Frontlines

Deck: 
<b>Never before have investors known less about what their company is up to. </b>
Fortnightly Magazine - July 15 2000
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Frontlines

What's a Utility?

Never before have investors known less about what their company is up to.

How many different types of "utility" companies can you name? Which ones would you trust the most to double or triple your investment nest egg? Which ones make you nervous?

In their latest memo to clients and "friends of the firm," lawyers Dan Fessler, Doug Hawes, and the rest of the crew at LeBoeuf, Lamb, Greene & MacRae identify no less than a half a dozen. They see the industry trying out such strategies as:

  • Distribution as a pure play (with GPU as a leading exponent),
  • Merchant energy (Enron),
  • Independent power generation (Calpine),
  • A regional focus, serving all energy markets at all levels (Dominion Resources),
  • A national focus in generation, combined with regional transmission and distribution (American Electric Power, Duke Energy, Southern Co., Unicom/ PECO), and
  • Technology or e-commerce (Montana Power, Avista).

And you can slice and dice some of these six categories. The letter from LeBoeuf, Lamb explains that AES looks like a generation company, like Calpine, and enjoys a high price-earnings ratio (also like Calpine), but also claims some 14 million distribution customers overseas. According to the firm, "the p/e magic must be related to something other than pure play."

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