Foundation, History and Decline
1. Enron company
1.1 What is Enron
1.2 History and Organization
1.3 Main business units
1.4 Main characters
2. Enron scandal
2.1 The decline
2.3 Consequences of the scandal
2.5 Enron's insurances
3. Enron reconstitution
3.1 Cleaning up after the fall
3.2 Restructuring Enron
3.3 The future (and present) of Enron
3.4 Preventive measures
1.1 What is Enron :
Enron was one of the ten largest American company in the late 1990s. It dealt with energy and gas distribution and was based in Houston, Texas.
On 2 December, 2001 the company made the largest bankruptcy in America until then (it was ...view middle of the document...
The first one includes the global marketing and logistics of commodities, with financial services and risk management.
Energy Services area includes the retail business, with the energy supply and the solutions of faulty management in outsourcing for worldwide customers, both commercial and industrial. Finally the area of Global Services, which manages the group's assets including oil and gas pipelines, the Portland General Electric, the international plants of production of electricity and the activities of distribution assets and business of engineering.
Geographically, the group is divided into Enron Americas ( Which manages the commercial business on the wholesale natural gas and electricity in North, Central and South America, including trading, marketing and development of new assets ) and Enron Europe ( Which manages the wholesale trading business in Europe, Australia and Japan and owns Enron Metals ).
Since 1996, Enron group has been one of the main electricity operators in the United Kingdom and the Scandinavian countries and the company's plans include a leading role in the liberalization of electricity and natural gas markets in continental Europe.
For six years, the Texan company has been awarded the title of the most innovative company from the magazine "Fortune".
Thanks to an aggressive expansion strategy and the adoption of online brokerage technology, sales of Enron rose from $ 9.5 billion in 1995 to 101 billion in 2000. In the 12 months up to the end of September, the turnover touched 180 billion, 75% of which are provided by the network management of Internet transactions on energy contracts, Enron Online. Operating profit in 2000 is 1.27 billion and 1.97 billion in the twelve months to September. Activities at the end of 2000 amounted to 47.3 billion.
The first cause of decline of the Company was the California energy crisis, but the most relevant thing that has really shaked the Enron group was the discovery of an investigation by the SEC, with the discovery of having inflated profits for three years and of having "neglected "in the balance some financial transactions. As a consequence, this led to underestimate the debt. In this way it started the first wave of sales on the title and it also came the "rejection" of the rating agencies. In two weeks the company burnt $ 17 billion market capitalization.
The title, that reached a maximum of $ 90 just a year before these discoveries, has fallen down until the value of less than one dollar. This decline obviously led to a fail of the company; the incident comes as something completely unexpected since the company officially in the 10 previous years has had a very rapid growth, increasing tenfold its value, reaching the 7 the place in the ranking of major U.S. corporations. However within a very short time, Enron shares, considered by everybody rock-solid, lost all their value, going from the quotation of $ 86 to 26 cents, burning about 60 billion dollars in three months....