up 1.4 per cent to = $38.42.=20 Enron, the bruised energy trading group, lost a further 5.1 per cent among = mounting worries over Dynegy's $9bn agreement to take over the company.=20 Retailers saw some gains on what is known as "black Friday", the day Americ= ans flock to malls and shops in search of holidays gifts. K-mart was up 3.3= per cent at $6.79, Dillard added 2.8 per cent to $15.48, while Federated D= epartment Stores was up 3.6 per cent at $38.47 and Sears Roebuck gained 2.4= per cent to $45.34.=20 Ericsson, the Swedish mobile telecommunications group, saw its ADRs gain 5.= 75 per cent to $5.52 after its chief executive said the company was expecti= ng fewer competitors in the third-generation mobile telecommunications mark= et.=20 The ADRs of rival Nokia were among volume leaders on the NYSE, up 2.1 per c= ent to $24.15.=20 Amid scant corporate news, D&E Communications, a telecom services company, = was down 11.2 per cent to $17.8 after it announced after the previous sessi= on's close that it would buy Conestoga Enterprises for $273.3m of cash, sto= ck, or a combination of the two. Conestoga shares gained 22.79 per cent to = $29.90.=20 Toronto edged lower in early trading as energy stocks ran into selling. The= S&P 300 composite index was off per cent at at midsession.=20 The latest attack of nerves for crude oil prices sparked a bear run on ener= gy stocks and Alberta Energy fell C$1.95 to C$58.55 and Talisman Energy C$1= .05 to C$55.70.=20 Technology leaders were little changed in light trading. Nortel Networks ha= rdened 2 cents to C$12.62.=20 Among Latin American markets, Sao Paulo continued to push higher in early t= rading, with the Bovespa index up 2.6 per cent at 13,355.37 at midsession.= =20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Editorial Desk; Section A Journal Wait Until Dark By FRANK RICH 11/24/2001 The New York Times Page 27, Column 1 c. 2001 New York Times Company In the immediate aftermath of Sept. 11, the Arab world was riveted by the r= umor that Israel was somehow behind the attack on the World Trade Center. A= l Jazeera went so far as to report that 4,000 Jews had been given advance n= otice not to go to work at the towers that day. You'd think that no one in = American officialdom would do anything to fan the flames of such noxious fi= ctions, but if so, you'd be underestimating John Ashcroft. As part of his m= ass dragnet prompted by the attacks on America, our attorney general has ro= unded up about 50 Israeli Jews, some of whom have been detained for nearly = a month on the pretext of minor offenses involving working papers.=20 Why hold Israelis when there is no evidence linking them to terrorist activ= ity? ''We are taking every step we can to prevent future terrorist attacks,= '' said a Justice Department spokesman when queried by Tamar Lewin and Alis= on Leigh Cowan, the Times reporters who broke the story of the Israeli deta= inees on Wednesday. ''We are leaving no stone unturned.'' Given that none o= f Mr. Ashcroft's 1,200 or so arrests to date, whether of Israeli Jews or an= yone else, have produced a single charge in connection with the mass murder= s of Sept. 11, it doesn't seem as if he is even looking in the right quarry= . But in his blundering, he has now handed radical Islam a propaganda coup = in its war against Israel. On this bittersweet Thanksgiving weekend, there are many reasons to feel th= ankful -- from the heroism of the Americans who sacrificed their lives for = others to George W. Bush's nuanced and so far effective prosecution of the = war. Though there have been boisterous nervous Nellies on the right attacki= ng the president's strategy, many of them even angrier at Colin Powell than= they are at Bill Maher, there are no gaping fissures in the country's unit= y. A Los Angeles Times poll last week shows that even Democrats support the= president by four to one, no matter how you read the ballots in Florida. A= nd yet on the domestic front, as exemplified by the actions of Mr. Ashcroft= , the administration is acting as if America has no inner strength whatsoev= er. By working its various end runs around our laws, the fearful message is= clear: American democracy is too weak to contend with terrorism, and two o= f the three branches of government, the judicial and the legislative, are n= ot to be trusted.=20 Even as we track down a heinous enemy who operates out of a cave, we are ge= tting ready to show the world that the American legal system must retreat t= o a cave to fight back. Our government refuses to identify its many detaine= es, or explain why they are held, or even give an accurate count. The next = stop on the assembly line for these suspects could be a military tribunal, = which, as decreed by President Bush in an executive order, is another secre= t proceeding in which neither the verdicts, evidence nor punishments ever h= ave to be revealed to the public. Thus could those currently in captivity m= ove from interment to execution without anyone ever learning why or where t= hey disappeared. If this sounds like old-fashioned American justice, it is = -- albeit of such Americas as Cuba and Chile.=20 If the administration were really proud of how it's grabbing ''emergency'' = powers that skirt the law, it wouldn't do so in the dead of night. It wasn'= t enough for Congress to enhance Mr. Ashcroft's antiterrorist legal arsenal= legitimately by passing the U.S.A.-Patriot Act before anyone could read it= ; now he rewrites more rules without consulting senators or congressmen of = either party at all. He abridged by decree the Freedom of Information Act, = an essential check on government malfeasance in peace and war alike, and di= screetly slipped his new directive allowing eavesdropping on conversations = between some lawyers and clients into the Federal Register. He has also ref= used repeated requests to explain himself before Congressional committees, = finally relenting to a nominal appearance in December. At one House briefin= g, according to Time magazine, he told congressmen they could call an 800 n= umber if they had any questions about what Justice is up to.=20 This kind of high-handedness and secrecy has been a hallmark of the adminis= tration beginning Jan. 20, not Sept. 11. The Cheney energy task force faced= a lawsuit from the General Accounting Office rather than reveal its dealin= gs with Bush-Cheney campaign contributors like those at the now imploding E= nron Corporation. The president's commission on Social Security reform also= bent the law to meet in secret. But since the war began, the administratio= n has gone to unprecedented lengths to restrict news coverage of not only i= ts own activities but also Osama bin Laden's. A Bush executive order dimini= shing access to presidential papers could restrict a future David McCulloug= h or Michael Beschloss from reconstructing presidential histories. To conso= lidate his own power, Mr. Ashcroft even seized authority from Mary Jo White= , the battle-proven U.S. attorney who successfully prosecuted both the 1993= World Trade Center terrorists and the bin Laden accomplices in the 1998 Af= rican embassy bombings. He has similarly shunted aside state and local law-= enforcement officials by keeping them in the dark before issuing his vague = warnings of imminent terrorist attacks.=20 Thanks to a journalist, Sara Rimer of The Times, we now know that one of th= e attorney general's secret detainees was in fact a local official: Dr. Irs= had Shaikh, a Johns Hopkins-educated legal immigrant who serves as the city= health commissioner of Chester, Pa. Dr. Shaikh's door was broken down by f= ederal agents who suspected he might be an anthrax terrorist. It's all too = easy to see why Mr. Ashcroft wants to hide embarrassing fiascoes like this.= But it's also likely that the attorney general wants to hide the arrests h= e is not making along with the errant ones that he is.