Exelon Market Cap 'In A Trench,' See Better Times Ahead - CEO
January 25 2012 - 1:19PM
Dow Jones News
As Exelon Corp.'s (EXC) stock price and market capitalization
have slid, in line with plunging natural gas and wholesale power
prices, the company is "in a trench" but sees better times ahead,
its top executive said Wednesday.
Exelon owns an Illinois utility, but its largest business
entails operating nuclear and other power plants and selling the
electricity on the wholesale market. The recent plunge in U.S.
natural gas prices has forced wholesale power prices sharply lower,
threatening Exelon's bottom line. Exelon plans to acquire
Constellation Energy Group Inc. (CEG) in an all-stock deal, earlier
valued at close to $8 billion, and the companies are awaiting
regulatory approvals.
Low gas and power prices have put wholesale power marketers like
Exelon at a disadvantage relative to rivals like Duke Energy Corp.
(DUK), Southern Co. (SO) and Dominion Resources Inc. (D) that
primarily own utilities that operate power plants and sell the
electricity to customers at regulated rates. However, Exelon is
cutting costs and expects prices--and its prospects--to rise,
Exelon Chief Executive John Rowe said.
"I don't like seeing Southern and Duke and Dominion having more
market cap than we do now, but fully regulated integrated
[utilities] are at the top of a curve and we're right now in a
trench," Rowe said during a conference call with analysts to
discuss fourth-quarter earnings. Exelon said it wouldn't provide
2012 earnings forecasts, pending its merger with Constellation.
Rowe, who plans to retire early this year when the companies
expect to close their merger, added that he wished he "could leave
when we had a better stock price."
Exelon President and Chief Operating Officer Christopher Crane
will become chief executive and president of the combined company,
and Constellation Chief Executive Mayo Shattuck will become
executive chairman.
Shares of Exelon were recently trading 0.95% lower at $38.85,
and were down 10.4% year to date.
Natural gas futures were recently trading at about $2.78 a
million British thermal units on the New York Mercantile Exchange,
up about 10% amid a rally from recent 10-year lows, but still
historically low.
Exelon reported a fourth-quarter profit of $606 million, or 91
cents a share, up from $524 million, or 79 cents a share, a year
earlier. Excluding mark-to-market adjustments, unrealized gains
related to its nuclear decommissioning trust and other items,
earnings fell to 82 cents from 96 cents. Revenue fell 5.4% to $4.25
billion.
Analysts polled by Thomson Reuters had most recently forecast
earnings of 88 cents on revenue of $4.8 billion.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468;
cassandra.sweet@dowjones.com
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