Before it was Enron, the company nearly named itself after the intestines
In 1986, after spending over $100,000 on consultants and focus groups, Kenneth Lay announced that his newly merged gas company would be called Enteron. Within weeks the plan was dropped: enteron turned out to be a medical term for the intestines. The press release that withdrew it introduced a shorter replacement, Enron.
The company was stitched together in 1985 from two regional gas firms. InterNorth of Omaha, facing a takeover threat from raider Irwin Jacobs, paid $2.3 billion for Houston Natural Gas, a premium of 40 percent. The combination created the second-largest gas pipeline system in the country, with roughly 37,000 miles of pipe. InterNorth's chief executive was soon fired, Lay took over, and headquarters moved to Houston, where he lived.
Deregulation opened the door to a different business. New federal rules let gas be bought and sold on a spot market, and in 1989 McKinsey consultant Jeffrey Skilling proposed treating gas as a tradable commodity. Enron's Gas Bank let producers and buyers lock in supplies while hedging price risk, and Skilling joined to run it. Over the 1990s Enron behaved less like a pipeline operator and more like an investment house, trading futures, options and swaps and pushing into overseas power; it became the first American company to build a power station in Britain, at Teesside.
Two accounting choices mattered most. Enron adopted mark-to-market accounting, booking the value of assets at current estimates, and Andrew Fastow began creating off-balance-sheet partnerships that were later used to hide losing ventures and speed up reported income. Warning signs came early: an oil trading unit concealed losses in the late 1980s, and two of its executives pleaded guilty to fraud.
Fortune named Enron America's most innovative company six years running, and it claimed revenue of nearly $101 billion in 2000. When the systematic fraud behind those figures emerged, Enron went bankrupt on 2 December 2001, taking its auditor Arthur Andersen down with it and helping bring about the Sarbanes–Oxley Act of 2002.
Source: Enron
