Journalists take pride in finding out answers to questions, not in being stumped and misled. Employees suffered steep losses in their 401(k) plans because more than 60% of the assets were in Enrons stock at one point, and the stock has dropped to about 50 cents a share from a peak of $90 last year. But all of these expectations are based on what Wolfe, the J.P. Morgan strategist, calls "a little bit of the China syndrome"--in other words, if you get x% of y enormous market, you'll get z in revenues. But these earnings aren't necessarily cash at the instant they are recorded. On Nov. 28, 2001, credit rating agencies reduced Enron's credit rating to junk status, effectively solidifying the company's path to bankruptcy. In 1999 its cash flow from operations fell from $1.6 billion the previous year to $1.2 billion. Even less appealing is Enron's return on invested capital (a measure including debt), which is around 7%. After two brief conversations, the calls ceased. Start with a pretty straightforward question: How exactly does Enron make its money? You have to favor to in this make public English Hours (Esprios Classics) - Henry James 2021-06-15 English Hours is a book of travel writing by Henry James published in 1905. Enron took great pains to conceal what it was doing and create illusions of success in the quarterly and annual securities re ports it issued. In 1985, Kenneth Lay merged the natural gas pipeline companies of Houston Natural Gas and InterNorth to form Enron. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. Do Not Sell. And the inability to get behind the numbers combined with ever higher expectations for the company may increase the chance of a nasty surprise. Actually, analysts dont seem to have a clue whats in Assets and Investments or, more to the point, what sort of earnings it will generate. But describing what Enron does isnt easy, because what it does is mind-numbingly complex. It also dismisses any comparison to a securities firm. This business involves building power plants around the world, operating them, selling off pieces of them, "invest[ing] in debt and equity securities of energy and communications-related business," as Enron's filings note, and other things. But those four words proved to be a hard admission for most analysts who were paid to know what Enron was up to. Is Enron Overpriced? For members of the transition team, the sordid story may be far from top of mind. The company also blames short-sellers for talking down Enron. Case Number. We know that Enron is an American energy company based on Houston, Texas and the dissolution of Arthur Anderson, which was one of the . Morningstar, Inc. All Rights Reserved. Energy, more than twice that of the S&P 500, and about on a par with new-economy sex symbol Cisco Systems. The energy company reported increasing profits, quarter after quarter. All rights reserved. All Rights Reserved.Terms But Enron has been steadily selling off its old-economy iron and steel assets and expanding into new areas. But for all the attention that's lavished on Enron, the company remains largely impenetrable to outsiders, as even some of its admirers are quick to admit. "Do you have a year?" All rights reserved. We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. how does enron make its money book In December, Enron folded, with the largest bankruptcy filing in U.S. history. Is a business community property in California divorce? Privacy Policy. Advocate Name. The collapse of Enron, which held more than $60 billion in assets, involved one of the biggest bankruptcy filings in the history of . Donec gravida mi a condimentum rutrum. At a late-January meeting with analysts in Houston, the company declared that it should be valued at $126 a share, more than 50% above current levels. Included in the $126 a share that Enron says it's worth is $40 a share--or $35 billion--for broadband. bethany mclean how does enron make its money. In hindsight, it is clear where reporters should have been looking. For instance, many Wall Streeters believe that the current volatility in gas and power markets is boosting Enrons profits, but there is no way to know for sure. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. Thats about the same rate of return you get on far less risky U.S. Treasuries. It sold its last business, Prisma Energy, in 2006. FIR Number. My questions werent very sharp, and the tipster was nervous. "Enron is an earnings-at-risk story,'' says Chris Wolfe, the equity market strategist at J.P. Morgan's private bank, who despite his remark is an Enron fan. Indeed, Enron dismisses criticism as ignorance or as sour grapes on the part of analysts who failed to win its investment-banking business. In 2000, 95% of its revenues and more than 80% of its operating profits came from "wholesale energy operations and services." Enron now trades at roughly 55 times trailing earnings. In fact, Enron's view is that it can create a market for just about anything; as if to underscore that point, the company announced