The lobbying by Enron had no effect on what Fortune published, highlighted on its cover with the headline, ”Is Enron Overpriced?” Then inertia. Is Enron Overpriced – Download as Word Doc .doc), PDF File .pdf), Text File .txt ) or read online. impenetrable. So why is Enron trading at such a huge multiple? Stock.” Right now, that title belongs to Enron, the Houston energy giant.= =

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How exactly does Enron make its money?

Submit a new text post. But all of these expectations are based on what Wolfe, the J. McLean married Chris Wilford in Brown senior power strategist. It still confuses me why companies get to pick their auditors and they get to pay the firm themselves. She was, however, one of the first journalists to openly question the stock market juggernaut, and as subsequent revelations evinced, her suspicions proved well-founded. Fastow, who points out that Enron has 1, trading “books” for different commodities, says, “We don’t want anyone to know what’s on those books.

Details are hard to come by because Enron keeps many of the specifics confidential for what it terms “competitive reasons. And unlike a trading firm, which thrives when prices are going wild, Enron says that volatility has no effect on its profits–other than to increase customers, who flock to the company in turbulent times.

In any event, some analysts seem to like the fact that Enron has some discretion over the results it reports in this area. Along with broadband, Enron has ambitious plans to create big businesses trading a huge number of other commodities, from pulp and paper to data storage to advertising time and space.

Use of this site constitutes acceptance of our User Agreement and Privacy Policy. They used subsidiaries holding their own stock and leveraged those. The same is true for Enron’s competitors, but “wholesale operations” are usually a smaller part of their business, and they trade at far lower multiples.

Will Mmmhops be a hit? As for the details about how it makes ehron, Enron says that’s proprietary information, sort of like Coca-Cola’s secret formula. Not all analysts are so aggressive. As to the overpriiced issue, I am sure that the 8 to 9 figure fee that AA was getting from Enron had a large impact on the partner passing on items AA should have reviewed further.


And the inability to get behind the numbers combined with ever higher expectations for the company may increase the chance of a nasty surprise. With the exception of a handful of people gambling with billions of dollars of other people’s money, even armchair investors can learn things from Enron’s gargantuan failure, McLean says.

Enron doc debuts just in time for trial of Lay, Skilling

It’s been a while since I read “The Smartest Guys in the Room” but one detail that always stuck out to me is the fact that Enron used to threaten Arthur Andersen by saying Enron would give their business to another Big 5 firm if AA didn’t play ball with certain things. Yes that’s what I meant. These two stories have still gone untold, but we knew we couldn’t finish our book with all of that ongoing, so we chose to finish our book with the day the company went bankrupt.

This requires big capital expenditures. And as Long Term Capital taught us, the best-laid hedges, even those designed by geniuses, can go disastrously wrong.

In addition to its commodities business, Enron has another division called Assets and Investments that is every bit as mysterious. But for all the attention that’s lavished on Enron, the company remains largely impenetrable to outsiders, as even some of its admirers are quick to admit. So are the numbers from these statements being referenced incorrect? So they are part of the mysterious machinery that is an important component of most Americans lives, but you actually never think about it until things go wrong.

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And as Long Term Capital taught us, the best-laid hedges, even those designed by geniuses, can go disastrously wrong. The company also blames short-sellers for talking down Enron. SoftBank and Toyota want driverless cars to change the world. You can feel free to be “harsh”, but never insulting.

Is Enron Overpriced?

But even among the books, the films and the news coverage, does McLean think casual followers of the Enron tale truly understand what she concedes is an often very complex corporate imbroglio?

Fastow, who points out that Enron has 1, trading “books” for different commodities, says, “We don’t want anyone to know what’s on those books. But these earnings aren’t necessarily cash at the instant they are recorded. Analyzing Enron can be deeply frustrating.


Changes in the valuation are reported in earnings.

Retrieved March 11, In overppriced annual report the company wrote that “the use of financial instruments by Enron’s businesses may expose Enron to market and credit risks resulting from adverse changes in commodity and equity prices, interest rates, and foreign exchange rates. Skilling says that Enron can convert these contracts to cash anytime it chooses by “securitizing” them, or selling them off to a financial institution.

It overpriecd dismisses any comparison to a securities firm. It was a really shitty enfon for a long time before the entire firm went down. Nor at the moment is Enron’s profitability close to that of brokerages which, in fairness, do tend to be more leveraged. Morgan’s private bank, who despite his remark is an Enron fan. CEO Jeff Skilling calls Enron a “logistics company” that ties together supply and demand for a given commodity and figures out the most cost-effective way to transport that commodity to its destination.

Is Enron Overpriced? : Accounting

For instance, many Wall Streeters believe that the current volatility in gas and power markets is boosting Enron’s profits, but there is no way to know for sure.

It’s better to know that than not know, right? Enron also uses derivatives, like swaps, oveprriced, and forwards, to create contracts for enro parties and to hedge its exposure to credit risks and other variables. In written reports, Morgan Stanley chalked up the decline to the poor performance of Enron’s “significant number of investments” in telecom stocks; Dain Rauscher Wessels blamed it on a lack of asset sales.

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Deluxe Edition” Sony,2: Enron vehemently disagrees with any characterization of its business as black box-like. Please use the report button to ask the moderation team to address off-side comments. Enron also uses derivatives, like swaps, options, and forwards, fnron create contracts for third parties and to hedge its exposure to credit risks and other variables. It also has McLean talking once again about Enron, the story that follows her everywhere, but she doesn’t seem to mind.