Enron's collapse weaves tangled PR web for many

HOUSTON: Enron's woes are causing far-reaching PR and IR problems

for a wide range of industries.



One year ago, the company was ranked number seven in the Fortune 500,

voted the most innovative company by that same publication, and ranked

25 in its list of most admired companies.



Now the complex corporation has filed for Chapter 11 bankruptcy,

following a cancelled merger with Dynegy, and its share price trading

below $1 following a 52-week high of $85.



Enron's fall could have implications for corporate accounting and

IR.



The SEC has already issued a warning to companies, and an "investor

alert" concerning "pro forma" financial reporting.



Other press coverage has focused on the implications of Enron's collapse

on continuing energy deregulation. Deregulation is slated to take place

in Texas as of January 1, 2002. Last year, Burson-Marsteller won a

four-year contract worth up to $36 million for a public education

campaign on the subject. Mike Lake, managing director of Burson's Dallas

office, said that the firm added a pop-up screen to the website it

developed for the campaign to answer questions that Enron customers

might have about their service.



California Governor Gray Davis answered questions about the impact of

Enron's bankruptcy while in Mexico City to promote tourism to the

state.



Enron warned customers that it would not be able to fill all its orders,

leading to new concerns about California's enduring power problems.



The Bush administration is also fending off difficult questions about

its ties with Enron. Rep. Henry Waxman (D-CA), has asked Vice President

Dick Cheney to disclose information Enron may have passed to him about

its financial problems.



But as Enron fights to survive, it remains the center of the most heated

PR battle. It has entered a war of words with Dynegy, and the two

companies have filed suit against each other.



The company's PR and IR strategy has also been severely criticized. The

Wall Street Journal reported that the company's lack of fiscal candor

contributed to its downfall by destroying shareholder confidence.



"While Enron has acknowledged that a loss of investors' confidence was

at the root of its woes, company officials have consistently defended

their actions as legal and proper," the WSJ reported. "An Enron

spokesman reiterated yesterday that the company made every effort to put

out accurate information."



The main agencies attempting to deal with the crisis are Brunswick -

which was hired by Enron to aid it through the Dynegy deal - and Kekst &

Company.



Enron has also laid off all but one of its European communications

staff, leaving VP of PR and communications Jackie Gentle to man the

press office at European headquarters.



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