HOUSTON - Energy marketer Dynegy Inc. said Wednesday that fourth quarter earnings fell 27 percent due in part to costs associated with its failed attempt to buy the ailing Enron Corp. <br>
<br>
For the three months ending Dec. 31, Dynegy reported net income of $77 million, or 21 cents per share, compared with $106 million, or 32 cents per share, a year earlier. <br>
<br>
Revenues fell 13 percent to $8.7 billion, down from $10 billion a year ago. <br>
<br>
Excluding $67 million in one-time charges related to the company's exposure to Enron and its aborted effort to purchase the now-bankrupt energy trader, Dynegy had fourth quarter operating earnings of $144 million, or 41 cents per share, which matched the estimates of analysts surveyed by Thomson Financial/First Call. <br>
<br>
Dynegy chairman and chief executive Chuck Watson said during a conference call with analysts on Wednesday that the company overall had a decent fourth quarter and a good year in spite of the hurdles it faced. In addition to the failed merger, Dynegy and other power markets faced sagging demand and prices for natural gas and electricity due to a weak economy and mild weather. <br>
<br>
"I don't like to dwell on the past much. We are clearly prepared for the future," Watson said. "We will demonstrate that Enron's failure is in no way a failure of the (energy) markets. It may be the best example of how the free market works. We at Dynegy plan to do in 2002 what we've done for the past 16 years. We will perform, we will execute." <br>
<br>
For 2002, Dynegy officials said they were hopeful for a recovery in the economy by late in the year. <br>
<br>
Dynegy reported that annual net income grew 29 percent to $648 million, or $1.90 per share, compared to $501 million, or $1.43 per share in 2000. The company attributed its success to its wholesale energy trading business and the addition of 3,000 megawatts of power generation. <br>
<br>
Revenues for 2001 grew by 44 percent to $42.2 billion from $29.4 billion a year ago. <br>
<br>
Shares of Dynegy rose $1.25 cents, or 5 percent, to $24.55 in trading early Wednesday on the New York Stock Exchange. <br>
<br>
Dynegy in November had agreed to buy Enron for $8.4 billion but abandoned the deal over concerns about Enron's financial condition. <br>
<br>
As compensation for a $1.5 billion investment in Enron when the merger was first announced, Dynegy claimed ownership of a large natural gas pipeline. <br>
<br>
Enron filed for Chapter 11 bankruptcy in New York Dec. 2, and also sued Dynegy for $10 billion, claiming its smaller rival had no right to the pipeline because it illegally terminated the deal. Dynegy countersued in Texas state court. <br>
<br>
Earlier this month, Enron agreed to surrender the pipeline and focus its efforts on its lawsuit against Dynegy. <br>
<br>
In December, Dynegy unveiled a $1.25 billion plan to shore up its balance sheet and address investor concerns. Last month, Moody's Investors Service downgraded several of the company's units. <br>
<br>
Dynegy officials on Wednesday had no comment about Arthur Andersen, the company's accounting firm, which until last week had been Enron's auditor. They did say the firm was in the final stages of completing its year-end audit of Dynegy. <br>
<br>
However, Rob Doty, Dynegy's chief financial officer, said the company has made changes in what it now includes in its quarterly and other reports, including information about risk management and off-balance sheet activities. <br>
<br>
"We think these are good disclosures," Doty said. <br>
<br>
Dynegy is an energy merchant and power generator in North America, the United Kingdom and Europe. It consists of a number of energy businesses, including supply, risk management and the wholesale of natural gas, power, coal, emission allowances and weather derivatives.<br>