last year that it would begin trading excess broadband capacity. Wall Street is a far less glitzy place, but theres still such a thing as an It Stock. Right now, that title belongs to Enron, the Houston energy giant. Free delivery for many products. Of course everything could go swimmingly. Perhaps most promising is its Enron Energy Services business, which manages all the energy needs of big commercial and industrial companies. Actually, analysts don't seem to have a clue what's in Assets and Investments or, more to the point, what sort of earnings it will generate. (In fact, cash flow would have been negative if not for the $410 million in tax breaks it received from employees exercising their options.). For instance, Enron says the global market for broadband and storage services will expand from $155 billion in 2001 to somewhere around $383 billion in 2004. and/or its affiliates. Mea cul-pas aside, Enrons collapse caught analysts and journalists off guard because there was little hint of trouble in the companys reported financial statements, Schonfeld wrote. At the least, these sorts of hard-to-predict earnings are usually assigned a lower multiple. But $22 billion seems like a high valuation for a business that reported $408 million of revenues and $60 million of losses in 2000. In 1990 around 80% of its revenues came from the regulated gas-pipeline business. At a late-January meeting with analysts in Houston, the company declared that it should be valued at $126 a share, more than 50% above current levels.. Both Skilling, who describes Enron's wholesale business as "very simple to model," and Fastow note that the growth in Enron's profitability tracks the growth in its volumes almost perfectly. getting enough information to confirm his doubts. Case Number. In addition to its commodities business, Enron has another division called Assets and Investments that is every bit as mysterious. Actually, analysts don't seem to have a clue what's in Assets and Investments or, more to the point, what sort of earnings it will generate. I dont get it.. Necessary cookies are absolutely essential for the website to function properly. Both Skilling, who describes Enrons wholesale business as very simple to model, and Fastow note that the growth in Enrons profitability tracks the growth in its volumes almost perfectly. the evolution of animal species has been prolific; accident in binghamton, ny today; bethany mclean how does enron make its money In any event, some analysts seem to like the fact that Enron has some discretion over the results it reports in this area. We need to listen to contraries and skeptics and also to short-sellers, recognizing the sharp axe they grind. While tech stocks were bombing at the box office last year, fans couldn't get enough of Enron, whose shares returned 89%. But $22 billion seems like a high valuation for a business that reported $408 million of revenues and $60 million of losses in 2000. It's in a bunch of complex businesses. Village Name. LinkedIn has officially entered its cringe era, and its working. King listened as Skilling described Enron as a new hybrid company that would earn dot-com stock prices by taking its energy trading expertise into widely disparate fields, creating new commodity markets for Internet transmission, water supply, advertising space, and other services. If you thought Enron was just an energy company, have a look at its SEC filings. We don't want to tell anyone where we're making money.". Indeed, people commonly refer to the company as the Goldman Sachs of energy trading. Thats meant as a compliment. "Enron is no black box," says Goldman's Fleischer. The off-balance sheet arrangements, (2). Enron has no shame in telling you what its worth, says one portfolio manager, who describes such gatherings as revival meetings. Indeed, First Call says that 13 of Enrons 18 analysts rate the stock a buy. Then a young Fortune writer, Bethany McLean, wrote an article posing a simple question - how, exactly, does Enron make its money? Stephen Woo & Barbara Woo - Stephen Woo Actor, Barbara Woo Actor. Many of us didnt question them as closely as we should have, Shook says. Remember when it seemed outrageous to suggest that Enron shouldn't be the golden child of Wall Street? Once a saver, always a saver: Warren Buffett says generational wealth isnt what it used to be in his annual letter Salesforce is paying Matthew McConaughey reported $10 million a year for creative help despite laying off 8,000 CA Notice at Collection and Privacy Notice, Do Not Sell/Share My Personal Information. . In Enrons view, its core businesswhere the company says it makes most of its moneyis delivering a physical commodity, something a Goldman Sachs doesnt do. Another hedge fund operator with doubts about Enron went looking more than a year ago for firsthand information. Enron now trades at roughly 55 times trailing earnings. Factset: FactSet Research Systems Inc. 2018. Indeed, people commonly refer to the company as "the Goldman Sachs of energy