Landlords and Dominators
“The market loves Enron because president Jeffrey Skilling and CEO Kenneth Lay seem to have come up with a business model that works for just about anything.”1 In August 2000, when these words appeared in Time magazine, there were many investors who would have enthusiastically agreed. Enron’s stock traded at a P/E of over 60, and banks enthusiastically loaned the company billions to expand into new markets. In November 2001, however, Enron filed a letter with the Securities and Exchange Commission declaring that $690 million in debt had to be paid almost immediately. Within a few months it filed Chapter 11.
The misconceptions about Enron’s approach and performance form one of the most intriguing ...