Feb. 15, 2006, 1:13AM
THE ENRON TRIAL
Witness: Skilling's pressure fed stock deception
Former head of broadband unit says finessing earnings reports was expected
By MARY FLOOD
Copyright 2006 Houston Chronicle
The former head of Enron's broadband business told jurors Tuesday that his mentor and friend Jeff Skilling pressured him to make his division appear to the public to be growing, even while the unit was in fact laying people off and had no revenues.
Ken Rice, a 47-year-old Houstonian, said he repeatedly misled investors about the financial health of the company's Internet business. And he walked the jury through a March 2001 analyst conference call in which he said Skilling also repeatedly misrepresented the faltering division's health.
On questioning by Enron Task Force Director Sean Berkowitz, Rice painted a picture of a pressure-cooker business with a major focus on maintaining the public face of a growing company so that Wall Street investors would bump up the stock price based on hopes for the future.
Rice said Skilling in particular worried the market would drop the price if Enron appeared to be primarily just a risk-taking trading company.
The second witness to take the stand in this case, Rice said he was expected to engage in all sorts of financial contortions to meet the earnings expectations assigned to his division, even though his two alleged revenue-generating businesses weren't generating anything.
"Mr. Skilling would simply say, in fact he did say, 'This is the number, this is what the number is going to be,' " Rice said of the earnings estimate predictions. Rice's testimony focused on Skilling, who he said was a hands-on boss who understood what was happening at Enron Broadband Services....>
http://www.chron.com/disp/story.mpl/front/3660310.html