=20 As far as anthrax terrorism goes, evidence like the lethal letter to Senato= r Patrick Leahy increasingly suggests that the culprit is not a Muslim or I= sraeli immigrant but, as Mr. Ashcroft's fellow cabinet member Tommy Thompso= n put it this week, ''a disgruntled American'' piggybacking on Islamic terr= orism. The obvious suspects include those on the Timothy McVeighesque fring= es of the Second Amendment cult, who proudly trade in germ war ''cookbooks'= ' at gun shows, and those in the anti-abortion terrorist movement, who have= a history of wielding anthrax scares as well as explosives in pursuit of t= heir cause.=20 But is Mr. Ashcroft pulling in, say, any of America's own Talibans, like th= e Army of God, with his dragnet? It seems unlikely, given that these organi= zations, which are big on advertising their own self-martyrdom, haven't rep= orted any such detentions. A cynic might think that domestic extremists who= share the attorney general's antipathy to abortion and gun control -- and = are opposed to the likes of Mr. Leahy and Tom Daschle -- receive a free pas= s denied to suspicious-looking immigrants. Yet that cynicism could be dispe= lled in a second if Mr. Ashcroft trusted the public, and for that matter hi= s former colleagues in Congress, to carry out his brand of law enforcement = in daylight.=20 While Mr. Ashcroft may abhor such openness because he's pursuing a politica= l agenda of his own, it's also possible that less malevolently, he's just t= rying to hide his failure at getting the job done. There's nothing in the m= an's history as either a governor or senator to suggest that he's the Rudy = Giuliani his assignment calls for, and despite his strong-arm policing sinc= e Sept. 11, he has no visible results. His latest scheme -- to spend 30 day= s interviewing 5,000 more immigrants who, he says, fit ''a set of generic p= arameters'' -- inspires so little confidence that some local police chiefs = are in open revolt against it.=20 Mr. Ashcroft likens himself to Robert Kennedy, who also at times warped con= stitutional protections in ravenous pursuit of criminality. But among the m= any differences between the men is the fact that Kennedy actually busted cr= iminals. If another 30 days and 5,000 interviews pass with no breakthroughs= , who knows what grandiose new plot Mr. Ashcroft will devise, and at what c= ivic price, to make himself look like Dick Tracy. At a time when most Ameri= cans feel confident that the war on terrorism is going as well, if not bett= er, than could be expected, his every ineffectual and extralegal move waves= an anomalous but still chilling white flag of defeat. Drawing=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C THE MARKETS: STOCKS AND BONDS Heartened by Holiday Shopping, Shares Rise in Quiet Day By Reuters 11/24/2001 The New York Times Page 5, Column 5 c. 2001 New York Times Company Stocks advanced during yesterday's holiday-shortened session as traders sna= pped up retail stocks, heartened by signs that the year-end shopping season= opened with a strong start.=20 The discount retailer Wal-Mart Stores and Federated Department Stores, the = department store operator, helped bolster the broad-market indexes amid onl= y light trade. Deep discounting has helped bring shoppers into the malls de= spite some large job losses and the slump in spending that followed the Sep= t. 11 terrorist attacks. Traders also said they were optimistic that the war in Afghanistan might en= d soon, after reports that some Taliban troops are close to a surrender.=20 ''It looks like the war is over and traders are getting a jump on it before= everyone comes in for work on Monday,'' said Mace Blicksilver, a money man= ager for Marblehead Asset Management. ''Retailers are doing well and the mo= od is better,'' he added.=20 Hopes for a rebound in the economy and corporate profits sometime next year= have driven the market higher in recent weeks, pulling it off the three-ye= ar lows that followed the Sept. 11 attacks. The Standard & Poor's 500-stock= index has closed up for seven of the past nine weeks.=20 The Dow Jones industrial average rose 125.03 points, or 1.3 percent, to clo= se at 9,959.71, while the broader S.& P. 500 gained 13.31 points, or 1.2 pe= rcent, to 1,150.34. The technology-laden Nasdaq composite index advanced 28= .15 points, or 1.5 percent, to 1,903.20.=20 Stocks closed higher for the third consecutive week, with the Dow rising 0.= 94 percent, the S.& P. 500 gaining 1.03 percent and the Nasdaq inching up 0= .24 percent.=20 Consumers thronged shopping malls yesterday, traditionally the busiest shop= ping day of the year, a sign that shoppers are willing to spend.=20 The discount retailer Wal-Mart rose 68 cents, to $55.80, while Federated, p= arent of the department stores Bloomingdale's and Macy's, gained $1.10, to = $38.21.=20 The S.& P. retail department store index rose 2.63 percent.=20 The United States-backed Northern Alliance said that it had suspended attac= ks on the Taliban-held city of Kunduz to allow besieged defenders more time= to agree to surrender, but said that it would resume attacks if no deal wa= s struck by this afternoon.=20 Trading was light, with many portfolio managers taking the day after Thanks= giving off. The stock market closed early at 1 p.m.=20 The energy-trading company Enron, which has already plunged to its lowest l= evels in more than a decade on worries about its credit standing and fears = that a proposed rescue by Dynegy could fall through, was the most actively = traded issue on the New York Stock Exchange for the third consecutive sessi= on. Enron fell 30 cents, to $4.71. Dynegy rose 64 cents, to $40.40.=20 Treasury bond prices drifted lower yesterday, kicking up yields on the benc= hmark 10-year note to 5 percent for the first time since August.=20 Trading was subdued during the shortened session after the holiday. ''It's = a really light trade; I don't think you're going to have to read too much i= nto it,'' said Drew Forbes, a trader at Daiwa Securities. ''People are very= cautious.''=20 Treasuries have sold off sharply in the last two weeks as investors, bettin= g on a swift economic recovery in 2002, have scaled back hopes for an 11th = interest rate cut this year when the Federal Reserve meets in December.=20 Yields on the rate-sensitive two-year notes have spiked more than 0.75 perc= entage point in two weeks. Thirty-year bonds are now yielding more than the= y did before the Treasury surprised markets on Oct. 31 by canceling sales o= f these issues, which set off a huge scarcity rally.=20 The 10-year Treasury note fell 15/32, to a price of 100. The note's yield, = which moves in the opposite direction from the price, rose to 5 percent fro= m 4.95 percent on Wednesday.=20 The price of the 30-year Treasury bond fell 20/32, to 99 31/32. The bond's = yield rose to 5.38 percent from 5.35 percent on Wednesday. Graph tracks the Dow Jones industrial average over the past year. (Sources:= Associated Press; Bloomberg Financial Markets) Tables: ''Hot & Cold'' prov= ides a look at stocks with large percentage gains and losses; ''The Favorit= es'' lists stocks held by largest number of accounts at Merrill Lynch. (Com= piled from staff reports, The Associated Press, Bloomberg News, Bridge News= , Dow Jones, Reuters)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business; Financial Desk Dynegy Scrambles to Save Enron Deal Energy: Shares of the acquisition targe= t have fallen 45% since the merger was announced. Analysts say the companie= s might renegotiate. C. BRYSON HULL REUTERS 11/24/2001 Los Angeles Times Home Edition C-1 Copyright 2001 / The Times Mirror Company HOUSTON -- A long weekend of work faced Dynegy Inc. and proposed acquisitio= n Enron Corp., whose worsening stock woes Friday heightened fear that the d= eal could be renegotiated or collapse entirely.=20 Enron shares fell 30 cents, or 6%, to close at $4.71 on the New York Stock = Exchange. Dynegy shares rose 64 cents to $40.40, also on the NYSE. Dynegy and its advisors were expected to spend the weekend reviewing rival = Enron's complex books, as both parties race against the decline in Enron's = stock to complete the thorough financial examinations a merger requires.