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Technology Stocks : John, Mike & Tom's Wild World of Stocks -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (2519)	10/23/2001 3:11:36 PM
From: John Pitera	Read Replies (1) \| Respond to of 2850

ENE: THE BALANCE SHEET MATTERS; PROSPECT FOR FURTHER WRITEDOWNS Enron Corp(ENE)# Rating: 1H As of 10/23/2001 Last Changed 04/13/2000 Salomon Smith Barney ~ October 19, 2001 Enron Corporation (ENE)# ENE: THE BALANCE SHEET MATTERS; PROSPECT FOR 1H (Buy, High Risk) FURTHER WRITEDOWNS Mkt Cap: $23,332.1 mil. October 19, 2001 SUMMARY * ENE shares have declined due to concern over POWER & NATURAL GAS writedowns, actual and prospective, in our view. While Raymond Niles management announced $2.21 billion in charges ($1.01 billion through the income statement and $1.2 billion as a direct charge to shareholders equity) when they Benjamin Morton reported earnings (see our 10/16/01 note), the prospect of further charges has spooked the stock * We think further write-offs are likely at non-core Brian Chin global assets (Dabhol and South America) and possibly at their broadband unit (already partially written off). Several other complex off-balance sheet vehicles have raised concern. * Offsetting these potential hits to shareholders equity are likely reductions in debt from the proceeds of various asset sales over the balance of the year * Moody's has captured these concerns by putting Enron's senior debt on review for possible downgrade. * We are evaluating these issues and currently maintain our 1H rating. FUNDAMENTALS P/E (12/01E) 17.9x P/E (12/02E) 15.0x TEV/EBITDA (12/01E) NA TEV/EBITDA (12/02E) NA Book Value/Share (12/01E) $15.66 Price/Book Value 2.1x Dividend/Yield (12/01E) $0.52/1.6% Revenue (12/01E) $100,789.0 mil. Proj. Long-Term EPS Growth 23% ROE (12/01E) 11.5% Long-Term Debt to Capital(a) 43.0% ENE is in the S&P 500(R) Index. (a) Data as of most recent quarter SHARE DATA RECOMMENDATION Price (10/17/01) $32.20 Current Rating 1H 52-Week Range $84.63-$25.15 Prior Rating 1H Shares Outstanding(a) 724.6 mil. Current Target Price $55.00 Convertible No Previous Target Price $55.00 EARNINGS PER SHARE FY ends 1Q 2Q 3Q 4Q Full Year 12/00A Actual $0.40A $0.34A $0.34A $0.41A $1.47A 12/01E Current $0.47A $0.45A $0.43A $0.46E $1.80E Previous $0.47A $0.45A $0.43A $0.46E $1.80E 12/02E Current NA NA NA NA $2.15E Previous NA NA NA NA $2.15E 12/03E Current NA NA NA NA NA Previous NA NA NA NA NA First Call Consensus EPS: 12/01E $1.81; 12/02E $2.14; 12/03E NA