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Enron Broadband Services Jeff Skilling President & CEO-Elect Enron Corp.

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Presentation on theme: "Enron Broadband Services Jeff Skilling President & CEO-Elect Enron Corp."— Presentation transcript:

1 Enron Broadband Services Jeff Skilling President & CEO-Elect Enron Corp

2 2 AA-Basic Enron Annual Sales 5.5B 9.2B 100.8B

3 3 AA-Basic 2.7B 9.6B 72.1B Enron Market Value

4 4 AA-Basic Enron Price/Earnings Ratio *Continuing operations

5 5 AA-Basic Enron Assets 10B 12B 53B * As of Q3 2000

6 6 AA-Basic Dec 97 Dec 96Dec 95 Dec 94 Dec 93 Dec 92Dec 91 Dec 90 Aug 00 Enron Corp. S&P 500 Pipeline Avg. Utility Avg. E&P Avg. 1,415% 383% 545% 281% 217% Nov 00Dec 99 Dec 98 Note: Calculated to December 31, 2000 Dec 00 Total Return to Shareholders Jan 1, 1990 to Dec 31, 2000

7 7 AA-Basic Enron Energy Services Enron Energy Services Enron Transportation Services Enron Transportation Services Enron Wholesale Services Enron Wholesale Services Enron Broadband Services Enron Broadband Services ®

8 8 AA-Basic EnronOnline Introduced Largest U.S. Gas Pipeline Company from HNG/InterNorth Merger Leading European Wholesale Gas & Power Marketer Leading U.S. Wholesale Power Marketer Enron Broadband Services Established Leading U.S. Wholesale Gas Marketer Worlds Largest Gas-Fired Power Plant Completed in the U.K. Enron Energy Services Established Enron Oil & Gas Company IPO Market Capitalization (Billions)

9 9 AA-Basic Cost of Interaction Value of Specialization $ Economic Trade-Off Volume

10 10 AA-Basic Barter Economy Creation of Money Evolution of Economic Trade-Off 1300s $ Volume

11 11 AA-Basic Barter Economy Creation of Money Transportation & Communication Evolution of Economic Trade-Off 1300s 1800s $ Volume

12 12 AA-Basic Barter Economy Creation of Money Transportation & Communication Internet & InfoTech Evolution of Economic Trade-Off 1300s 1800s 2000s $ Volume

13 13 AA-Basic Types of Interaction Costs Price of Successful Economic Transactions Legal & Regulatory Information Seeking & Gathering Inventory Payments Logistics Credit

14 14 AA-Basic Cost of Interaction Mining Financial Institutions U.S. India 30-40%60-70%55% 40-50% Source: McKinsey

15 Business Structure Transformation Costs Interaction Costs Total Costs Finished Product Finished Product Transformation Interaction Transformation Costs Interaction Costs Total Costs

16 16 AA-Basic Cost of Teller Transaction $1.50 $0.30 $ (Bank) 1995 (ATM) 2000 (Internet)

17 17 AA-Basic Length of Time to Provision Bandwidth 6-8 months 2-3 months < 1 second 1995TodayNext Year

18 18 AA-Basic Length of Time to Execute a Long-Term Gas Contract 9 months 2 weeks < 1 second 2-3 years

19 Transformation Costs Interaction Costs Total Costs Finished Product Finished Product Transformation Interaction Change in Economics of Business Structure Transformation Costs Interaction Costs Total Costs

20 Wheres the Opportunity?

21 Wheres the Opportunity? Not Cost Competitive

22 Wheres the Opportunity? Commoditized Overcapitalized Globalized Cant make compensatory return in traditional asset business

23 Wheres the Opportunity? Creating low cost, dependable market interfaces Market making Logistics Back office Trade finance

24 Wheres the Opportunity? Virtual Integration Providing packaged turnkey solutions for customers Complex structures Differentiation Customization

25 25 AA-Basic Enron Opportunity Traditional Business Model New Business Model Asset intensive Vertically integrated Slow moving and rigid Hierarchical Brain power intensive Networked Oriented toward real options Fast moving Entrepreneurial

26 26 AA-Basic Enron–Accelerating Market Development Commodity Product Financial Australian Power & Gas Bandwidth Metals Natural Gas Electricity UK Power & Gas Financials (interest rate, equity) Emissions Plastics Scandinavian Power & Gas Weather Coal Pulp & Paper Currencies * Lighter shading indicates a developing market Darker shading indicates a mature market

27 27 AA-Basic EnronOnline – Changing the Way Commodities Are Traded Free, Reliable Transaction System with Enron as Principal Transactions per day

28 28 AA-Basic Enron Efficiency Gains Marginal Cost Per Transaction (Indexed) Transactions Per Market Maker ,

29 ®


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