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Monday, 22 October, 2001, 19:25 GMT 20:25 UK
Probe sends Enron shares tumbling
Electricity pylons in California
Power to the people: Enron deals in electricity and natural gas
A regulatory probe into company transactions dealt the latest blow to the embattled US energy company Enron.

The Securities and Exchanges Commission's (SEC) probe into North America's largest buyer and seller of natural gas and electricity shaved more than a fifth off the company's share price.

By Monday afternoon, the stock had lost $5.49, or 21% to trade at $20.56.

The market value of the company fell by $4.2bn in a matter of hours, despite warnings by analysts against overreacting.

"This is an inquiry, not an investigation, and I cannot imagine Enron's attorneys or accountants would allow it do to something illegal," said Merrill Lynch analyst Donato Eassey.

"It's easy for the market to kick a company when its down, but these challenges do not last for a solid company, and we think Enron is one."

Enron said it would cooperate with SEC.

Familiar tale

For Enron's investors, the fall in share prices was a familiar experience: So far this year, Enron's stock has slipped 75%.

In August, Enron's chief executive Jeff Skilling resigned, only six months after taking the job.

Last week, the company reported a loss for the third quarter, its first quarterly loss in four years.

It also took a $1bn charge to pay for past poor investments that never worked out.

Last week, Enron's share price fell 23% following press reports about links between its senior people and external partnerships.

"Investors have had several opportunities to question Enron's credibility and at each of those turns the share price has declined," said Credit Suisse First Boston analyst Curt Launer.

See also:

24 Aug 01 | Business
Energy giant piles pressure on India
25 May 01 | Business
India's power crisis escalates
11 Jul 01 | South Asia
Energy giant appeals to India
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