This week, Enron
announced its earnings. And they were tremendous. Net income increased 30
percent to $289 million and revenues soared 75 percent to $16.9 billion.
Weren’t only Internet companies supposed to grow like this?
True, Enron is in some big but sleepy businesses, such as natural gas and
electricity. However, Enron is quickly becoming an Internet company. Management
understood there were tremendous benefits to be gained from going digital. The
result has been EnronOnline. It is a Web-based transaction system that allows
customers to buy and sell the energy-related products of Enron. These products
include traditional things, such as crude oil and gas, as well as exotic products,
like emission allowances and weather derivatives. There are even plans to sell
airport runway rights.
How does a big company do such things? Aren’t they supposed to be unseated
by disruptive technologies? Actually, Enron has a very open culture. For
example, there was no need for CEO approval for EnronOnline.
Currently, EnronOnline accounts for about 60 percent of Enrons wholesale
transactions. The online system has more than 800 products and has
conducted about $100 billion in transactions since it was launched in
November 1999.
But Enron has also ventured into another line of business: broadband. This
is the result of a joint venture with Sun Microsystems. Enron has also
partnered with SBC, Verizon, Qwest, Covad, Telus, and ReFlex. In the past
quarter, the Enron Broadband division had $151 million in revenues and an $8
million loss.
Expect lots of growth from this division. Recently, the company struck deal
with Blockbuster (BBI). It is a 20-year exclusive contract to deliver
movie-on-demand services. The in-home entertainment business is expected to
be substantial, with about $20 billion per year.
Given all this, it is no surprise that Fortune magazine has named Enron the
“Most Innovative Company” for the past five years. In a way, Enron is like
Cisco. Cisco has created incredible shareholder wealth by making the Web an
integral part of the company. This is what Enron is doing, and the results
have been almost instantaneous.
