For those that haven't heard:
Enron (ENE) 65 9/16: Enron is forming another online business, one that could be a blockbuster. In this morning's Stock
Brief, we introduced you to Enron, pointing out that its Enron Online operation was a corporate jewel whose potential value
hasn't been recognized. The company's new EnronCredit.com service is a perfect example of what we're talking about.
Enron announced on Wednesday that it is forming EnronCredit with the intention of providing "live credit prices [enabling]
business-to-business customers to hedge credit exposure (ie: risk that counterparty to a deal can't pay) instantly via the
Internet". D-Day for Enron's new venture in credit risk market-making is set for March 8th. It's no accident that Enron is getting
into this business, it's an outgrowth of a service the company has been providing internally to its electricity traders. In the
free-for-all that has been the trading market in electricity, Enron needed to be able to evaluate whether or not a counterparty
to a trade would be able to make payment on delivery. With EnronCredit, Enron is simply going commercial with a service
they've been providing internally, with unmatched success I might add. The timing is perfect. With trading markets in
everything from lab supplies to steel breeding like bunnies on the Internet, the much vaunted "Netexchanges", the need to
lay-off credit risk is going to explode. No one is better equipped to provide this service than Enron. Enron has been spending
$70-100 mln a year on information systems to support its internal trading operations. This is a perfect example of how Enron
is going to be leveraging those investments and applying to them wider commercial applications. By the way, Enron
chairman Ken Lay told a PaineWebber conference a couple of weeks ago that its Enron Online energy trading operation has
handled $8.5 billion in transactions since the service's "launch" in November. That makes them one of the biggest, if not the
biggest, B2B e-commerce players. Enron is a story with incredible depth. It's like an onion, you peel away one layer and
another, a fresher one magically appears. It's the corporate gift that keeps on giving. |
