Electric Utilities: When Will the Storm End? Bear Stearns' Research Department Focuses a Spotlight on Electric Utilities.Energy Editors/Business Editors NEW YORK--(BUSINESS WIRE)--March 13, 2003 It may be a while before electric utilities light up Wall Street. Rocked by Enron's bankruptcy, trading scandals and negative headlines a Bear, Stearns & Co. Inc. report finds electric utilities, long considered defensive in part because of their dividends, may continue to struggle for some time to come. "The electric industry has been plagued by a laundry list laundry list A popular term for a long list of Sx, diseases, or etiologies that share something in common–eg, differential diagnosis of acute abdomen of issues including a sharp slowdown in demand, excess supply, liquidity concerns and financial scrutiny by investors and analysts following the Enron bankruptcy," said David Fore electric utilities analyst. "As a result, almost all electric utility companies have suffered to some extent. While the need for electricity is not going away, the negatives outweigh the positives right now." According to the report, So Much for Being Defensive, investors who turned to electric utilities in tough markets have been caught in a virtual electrical storm electrical storm Cardiology A cardiac event defined as multiple recurrent episodes of ventricular fibrillation, or hemodynamically destabilizing ventricular tachycardia, with a very poor prognosis; ES is most common in older men with CAD, often in a background of . The S&P Utility Index plunged 33% last year versus a 23.4% drop in the S&P 500. The Dow Jones Utility Index fell 26.8% compared to a 16.8% slide in the Dow Jones Industrial Average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. . On a broader scale, the Dow has outperformed the Dow Jones Utility Index in all but eight years in the period from 1972 to 2002. Utilities are also be in the middle of the largest credit crunch Credit Crunch An economic condition whereby investment capital is difficult to obtain. Banks and investors become weary of lending funds to corporations thereby driving up the price of debt products for borrowers. since the Great Depression as an estimated $60 billion to $75 billion in debt comes due for refinancing by 2005. Utilities faced with potential downgrades by credit rating agencies Credit Rating Agencies Firms that compile information on and issue public credit ratings for a large number of companies. have been forced to rein in to check the speed of, or cause to stop, by drawing the reins. to cause (a person) to slow down or cease some activity; - to rein in is used commonly of superiors in a chain of command, ordering a subordinate to moderate or cease some activity deemed excessive. See also: Rein Rein costs through asset sales, lower capital spending and even cuts in the dividend. "Many utilities have had to put their dividends under the knife as they look for ways to conserve cash and slash debt in an attempt to avoid downgrades," said Fore. Fore recently launched coverage of Dominion Resources (D) and Southern Company (SO) with a Peer Perform and Duke Energy (DUK DUK Duke Energy Corporation (stock symbol) DUK Dead Upon Keyboard ) at an Underperform. Dominion Resources is a diversified energy company serving electric and gas customers in Virginia, Ohio, Pennsylvania and West Virginia, Southern Company is one of the largest electric utility holding companies in the country while Duke Energy is an integrated electric utility serving North and South Carolina. Duke also has sizable wholesale electric generation and gas transmission businesses. For a copy of the report, members of the press may contact Monica Orbe at (212) 272-9294 or morbe@bear.com. Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. (NYSE NYSE See: New York Stock Exchange :BSC (Binary Synchronous Communications) See bisync. ). With approximately $30.6 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales, trading and research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers prime broker and broker dealer services, including securities lending. Headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , the company has approximately 10,500 employees worldwide. For additional information about Bear Stearns, please visit the firm's Web site at http://www.bearstearns.com. For important information regarding the companies in this report, please contact your registered representative at 1-800-371-0978, or write to Uzi Rosha, Equity Research Compliance, Bear Stearns & Co. Inc., 383 Madison Avenue, New York, NY 10179 |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion