Prefacing an hour-long discussion with investors on Friday,Enron Corp. COO Jeffrey Skilling said the rumors about theHouston-based energy giant, which have sent the company’s stockspiraling to a 52-week low, are mostly “noise,” with no basis infact. Skilling, who said his comments would be “short and sweet,”reiterated more than once that business from all four sectors is in”great shape.”

“I wish we didn’t have to have this call, but with what’s goingon in the stock market, we thought we better have this call,” saidSkilling. He went through each of Enron’s four business segments,offering an update, and addressing what he called the “four areasof noise” within the core businesses.

About the only “problem” Enron has had has been completing itsdivestiture of Portland General Electric, said Skilling, and evenif that is not approved, it would not be a bust for Enron, he said.Portland General was first put on the block in 1999, and SierraPacific Resources announced plans to pick it up (see Daily GPI Nov.9, 1999).

The Oregon Public Utility Commission approved the merger lastNovember, but it still has not received approval from the FederalEnergy Regulatory Commission or the Securities and ExchangeCommission. If the final approvals don’t come, Skilling said Enronhas come full circle on the deal, and because “pipelines are doinggreat,” it would actually be a “positive” if the sale did not gothrough.

“If it (the sale) does not happen, it is credit positive toEnron,” Skilling said. “We’re not in a particular rush to get itdone. There would be no impact in fact (if it didn’t occur). Infact, it would be somewhat positive if it did not occur.”

The second business sector he focused on, wholesale, is “havingan outstanding quarter,” Skilling said. “We are seeing the impactnow of enormous growth. Volumes are up, even though they areslightly below the fourth quarter, but (that quarter) was unusual.Financial volumes are double what they were a year ago.” Skillingsaid EnronOnline now has about 5,000 transactions a day and heexpected it to grow.

In the retail segment, Skilling said Enron was actually “seeinga positive effect out of the chaos of California,” because of the”tremendous interest” in retail business. Its outsourcing unit,which maximizes energy costs for businesses, has drawn a lot ofinterest from utilities, he said, that want to “move out of themerchant function.” For that, “Enron is in a perfect position.”

Regarding its broadband unit, Skilling was blunt and to thepoint. “There have been broadband rumors out there that we haveterminated our intermediation business. That’s absolutely nottrue.” He said, “I want to remind you that we have an enormouslead” in this business. He cited some competitors in the business,including Williams, but said, basically, that Enron was ahead ofthe pack in every area. He predicted broadband would have between400 and 500 transactions this year, which would be “ahead of theplan. We expect it to do good business for us.”

Pointing out that the failure of Enron to maintain its long-termcontract with Blockbuster for video-on-demand was real, Skillingsaid the contract “was not providing us the content that wewanted,” but he said it was an area the unit was working on andthat he was “very confident we’ll have specific contracts to showyou” before the end of the year.

Responding to rumors that Enron is laying off people orshuffling management, Skilling did not admit to any layoffs, butsaid that the bandwidth market did not require the company to “makeas large an investment in network because we’ll have access tothird party networks. We have a very positive outlook in this, andwe expect the capital budget to be lower than anticipated “if wecan get contract access.” With that, Enron can do what it needs todo with “less capital employment. It’s important for us; we’recommitted to it. Our strategy was predicated on a surplus insupply.”

Skilling said Enron also was going forward to grow its liquefiednatural gas market. He said Enron had “made a lot of progress” onLNG, with 15 spot cargoes already this year, “up from virtuallynothing last year. We are very interested in this for our future,”he said, pointing out that Enron had options on three LNG ships,and was moving ahead with its gasification facility in Venezuela,and its plans to build an LNG facility in the Bahamas to transportLNG to the Florida market.

LNG is going so well, in fact, that Skilling said EnronOnline,its wholesale trader, would begin listing LNG “later this year.”

There also have been rumors swirling that the executive team atEnron is shaking out. On that, Skilling said there have been somemajor shifts, but all of them are positive. The most prominent is apromotion for Lou Pai, CEO of Enron Energy Services LLC. Pai hasbeen tapped to head up Enron’s newest unit, Enron Accelerator,Skilling said, which will “take the six best ideas at Enron andcreate businesses out of them.” He said the new unit had a “verygood upside,” but declined to offer other details.

Other moves also are planned within Enron’s executive team, butSkilling said they were strategic moves, with no layoffs. In fact,in a minute of humor, Skilling said the only thing that worried himabout the promotions was knowing that there were talented peoplelined up to replace him. “That’s what scares me,” he said.

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