=20 Houston-based Dynegy on Nov. 9 agreed to pay about $9billion in stock for E= nron. But after the 45% drop in Enron shares by Friday's close, on fears th= e company could run out of cash before the deal closes, Enron's market capi= talization is only about $4 billion.=20 At Dynegy's current stock price, its offer for Enron is worth about $10.85 = a share--more than twice Enron's current share price.=20 Executives and advisors from both companies are in the final stages of the = review, known as due diligence, sources familiar with the matter said. The = sources said that renegotiations had not been discussed as of Friday aftern= oon and that such discussions could not occur until the review is finished.= =20 But should it turn up any more unpleasant surprises that qualify as a "mate= rial adverse change" in Enron's business, the likelihood increases of Dyneg= y invoking escape clauses or renegotiating, analysts and observers say.=20 "You've got to believe there is that possibility. There is a 90% spread on = the deal," one analyst said. "There's unquestionably continued malaise in E= nron's core business, and Dynegy has left itself open to renegotiate with E= nron."=20 Enron spokeswoman Karen Denne said that, to her knowledge, Dynegy was not r= enegotiating the terms of the acquisition.=20 She repeated that Enron was working on obtaining an additional $500 million= to $1 billion in private equity funding to help shore up the balance sheet= .=20 Dynegy spokesman John Sousa said that due diligence was continuing and that= the company remains optimistic about the merger.=20 Enron's recent admission that lower volumes at its trading business--the cr= own jewel of Enron that Dynegy most covets--could cause low fourth-quarter = earnings raises the possibility that the trading business is losing its pro= fitability.=20 Electricity traders said the latest developments are making it seem more li= kely that Dynegy will renegotiate the deal or back out, a move they said wo= uld leave Enron vulnerable to creditors and a possible bankruptcy.=20 This week, rating agency Fitch Investors said that if Dynegy stepped away f= rom the merger, Enron's credit situation seemed untenable and a bankruptcy = filing was highly possible.=20 Traders, speaking on condition on anonymity, said they expected Dynegy to s= cramble over the weekend to narrow the growing share-price gap. Enron's dro= pping market value and the shrinking volume in its EnronOnline trading syst= em increase the likelihood that Dynegy could pull out, traders said.=20 Meanwhile, energy traders reiterated that they would shy away from long-ter= m deals with Enron unless they received substantial assurances the company'= s credit rating would soon improve.=20 Enron's bonds on Friday were again talked at junk bond levels, but even low= er than before.=20 Enron's 6.4% notes maturing in 2006 and its 6.75% notes were bid at 57 cent= s on the dollar, down from a respective 62 cents and 60 cents on Wednesday,= according to a trader. The notes yield to maturity a respective 21.5% and = 17%. Its 20-year zero-coupon convertible bonds fell about 1 cent on the dol= lar to just more than 33 cents. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business; Financial Desk Lawsuit Slows MSN Broadband Roll-Out Internet: The action by partner Enron = hurts sales during important holiday season, analysts say. The service has = reached only 33 of the 45 targeted markets. DINA BASS BLOOMBERG NEWS 11/24/2001 Los Angeles Times Home Edition C-2 Copyright 2001 / The Times Mirror Company Microsoft Corp.'s plan to expand its MSN high-speed Internet service has be= en delayed by a lawsuit by Enron Corp., which could cost the software giant= customers during the holiday season.=20 MSN, with Enron's help, had hoped to have fast Internet access over telepho= ne lines available in 45 markets starting Oct. 25. Instead, the service is = available in only 33 markets, including Los Angeles and San Diego, a Micros= oft spokesman said. Houston-based Enron, which agreed in June to provide the backbone for a nat= ionwide expansion of MSN's service, contends that it isn't required to deli= ver broadband services if Microsoft hasn't first provided a billing and ord= ering system.=20 Microsoft officials declined to comment on the suit but said some of their = other high-speed access partnerships, including a 14-state deal with Qwest = Communications International Inc., are going well.=20 The delay is problematic because the holidays are a popular time for consum= ers to buy broadband access, often with new personal computers. It follows = a string of setbacks for the roll-out of the service.=20 Microsoft has "a track record of picking broadband partners that don't quit= e work out," said Joe Laszlo, senior analyst at market researcher Jupiter M= edia Metrix Inc. "It definitely hurts them with customers who want broadban= d right now."=20 The company originally began a service with NorthPoint Communications Group= Inc., a now-bankrupt provider of fast Web access.=20 MSN expanded elsewhere by working with Enron competitors, which MSN Marketi= ng Director Bob Visse declined to name. Most recently, MSN's high-speed ser= vice expanded into San Francisco, Sacramento, Houston, Dallas, San Antonio = and Austin, Texas.=20 MSN Product Manager Lisa Gurry said Microsoft will have broadband access fo= r sale by the end of March to 90% of the households that have digital subsc= riber lines in their neighborhoods. MSN had aimed for 90% by last month.=20 Subscribers to fast Internet access services are expected to grow fourfold = by 2006 as sales of slower access plans decline, according to Jupiter Media= Metrix.=20 Top Internet service provider America Online, owned by AOL Time Warner Inc.= , also has been slow to get into the high-speed market, analysts said.=20 Laszlo said MSN and AOL might pay for their sluggishness with tougher compe= tition from third-place EarthLink Inc. and from cable and telephone compani= es that have more experience selling high-speed Internet access.=20 America Online has more than 31 million subscribers, MSN has 7 million, and= EarthLink has 4.8 million. Laszlo doesn't think MSN or America Online can = build the kind of lead in the high-speed market that America Online has in = the slower dial-up access market.=20 "There is very little growth left in the dial-up access space for Microsoft= or anybody, which leaves them with broadband as the only potential growth = area," said Youssef Squali, an analyst at FAC/Equities.=20 Analysts also said Microsoft still needs to find a cable partner that will = let MSN use its network to sell fast access over cable lines. Cable is more= popular than DSL with customers looking for fast Web service. The five lar= gest cable providers control 51% of the U.S. high-speed Internet market.=20 MSN Vice President Yusuf Mehdi said last month that the company might be in= terested in an investment in AT&T Corp.'s cable television unit, which AT&T= is considering selling.=20 *=20 Times staff writer Joseph Menn contributed to this report. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business Review could alter terms of Enron sale to Dynegy From Tribune news services 11/24/2001 Chicago Tribune North Final ; N 1 (Copyright 2001 by the Chicago Tribune) Power companies Enron Corp. and Dynegy Inc. and their advisers are schedule= d to spend this weekend poring over Enron's books, which could lead to a re= negotiation of Dynegy's acquisition of embattled Enron.=20 The specter of renegotiation pushed Enron shares down 6 percent, or 30 cent= s, to $4.71 at the close of Friday trading on the New York Stock Exchange. = Dynegy shares closed up 64 cents, or 1.61 percent, to $40.40. Despite the light trading of the overall market in the holiday- shortened s= ession, Enron shares were trading robustly. Enron again led the list of the= most heavily traded stocks on the exchange by a wide margin.=20 Dynegy agreed to pay about $9 billion in stock for Enron. But after falling= 45 percent by Friday's close amid fears that it could run out of cash befo= re Dynegy completes its buyout, Enron sports a market capitalization of onl= y about $4.03 billion.