SEC queries Williams Cos. on 3Q profit

Gas pipeline firm calls agency's letter `routine'

April 04, 2002|By BLOOMBERG NEWS

TULSA, Okla. - Williams Cos., the second-largest U.S. natural gas pipeline operator, said yesterday that it was asked by federal regulators in February to clarify its third-quarter earnings. The stock fell 4.5 percent.

The Securities and Exchange Commission sent "an informal, routine inquiry letter" that was answered promptly, said Jim Gipson, a Williams spokesman. The SEC has no other questions "as far as we know" and Williams considers the matter closed, he said. An SEC spokesman declined to comment.

Williams didn't tell investors about the inquiry letter because it was a "routine matter," Gipson said.

The SEC is examining the accounting of companies such as Williams, Adelphia Communications Corp. and Global Crossing Ltd. after Enron Corp., once the biggest energy trader, hid losses and debt from investors and filed for bankruptcy.

"I don't think there is anything all that serious going on at Williams as far as the numbers go," said Frederic Russell, president of Frederic Russell Investment Management, owner of 107,000 Williams shares. "But when you don't disclose, you leave room for misimpression."

The company had delayed releasing fourth-quarter earnings by five weeks to review costs from a former telecommunications unit, Williams Communications Group Inc. It reported a $1.24 billion loss that included $1.31 billion in expenses from Williams Communications.

"Williams has always been a straight pipeline company with a marketing arm," said Edward J. Tirello Jr., senior power analyst for Berenson Minella, a New York investment bank. "Where questions have been raised was the telecom area."

Shares of Williams fell $1.09 to $23.08 after earlier touching $21.40. The stock has dropped 37 percent in the past year.

Third-quarter net income rose 83 percent to $221.3 million. Profit more than doubled from energy trading, a business that requires companies to estimate results of future transactions for electricity, gas and oil. Investors complain that energy traders don't tell them about the basis for those estimates.

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