I was looking for a bounce late Friday and was going to pick up some shares. Missed my opportunity, thank God. From Reuters:
dailynews.yahoo.com
Sec Looks Into Enron Deals; Stock Slides
By David Howard Sinkman
NEW YORK (Reuters) - Shares of Enron Corp. (NYSE:ENE - news) slumped more than 20 percent on Monday after it said U.S. regulators are looking into company transactions, another blow to a company whose chief executive resigned in August.
A spokesman for North America's biggest buyer and seller of natural gas and electricity declined to discuss an inquiry by the U.S. Securities Exchange Commission, but said it was cooperating. The SEC also declined to outline details of its inquiry.
Investor confidence in the company has been rocked by reports from The Wall Street Journal about its relationship with two limited partnerships that were run until recently by Enron's chief financial officer, Andrew Fastow. The company also reported last week its first quarterly loss in more than four years, and took $1.01 billion in charges and writedowns on ill-fated investments.
Problems at Enron surfaced two months ago when CEO Jeff Skilling resigned after only six months at the helm.
Enron shares declined $5.40, or 20.73 percent, to close at $20.65 Monday on the New York Stock Exchange (news - web sites), shaving off almost $4.2 billion of its market capitalization. The stock, the biggest decliner by percentage loss on the NYSE, fell as much as 22.8 percent on Monday, when it opened at its lowest level since September 1998.
Shares declined 23 percent last week after the Journal ran its first story about the limited partnerships on Wednesday.
Enron declined to comment on whether the SEC's inquiry into ''certain related party transactions'' involved the partnerships.
``Related party transactions'' is the heading used by Enron in its 1999 and 2000 annual reports to discuss dealings with its limited partnerships, LJM Cayman LP and the larger LJM2 Co-Investment LP, which engaged in complex hedging transactions involving company assets worth hundreds of millions of dollars.
Fastow severed his ties to the partnerships in June. LJM was set up in June 1999 for energy-related investments, and LJM2 in December 1999 for energy- and communication-related investments.
The Journal reported $35 million of its third-quarter loss of $638 million were connected with the limited partnerships
Curt Launer, an analyst at Credit Suisse First Boston, said investors should question Enron's use of real value accounting when the value of certain assets, ``most notably in telecommunications,'' have declined precipitously.
``Investors have had several opportunities to question Enron's credibility and at each of those turns the share price has declined,'' Launer said.
Some analysts, though, cautioned against assuming fire when there might only be smoke.
``This is an inquiry, not an investigation, and I cannot imagine Enron's attorneys or accountants would allow it do to something illegal,'' said Merrill Lynch analyst Donato Eassey.
``It's easy for the market to kick a company when its down, but these challenges do not last for a solid company, and we think Enron is one.''
Shares in the company are down 75 percent this year. |