=20 With Enron shares continuing to trade at a steep discount to the deal's val= ue, the trading pattern indicates the market has little faith in the deal b= eing completed as announced.=20 Investment bankers on the deal are in the final stages of due diligence, so= urces say. Should the examination of Enron's business turn up any more unpl= easant surprises, renegotiation of the deal's terms is a strong possibility= .=20 An Enron spokeswoman said that, to her knowledge, Dynegy was not renegotiat= ing the terms of the acquisition. Dynegy could not be reached for comment.= =20 In a report on Wednesday, Ronald Barone, an analyst at UBS Warburg, suggest= ed that the deal's exchange ratio of 0.2685 share of Dynegy for each share = of Enron could be readjusted.=20 "We believe the odds of Enron incurring a material adverse change on its op= erations is soaring, which suggests that--assuming Dynegy wants to continue= to move forward with the deal--the 0.2685 ratio will not hold," he wrote.= =20 Barone said that a much lower exchange ratio of 0.15 was more realistic.=20 There also is the possibility that Enron's lower stock price is an indicati= on that traders are speculating Enron will need to issue more stock to stab= ilize its financial position.=20 The market is closely waiting to hear if there is more news to come from th= e credit rating agencies. Any downgrade would be devastating to Enron, whic= h is sitting just one notch above speculative status.=20 On Wednesday, Fitch Inc. said it was maintaining Enron's credit rating, bas= ed on the possibile merger and on the support of its lending banks.=20 Glen Grabelsky of Fitch's credit policy group said he expects Enron to clos= e on additional financing, but he couldn't specify a time frame in which it= would occur.=20 Enron spokeswoman Karen Denne said the company was trying to get $500 milli= on to $1 billion in additional financing. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business & Finance: Enron's dizzy fall from grace threatens disruption in U= S energy markets - Shares in the US's biggest electricity trader, Enron, ar= e down from dollars 90 to dollars 5 and it is under federal investigation. = How did it all go so wrong? Co 11/24/2001 Irish Times Copyright (C) 2001 Irish Times; Source: World Reporter (TM) Six months ago, when US President George W Bush turned down California's re= quest for energy relief, many observers believed the reason was the close t= ies between Mr Bush and the Enron Corporation of Texas, the biggest US elec= tricity trader.=20 Enron's chief executive, Mr Kenneth Lay, was the President's biggest campai= gn contributor. The 58-year-old billionaire, who ran Mr Bush's Texas gubern= atorial campaign, loaned the Bush family Enron's private Lear jets, and con= tributed dollars 100,000 (?114,000) towards the inaugural gala in January. After Mr Bush took over the White House, Mr Lay became a powerful voice in = Washington as energy adviser, helping to shape a policy which enraged envir= onmentalists and encouraged Mr Bush to use California as a stalking horse f= or plans to drill for new oil on federal lands.=20 Now Mr Lay's reputation and career lie in ruins, and his company is fightin= g for survival.=20 Stock in Enron, once considered the smartest and most aggressive company in= the electricity and natural gas industries, has crashed from dollars 90 to= dollars 5.=20 Enron's controversial financial dealings are under federal investigation fo= llowing the disclosure of massive write-offs in hitherto hidden partnership= s.=20 The dizzying speed of Enron's fall has threatened widespread disruption in = the US energy market which it dominated.=20 Whether the company survives depends now on its banks and the commitment of= rival energy firm, Dynegy, to follow through on an offer to pay about doll= ars 9 billion in stock for the debt-ridden company.=20 Since the scandal broke it has been revealed that Enron had 33 partnerships= which held billions of dollars in debt, for which the company was liable.= =20 Enron needed such debt, analysts said, to support expanding levels of tradi= ng in electricity and gas. However, the weight of debt left the company una= ble to maintain its credit rating, growth and high stock valuation.=20 The revelation that partnerships were used to move debt off the company's b= alance sheet and that Enron overstated profits in the past five years by al= most dollars 600 million was shocking enough for Enron employees.=20 However, they were infuriated further when they learned on Thursday that Mr= Lay was due to get a severance package of dollars 60.2 million from Dynegy= at the same time as the value of their stock options and retirement accoun= ts had evaporated.=20 The reaction to the idea that Mr Lay would profit handsomely from the merge= r was so hostile that the chief executive was forced to waive the compensat= ion, amounting to three year's severance pay.=20 Still, Mr Lay's personal wealth is not threatened; last year he cashed in o= ptions for dollars 123 million.=20 Since 1989, Mr Lay has accumulated dollars 13 million in salary, dollars 26= .8 million in cash bonuses and dollars 266.7 million in profits from sellin= g stock.=20 His bonus in 2000 was dollars 7 million, an award that Enron's board said w= as based on rising profits and high shareholder return.=20 The company has since admitted it improperly applied accounting rules and t= hat about 40 per cent of its profit in 2000 came from transactions with par= tnerships controlled by Enron's chief financial officer.=20 Yesterday, shares in Enron fluctuated wildly as concerns grew over whether = the Dynegy acquisition plan could be changed or that the deal could collaps= e.=20 Enron shook the markets when it disclosed on Monday that it might have to r= epay dollars 690 million debt by November 26th because its credit ratings h= ad been lowered, but on Wednesday repayment was postponed to mid-December.= =20 The three-week reprieve gives the company more time to restructure its fina= nces, but its bonds fell amid concern Enron would run out of cash before th= e Dynegy takeover is completed next year.=20 Enron's current cash balance is inadequate to pay off debt repayments of do= llars 2.8 billion due before the end of December, according to Goldman Sach= s, and wholesale trading customers have asked Enron to put up more cash for= collateral, according to the Fitch ratings agency.=20 Mr Lay, the son of a country preacher, and his partner Mr Jeffrey Skilling = - who resigned abruptly as Enron's CEO in August - used innovative financia= l techniques during the 1990s to profit from increased federal deregulation= of the energy industry.=20 The financial control Mr Lay exerted over the oil and gas markets - labelle= d excessive and misguided by critics - had an enormous effect on California= 's disastrous experiment with electricity deregulation, according to the Lo= s Angeles Times.=20 Analysts said Enron faced collapse if the merger with Dynegy, a much smalle= r company, fell apart - and that its survival depended on being able to res= tore investors' and trading partners' confidence in its financial health. M= any energy companies have already scaled back their dealings with Enron.=20 The Enron case will come before the Securities & Exchange Commission (SEC) = chaired by Bush appointee Mr Harvey Pitt.=20 The commission will look into whether Enron adequately disclosed the risk t= o shareholders from its partnership deals. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business Enron price slides amid fear for rescue bid Carl Mortished International Business Editor 11/24/2001 The Times of London News International Final 2 60 (Copyright Times Newspapers Ltd, 2001) SHARES in Enron yesterday continued their precipitous fall amid fears that = a rescue bid for the embattled US power group could fall at the last hurdle= .=20 The shares plunged another 6 per cent, taking losses for the week to more t= han 50 per cent, as it emerged that the rival Dynegy, which launched a $9 b= illion (Pounds 6 billion) rescue bid earlier this month, might try to walk = away from the deal. Dynegy's current offer values Enron at about $10.85 a share -more than twic= e the group's current share price.