Calpine Posts a Loss of $18 Million

Power-plant builder Calpine Corp., struggling with low electricity prices and a decimated trading operation, on Thursday posted a loss of $18 million, or 5 cents a share, for the fourth quarter.

In contrast, Calpine recorded net income of $100 million, or 30 cents a share, for the fourth quarter of 2001.

The changing fortunes are a clear indication of the rapid deterioration of the electricity business since the December 2001 bankruptcy filing of Enron Corp., then the world’s largest energy trader, whose collapse left investors and lenders leery of other companies with large trading operations.

Calpine’s revenue in the latest quarter rose 29% to $1.9 billion, from $1.47 billion, as it sold more electricity and natural gas. The company’s fourth-quarter trading revenue, however, fell to $12.4 million from $31.7 million.

San Jose-based Calpine said it made significant strides in strengthening its business during the year and would have earned $34.6 million, or 9 cents a share, in the fourth quarter from recurring operations if not for more than $180 million in one-time charges, primarily from canceled orders for power turbines to conserve cash. The operating results met the average earnings expectations of Wall Street analysts.

During 2002, “we faced intense pressures -- with American industry in general and the power industry in particular -- suffering a great loss of confidence from the public and from investors,” Calpine Chairman and Chief Executive Peter Cartwright said. “Calpine enters 2003 as a stronger organization” because of asset sales, a severely pruned construction budget and debt refinancing, he said.

Although Calpine currently has enough cash to pay its bills, some $2 billion in debt matures this year and $4.7 billion comes due next year.

Calpine’s stock slipped 12 cents, or 4%, to close Thursday at $2.95 a share on the New York Stock Exchange.

“The company faces enormous challenges at a time when market fundamentals are not good,” said Andre Meade, utility analyst with Lazard Freres & Co., who does not own the stock and maintains a “sell” rating on Calpine. “It’s a question of survival.”

But Lasan Johong, energy analyst with Blaylock & Partners in New York, has a “buy” rating, based on the rising price of natural gas, which Johong thinks will boost electricity prices.

For 2003, Calpine estimated it would earn 40 to 50 cents a share, short of the 66 cents that analysts had expected.