The Enron Debacle: Byzantine deals have shattered the energy outfit's credibility

No one could have predicted such a jaw-dropping outcome for Enron Corp. the nation's largest and most innovative energy trader. Since October 16, when Enron revealed a $35 million charge to earnings to reflect losses on those partnerships and was forced to knock $1.2 billion off its shareholders' equity, the company's stock has plunged 60%. The Securities & Exchange Commission is investigating Enron's accounting for its partnerships and whether it properly disclosed them to investors. Suddenly the company, which brought high-tech and complex finance to energy trading, is essentially trying to avoid a run on the bank. Moody's Investors Service has already downgraded the company's debt. Enron says it is meeting with credit agencies to calm their fears, and analysts say Enron is working on a turnaround plan that would likely include accelerating asset sales, issuing shares, and obtaining new credit lines. Enron's board has set up a special committee to look into its controversial partnerships. But analysts also worry that Enron's trading partners could pull the plug if they lose confidence that it can honor its trades.