=20 Enron's troubles were further aggravated yesterday by the revelation that m= embers of the company's retirement plan have filed class-action lawsuits ag= ainst the company alleging that they were misled about the risk of investin= g in Enron shares. Under the 401(k) retirement plan, employees are able to = choose a number of different investments, including mutual funds, but one o= ption is stock in their own company.=20 The suit alleges that the trustees of the Enron plan failed to inform plan = participants that the company stock was in peril. Enron was unavailable for= comment yesterday.=20 Investment bankers working on Dynegy's offer will spend the weekend carryin= g out due diligence on Enron's books. Wall Street sources believe advisers = might use the opportunity to renegotiate the price, or worse still, walk aw= ay from a bid altogether.=20 One analyst, who declined to be named, said that the chance of Dynegy wrigg= ling out of the bid by citing a "material change" was rising with every hou= r that passed. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business Market Report: Investors fret over Barclays' exposure to troubled Enron Michael Jivkov 11/24/2001 The Independent - London FOREIGN 22 (Copyright 2001 Independent Newspapers (UK) Limited) THE BANKING giant Barclays found itself firmly on the blue chip fallers lis= t yesterday as investors fretted about the group's exposure to the beleague= red US energy group Enron. Talk in the market was that Barclays, down 98p a= t 2,150p, has a significant exposure to the company, which has been teeteri= ng on the brink of collapse for the last few weeks.=20 Although Enron has received a $9bn (pounds 6bn) rescue approach from the US= company Dynegy, the troubled group has seen its share price nearly halve s= ince the offer was tabled. This has led to speculation that the deal has co= llapsed which according to analysts would leave Enron facing bankruptcy. Bank of America also weighed on Barclays shares as the broker reduced its r= ating to "market perform" from "buy". In the meantime it upgraded HBOS, off= 13.5p to 844.5p, to "buy" from "market perform". It argued that the switch= was an attempt to reposition clients out of what it perceived was Barclays= ' international and US exposure and into a bank more focused on the UK.=20 The FTSE 100 slipped 52.7 points to 5,293.2, largely ignoring gains on Wall= Street, which was open only for a half day.=20 Oils stocks had a roller-coaster ride yesterday. They made impressive gains= at the start of the session buoyed by Norway's decision on Thursday to cut= production by 200,000 barrels a day but fell back in late trade as it emer= ged that Russia would shave only 50,000 off its daily production of 7 milli= on. The market viewed the cut as far from sufficient, sending the price of = crude lower and with it Shell, off 4p at 493p, BP, down 5.5p to 530p, and E= nterprise Oil, 13p weaker at 451p. Analysts at Credit Suisse First Boston a= dvised clients to sell down holdings in the sector, arguing that fundamenta= ls for the industry are looking weak.=20 Man Group rose 18p to 1,255p as Merrill Lynch upped its price target to 1,7= 50p from 1,500p and reiterated its "buy" rating. The broker reckons there i= s no short term pressure on the fund manager's margins and applauded the fa= ct that Man charges significant fees but also delivers significant performa= nce benefits after all fees have been paid.=20 GKN was not so lucky, slumping 13.5p to 300p, after HSBC Securities downgra= ded its rating to "hold" from "add". In a note to clients HSBC highlights t= he stock's impressive rally from the 220p level since late September and su= ggests that it has little further to run. It reckons that the automotive se= ctor in which GKN operates will hit negative newsflow in the coming months = as market conditions in Europe and the US continue to deteriorate.=20 The television and radio group Chrysalis jumped 15p to 230p after deputy ch= airman Charles Levison disclosed the purchase of 10,000 shares at 215p. The= media sector more generally, which has been in vogue in recent weeks on ho= pes of an economic recovery, was in retreat as investors opted for the safe= ty of defensive plays. Pearson fell 38p to 827p, BSkyB lost 35p to 812p whi= le Reed International was off 13p at 577p.=20 Hays fell 9.25p to 202p as Dresdner Kleinwort Wasserstein downgraded to "ho= ld" from "buy" citing concerns about volumes in the group's network areas a= nd concerns about delays to new outsourcing contracts. The German broker al= so warned that the hangover from last year's problems and staffing slowdown= could lead to no earnings growth in 2002 for Hays.=20 The food manufacturer Geest rose 20.5p to 669.5p after City analysts visite= d the group's Lincolnshire sites and returned to upgrade their estimates. C= harles Hall of WestLB said that a presentation by management during the vis= it showed that growth continues to be excellent and that Geest is starting = to deliver attractive returns. He said that both the plants visited were we= ll invested and "as good as anything we have seen in the industry".=20 Princedale rose 3.5p to 19.5p after the plastics manufacturer received a 20= p per share cash bid valuing the group at pounds 15m. The offer represents = a premium of 25 per cent on the previous session closing price.=20 The boilers to workspace solutions group Bullough fell 2.25p to 19p after w= arning of significant full year losses and unveiling job cuts. The group al= so said that the well known value investor Peter Gyllenhammar will join the= board as a non-executive director. Mr Gyllenhammar is also deputy chairman= of Montpellier, which recently picked up a 26 per cent holding in the comp= any. Bullough planned to sell off its boilers division but yesterday announ= ced it was halting the sale, saying that the offers it had received were in= adequate.=20 IT EMERGED yesterday that Robert Bonnier, the former chief executive and fo= under of Scoot.com, has sold the bulk of his stake in the troubled on-line = information company.=20 At the height of the dot.com boom his 44 million shares, held in the name o= f Toocs International, were worth more than pounds 100m. At the end of last= month he could only raise a mere pounds 440,000 for his stake selling it a= t 1.1p a share. Scoot shares were up 0.14p to 1.74p yesterday.=20 MARKET MOVERS=20 Regus 48p (up 5p, 11.6 per cent). Major competitor HQ Global plans to close= down the majority of its European operations.=20 Telewest 72.5p (up 4p, 5.8 per cent). Morgan Stanley reiterates its "outper= form" rating with 132p target price.=20 Manchester United 143p (up 6p, 4.4 per cent). Reports that strike by footba= llers has been averted excite investors.=20 Brake Bros 542.5p (up 20p, 3.83 per cent). Credit Suisse First Boston upgra= des to "buy" from "hold" with 700p target price arguing that the recent sel= l-off has been overdone.=20 Henlys 113.5p (up 20p, 21.4 per cent). Nova Bus division wins contract with= Transport Urbain de Quebec in Canada.=20 Lastminute 36.75p (up 4.25p, 13.1 per cent). Announces a surge in sales and= says it will break even in six months time.=20 Applied Optical Technologies 98.5p (up 11p, 12.6 per cent). Confirms anti-c= ounterfeiting contract for 2004 Athens Olympic Games merchandise range.=20 Jacobs 21p (up 2p, 10.5 per cent). Plans restructuring and possible disposa= l of non-core assets.=20 Wellington Underwriting 91.5p (up 9p, 10.9 per cent). Says it is in talks w= ith a number of venture capitalists with view to setting up a new insurance= company.=20 Cambridge Antibody Technology 1,879 (down 41p, 2.1 per cent). Slight nervou= sness ahead of full year results on Monday with analyst expecting losses to= widen.=20 Gameplay 0.85p (down 0.30p, 26.1 per cent). Takeover talks collapse.=20 William Baird 50.5p (down 14p, 21.7 per cent). Says full year results will = be significantly below expectations.=20 Black Arrow 52.5p (down 13p, 19.9 per cent). Says order book at a low and u= nveils a slump in first half pre-tax profits.