Dream Job Turns Into a Nightmare

Skilling's Success Came at High Price

Second of five articles

Jeffrey K. Skilling was sketching the history of Enron Corp. for a newspaper reporter last summer, boldly comparing its impact on energy trading to the revolutionary changes that John D. Rockefeller's Standard Oil imposed on the petroleum industry a century before.

The moment the interview ended, the 47-year-old executive checked his desktop computer, where Enron's stock price flashed on the screen.

For Skilling, Enron's brash and relentlessly competitive chief executive, the price was critical to his success. It had been about $79 a share when he became chief executive in February 2001. In typically audacious fashion, Skilling boasted to securities analysts that it should be $126. Instead, it had tumbled.

By the beginning of August, the stock price was below $46. If it kept falling, Enron's very foundations could crumble under the weight of an avalanche of debt, a threat known to only a few at the top of the company.

Nothing had gone right in the six months since Skilling had ascended to his dream job.

Enron abandoned a costly bid to become the leading supplier of first-run movies on the Web. Its other bright hope, retail electricity sales, was fading. The California energy crisis had stained the company as a greedy profiteer; in June, a protester hit Skilling with a pie. The company's costly power plant in India was mired in political controversy. Enron privately classified 45 percent of its $9 billion in international projects as "troubled" assets.

The strain on Skilling, a man who hated to lose at anything, was unmistakable. Several months earlier, he lost his cool in a conference call with analysts, rebuking a skeptical fund manager with a crude anatomical reference. That shocked some Enron board members. One director began asking major investors, "What do you think of Skilling?"

The bad news kept coming.

On Aug. 7, the stock of an electricity retailer called the New Power Co. plunged 30 percent after it issued a gloomy financial report.

Enron had created New Power and spun it off as a publicly traded company, keeping a large stake for itself. At first, New Power's stock price climbed, giving Enron a $370 million paper profit. The drop threatened to erase that gain.

More ominously, the New Power investment was linked to a much larger, multibillion-dollar structure, a confidential series of four investment vehicles called the Raptors. Those vehicles were funded by Enron and New Power stock.