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Avow or Avoid?: The Public Communication Strategies of Enron and WorldCom
Unformatted Document Text:  Avow or Avoid? 12 But on the other hand, the company continued to avoid the issue and try to refocus it by making forward-looking statements and outlining its restructuring plan, which included focusing on its core businesses, reducing costs, and restructuring debt (Enron files, Nov. 19, 2001). They appointed an executive vice president-finance and treasurer who was “well respected and trusted by the banks” (Enron elects, Nov. 13, 2001, para. 3). And those banks had provided Enron with secured credit lines that would enable it to “enhance our cash position, strengthen our balance sheet and address upcoming maturities” (Enron announces progress, Nov. 21, 2001, para. 3). Its merger with Dynegy would allow it to create “a formidable player in the merchant energy business” (Enron announces progress, Nov. 21, 2001, para. 2). The news coverage was not as positive in terms of the future outlook. The coverage focused on the legal tactics employed by Enron. For example, the Gas Market Report revealed that “with the story changing by the hour,” Enron placed the blame on Fastow in its 8-K disclosure filing and quoted Enron as saying that Fastow “is no longer working for Enron.” Four upper-level managers associated with either Enron or one of Enron’s divisions had also been fired or were “no longer associated with Enron” (With Enron’s stock, Nov. 9, 2001, para. 8). The article quoted Lay’s attempts to sooth investors and the analysts but noted that “Lay’s words did little to calm the market or stockholders” (With Enron’s stock, Nov. 9, 2001, para. 17). The New York Times, on the other hand, was more positive. It quoted Dynegy officials who were confident in Enron’s situation. “I’m confident that it’s as solid as we thought it was” (Rival to buy Enron, Nov. 10, 2001, para. 7). But the Times also noted that Lay “tried” to reassure investors. And the Houston Chronicle reported that as questions on Wall Street mounted, Enron retreated into silence (Dynegy to acquire Enron, Nov. 10, 2001). BusinessWeek also portrayed an Enron that was not forthcoming even with its own employees. In a meeting with employees, Lay was asked by one employee if he were “on crack.” And BusinessWeek disclosed that Lay had tried to slip disclosure of a $1.2 billion hit to equity in the third quarter

Authors: Reber, Bryan. and Gower, Karla.
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Avow or Avoid?
12
But on the other hand, the company continued to avoid the issue and try to refocus it by
making forward-looking statements and outlining its restructuring plan, which included focusing
on its core businesses, reducing costs, and restructuring debt (Enron files, Nov. 19, 2001). They
appointed an executive vice president-finance and treasurer who was “well respected and trusted
by the banks” (Enron elects, Nov. 13, 2001, para. 3). And those banks had provided Enron with
secured credit lines that would enable it to “enhance our cash position, strengthen our balance
sheet and address upcoming maturities” (Enron announces progress, Nov. 21, 2001, para. 3). Its
merger with Dynegy would allow it to create “a formidable player in the merchant energy
business” (Enron announces progress, Nov. 21, 2001, para. 2).
The news coverage was not as positive in terms of the future outlook. The coverage
focused on the legal tactics employed by Enron. For example, the Gas Market Report revealed
that “with the story changing by the hour,” Enron placed the blame on Fastow in its 8-K
disclosure filing and quoted Enron as saying that Fastow “is no longer working for Enron.” Four
upper-level managers associated with either Enron or one of Enron’s divisions had also been
fired or were “no longer associated with Enron” (With Enron’s stock, Nov. 9, 2001, para. 8).
The article quoted Lay’s attempts to sooth investors and the analysts but noted that “Lay’s words
did little to calm the market or stockholders” (With Enron’s stock, Nov. 9, 2001, para. 17).
The New York Times, on the other hand, was more positive. It quoted Dynegy officials
who were confident in Enron’s situation. “I’m confident that it’s as solid as we thought it was”
(Rival to buy Enron, Nov. 10, 2001, para. 7). But the Times also noted that Lay “tried” to
reassure investors. And the Houston Chronicle reported that as questions on Wall Street
mounted, Enron retreated into silence (Dynegy to acquire Enron, Nov. 10, 2001). BusinessWeek
also portrayed an Enron that was not forthcoming even with its own employees. In a meeting
with employees, Lay was asked by one employee if he were “on crack.” And BusinessWeek
disclosed that Lay had tried to slip disclosure of a $1.2 billion hit to equity in the third quarter


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