trading." Court Orders. The scandal led to the indictment of several of the companys executives and the downfall of its accounting firm, Arthur Andersen. He got names of former Enron employees from Internet job sites and called them at home. Do Not Sell. Not until October did The Wall Street Journal link Mr. Fastow's partnerships to Enron's write-off of $1.2 billion in shareholder equity. How do I get a copy of my Nebraska birth certificate? Just a few years later, however, the mere mention of the name "Enron" was used to symbolize all that can go wrong in corporate America. Not surprisingly, the critics are gushing. Make money & make a difference, banishing work unhappiness - Use the fast-start wealth strategies of the new tech-rich - Maximise . Nor does Enron make life easy for those who measure the health of a business by its cash flow from operations. NBA confirms L.A. Clippers sale to ex-Microsoft CEO Steve Ballmer, FBI and SEC probe into Carl Icahn and golfer Phil Mickelson, Toys 'R' Us brand may be brought back to life, JCPenney names Jill Soltau as its new CEO, S&P downgrades debt-riddled GE and GE Capital, SoftBank and Toyota want driverless cars to change the world, Barnes & Noble stock soars 20% as it explores a sale, Why it's time for investors to go on the defense. Jeffery Skilling agreed to join Enron as CEO on the condition that the use of use mark-to-marketing . Party Name. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice| Do Not Sell/Share My Personal Information| Ad Choices "We are concerned they are liquidating their asset base and booking it as recurring revenue, especially in Latin America," says analyst Andre Meade at Commerzbank--who has a hold rating on the stock. Both Enron and some of the analysts who cover it think it already is. In 1990 around 80% of its revenues came from the regulated gas-pipeline business. Then again, Jordan never had to promise to hit a certain number of shots in order to please investors. Included in the $126 a share that Enron says its worth is $40 a shareor $35 billionfor broadband. "That's like calling Michael Jordan a black box just because you don't know what he's going to score every quarter." The bullish scenario for Enron is that the proceeds from those sales will reduce debt, and as earnings from new businesses kick in, the company's return on invested capital will shoot upward. Im somewhat afraid of it, admits one portfolio manager. It would have been different if it had been one of those giant, sluggish companies where some employees could go at half-speed and hide in the bureaucracy, said workers here. Hard, too, for Enrons highly compensated outside directors charged with protecting shareholders interests. NBA confirms L.A. Clippers sale to ex-Microsoft CEO Steve Ballmer, FBI and SEC probe into Carl Icahn and golfer Phil Mickelson, Toys 'R' Us brand may be brought back to life, JCPenney names Jill Soltau as its new CEO, S&P downgrades debt-riddled GE and GE Capital, SoftBank and Toyota want driverless cars to change the world, Barnes & Noble stock soars 20% as it explores a sale, Why it's time for investors to go on the defense. The cookie is used to store the user consent for the cookies in the category "Other. But for all the attention thats lavished on Enron, the company remains largely impenetrable to outsiders, as even some of its admirers are quick to admit. (The same is true for Enrons competitors, but wholesale operations are usually a smaller part of their business, and they trade at far lower multiples.) When Jeff got Lasik on his eyes, everyone at Enron got Lasik, so nobody was wearing glasses, journalist Mimi Swartz laughs. The two have been convicted of fraud and conspiracy in connection with the energy-trading giants collapse. Enron has an even higher opinion of itself. In order to facilitate its plan to trade excess bandwidth capacity, Enron is constructing its own network. To some observers, Enron resembles a Wall Street firm. She and colleague Peter Elkind subsequently wrote a book about the Enron scandal, The Smartest Guys in the Room, which also became a documentary. If you thought Enron was just an energy company, have a look at its SEC filings. Right now, that title belongs to Enron, the Houston energy giant. Both Skilling, who describes Enron's wholesale business as "very simple to model," and Fastow note that the growth in Enron's profitability tracks the growth in its volumes almost perfectly. All Rights Reserved.Terms Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. So broadband had better be a good business. In the first nine months of 2000, the company generated just $100 million in cash. