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
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
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 &
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.