Posted on 11/04/2005 3:11:39 PM PST by MeneMeneTekelUpharsin
SAN FRANCISCO (MarketWatch) - Calpine Corp. stock closed down more than 9% on Friday after the independent power producer posted its third-quarter results, which it subsequently had to correct, and Fitch Ratings cut the firm's credit rating. San Jose, Calif.-based Calpine turned in a third-quarter loss on Thursday that was wider than analysts expected. See full story. The company then later Thursday corrected its press release detailing its financial results to account for certain charges and items.
Among the changes, Calpine corrected its earnings before income taxes depreciation and amortization for the nine-month-period through Sept. 30 to $880.4 million, down from $1.12 billion as had been stated. The company also lowered its adjusted non-GAAP earnings to $379.6 million from $516.4 million for the third quarter. The company said it had incorrectly recorded certain asset-related charges as gains. Also weighing on the shares during Friday's session, Fitch Ratings cut Calpine's senior unsecured notes' credit rating to CCC- from CCC+. "The rating action reflects further deterioration in CPN's core operating EBITDA, slower than anticipated progress in achieving previously stated debt reduction targets, and the continued uncertainty surrounding ongoing bondholder litigation," wrote Fitch analysts.
Fitch has a negative outlook on Calpine's debt.
The credit markets' view of Calpine is important because of its debt, which it is working to whittle down. Calpine (CPN: Calpine Corporation News, chart, profile Last: 2.09-0.21-9.13%) 4:25pm 11/04/2005 FinancialsMore CPNCPN2.09, -0.21, -9.1%) shares closed the day down 21 cents to $2.09 on volume of over 29 million as the third-most active stock on the New York Stock Exchange. So far this year, Calpine stock is down almost 42%.
FYI fellows.
I haven't been following this closely the past couple of years, but it seems to me that Gray Davis pretty near bankrupted the Cali power companies and did nothing to solve the state's energy problems.
Since coming into office, Arnold also has done little or nothing to deal with environmental and regulatory constraints that are preventing any kind of long-term solution.
This was bound to come back, sooner or later.
You point to one of the basic problems. They "deregulated" the wholesale market but kept the retail costs tightly regulated.
The other major problem is that even under the best conditions, California doesn't make enough power to satisfy its needs. So they suck in power from all the neighboring states. When it got really hot, they practically destroyed all their neighbors as well as themselves.
There's certainly something wrong when a state can behave like that and all the power producers, even from out of state, are required to bow down and kiss their toes and give them all the power they want.
Gas prices haven't helped them. And the fact that they put so much debt on their assets was the killer.
However, from those shareholders who did sell and took the 80% loss, or are looking to recoup lost dividends, the State has nothing to fear, as it can simply point the finger at the FERC, who failed to act regardless of evidence of wrongdoing on the part of the power providers and traders at the time.
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