Jeff Skilling sentenced to 24 years and four months in prison for Enron crimes…Halliburton plans to spinoff KBR by April…Exxon Mobil signs deal to sell the gas from Russia’s Sakhalin Island to China….
Former Enron CEO Jeff Skilling was sentenced in a Houston federal courtroom to more than 24 years in prison on 19 counts of fraud, conspiracy, insider trading and lying to auditors. It’s the harshest sentence yet to emerge from the company’s spectacular 2001 collapse. U.S. District Judge Sim Lake denied Skilling’s request for bond, and ordered him to home confinement. He must wear an ankle monitor, and prison officials will soon notify him when he should report. Before the sentence, the judge allowed a few former employees to speak in court, including Dawn Powers Martin, who later spoke with reporters outside the courthouse. She now wonders if she’ll outlive her savings.
“I’m so upset I, you know, you want to give your kids things. You want a better life for your children. And so I had hoped to leave my children something when I die and now I’m wondering how long is it going to last. Am I going to outlive my money?”
Martin said in court that Skilling has proven “to be a liar, a thief and a drunk, flaunting an attitude above the law.” Sherri Sera, a former Enron administrative assistant who continued working for Skilling as he was preparing for trial, spoke in his support. Sera said in 20 years she never saw or heard anything about Skilling leading a massive conspiracy to mislead Enron shareholders and employees. Sera said she, too, lost thousands in Enron stock and benefits, but blames herself for not diversifying. Skilling told reporters after sentencing he certainly feels remorse for those who’ve lost their retirement savings.
“I feel terrible about what’s happened, and this is one of the things I said that, you know, people say that, you know, Jeff hasn’t shown remorse. That’s, you know, that’s not true. I mean, you know, my life, my life has been a nightmare. So you, I mean, of course I feel bad. I feel horrible. But that’s not to say that I think I did something illegal.”
Skilling vows to continue fighting his convictions. But prosecutor Sean Berkowitz said Skilling violated the trust that people placed in him, and not in a one-time event. As a result, he said many people lost trust and faith in the marketplace. Skilling’s remaining assets, about $60 million, will be distributed in a restitution fund for former Enron employees and stockholders, as well as Skilling’s legal team. Judge Lake told Skilling that his crimes have imposed a lifetime of poverty for many people. Enron’s 2001 collapse led to the loss of thousands of jobs, more than $60 billion in Enron stock and more than $2 billion in employee pension plans.
Houston-based Halliburton told analysts it plans to complete a spinoff of its KBR engineering and construction unit by April. The oilfield services conglomerate said in July it would pursue a spinoff rather than a previously announced initial public offering. But Halliburton chief executive Dave Lesar said today the company believes an IPO could be in the works since the market has improved. He says Halliburton expects to complete an IPO of just under 20 percent of KBR’s outstanding shares. That would be followed by a spinoff of the remaining shares to Halliburton shareholders by April. Lesar says that if Halliburton can’t proceed with the IPO, it expects to spin off 100 percent of KBR to Halliburton shareholders by April. KBR has kept Halliburton under lawmakers’ scrutiny for its work in Iraq since U.S. forces invaded the country three years ago. Halliburton was once led by Vice President Dick Cheney.
Exxon Mobil has signed a preliminary deal to sell to China the gas it exports from a project off the Russian far eastern island of Sakhalin. The deal to sell gas to China National Petroleum Corporation underscores the importance of the Russian oil and gas province to Asian markets. An Exxon Mobil spokesman says the deal paves the way for a final sale and purchase agreement to be signed between the two companies. The spokeswoman says the Irving-based company aims to sell eight billion cubic meters of gas per year to China. It now supplies 1.7 billion cubic meters per year to local consumers in a nearby Russian region and plans to raise that figure to three billion cubic meters.
AT&T reports third-quarter earnings rose 74 percent to $2.17 billion. The San Antonio-based phone company credits strong growth and profit margins at Cingular Wireless, as well as the addition of its long-distance phone business. The company, formerly known as SBC Communications, changed its name to AT&T late last year after acquiring the old AT&T’s long-distance operations. Third-quarter revenue totaled $15.64 billion–up from a pre-merger figure of $10.3 billion in last year’s quarter. Because AT&T shares management control of Cingular with Atlanta-based BellSouth, the cell phone operation’s revenues aren’t reflected in AT&T’s tally.
Kimberly-Clark posted a third-quarter profit 12 percent higher than last year’s quarter. The Irving-based tissue and diaper giant credits increased sales–especially in developing markets–for the increase in the July-to-September quarter’s profit. Kimberly-Clark says it earned $364 million. The maker of Kleenex tissues and Huggies diapers says third-quarter revenue rose 5.2 percent to $4.21 billion. That’s roughly in line with analysts’ forecast of $4.2 billion.
Radio silence from RadioShack is frustrating Wall Street. Investors want answers from the Fort Worth-based company that’s seen executive shake-ups, poor sales and a public relations nightmare involving the firing of employees via e-mail. Some analysts and observers said the lack of answers about the company’s turnaround plans since the arrival of new CEO Julian Day has been an ongoing source of frustration. The Associated Press says executives have refused all media interviews. They’ve also stopped holding conference calls with analysts during quarterly earnings reports, a common practice among publicly traded companies. They won’t be talking to investors or analysts when RadioShack posts third quarter earnings Wednesday. William Baldwin, a Dallas-based analyst for Baldwin Anthony Securities, says he doesn’t know how you get away with running a public company like a private company. Baldwin also says he’s “befuddled” as to why RadioShack stock is going up.
Texas Instruments reports its profit rose slightly in the third quarter. But Dallas-based TI–which makes chips for mobile phones–warned that orders declined and fourth-quarter semiconductor growth will be below the seasonal average. TI earned $702 million in the July-September period. That compares to year-ago net income of $631 million. Chief executive Richard Templeton said the third quarter was one of the best in the company’s history, but he also warned about the decline in orders.