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

. Cliff Baxter complained mightily to Skilling and all who would
listen about the inappropriateness of our transactions with LJM.
c. I have heard one manager level employee ... say "I know it would be
devastating to all of us, but I wish we would get caught. We're such
a crooked company."... Many similar comments are made when
you ask about these deals.
341. On 8/14/01, Lehman Brothers issued a report on Enron. It rated Enron a "Strong
Buy" and continued to forecast 01 and 02 EPS of $1.82 and $2.18 for Enron. Lehman also raised
to 20% the five-year EPS growth rate for Enron. It also stated:
• Relative Valuation Has Bottomed Out. Mounting Evidence Of Major New
Markets Will Act As Catalyst To Expansion In Multiple. At A Minimum We
Expect Collection Of The 20% Growth In EPS.
* * *
... Enron has quietly lifted earnings guidance from 15% to 20% over the last 12
months indicating that the present rate is sustainable for the foreseeable future....
Significant traction has been gained. Presentations at the annual analyst meeting
and the assumption of a higher profile in quarterly investor briefings lead us to
believe that market penetration in these new areas will rekindle interest in the
stock.
342. Despite the efforts of Enron and its banks to support Enron's stock during 5/01-7/01,
it continued to erode. By late 7/01, Enron's stock had pierced more equity issuance trigger levels,
trading as low as $42. In early 8/01, as Enron was forced to reveal it was abandoning its attempt to
create an international water business and was attempting to sell the Dabhol power plant, Skilling
and other top insiders at Enron knew the end was at hand. By 8/9/01, Enron stock still traded as low
as $42. By 8/29/01, Enron stock had plunged to as low as $37-17/64. Skilling decided to attempt
to try to escape the coming conflagration by resigning. Because Skilling had been promoted to CEO
only a few months earlier, this resignation had the potential to cause the scheme they were
participating in to completely unravel. Thus, it was necessary to cover up the true reason for
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