Enron Corp. - University of California | Office of The President

streaming content because the EIN and BOS didn't work – and multiplied that number by the number
of customers each ISP had. Thus, the 16 million customers Enron claimed as its own, in fact,
belonged to ISPs. Moreover, assuming that Enron could provide the high-quality uninterrupted
bandwidth-on-demand that it claimed the EIN could provide through the BOS – neither of which
ever worked – as of 12/00 an internal EBS document reflects that EBS only had enough server
capacity to reach about 47,000 customers, which is about 15 million customers short of the total
Enron claimed 12 months earlier! In short, Enron had no real broadband customers or revenues,
and the EIN was nowhere near being substantially complete.
(l) The prospects for future revenue and profits from Enron's EBS operation and
the purported value of that operation to Enron and to its stock price was completely arbitrary and
without any basis in fact because Enron knew from current problems in that business, as well as the
current state of EBS business, that such revenue and profit forecasts and valuations were arbitrary,
unreasonable and unobtainable.
(m) Enron's purported growth in broadband intermediation – trading bandwidth
access – was neither as successful as claimed nor was the market developing as quickly or in the
manner Enron asserted. Enron grossly overstated the number of customers or counterparties it was
doing bandwidth intermediation with by counting as ongoing customers or trading partners entities
that had done only a test or an experimental trade and not engaging in any ongoing bandwidth
intermediation. Even worse, Enron grossly overstated the number of trades being conducted by its
broadband intermediation to create the illusion of ever-increasing levels of activity, which it
accomplished by splitting up what was, in fact, a single unified trade into five or 10 or even more
separate trades, thus creating the false image of increasing trading activity. For instance, Broadband
traders would turn one EBS transaction into multiple trades, just to show the volume of broadband
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