FYI: Enron was the 7th largest company by revenue (close to $50 billion) before declaring the largest bankruptcy in the U.S. (at that time).
Fortune magazine named it “the most innovative company” six years running from 1995-2000, right before they blew up.
They were also named the 7th “most admired” company in 2001, the year they declared bankruptcy.
Company management overstated profits by roughly $600 million while assets were overstated by $24 billion through the use of mark-to-market accounting shenanigans.
Enron employees lost an estimated $850 million from money invested in the company’s stock (which made up more than 60% of the assets in the company’s retirement plan).
As the stock fell from $90 or so down to around $4 (and eventually zero) half of the Wall Street analysts covering the company still rated the stock a ‘strong buy’ or ‘buy.’
Nine months before they collapsed, Enron was compared to Hollywood it girls Jennifer Lopez and Kate Hudson because “Wall Street was virtually drooling over the stock.”
It’s been nearly two decades but the Enron saga remains one of the craziest business stories I’ve ever heard. In their book, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, Bethany McLean and Peter Elkind profile the biggest players in the Enron scandal.
Regards,
Ted
http://awealthofcommonsense.com/2018/05/when-intelligence-fails-miserably/
