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Jim Fallon To: Kevin Hannor,/Enren Cornmunicalions@Enron Communications
cc: h:~n Rice!Enron Communicaiiorsra..Enron Communications
11120/2000 03:35 Subject: Re: Earnings[]

Kevin,

Obviously I am not searching for any additional write-offs. It is clear to me that you have not come to
terms with the problems we have already identified. We are only trying to make sure that we have
accurately quantified these problems already identified. As I am sure you know, we estimate that there is
no remaining value in the por olio and more than likely material write-offs. Therefore, to make earnings
we are going to have create positive incremental value. Trading will produce no positive incremental value
in this quarter. On a go forward basis we have losses we must recognize to clean up the portfolio and
move on.

The Lightrade deal involved selling pooling points that could be considered somewhat central to our
success as a bandwidth trading organization - we were willing to do this to help EBS make short term
earnings. If we did not burn up in excess of $500 million this year, accomplishing virtually nothing, then
we would not be in this position.

You have never considered prudent write-offs, why start now.

Regard=,

Jim

  Kevin Hannon

  Kevin Hannon To. Jim Fallon/Enron Com;r,unicationsi? ~nron Communications
~-~ 11/20/00 06:16 PM :
  Subj cc:ect: Earnings

Jim

The latest budget numbers still snow us approx S100mm behind plan with not much more than one full
month to go in the year If the Lightrade deal is truly of, wnich I believe it is, this Only makes ourjob
harrier. "Bad News carry" is apparently trying to drop that title because he confessed to me today chat you
were looking for further write-offs This obviously is going in the opposite direction from where we need to
he. I am happy to consider any prudent write-offs to the extent we can offset them with earnings sufficient
to allow us to still reach our target. However, seeking out potential write-offs this quarter when we are
clearly struggling Is puzzling and seems to send all the wrong signals to the Organization. Please let me
know if I am missing something here.

Kevin

EXH009-00097

GOVERNMENT
EXHIBIT
  2837
  Crim. No. H-04-25 (S-2)