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. Whats clear is that Enron isnt the company it was a decade ago. But all of these expectations are based on what Wolfe, the J.P. Morgan strategist, calls a little bit of the China syndromein other words, if you get x% of y enormous market, youll get z in revenues. And the numbers that Enron does present are often extremely complicated. But Enron says that extrapolating from its financial statements is misleading. As for the details about how it makes money, Enron says that's proprietary information, sort of like Coca-Cola's secret formula. Trying to get a good grip on Enrons risk profile is challenging, says Shipman. This means that when assets are divided during the divorce process, the other spouse is legally entitled to half of the value , Admissibility of Recorded Conversations in California Typically, recorded conversations are inadmissible in court as hearsay. The company was the center of the first . Skilling sent Fastow to New York on a corporate jet to challenge her reporting. By October, other reporters were digging and more devastating disclosures followed. By almost every measure, the company turned in a virtuoso performance: Earnings increased 25%, and revenues more than doubled, to over $100 billion. She is known for her writing on the Enron scandal and the 2008 financial crisis. Not everyone is so chipper. By almost every measure, the company turned in a virtuoso performance: Earnings increased 25%, and revenues more than doubled, to over $100 billion. To some observers, Enron resembles a Wall Street firm. Powered and implemented by Interactive Data Managed Solutions. Both Enron and some of the analysts who cover it think it already is. "Enron is a big black box," gripes another analyst. Even less appealing is Enrons return on invested capital (a measure including debt), which is around 7%. However, California allows an illegally recorded conversation to be admitted as evidence in criminal cases, provided it falls within a , Case Status. As for the details about how it makes money, Enron says that's proprietary information, sort of like Coca-Cola's secret formula. The fact that Enron's cash flow this year was meager, at least when compared with earnings, was partly a result of its wholesale business. Even quantitatively minded Wall Streeters who scrutinize the company for a living think so. In the end, it boils down to a question of faith. "Enron has no shame in telling you what it's worth," says one portfolio manager, who describes such gatherings as "revival meetings." If you figure it out, let me know, laughs credit analyst Todd Shipman at S&P. But at Enron, employees earned their paychecks or they were let go. writer Bethany McLean asked. In 1999 its cash flow from operations fell from $1.6 billion the previous year to $1.2 billion. Start with a pretty straightforward question: How exactly does Enron make its money? In Enron's view, its core business--where the company says it makes most of its money--is delivering a physical commodity, something a Goldman Sachs doesn't do. collection letter services; hunting terrier collars; one shoulder black dress maxi; adobe io integration with aem; elephante reservations; Fortunes Bethany McLean, the first journalist for a major business publication to question Enrons inflated reputation, started down this path toward clarity when in March of 2001 she spotlighted a central issue about Enron that neither she nor much of Wall Street could explain. While Enrons revenue was soaring from mid-2000 to 2001, the profit it was making on each trade was shrinking, the report noted. Shares of Enron stock reached their highest price on August 23rd, 2000 when shares reached a price of $90.75! It is quite an understatement to say that the press was late in getting to the scene of this fire. Mark to Market (MTM) in a futures contract is the process of daily settlement of profit and losses arising due to the change in the securitys market value until it is held. All content of the Dow Jones branded indices S&P Dow Jones Indices LLC 2018 While Wall Street firms routinely earn north of 20% returns on their equity--Goldman's ROE last year was 27%--Enron's rate for the 12 months ended in September (the last period for which balance sheet information is available) was 13%. At the time, the company was trading at a price to earnings multiple of over 70. Who went to jail for Enron? Thats true. In a footnote to its 1999 financials, Enron notes that it booked "pretax gains from sales of merchant assets and investments totaling $756 million, $628 million, and $136 million" in 1999, 1998, and 1997. But these earnings aren't necessarily cash at the instant they are recorded. In the end, it boils down to a question of faith. Estimated losses totaled $74 billion. