NEW YORK (Dow Jones)--Investors rewarded Calpine Corp. (CPN) Monday for
being one of the first independent power producers to certify its financial
filings to the Securities and Exchange Commission, sending the stock as much
as 15% higher.
In an industry plagued by government investigations into questionable
accounting and trading practices, as well as a deluge of credit downgrades
and liquidity problems, Calpine may end up being one of the few merchant
energy firms able to give an unqualified response to the SEC certification
demand, whose deadline is Wednesday.
"You're bound to have in the initial filings, in my opinion, some kind of
hedged statement by some of the companies still in the process of re-auditing
2001 or pursuing accounting investigations," said Craig Shere, an equities
analyst at Standard & Poor's.
Some firms, like CMS Energy Corp. (CMS), said they're unable to verify their
financial results for 2002 until restatements of earnings for previous years -
necessitated by round-trip trading - have been completed.
In contrast to many of its peers, Calpine has an easy-to-understand business
model undergirded by physical assets, making it less exposed to vagaries in
the marketing and trading side of the business, Shere said.
"They're not overly compacted with obfuscations, and smoke and mirrors and
side agreements," said Shere. "They produce very cheap power and expect to
make a profit from it."
And its verification of SEC filings sends a signal that the market need not
fear any unwelcome surprises, like restatements of past earnings, in the near
future.
But analysts agreed that given the low levels to which share prices across
the independent power group have dropped, even a 10% gain on the day was
nothing to get excited about. |