=20 Durlacher 7p (down 0.75p, 9.6 per cent). Lehman Brothers dumps 1.2m shares = on the market.=20 SEAQ TRADES: 116,464=20 SEAQ VOLUMES: 1.86bn Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business Dynegy could renegotiate Enron bid --- Target stock sags to less than half = of offer's value Carolyn Koo 11/24/2001 The Toronto Star Ontario E09 Copyright (c) 2001 The Toronto Star Power companies Enron Corp. and Dynegy Inc. and their advisers are schedule= d to spend this weekend poring over Enron's books, which could lead to a re= negotiation of Dynegy's acquisition of embattled Enron.=20 The spectre of renegotiation pushed Enron shares down more than 5 per cent,= or 27 cents (U.S.), to $4.74 yesterday on the New York Stock Exchange. Dyn= egy closed up 64 cents, or 1.61 per cent, to $40.40. Dynegy originally agreed to pay about $9 billion in stock for Enron. Amid f= ears that Enron could run out of cash before Dynegy completes its buy, howe= ver, Enron now has a market capitalization of only about $4.03 billion. At = Dynegy's current stock price, the offer for Enron is worth about $10.85 a s= hare, more than twice Enron's current share price.=20 Investment bankers on the deal are currently in the final stages of due dil= igence, sources said. They said renegotiations had not been discussed as of= yesterday afternoon, and that such discussions could not occur until the d= ue diligence review is finished. If the examination of Enron's business tur= ns up any more unpleasant surprises, renegotiation of the deal's terms is c= onsidered a strong possibility.=20 In a report on Wednesday, Ronald Barone, an analyst at UBS Warburg, suggest= ed the deal's current exchange ratio of 0.2685 of a share of Dynegy for eac= h share of Enron could well be readjusted.=20 "We believe the odds of Enron incurring a material adverse change on its op= erations is soaring, which suggests that - assuming Dynegy wants to continu= e to move forward with the deal - the 0.2685 ratio will not hold," he wrote= . He said a ratio of 0.15 was more realistic.=20 Another analyst also said renegotiation is likely: "You've got to believe t= here is that possibility. There's unquestionably continued malaise in Enron= 's core business and Dynegy has left itself open to renegotiate with Enron.= "=20 Recently, some of Enron's natural gas and electricity trading partners have= further scaled back their activity, causing that "malaise." Many of those = partners are shunning new long-term deals and greatly reducing the number o= f transactions.=20 Lower volumes in Enron's trading business, which is the largest and most co= veted portion of its operation, could cause fourth-quarter earnings to come= in below expectations, Enron has said.=20 Concern is also growing about Enron on the bond market. The company's 6.4 p= er cent notes maturing in 2006 and 6.75 per cent notes were bid yesterday a= t 57 cents on the dollar, down from a respective 62 and 60 cents on Wednesd= ay, a trader said. The notes' yields to maturity are 21.5 and 17 per cent r= espectively. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Financial Post: World Enron's stock slump could mean deal is renegotiated: Shares off 45% Carolyn Koo Reuters, with files from Bloomberg News 11/24/2001 National Post National FP8 (c) National Post 2001. All Rights Reserved. NEW YORK - Power companies Enron Corp. and Dynegy Inc. and their advisers a= re scheduled to spend this weekend poring over Enron's books, which could l= ead to a renegotiation of Dynegy's acquisition of embattled Enron.=20 The spectre of renegotiation pushed Enron shares down more than 5%, or US27= cents, to US$4.74 at the close of Friday trading on the New York Stock Exc= hange. Dynegy shares closed up US64 cents, or 1.61%, to US$40.40. Dynegy originally agreed to pay about US$9-billion in stock for Enron. But,= after falling 45% by Friday amid fears it could run out of cash before Dyn= egy completes its buy, Enron now sports a market capitalization of only abo= ut US$4.03-billion.=20 At Dynegy's current stock price, its offer for Enron is worth about US$10.8= 5 a share -- more than twice Enron's current share price.=20 Investment bankers on the deal are currently in the final stages of due dil= igence, sources say. Should the examination of Enron's business turn up any= more unpleasant surprises, renegotiation of terms is a strong possibility.= =20 An Enron spokeswoman said that, to her knowledge, Dynegy was not renegotiat= ing the terms of the acquisition. Dynegy spokesman John Sousa said the comp= any "remains optimistic for the potential of the merger."=20 In a report on Wednesday, Ronald Barone, an analyst at UBS Warburg, suggest= ed that the deal's current exchange ratio of 0.2685 share of Dynegy for eac= h share of Enron could well be readjusted. Mr. Barone said a much lower exc= hange ratio of 0.15 was more realistic.=20 "You've got to believe there is that possibility. There is a 90% spread on = the deal," said one analyst, referring to a potential renegotiation.=20 "There's unquestionably continued malaise in Enron's core business and Dyne= gy has left itself open to renegotiate with Enron," he continued.=20 Recently, some of Enron's natural gas and electricity trading partners have= further scaled back their activity, causing that "malaise." Many of those = partners are shunning new long-term deals and greatly reducing the number o= f transactions.=20 Lower volumes at its trading business, which is the largest and most covete= d portion of its operation, could cause fourth-quarter earnings to come in = below expectations, Enron has said.=20 Even as the two companies' advisers review the company's books, Enron is fa= cing an increasing number of lawsuits and a tidal wave of potential liabili= ties, if the past year is any guide.=20 Some big pension funds that invested in Enron have said they are considerin= g legal options in the wake of Enron's stock collapse and a regulatory prob= e of its dealings.=20 The company has also been sued by employees who say they lost large amounts= of money in retirement savings that were heavily invested in Enron's stock= . One of the suits, filed in U.S. District Court in Houston on Tuesday, all= eged that Enron "recklessly endangered" the retirement savings of its emplo= yees by encouraging them to invest heavily in Enron stock without warning t= hem of any risks. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Report on Business: International Dynegy may renegotiate deal Firms to finish examining Enron's books Reuter News Agency 11/24/2001 The Globe and Mail Metro B11 "All material Copyright (c) Bell Globemedia Publishing Inc. and its licenso= rs. All rights reserved." NEW YORK -- Power companies Enron Corp. and Dynegy Inc. and their advisers = are scheduled to spend this weekend poring over Enron's books, which could = lead to a renegotiation of Dynegy's acquisition of embattled Enron.=20 The spectre of renegotiation pushed Enron shares down more than 5 per cent,= or 27 cents (U.S.), to close at $4.74 yesterday on the New York Stock Exch= ange. Dynegy shares closed up 64 cents, or 1.61 per cent, to $40.40. Dynegy originally agreed to pay about $9-billion in stock for Enron. But si= nce the company's stock fell 45 per cent by yesterday's close amid fears th= at it could run out of cash before Dynegy completes its buy, Enron now spor= ts a market capitalization of only about $4-billion.=20 At Dynegy's current stock price, its offer for Enron is worth about $10.85 = a share -- more than twice Enron's current share price.=20 Investment bankers on the deal are currently in the final stages of due dil= igence, sources say. Should the examination of Enron's business turn up any= more unpleasant surprises, renegotiation of the deal's terms is a strong p= ossibility.=20 An Enron spokeswoman said that, to her knowledge, Dynegy was not renegotiat= ing the terms of the acquisition. Dynegy could not be reached for comment.= =20 In a report on Wednesday, Ronald Barone, an analyst at UBS Warburg, suggest= ed that the deal's current exchange ratio of 0.2685 shares of Dynegy for ea= ch share of Enron could well be readjusted.