New York Times - 13 Jul 01

Prof. Robert B. Laughlin
Department of Physics
Stanford University, Stanford, CA 94305
(Copied 8 May 09)

Enron Net Rose 40% in Quarter

Published: Friday, July 13, 2001

The Enron Corporation, an energy trader, said today that its second-quarter profit rose 40 percent as its sales of natural gas and electricity surged in the United States and Europe.

Net income rose to $404 million, or 45 cents a share, from $289 million, or 34 cents, in the period a year ago, Enron said. Results beat analysts' estimates by 3 cents a share.

Revenue almost tripled to $50.1 billion. Enron, which is based in Houston, sold almost twice as much power in North America and five times as much in Europe than in the quarter a year ago.

Although electricity and natural gas prices surged in California, Jeffrey K. Skilling, the chief executive of Enron, said the state "is just not a big factor" in Enron's increasing profits. The company bolsters earnings by increasing sales of energy and other commodities like lumber and steel rather than by raising prices, analysts said.

"That's the nature of the commodities business," said Zach Wagner, an analyst with Edward Jones & Company. "As markets open up, their volumes will grow. Their margins are basically flat."

Enron's profit margin was less than 1 percent last year and has averaged 2.1 percent the last five years, based on Bloomberg data. That compares with a profit margin of 6.5 percent for Exxon Mobil, the largest publicly traded energy company.

Shares of Enron have dropped 31 percent the last year, despite steadily increasing earnings, and sales that now rival those of Exxon Mobil. Shares of Enron rose 45 cents today, to $49.55.

Enron was expected to make 42 cents a share in the quarter, the average estimate of analysts polled by Thomson Financial/First Call.