Enron 's Impact On The Natural Gas Industry

2699 Words Oct 21st, 2014 11 Pages
Introduction: Enron was founded in 1985 as a result of a merger between Houston Natural Gas and InnerNorth of Omaha. During this time period there was a series of deregulations in the utilities industry which was highly regulated at the time. Enron original business was selling natural gas. Jeff Skilling developed the idea of a “gas bank” which was the middlemen for consumers and suppliers. Enron decided that if they were to increase their growth they needed to enter other markets due to the increase competition in the natural gas industry. Enron enter in the electric, water, broadband, pulp and paper industries. This new ventures were supposed to create millions of dollars in revenue for Enron; however most of this new ventures were immense failures which cost Enron significant losses. Enron never disclosed these losses to investors or the SEC until October 2001. Through different accounting practices with the help of its auditors (Arthur Andersen) Enron declared revenue numbers in the billions of dollars. Fortune magazine named Enron the most innovative company for six years straight and was ranked as the seventh largest company in the Fortune 500. Investors were in love with Enron although they could not explain how Enron was profitable. A year before Enron declared bankruptcy Enron’s shares were trading in the NYSE for $85 dollars. Many of Enron’s employees were encouraged to purchase company stock and many of them did. Retirees made it part of their 401…
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