The Article that Eventually Killed Enron
March 19th, 2010
Is Enron Overpriced?: This was the 2001 Fortune article that started the Enron downfall. Bethany McLean simply asked why Enron was trading so high. This was the beginning of the end for the company, and it led to her book and documentary entitled “Enron: The Smartest Guys in the Room.”
This excerpt is telling:
Start with a pretty straightforward question: How exactly does Enron make its money? Details are hard to come by because Enron keeps many of the specifics confidential for what it terms "competitive reasons." And the numbers that Enron does present are often extremely complicated. Even quantitatively minded Wall Streeters who scrutinize the company for a living think so. "If you figure it out, let me know," laughs credit analyst Todd Shipman at S&P. "Do you have a year?" asks Ralph Pellecchia, Fitch’s credit analyst, in response to the same question.
I know from watching the movie, that virtually no one – not even employees – really understood just exactly what the company was doing or was supposed to be doing. That’s never a good sign.