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Enron Reports
$1 Billion
In Charges
Anda Loss
 Dy ICENNETH N. GILPIN

 The Eaton Coz~oration, tue na-
tiona leading wholesale electricity
niadieter and naporal gas trader,
~ ed a third-quarter loss yesterday
      of more than $1 billion in
one-time charges for various bust.
 The company reported met loss of
$13 million, or 64 cents a share, in
contrast to net income of $291 nul-
hon. or 34 cents a share, in the period
a year earlier Excluding charges.
Enron said it earned $393 million, or
43centsa share~ Revenue jumped 59
r recur, to WA billion, front $30
 ilhion a year ago.
 The charges, which total $101 bil-
lion, or P11 ashore, Included a $287
million wnte.4owu on Azarix, die
companrs troubled water-manage-
meat dwtsion. mmd $180 billion in
restructuring charges at Its broad-
band telecommunications operatIon.
 But more than ball the charges
Were related to various uweurment
losses, mostly from Karen's stake in
the Hew Power Company, a retail
electricity joint venture with AOL
Time Warner and LLM.
 "After a thorough review of our
businesses. we have decided to take
these charges to clear away Issues
that bare clouded die perfontiance
and earnings potential of our core
energy bualnesses." Icenneth L Lay,
Enron's chairman and chief execu-
tire, sail in a statement.
 Even as its stock surged last year
and into this year. analysts corn-
planed that the oompany had a corn-
jilex web of businesses mad lacked
e~armty In us financial reporting.
 In the wake of the California ener-
gy crIsis, the value of Eaton shares
began a sharp retreat, and the focus
ott problems at sonic of its opera.
Ijons lntensaficd

  On Aug. 14. Jeffrey IC Shilling
 ~bruptly resigned as president and
 ~blef executive alter just am months
 on the joh~ The move forced Mr. Lay,
 who transformed the company from
 ~n intrastate Plreline company unto
	    ognerate, to resume
 bperattonal controL   -
  Wall Street had been expecting
 wnte.olfs, and analysts said more
 could be coming. But the news yes-
 terday' had little effect on Koran's
 shares. which rose 67 cents, to $3384
 They are off 59 percent this year.
  "They didn't telegraph exactly
 what they were going to do, or when
 or how," said David Fleiseher, all
 analyst at Goldman, Sachs "But for
 many quarters the topIc has been
 how many billions are they going to
 write off? Now the question as,
 'What's next?'
 * RonaldDarone,aiianalystatuDS
 Watbur. said the write-otis were "a
 step in the right direction."
  "Investors can look at this with
 more confidence that problems are
 being faced and addressed." he said
  Mr Barone and others said the
 company aught have to make deci.
 miens at some poInt about troubled
 niterantional assets, including its
 power plant ma India as well as its
 broadband unit.
  Earlier this year. Mr. Shilling in.
 posted that Eaton's broadband trad-
 jag business was worth 335 billion.
 After die restructuring yesterday.
 ~aronhasa$60O million Investment
  "1 don't thuds anyone know; what
 the broadband operation is worth,"
 said Todd Shipnian. an analyst at
 Standard & Poor's. "It seems to me
 they don't dunk there is a bIg pros-
 pect of a short-term turnaround
 They are putting die whole flung in
 cold storage."
  Despite Enrozi's potential, ana-
 lysts said Mr. Lay faced a consider.
 able task.
  "Management has lost credibility
 and have to reprove themselves."
 Nr Flelacher at Goldman, Sacha
 said. "They need to convince invest.
 ore these earnings arc real, dial the
 company is for real and that growth
 wlllberealized Thathastobeprov-
 en over time."
  The eariungs report issued yester-
 day provides "a little more break-

 d~,wn," he added, "but at wall take
 wore disclosure."

 R.p~duced iitt, pwmlialon of to cop~otghl OYfl1.I~ Pijilief roproduolion prohibited wnioul pe~mlioIon,

						       GOVERNMENT
							 EXHIBIT
							 24377
							Crim No. H 04-0025

I