Originally created 03/12/06

Power company's fall includes cautionary tale of greed



The article March 5 on the demise of the Montana Power Company left out the role of the greed of Wall Street advisors in the destruction of this company.

At each step of the demise, the advice was what would generate the most money to the advisors rather than what was best for the company. Unfortunately, management followed the Lorelei of bad advice until there was nothing left of the business to generate new fees.

Montana Power entered the fiberoptic cable business by stringing cable along their rights-of-way for electric and pipe lines. Construction costs were paid by selling most of the capacity and keeping the remainder.

Thus, the fiberoptic lines cost the company nothing and started to generate revenue. This attracted the attention of Wall Street with a premium placed on the price of their stock. Then the flow of bad advice started for getting out of the slow growth electric power business and into high tech where the rewards would be tremendous. The chaotic mess inflicted on the customers and stockholders of Montana Power followed.

James W. Cleary, Keysville