usa : persistent problems chinking enron ' s armor . - - - - - original message - - - - - from : djcustomclips @ djinteractive . com @ enron [ mailto : imceanotes - djcustomclips + 40 djinteractive + 2 ecom + 40 enron @ enron . com ] sent : thursday , april 12 , 2001 2 : 34 pm to : 168842 @ mailman . enron . com subject : rahil jafry : usa : persistent problems chinking enron ' s armor . usa : persistent problems chinking enron ' s armor . by c . bryson hull 04 / 12 / 2001 reuters english news service ( c ) reuters limited 2001 . houston , april 12 ( reuters ) - the teflon around energy and trading powerhouse enron corp . is starting to show some scratches , as negative events over the past few months from india to its broadband unit , begin to take their toll , analysts say . make no mistake , wall street still sees the houston - based giant as the energy convergence sector leader . analysts polled by thomson financial / first call still believe enron will meet its earnings per share targets of $ 1 . 75 for 2001 . but the stock has dropped to its lowest levels since late 1999 , a slide which started with news that enron ' s keystone broadband content deal with blockbuster inc . had fallen apart . the stock had traded in the mid - $ 80 s as recently as february , before the stock market ' s recent collapse and a string of negative news . on friday , it traded at $ 57 . 45 on the new york stock exchange , down $ 1 . 06 cents or 1 . 8 percent , and well off its high of $ 90 . 56 last august . " their share price hasn ' t been bulletproof and that ' s what counts . they were up pushing $ 90 and they ' re now in the $ 50 s while the energy sector has done quite well , so they have underperformed quite a bit and that doesn ' t seem bulletproof to me , " analyst andre meade of commerzbank securities said . meade said the price fall came as investors took the bad news out of enron ' s valuation , particularly in devaluing the broadband business . " with broadband the market initially gave them full credit . but investors got smart over the next year , and once you got some bad news out there , you could argue that valuation was pulled , " meade said . but the bad news neither starts nor ends there . the latest negative item came wednesday , when a california federal judge ordered enron to return the university of california and california state university systems to direct power access , which enron says will cost them $ 12 million a month . the universities ' lawsuit which claimed enron energy services breached their power management contract , could cast a shadow over the houston - based company ' s power risk management arm which recently saw a huge upsurge in business involving similar multimillion dollar deals with large corporations . other bad news includes broadband layoff talk , failed water company spinoff azurix inc . ' s impending sell - off its north american assets , the failure of the video on demand deal with blockbuster , word that the $ 2 billion sale of utility portland general is unlikely to go through and continuing payment problems at the dabhol power plant in india . that long - running dispute in india reared its head again on monday . enron confirmed it issued a notice of political force majeure to the maharashstra state electricity board ( mseb ) , which has consistently defaulted on payments . force majeure is an event beyond the control of a contractual party that could not have been prevented . " it ' s one of the steps in the process of protecting our rights . it ' s one step , but it ' s not the only step , " enron spokesman john ambler said . enron has already invoked payment guarantees from the indian national government , but it has refused to cover mseb ' s $ 21 . 9 million december bill until enron and mseb settle another dispute over a fine . the mseb wants the $ 85 . 8 million fine , which it levied , to cover its outstanding bills . layoffs or redeployments ? another nettling problem for enron is news of trouble at enron broadband services ( ebs ) , the cutting - edge unit that encompasses a nascent bandwidth trading operation and a broadband content services business . most recently , enron has had to answer questions about a reduction in the number of employees at ebs because of the stock market ' s faltering confidence in telecoms generally . two weeks ago , the company characterized word of layoffs at the broadband unit as nothing more than an internal redeployment of staff to areas that were growing at a higher rate . " it ' s word games . initially they said they were redeploying , and that was not the word i heard from inside the company , but that was the way they put it . it ' s probably a little of both , " said analyst john olson of houston investment house sanders morris harris . ebs spokeswoman kelly kimberly on monday said 227 employees were leaving the broadband unit to work in other areas of the company . " most of them have elected to go into the redeployment pool or are already moved into corporate or another business , " kimberly said . kimberly did not have an exact figure on the number who have opted to take a severance package , but characterized it as a small percentage . it has been a rough few weeks for ebs , which also suffered from the blockbuster debacle . last month , the two announced a mutual end to a 20 - year exclusive video on - demand deal , which had been considered a cornerstone of ebs ' content services push . folder name : rahil jafry relevance score on scale of 100 : 79 to review or revise your folder , visit http : / / www . djinteractive . com or contact dow jones customer service by e - mail at custom . news @ bis . dowjones . com or by phone at 800 - 369 - 7466 . ( outside the u . s . and canada , call 609 - 452 - 1511 or contact your local sales representative . ) copyright ( c ) 2001 dow jones & company , inc . all rights reserved