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To: White Bear who wrote (81157)	12/10/2000 1:11:08 AM
From: Douglas V. Fant	Respond to of 95453

Sahara, Mo khabek quif halek? (That's my best effort phonetically in Arabic to say "how are you doing my friend?) Enron was picked as one of the "Magic 25" this year. I'd personally wait for a price pullback though before I jumped in here. But give Enron tremendous credit. They are far and away the leader in noveau strategic business planning in the energy industry- And they appear to be everywhere on the cutting edges of alternative energy too.... Here's Indivudal Investor's writeup... An energy-trading company in the Magic 25? Must be a hedge against a bear market, right? Nope. The hedge we like is the one Enron gives its customers. Formed by a 1985 merger of two gas-pipeline companies, Enron is the leading U.S. energy broker and is expanding its expertise to other products such as broadband-communications capacity. Enron, at its Houston headquarters, makes markets in gas and electricity by bringing buyers and sellers together. The company sells either its own supplies or capacity that it buys from other producers, making a profit on the spread. Third-quarter earnings before interest and taxes (EBIT) in this business grew 66% over the year-earlier quarter, to $627 million. (To factor out the effect of big one-time charges, analysts use EBIT to gauge Enron's progress because the company invests heavily in new businesses.) Wholesale energy profits have been growing at an annual rate of more than 30% and should account for roughly 70% of Enron's expected EBIT of $2.5 billion in 2000. And with only about 20% of the global energy market deregulated to date, demand should expand in the next several years. Enron also offers energy management, an estimated $240 billion industry. By overseeing the energy needs of such customers as Simon Property Group and Starwood Hotels & Resorts, Enron helps them achieve 8% to 13% annual savings. Formed in 1997, this unit broke into the black in 2000, and in the third quarter reported a 172% revenue gain and a $30 million profit. Management projects that this business could earn $1 billion annually in five years. Still, the impetus that doubled Enron's stock price during the past year is its New Economy strategy, led by chairman and CEO Kenneth Lay. In November 1999, it rolled out EnronOnline, an Internet trading platform that has already racked up $183 billion worth of transactions. Through EnronOnline, the company trades bandwidth (the electronic "pipes" that deliver video and data) as if it were any other commodity. As with energy before deregulation, the market for bandwidth has been inefficient because customers-content providers, network carriers, and end-users-can get locked into long-term commitments forcing them to buy unneeded capacity. Enron's solution is to sell bandwidth to customers on an as-needed basis. Enron sold its first contract in December 1999, and has projected 5,000 trades in 2000. EnronOnline gives the company an infrastructure to create a market in any tradable product. The company already makes markets in pulp and paper, steel and other metals, and it expects to do the same for other products, including semiconductor chips. "The potential for this business model is enormous," says president and chief operating officer Jeffrey Skilling. The next goal is Internet content delivery. Last summer, Enron signed a 20-year deal with Blockbuster to deliver video-on-demand over Enron's network. Enron is still building infrastructure and expects the business to lose $60 million in both 2000 and 2001, but forecasts annual operating profits of $1 billion in five years. At a recent $82.94, Enron's shares traded at a hefty 58.4 times expected 2000 earnings of $1.42 a share. Given the growth potential, however, Enron has plenty of upside. Using a sum-of-the-parts analysis of the company's units, including its 32,000-mile pipeline business, Credit Suisse First Boston analyst Curt Launer sets a price target of $115, 28% above the level where the shares trade today. -- Jeff Schlegel ENE Last Trade 16:03 73.06 Chg +0.19 Bid 69.38 Ask 74.00 52wk High 90.75 52wk Low 36.18 Trl Eps 1.37 20 min. Delayed