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To: BWAC who wrote (38195)	2/5/2002 8:52:31 AM
From: E.J. Neitz Jr	Read Replies (1) \| Respond to of 53068

Enron's Flu Has Spread Wide and Will Linger --Article By James J. Cramer 02/05/2002 08:06 -------------------------------------------------------------------------------- If Enron ENRNQ had just been an energy trader, its ripple effect would not have been so great. Unfortunately, Enron was much more than that. Enron was a tech company; it sponsored many new broadband initiatives, tainting that whole market. Enron was an investment bank; it had lots of initial public offerings. Enron was a stock broker; it wrote dozens of big derivatives. And Enron was a venture capitalist; it brought public lots of useless companies into the height of the market's frenzy. That's why, for example, Microsoft MSFT goes down on Enron news. Microsoft underwrote a huge number of venture deals and issued giant put sell programs just like Enron. That's why, for example, General Electric GE goes down every day. Its finance division does many of the kinds of things that Enron's finance division did. It's why, of course, the banks and brokers go down; because there is a growing recognition that the financial engineering Enron lived off of was provided by these banks and brokers. And in the future, these kinds of activities will be frowned upon as ways of making money. That means earnings in the future will have to be taken down. You just aren't going to see much of this kind of derivative financial engineering being done. It is too complex and therefore too scary for investors to understand. How long will this last? Until companies take pledges not to do these kinds of things, which, given that until two weeks ago no one was thinking about doing, means that we will be with this pall for at least two reporting quarters. That's how long it will take to get Enronitis out of our system. It's like a really bad flu. It just doesn't go away immediately; it lingers until we can check out a couple of quarters to see how companies made money. If they made money with financial engineering (pension plan, sale leaseback, initial public offering, venture capital, sale of puts, lots of stock instead of cash as compensation), they will still be considered sick. This is the worst flu we've had in years, worse than the Milken flu, frankly. The worst I can recall.