Letters to the Editor / Corrections & Clarifications
To the Editor:
In a letter to the Oct. 1, 2003, , a letter from Lewis Evans and Kevin...
CFOs speak out: Growth Strategy for the 21st Century
the past five to six years, where other companies have been going down different paths of merchant generation or trading or so forth, we have always stuck to our guns. We believe having a foot in the generation, transmission, and distribution markets was the right spot for FirstEnergy. That is what we intend to do going forward. We have a good set of assets, we have operations in three states, and we have valuable regulatory plans that help us operate successfully in those three areas. So, we have some things going for us that other companies may not have.
In terms of growth going forward, I don't see any departures to our strategy. We are going to continue to reap additional efficiencies out of the business that exists. We are going to use the strong cash flow that we have to finish our debt repayment program. We'll be able to use some of that cash before too long to give back to shareholders in the form of a dividend increase, which will increase their total return on the stock. It's really very much an execution story. Basically doing the same things we have been doing, but continuing to do them better, more efficiently, and therefore being able to grow earnings incrementally for shareholders.
Will you look to acquire another company?
RM:We've done two mergers since 1997, each of which doubled our size. So we certainly know how mergers work, and we know the potential benefits. But it is such a specific situation. It's like marriage. You have to get two parties that come together at the right time and the right place, and that is always very difficult. You can see that there haven't been any significant transactions in our industry for several years now, so that illustrates how hard that is.
We're not banking on acquisitions. We are focused internally, growing the business and running the business more efficiently. To the degree that somewhere down the road something pops up that would be beneficial for our shareholders, certainly we're looking for that. But we're really focused internally on building value through operating the assets that we have now.
Would you be open to being acquired, or would your focus be on specific assets?
RM:I can tell you that right now the company is not for sale. We believe we are in a position to operate it successfully and produce value for our shareholders. That's the plan. However, at the end of the day we'll always do what is in the best interest of our shareholders.
It could very well be that we would buy select assets at some point in the future. We have talked a lot about our interest in a certain type of generating facility in the PJM marketplace that would help us improve the margin on our Pennsylvania Provider-of-Last-Resort (POLR) obligation. I would expect that there could be transactions like that-limited, small scale, and very specific. We'll have to see what the dynamics are in the larger marketplace.
What growth levels do you believe your business