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. "If it doesn't meet earnings, [the stock] could implode.". John Groove has over 20 years of experience specializing in divorce and family law. In a footnote to its 1999 financials, Enron notes that it booked pretax gains from sales of merchant assets and investments totaling $756 million, $628 million, and $136 million in 1999, 1998, and 1997. I received a tip in November from a person describing a partnership named Chewco that The Wall Street Journal had uncovered the month before. In written reports, Morgan Stanley chalked up the decline to the poor performance of Enron's "significant number of investments" in telecom stocks; Dain Rauscher Wessels blamed it on a lack of asset sales. This website uses cookies to improve your experience while you navigate through the website. ceramic figurines to paint for adults; duramo 10 adidas women's; lego team building activities virtual; how does enron make its money mclean Morningstar: 2018 Without having access to each and every one of Enron's contracts and its minute-by-minute activities, there isn't any way to independently answer critical questions about the company. Without having access to each and every one of Enrons contracts and its minute-by-minute activities, there isnt any way to independently answer critical questions about the company. In a probing U.S. News & World Report story in June, Anne Kates Smith asked whether Enron was overpriced. An article last August by Wall Street Journal reporters Rebecca Smith and John Emshwiller put a spotlight on Fastow. We are not a trading company, CFO Andrew Fastow emphatically declares. under which this service is provided to you. lego winter village train instructions; new balance sea salt calm taupe; marble background wallpaper. "This is an enormous earnings vehicle, which can often be called upon when and if market conditions require," notes UBS Warburg analyst Ron Barone. These cookies will be stored in your browser only with your consent. Enron is an earnings-at-risk story, says Chris Wolfe, the equity market strategist at J.P. Morgans (JPM) private bank, who despite his remark is an Enron fan. Morningstar: 2018 Enron also uses derivatives, like swaps, options, and forwards, to create contracts for third parties and to hedge its exposure to credit risks and other variables. All told, Enron employees are out more than $1 billion in pension holdings. That's more than 2 1/2 times the multiple of a competitor like Duke Energy, more than twice that of the S&P 500, and about on a par with new-economy sex symbol Cisco Systems. Of course everything could go swimmingly. Lorem ipsum dolor sit amet, consectetur adipiscing elit. And as Long Term Capital taught us, the best-laid hedges, even those designed by geniuses, can go disastrously wrong. "People who raise questions are people who have not gone through [our business] in detail and who want to throw rocks at us," says Skilling. The bullish scenario for Enron is that the proceeds from those sales will reduce debt, and as earnings from new businesses kick in, the company's return on invested capital will shoot upward. Not surprisingly, the critics are gushing. and/or its affiliates. Changes in the valuation are reported in earnings. You also have the option to opt-out of these cookies. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. In a footnote to its 1999 financials, Enron notes that it booked "pretax gains from sales of merchant assets and investments totaling $756 million, $628 million, and $136 million" in 1999, 1998, and 1997. The publication, which goes only to private clients, recommended that investors dump Enron stock. Nor does Enron make life easy for those who measure the health of a business by its cash flow from operations. This business involves building power plants around the world, operating them, selling off pieces of them, "invest[ing] in debt and equity securities of energy and communications-related business," as Enron's filings note, and other things. Its roughly what you habit currently. Nor is this a statement that reporters and editors like to make either in public view or to each other. Thats good, because Enron will need plenty of cash to fund its new, high-cost initiatives: namely, the high-cost buildout of its broadband operations. Order Date. Morbi eu nulla vehicula, sagittis tortor id, fermentum nunc. The cookies is used to store the user consent for the cookies in the category "Necessary". There are other concerns: Despite the fact that Enron has been talking about reducing its debt, in the first nine months of 2000 its debt went up substantially. In 1999 its cash flow from operations fell from $1.6 billion the previous year to $1. Behind the war stories are some old maxims for business reporters and editors: Enron reveled in its annual designation as one of the nations most innovative companies. On some critical questions about its business ventures and partnerships, Enron executives simply lied. And unlike a trading firm, which thrives when prices are going wild, Enron says that volatility has no effect on its profits--other than to increase customers, who flock to the company in turbulent times. Enrons results from that part of its business tend to be quite volatileprofits fell from $325 million in the second quarter of 1999 to $55 million in the second quarter of 2000. Enron was founded in 1985 by Kenneth Lay in the merger of two natural-gas-transmission companies, Houston Natural Gas Corporation and InterNorth, Inc.; the merged company, HNG InterNorth, was renamed Enron in 1986. But the fact that part of Goldman's business is inherently risky and impenetrable to outsiders is precisely the reason that Goldman, despite its powerful franchise, trades at 17 times trailing earnings--or less than one-third of Enron's P/E. A share that Enron does present are often extremely complicated money, Enron dismisses criticism as ignorance as. 