California’s power crisis had no effect on Enron’s fourthquarter earnings and will have little effect on the earnings impactfor this year, COO Jeff Skilling said yesterday. Enron does not owngeneration assets in the state, but markets electricity there, withits profits coming from merchant activities it chooses to conduct.

Skilling, speaking to analysts during an earnings conferencecall Monday, said “nothing can happen in California that wouldjeopardize” its earnings performance,” which analysts of FirstCall/Thomson Financial estimate to be between $1.65 to $1.70 in2001. “We do not expect the California situation to have anysignificant effect on Enron’s financial outlook, specifically ourability to hit 2001 targets,” Skilling said.

What did impact fourth quarter earnings was a 77% decline in netincome on charges related to Azurix Corp., its water companyspinoff. However, Enron’s operations profits still beat earningsestimates because commodity sales and services tripled during theperiod. Earnings from operations rose 34%, to $347 million, or 41cents a share, from $259 million or 31 cents a share a yearearlier. First Call/Thomson Financial had estimated earnings of 35cents a share.

Revenues rose 271 percent to $40.8 billion.Its net income,however, for the fourth quarter was $60 million, or five cents perdiluted share, due to the Azurix charges, compared with earnings of$259 million, or 31 cents a share in 1999.

EnronOnline capped its first full year of operation in 2000,executing 548,000 transactions with a gross value of $336 billion.Natural gas sales and related business on EnronOnline grabbed mostof the earnings’ spotlight, with revenue jumping to $40.8 billionfrom $11 billion a year earlier. Power trading in Europe alonequadruped during the quarter, and sales of electricity tripled to23 MM MWh, up from 6.6 MM MWh a year earlier.

Its retail energy business jumped nearly five times, with anincrease to $33 million, and Enron Energy Services saw a 73%increase in the fourth quarter, with total contracts of $4.5billion. Enron Broadband Services reported a $32 million loss onrevenue of $63 million, with losses resulting from building the newfiber optics business.

Merrill Lynch analyst Donato Eassey said he was retaining a”buy” rating on Enron, adding it was one of his top picks. “I thinkthat they will sustain a higher growth rate on average for the nextseveral years going forward.because of their innovation and theirway of attacking the markets.” Enron’s common stock jumped morethan four points yesterday.

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