In the time I've been writing for the Drip Portfolio, I've received some interesting e-mail. However, nothing has compared to the correspondence prompted by the series on Enron (NYSE: ENE) and the bandwidth trading market. This week I want to play back some of the highlights of what was sent to me:
From John Bonitz:
"I'd really like to help ensure that another 'rule-breaking' element of their business is exposed: Their wind and photovoltaic businesses have them poised to benefit from just about any future scenario, including high oil prices OR stable oil prices, domestic energy deregulation, ventures in Europe or developing nations, or potential international climate change agreements."
From Jim Steenhagen, Petroleum Finance Corporation:
"I thought you might be interested in an article we just put out called the Energy 50. It's a new ranking and analysis of energy companies that has both traditional oil and gas firms with utilities, recognizing that there is a major convergence trend underway in energy (and telecoms). Enron figures prominently in this. Besides Enron, some interesting firms are El Paso Energy, Williams and National Grid, which are positioned for energy utility/telecom convergence. Enron is really a different animal, though; they are so far into the merchant mindset, some there say their real competition is Goldman Sachs.
"Our article talks about who the big movers are in the energy business besides the super majors. It highlights some of the most dynamic companies like the above plus AES, BG, and Dynegy. These guys are redefining what an integrated energy company looks like. The industry's also been reshaped by the M&A among the utilities as these markets deregulate. The sleepy utility side of the energy business is becoming pretty dynamic.
"The Energy 50 article is on our website (http://www.pfcenergy.com) if you wish to have a look."
From John Meeske:
"As you probe the area of energy companies' role(s) in fiber optics and telecom, I think you need to also look at El Paso Energy. While El Paso is behind Williams time-wise, they have more pipe which goes more places than either Williams or Enron."
There were also a few Fools with less-than-enthusiastic opinions about Enron and those in its business. Let's look at what they had to say about Enron.
There was this letter from Tonia Stott:
"As a utility company worker, I felt a need to respond to your Enron article. Companies like Enron are loved by Wall Street, but woe to their customers. Look at what happened to the trading company of Cinergy. If a company as large as Enron pulls the same stunt, you have a major disruption in the entire electrical grid, business grinds to a halt, and national security is jeopardized. If Enron is the future, the future sure is bleak."
There was this letter from John Abramson:
"Interesting you picked up on Enron. Although I consider myself somewhat of a bottom-feeder in my stock picks, Enron looks to me like a bottom-feeder in the energy supply market. Wholesale gas and electric sales are where it's at if you can 'make it up on volume.' But the profitability of that game is pretty fickle, and for that you should have a strong balance sheet. Witness players like LGE exiting the game, and guys like Cinergy losing big time in one summer month. In other words to make it in the energy trading market, you've got to have brass you-know-whats, be smarter than the average bear (aka utility), and have a lot of staying power. I'm not saying Enron can't cut it, but with that game as a core business, it should hardly make it a glamorous stock."
Finally, we hear from Doug Wyman, who disagrees with Enron's use of an IP-only network:
"IP predates ATM by a couple of decades, and while it is a reliable workhorse for e-mail, interactive connections and LAN file servers, it has serious shortcomings for adding voice and video, shortcomings which motivated the design of ATM. Most of the experienced data carriers use a combination of ATM over the long-haul circuits and IP for the last mile and/or LAN to take advantage of its ubiquitous support on PCs and workstations. Combining voice and quality streaming video with legacy data all the way to the desktop will require a migration to ATM from end to end. Legacy data alone will not energize bandwidth trading."
Bandwidth trading was a very interesting subject, and I will revisit it from time to time. However, next week I want to move on and look at a Pathfinder company that has had some troubles -- Lucent. Is it lost in the woods? Or did it just temporarily wander off the trail? We'll see where this one leads. For the rest of the week, stay Foolish!