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Reply #84: Exec: Enron Was Wrong to Hike Earnings [View All]

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UpInArms Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-07-06 11:06 AM
Response to Reply #26
84. Exec: Enron Was Wrong to Hike Earnings
http://www.cbsnews.com/stories/2006/02/07/ap/business/m...

AP) Enron Corp.'s former investor-relations chief grew tense Tuesday when he insisted the company was wrong to hike earnings by a penny per share in early 2000 to meet Wall Street estimates, even though he didn't know how the final figures were reached.

In his fourth day testifying in the fraud and conspiracy trial of Enron founder Kenneth Lay and former CEO Jeffrey Skilling, Mark Koenig reiterated his belief that top executives bent on meeting or beating Wall Street earnings expectations made overnight changes that he considered suspect.

Failure to meet or beat analyst earnings expectations could spark a drop in the company's stock price, which Koenig said was all-important at Enron.

Under cross-examination by lead Skilling lawyer Daniel Petrocelli, Koenig recalled informing Skilling and former top Enron accountant Richard Causey on the day before Enron was to announce fourth-quarter 1999 earnings that analysts had kicked up expectations to 31 cents per share from 30 cents. Drafts of earnings press releases showed Enron was to announce earnings of 30 cents per share.

He said Causey told him he would "work on it," and "a decision was made to increase the earnings." However, Koenig did not say Skilling ordered the change.

"I know they figured out a way to come up with the extra penny. I didn't inquire into the exact transaction or adjustment, no," he said. "To go back and sharpen a pencil to find another penny, that's wrong."

<snip>

Enron went bankrupt in December 2001 within weeks of revelations of hidden debt and inflated profits. Prosecutors contend Lay and Skilling repeatedly lied about Enron's health when they knew that accounting maneuvers propped up a facade of success.

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