=20 "We believe the odds of Enron incurring a material adverse change on its op= erations are soaring, which suggests that -- assuming Dynegy wants to conti= nue to move forward with the deal -- the 0.2685 ratio will not hold," he wr= ote.=20 Mr. Barone said an exchange ratio of 0.15 is more realistic.=20 "You've got to believe there is that possibility. There is a 90-per-cent sp= read on the deal," said one analyst, referring to a potential renegotiation= .=20 "There's unquestionably continued malaise in Enron's core business, and Dyn= egy has left itself open to renegotiate with Enron," he continued.=20 Recently, some of Enron's natural gas and electricity trading partners furt= her scaled back their activity, causing that "malaise." Many of those partn= ers are shunning new long-term deals and greatly reducing the number of tra= nsactions.=20 Lower volumes at its trading business, which is the largest and most covete= d portion of its operation, could cause fourth-quarter earnings to come in = below expectations, Enron has said.=20 Even as the two companies' advisers review the company's books, Enron is fa= cing an increasing number of lawsuits and a tidal wave of potential liabili= ties, if the past year is any guide.=20 Some big pension funds that invested in Enron have said they are considerin= g legal options in the wake of Enron's stock collapse and a regulatory prob= e of its dealings.=20 Enron has also been sued by employees who say they lost large amounts of mo= ney in retirement savings that were heavily invested in the company's stock= . One of the suits, filed in U.S. District Court in Houston on Tuesday, all= eged that Enron "recklessly endangered" the retirement savings of its emplo= yees. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business INVESTORS RETURN STUFFED AND READY TO BUY; BLUE CHIPS TURN IN A STRONG DAY,= REVERSING PROFIT-TAKING SESSIONS BY ADAM GELLER, Associated Press 11/24/2001 San Jose Mercury News Morning Final 8C (c) Copyright 2001, San Jose Mercury News. All Rights Reserved. NEW YORK -- Investors returned from the Thanksgiving holiday in a buyingmoo= d Friday, sending blue-chip stocks to strong gains and reversing the profit= -taking trend of recent sessions.=20 The Dow Jones industrial average ended an abbreviated trading session up 12= 5.03 to 9,959.71. For the week, the Dow climbed 92.72 points, or 0.9 percen= t. Broader stock indicators also rose. The Standard & Poor's 500 index was up = 13.31 to 1,150.34, to end the week up 1 percent. The Nasdaq composite index= rose 28.15 to 1,903.20, to end the week up 0.2 percent.=20 Advancing issues outnumbered decliners by a nearly 3-1 ratio on the New Yor= k Stock Exchange, where consolidated volume came to 512.75 million shares, = down sharply from 1.28 billion in Wednesday's session.=20 The rise in stock prices, despite the absence of news, shows some investors= see buying opportunities after market backtracking earlier this week, anal= ysts said.=20 ''We did see some selling. We did see some money taken off the table. But t= here are bargain hunters that refuse to sit idly by as optimism appears to = be increasing,'' said Alan Ackerman, executive vice president at Fahnestock= & Co. in New York.=20 Friday's gains reversed the trend of earlier this week, but are in line wit= h the market's recent surge, which has seen stocks gain about 20 percent fr= om the lows that followed the Sept. 11 terrorist attacks.=20 Stock markets closed early at 10 a.m. PST.=20 Gainers included Ericsson, whose chairman said this week he expects less co= mpetition in the market for third-generation wireless technology. The compa= ny's stock rose 33 cents to $5.55.=20 Wal-Mart Stores, the nation's largest retailer, rose 68 cents to $55.80 as = consumers headed to stores on the day regarded as the official start to the= holiday shopping season. Toys R Us shares also rose, up 95 cents to $23.05= .=20 Enron, whose acquisition by Dynegy is now being questioned by investors, fe= ll 30 cents to $4.71.=20 The Russell 2000 index, which tracks smaller company stocks, rose 6.11 to 4= 58.42.=20 Bond prices fell in an abbreviated, post-holiday session as investors seeme= d to prefer stocks instead.=20 The price of the benchmark 10-year Treasury note fell 1/2 point, or $5.00 p= er $1,000 in face value. Its yield, which moves in the opposite direction, = rose to 5.00 percent compared with 4.95 percent late Wednesday. Bond market= s were closed Thursday in observance of Thanksgiving Day.=20 The 30-year Treasury bond fell 5/8 point to yield 5.38 percent, up from 5.3= 5 percent on Wednesday, according to Moneyline Telerate.=20 Overseas, stock markets were mixed. In Europe, Germany's DAX index rose 0.2= percent, while Britain's FT-SE 100 was off 1 percent, and France's CAC-40 = fell 0.6 percent. Japanese markets were closed Friday for a national holida= y.=20 In currency trading, the dollar managed four-month highs against the yen an= d the pound.=20 The dollar reached 124.48 yen, its highest since Aug 2. The British pound h= ad a low against the dollar at $1.4035, its lowest since July 18. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business DYNEGY, ADVISERS PORE OVER ENRON DETAILS; DEAL From Reuters and the Associated Press 11/24/2001 San Jose Mercury News Morning Final 2C (c) Copyright 2001, San Jose Mercury News. All Rights Reserved. A long weekend of work faced Dynegy and proposed acquisition Enron, whose w= orsening stock woes Friday whipped up fear that the deal could be renegotia= ted or collapse entirely.=20 Houston-based Dynegy and its advisers were expected to spend the weekend re= viewing larger cross-town rival Enron's complex books, as both parties race= against the decline in Enron's stock to complete the thorough financial ex= aminations a merger requires. Enron shares ended down 6 percent, or 30 cents, to $4.71 at the close of ab= breviated Friday trading on the New York Stock Exchange. Dynegy shares rose= 64 cents, or 1.6 percent, to $40.40.=20 Dynegy on Nov. 9 agreed to pay about $9 billion in stock for Enron. But, af= ter falling 45 percent by Friday's close amid fears it could run out of cas= h before the deal closes, Enron's market capitalization is only about $4.03= billion.=20 At Dynegy's current stock price, its offer for Enron is worth about $10.85 = a share -- more than twice Enron's current share price. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 EDITORIAL WORKERS, NEST EGGS DEVASTATED 11/24/2001 Portland Oregonian SUNRISE D07 (Copyright (c) The Oregonian 2001) About 2,700 local Portland General Electric/Enron employees, along with 18,= 000-plus other Enron employees, had their 401(k) plans locked down after En= ron announced a $618 million third-quarter loss, suffering huge losses to t= heir retirement nest eggs ["401(k) plans sink with Enron," Nov. 16].=20 This is the corporation that gave millions of dollars to get President Bush= 's regime into power. I'm surprised Bush did not, without congressional con= sent, offer Enron a multibillion-dollar "economic stimulus" package to save= the corporation. Meanwhile, the hard-working Enron employees are devastated.=20 JOHN B. WAITE Milwaukie Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Analysis: Travails of the Enron Corporation 11/24/2001 NPR: Weekend Edition - Saturday Copyright 2001 National Public Radio, Inc. All Rights Reserved. SCOTT SIMON, host: This is WEEKEND EDITION from NPR News. I'm Scott Simon. = Coming up, recognizing New Yorkers by their lunch orders.=20 But first, trading energy. This week, stock in the Enron Corporation fell l= ike a 14-pound turkey carcass thrown from a third-story kitchen window--kat= hunk. Continues a trend over the past few months. Enron shares have plunged= more than 90 percent since the departure of the company's chief executive = and the reworking of some balance sheets resulting in a restatement of inco= me, about $580 million less than previously reported. Joe Nocera is the exe= cutive editor of Fortune magazine and a frequent contributor to this progra= m. Joe, thank you for being with us.