No matter what the bankers and lawyers decide, the fact that the world's most powerful energy trader collapsed so quickly and completely will have major effects on the industry. Mirant Corp., El Paso Corp., Reliant Energy Inc. and others could gain a lot from Enron Corp.'s demise, as scores of new trading partners and experienced employees come knocking. In return, analysts anticipate that corporate executives will have something to give as well-plentiful, clear financial information that will help energy marketers maintain a healthy relationship with Wall Street. Analysts long complained that information from Enron executives was convoluted-when provided. At least one investment guru refused to cover the company. "I used to defy people to come up with earnings estimates using the numbers that [Enron was] able to supply," says Raymond Moore with Weatherly Securities in Houston. "I didn't know if it couldn't be done, but I know I didn't have the time to do it." Enron wasn't the only energy merchant with Wall Street communication issues, however. "The bombs which have gone off at Enron will almost dictate on Wall Street a much franker disclosure policy wherein judgments will have to be made and more illumination will be necessary," says John Olson, an analyst with Sanders Morris Harris in Houston. "We analysts did not have a clue about to what great degree these off-balance-sheet partnerships or special-purpose entities had mutated in Enron's situation." Proactive managers will do better in the future to disclose meaningful earnings contribution lines, asset investment levels and things of that ilk, he adds. Andre Meade, head of U.S. utility research for Commerzbank Securities, says many companies will now go out of their way to reassure people of how they account for their business. "It's probably a good thing for the market at this point because it's leading to more disclosure and more clarity of what drives earnings. You're going to see a more-straightforward balance sheet and a lot more guidance on what's driving earnings in the future." Sometimes companies provide lots of numbers to analysts, but they are not the numbers that analysts need. Moore says, "Sometimes [operations] will be broken down by revenues, which to me is useless, particularly when you're dealing with a very, very low-margin business. And sometimes you'll break them down by operating income...which to me is probably just as useful as revenues. It just doesn't mean anything to me." He adds that he is annoyed when revenues and operating income are cited as measures of progress. "These businesses require significant capital commitments. Cash flow doesn't mean anything to me if I'm paying it all out, and my return could be really crummy." For companies that don't make the effort to communicate clearly, the repercussions could be great. Olson says disclosure will improve "or else managements will have to ask themselves why their companies are trading at five to 10 times earnings instead of 20 to 30." -Jodi Wetuski

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