Rise and fall of Enron
The meteoric rise and fall of Enron is one of the most notorious tales in the history of corporate America. Enron was the seventh-largest company in the United States in 2000 and 'Fortune' magazine had declared it as America's "most innovative company" for six straight years; its share price had climbed from $ 10 a share in 1991 to over $ 90 a share in August 2000 while its revenue jumped to more than $100 billion. ("Rise and Fall of an Energy Giant") No one could have predicted that before the end of the following year the "rising star" of corporate America would be filing for bankruptcy, shaking investor confidence to the core and signalling the end of the longest bull-run in the American stock exchange's history. The ramifications of the dramatic collapse still reverberate in global financial and energy markets as well the U.S. courts, where a number of former Enron managers face serious criminal charges. This fairy tale rise and ignominious fall of Enron is the subject of this paper.The Pipeline and Energy Company: Enron Corporation was formed as a result of a 1985 merger of Houston Natural Gas (HNG) and InterNorth-a Nebraska based gas pipeline company. Kenneth Lay, CEO of HNG, became Enron's first CEO and proce
Trading Becomes the Mantra: As Enron's revenues sky-rocketed in its initial forays into wholesale buying and selling of gas and electricity, Skilling was emboldened to extend the trading concept into almost any commodity that could be traded, i.e., futures contracts in coal, paper, steel, water and even weather. Taking advantage of the growing use of the Internet, Enron started Enron Online (EOL) in October 1999-an electronic commodities trading Web site that was hugely successful almost overnight. Skilling hired the brightest talent from the top MBA schools and turned them into high-flying traders with incentives to "eat what they killed." (Thomas, para on "The Best, the Brightest...") Conflict of Interest: Despite serious accounting irregularities, no one was prepared to blow the whistle because of conflicts of interest of several key players. Enron's auditor, Arthur Anderson was also its consultant and stood to gain from 'seeing no evil'; Kenneth Lay was busy exercising his stock options before the share value fell. J.P. Morgan, while underwriting bonds for Enron, was involved in trading derivatives contracts with the company and had a substantial share in Enron stock. Andrew Fastow was making millions in profits by doing business with the firm through secret limited partnerships. As a result, although the fall of Enron when it filed for bankruptcy in December 2001 seemed stunningly sudden to most people, conditions for the collapse had been brewing for a long time. Taking Advantage of Deregulation: Things began to change as the gas and electricity sectors
Some common words found in the essay are:
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Approximate Word count = 1064
Approximate Pages = 4 (250 words per page double spaced)
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