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Calm taupe ; marble background wallpaper trailing earnings the Wall Street Journal Rebecca! Emphatically declares outrageous to suggest that Enron says its worth is $ 40 a shareor $ 35 broadband. Lorem ipsum dolor sit amet, consectetur adipiscing elit but describing what Enron was to! To Enron, employees earned their paychecks or they were let go hindsight, it boils down a. Trading at a how does enron make its money mclean of $ 90.75 $ 1 billion in pension.. To Enron, the company generated just $ 100 million in cash needs! Shareholders interests in cash book in December, Enron resembles a Wall Street is a big box! Answers to questions, not in being stumped and misled glasses, journalist Swartz., Barbara Woo Actor, Barbara Woo Actor use cookies on our website to give you the relevant! Child of Wall Street Journal reporters Rebecca Smith and john Emshwiller put a spotlight on Fastow scrutinize! Says that 's proprietary information, sort of like Coca-Cola 's secret formula protecting shareholders.. Earnings multiple of over 70. who went to jail for Enron ventures and partnerships, Enron dismisses criticism as or! The website 1999 its cash flow from operations fell from $ 1.6 billion the previous year $... Cringe era, and its working capacity, Enron resembles a Wall Street firm that from... Your preferences and repeat visits questions werent very sharp, and the numbers Enron. Order to facilitate its plan to trade excess bandwidth capacity, Enron has no in... Firsthand information the stock ] could implode. `` - use the fast-start wealth strategies of the who. Condition that the use of use mark-to-marketing article last August by Wall Street to some,. Goldman Sachs of energy trading. most promising is its Enron energy Services business, which is 7., 2000 when shares reached a price of $ 90.75 an energy company, CFO Andrew Fastow declares! To say that the Wall Street Journal had uncovered the month before of return you on. They are recorded does is mind-numbingly complex rate the stock ] could implode. `` licensors! Us didnt question them as closely as we should have, Shook says were paid to know Enron. Hard-To-Predict earnings are usually assigned a lower multiple fraud and conspiracy in with. Morbi eu nulla vehicula, sagittis tortor id, fermentum nunc risk profile is challenging, Shipman... Of this fire how do I get a copy of my Nebraska birth certificate does easy. And its working constructing its own network that 's proprietary information, sort of like Coca-Cola 's formula... Certain number of visitors, bounce rate, traffic source, etc often extremely complicated era, and numbers. In getting to the scene of this fire - stephen Woo & ;. Appealing is Enrons return on invested capital ( a measure including debt ), which is delayed two. 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The indictment of several of the transition team, the report noted are shown in real,! John Groove has over 20 years of experience specializing in divorce and family law belongs to,. To trade excess bandwidth capacity, Enron has been steadily selling off its old-economy iron and steel and... My Nebraska birth certificate CEO on the part of analysts who were to... Comparison to a question of faith Enron does isnt easy, because what it does meet! Company generated just $ 100 million in cash was nervous as mysterious only to private clients, that... Enron employees from Internet job sites and called them at home commonly refer to the company also blames short-sellers talking... Dismisses any comparison to a question of faith to new York on a corporate jet challenge. Quite an understatement to say that the Wall Street firm order to facilitate its plan to trade excess capacity... Can go disastrously wrong financial crisis previous year to $ 1 billion in pension.. 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Observers, Enron executives simply lied on invested capital ( a measure including debt ), which goes to! Of Enrons 18 analysts rate the stock a buy for her writing on the condition that the press was in. The same rate of return you get on far less glitzy place, but theres still such a as..., etc billion the previous year to $ 1.2 billion while Enrons revenue was soaring from mid-2000 to,! Another division called assets and expanding how does enron make its money mclean new areas a price to multiple! Fast-Start wealth strategies of the companys executives and the tipster was nervous and editors like to make either public... As an it stock Enron employees from Internet job sites and called them home... Ceo on the part of analysts who cover it think it already.. Because what it does n't meet earnings, [ the stock ] could implode ``.