Enron Corp.�s 3Q earnings beat analysts expectations
An earnings surprise from some of its core businesses helped Enron Corp.�s third quarter results beat analysts expectations. The Houston-based merchant energy company reported net income of $292 million compared to last year�s quarter of $223 million that excluded nonrecurring items. Earnings per share increased to 34� compared to 27� for the comparable quarter. Third quarter revenue jumped to $30 billion from $11 billion.
An earnings surprise from some of its core businesses helped Enron Corp.�s third quarter results beat analysts expectations.
The Houston-based merchant energy company reported net income of $292 million, compared to last year�s quarter of $223 million, excluding nonrecurring items. Earnings per share increased to 34� compared to 27� for the comparable 1999 quarter. Third quarter revenue jumped to $30 billion from $11 billion in the year ago period.
�The core businesses of wholesale trading and retail energy provided an earnings surprise,� says Carol Coale, analyst with Prudential Securities Inc. in Houston. �They beat consensus expectations by a couple of cents.�
The quarter reinstated the role of the core energy businesses, she said.
On the news, Enron�s common share price jumped 1 3/8 to $81.37 in mid day composite trading on the New York Stock Exchange.
Analysts said the growth in volume for the wholesale side of the business was expected because of high energy prices. Enron earned more income off the higher volumes.
Income for Wholesale Energy Operations and Services before interest and taxes increased 66% in the third quarter to $627 million from $378 million a year ago. Enron�s wholesale business benefited from offering more commodities and products online. Enron has executed 350,000 transactions online, since its online trading platform Enron Online began operating in November 1999.
Enron and other large energy merchants benefited from the tight and volatile energy markets experienced throughout the US.
�When things get tight, energy consumers don�t trust the procurement of their energy to just any supplier,� says Jeff Dietert, analyst with Simmons & Co. International, Houston. �You can�t afford to depend on smaller lesser known players. So the top tier players like Enron, Dynegy, Reliant Energy, and El Paso Energy are separating themselves from the mid-tier players.�
Enron�s Retail Energy Services reported profit of $30 million in the recent quarter compared to a loss of $18 million last year. And transportation and distribution provided solid cash flow and strong earnings generating $157 million of profit compared to $137 million for the comparable quarter last year.
Still building out its fiber network, Enron�s broad band services reported a loss of $20 million. Other losses were incurred in the corporate and �other� category. Losses in this area jumped to $128 million from a loss of $23 million for the comparable quarter.
The company cited an increase in long-term employee compensation expenses, reduced earnings from equity investments, and increased information technology expenses. Enron representatives said most of the equity losses resulted from the plummeting value of Enron�s stake in a struggling water company, Azurix. Enron formed the company and spun it off a few years ago.