Once considered the most complex solution, we are now driven by
customer demand to build customer specific, less complex solutions. While our
customers are at the front line of this change, perhaps the biggest winners
are our suppliers. Broad application development has always allowed the
supplier to differentiate between a customer with thousands of units and
others with less. The internet and e-business are increasing the volume of
transactions and expanding the need to make each transaction uniquely
tailored to the customer. This trend will ensure that those who are able to
develop online, differentiating e-business solutions will have an advantage.
The challenge however is not in developing the solution, but in doing so
without unduly risking the core proprietary Enron values of rapid time to
market, continuous trading, liquidity, transparency, low cost, and scalability.
Each solution requires a careful balance of these attributes in order to
achieve customer value and to maintain our core business values.
The requirements for each type of solution vary greatly in relation to the
customer's specific objectives, the size and characteristics of the
transaction, and the commodity. A good example of this balancing act is
highlighted by the pulp and paper industry. Our solution for this industry
was not to replicate current trading systems on the internet because such an
approach could not sufficiently differentiate Enron's pricing or execution
from that of its competitors. Despite strong efforts by a few companies in
the industry to do just that, internet based trading of pulp and paper
products has not developed, because of an inability to sufficiently
differentiate these products from their competitors. The uniqueness of these
commodities, coupled with our need for rapid time to market in order to
justify these commodities as highly differentiated from existing products,
has caused us to focus on another solution.
When evaluating new business opportunities we examine the customer's needs,
how our products and services can meet those needs, and ensure that the
solutions we propose are consistent with our core values.
Balancing these attributes of time to market, continuous trading,
liquidity, transparency, low cost, and scalability with the need to protect
our proprietary business model and unique value propositions is not easy.
Ultimately, the design of the optimal model is dependent upon an understanding
of the commercial context of each commodity we serve. For example, the
optimal solution for a given customer in the pulp and paper industry could
differ from the optimal solution for another customer in the steel industry.
We have not always been successful in our business model development efforts.
Therefore, we will continue to modify our business model based upon customer
feedback and grow the business in areas in which we are successful.
As the Enron group grows, we will continue to focus on the core values that
have made us successful. We have been able to take advantage of our unique
position as a market maker to help shape the development of new markets and
products. In the future, as we continue to move ahead on the vision of our
organizational plan, we hope to increase our overall profitability by
continually looking for ways to reduce cost and find new markets for
existing commodities as well as identifying new, high growth commodity
opportunities to serve.
Trading
EnronOnline is the first web-based, company-to-company trading marketplace.
It brings the power of Enron's trading business to buyers and sellers of
commodities and commodities risk management products every where these
products are traded, with the added bonus of easy, rapid, and low cost
execution.
The average transaction execution on EnronOnline is two days. In addition,
EnronOnline offers the first application that enables every Enron employee to
enter trades and settle commodity transactions online. This wide-scale
adoption enables commodity risk managers to manage positions, obligations,
and dependencies across Enron's broad customer base.
EnronOnline has helped lower transaction costs, facilitate greater certainty
of settlement, and enhance counterparty relationships across the industry by
allowing participants to better manage their physical and financial
exposures, and to accurately value and hedge credit risk. To date, over 350
different counterparties have completed trades on EnronOnline, and over
1,500 people have been registered to trade on the system.
Processing
Another key element of EnronOnline is the Human Resources application, which
enables each Enron employee to enter his or her own trades and settle them
through EOL. As an on-line system, EnronOnline and the Enron Intranet ensure
that employees can transact Enron business wherever they are, around the
clock, every day of the year. In July 2000, Enron became the first Fortune
1000 company to establish an internet trading site for major physical
commodities. In less than one year, this initiative has become the standard
in the industry.
Broadband
In March, Enron launched its new broadband initiative, Enron Broadband
Services. In the past six months we have seen a tremendous response from
customers around the world, who have ordered more than 1,500 web-connected
devices.
With broadband, the speed of innovation is happening at an unprecedented
pace, the future is coming quickly, and customers have demanded the
flexibility to choose the best software providers. The future of the Enron
Broadband services lies in its ability to provide customers with a choice of
delivery methods, content, and services. As the portfolio of Enron broadband
solutions grows, Enron will continue to be flexible and dynamic in our
response to the marketplace.
Enron also announced a wholly-owned subsidiary, Enron Communications, Inc.
This telecommunications company, launched in June, is wholly-owned and
managed by Enron Communications, which is the group responsible for all of
Enron's internet development, engineering, and infrastructure investments.
Enron Communications has acquired iconews.com and will launch e-TV, a
one-stop-shop for video news and business information for commodity market
participants.
Investor conference
Enron established its investor relations initiative in November 1999. The
objective of this program is to communicate to Enron's shareholders and the
investing public information about the company and its directors, officers,
and certain employees. Information is provided, both in written and
audio/visual format, on the Company's intranet.
The program is primarily supported by a team of almost 20 professionals,
located in Houston, who provide information to the public investor
relations, media, and broker community by telephone and the internet.
Enron was named Best Company for Investors by Personal Finance in two of the
last three years. Last year, Enron was also named as one of America's Most
Improved Companies by Fortune Magazine for the seventh consecutive year.
Forward-Looking Statements
To view this release and the file of the of this press release, visit
http://www.enron.com. These statements and information are based on beliefs
and assumptions by, and information currently available to, Enron
management. Although Enron believes that its expectations are reasonable, it
can give no assurance that its goals will be achieved. Forward-looking
statements are subject to a number of risks and uncertainties, many of which
are beyond Enron's control, that could cause Enron's actual results to differ
materially from those described in the forward-looking statements. These
factors include the following: uncertainties as to power and fuel prices;
uncertainties of obtaining required regulatory approvals; uncertainties
regarding the adequacy of Enron's capital resources to continue operations;
unexpected liabilities; and other factors discussed in the Company's filings
with the Securities and Exchange Commission. Should one or more of these
risks and uncertainties occur, or should any of Enron's assumptions prove
inaccurate, actual results may vary materially from those described in
Enron's forward-looking statements and projections.
CONTACT: Investors Newsome 713/853-5317
Web site: http://www.enron.com