=20 JOE NOCERA (Executive Editor, Fortune Magazine): Thanks for having me, Scot= t.=20 SIMON: Now Enron, we ought to explain, it's more than pipelines and gas. Ye= s?=20 NOCERA: It's a lot more--or a lot less, depending on how you look at it.=20 SIMON: A lot less perhaps, yes, now.=20 NOCERA: They've actually shed most of their hard assets when they became a = trading company, trading energy futures, weather futures, broad band future= s, a very complicated New Age, modern type company. And for a long time, ev= erybody really believed in what Enron was. They were the kind of the dot-co= m of the energy world and were thought to do no wrong. And then, Scott, peo= ple stopped believing; people stopped having faith and, in particular, peop= le stopped believing anything management said. This is a case study in what= happens when management loses credibility. These guys kept saying, `All th= e problems are behind us,' and every time they said it, a week later, some = new problem would crop up. And people started examining their balance sheet= and finding all this squirrelly stuff in it. And now basically, if Enron d= oesn't do this deal that it's negotiated to do with Dynegy, they're going t= o go bankrupt. It's really an incredible story.=20 SIMON: Explain to us, if you could, what you refer to--and I guess it's a t= echnical term among economists--`squirrelly stuff.'=20 NOCERA: Yeah, the squirrelly stuff.=20 SIMON: Yeah.=20 NOCERA: Well, the worst that happened was that they had--it turned out that= they had all these side partnerships that included Enron officials that we= re doing billion-dollar trades with Enron, and nobody quite knows why they = were doing this. Some people believe it was to enrich the officers in quest= ion, but other people believe that they were doing this to help smooth out = their earnings. In other words, it was a form of hyping the stocks to keep = the earnings going up, and they would take their losses--they'd bundle thei= r losses and they'd throw them in these partnerships so they wouldn't be on= the balance sheet.=20 And when this stuff started to emerge in the newspapers, that's when the wh= eels really started to fall off, and people were saying, `If this is going = on, what'--I mean, this his terrible in and of itself--`but what else could= there be?' And it turns out there've been other things as well.=20 SIMON: Well, you know, I think I understand why now Enron wants the deal wi= th Dynegy to go through, but what does Dynegy see in this?=20 NOCERA: Well, Enron still does somewhere 25 and 33 percent of all the natur= al gas and energy futures trade in the United States. It's a huge marketpla= ce, and Dynegy is a much smaller and more conservative player and, you know= , by buying Enron, suddenly they became a much, much bigger player. Also, D= ynegy actually has hard physical assets and, unlike Enron, they wouldn't ju= st be a middleman on these trades, they would actually be delivering the na= tural gas. There is something in it for Dynegy. They're buying a very big c= ompany at for what now looks like $5 a share. It's really incredible.=20 SIMON: And let me ask about this, finally; some Enron employees--a good num= ber of Enron employees are suing the company, contending, credibly, that th= ey've been essentially defrauded out of pension money.=20 NOCERA: Right. Their big gripe is that when the thing started to tank, when= the stock started to go down, they were unable to move their--get out of E= nron stock and their pension fund--that Enron actually throws the stock in = their fund, so they couldn't move out into a different investment vehicle. = Now they're saying that, you know, they've been defrauded because the stock= was fraudulently hyped. And you know what, Scott? When all is said and don= e, I think they've got a case. I think they're going to be able to, in fact= , show that much of what Enron did, the reason they did the things they did= was to hype the stock. And this is a classic case of what happens when you= put the stock in front of the company instead of the company in front of t= he stock.=20 SIMON: I hate to ask a question like this with just five seconds left, but = could there be a criminal investigation?=20 NOCERA: Oh, I think there will be. The SEC is already circling around.=20 SIMON: OK, Joe, thanks very much.=20 NOCERA: Thank you, Scott.=20 SIMON: Joe Nocera, executive editor of Fortune magazine, and speaking with = us from the studios of member station WFCR, Amherst. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Dynegy's Right to Enron Pipeline May Be Disputed, Barron's Says 2001-11-24 13:52 (New York) Houston, Nov. 24 (Bloomberg) -- Dynegy Inc. may have a hard time claiming one of Enron Corp.'s pipelines if their merger agreement collapses, because the asset has been pledged as collateral for $1 billion in bank loans, Barron's reported. Dynegy has said its initial investment of $1.5 billion in Enron, using cash from ChevronTexaco Corp., gave Dynegy the right to acquire Northern Natural Gas Co. if the deal falls through. Enron, though, has pledged the assets of its Transwestern and Northern Natural Gas pipelines to get $1 billion in loans from J.P. Morgan Chase and Salomon Smith Barney Inc. Dynegy's claim to the pipeline may be challenged by Enron's lenders if Enron is forced into bankruptcy, Barron's said. Dynegy may also be concerned about Enron affecting its credit rating, Barron's said. Dynegy, which has a market value of more than $10 billion and assets worth only $2.5 billion, is listed two notches above junk status and is on watch for a possible downgrade, the weekly newspaper said. Barron's said renegotiating the purchase in response to a recent decline in Enron's shares might not make sense because the company's debt accounts for most of the deal's value, now around $23 billion. Deal still on as Enron shares drop 6%=20 Houston Chronicle By NELSON ANTOSH Staff 11/24/01 Shares of Enron dropped another 6 percent Friday, as the investment communi= ty fretted that the acquisition price for the company by Dynegy may be redu= ced, or the deal might not go through at all.=20 The two sides didn't offer anything new for worried investors.=20 Dynegy stuck to its Wednesday statement that it is working to accelerate re= gulatory approvals in order to complete the deal as previously announced.= =20 Dynegy is continuing to take a close look at Enron as part of the due dilig= ence process, which will involve careful study of Enron 's books, Dynegy sp= okesman John Sousa said on Friday.=20 On Wednesday, Dynegy Chief Executive Chuck Watson said he was encouraged th= at Enron had closed a $450 million credit security and received an extensio= n on a $690 million IOU.=20 Dynegy remains optimistic that the deal can be done, said a source close to= the company.=20 Enron spokeswoman Karen Denne said she was unaware of any meetings planned = between top executives of the two companies this weekend, which could signa= l alterations to the deal.=20 Enron 's stock, which was the most active on the New York Stock Exchange on= Friday, dropped 30 cents to close at $4.71 per share.=20 This made it the worst performing stock in the Standard & Poor's 500 index = for the week, with a loss of 48 percent for the holiday-shortened period.= =20 It was a bad week for a stock that has come down from a 52-week high of $84= .87 on Dec. 28 last year. For the year to date, Enron 's price is off 94 pe= rcent.=20 More than 40 million shares traded hands Friday. On Wednesday, 116 million = shares were traded.=20 Analyst Ron Barone of UBS Warburg said the odds of a reduced exchange ratio= in the deal were rising.=20 As announced Nov. 9, Dynegy would exchange 0.2685 of its shares for each sh= are of Enron . According to Barone, 0.15 might be more appropriate.=20 Traders also speculated that Enron might need to issue more stock to stabil= ize its finances, which would dilute the shares currently outstanding.=20 Dynegy's stock gained 64 cents to close Friday at $40.40 per share, on trad= ing of 2.1 million shares. For the year to date, Dynegy's price is off 28 p= ercent.