Lay It on Thick: Enron Returns Reins to Longtime CEO

The old guard is back at Enron (ENE Quote).

Enron President and Chief Executive Jeffrey Skilling resigned unexpectedly Tuesday, giving way to former CEO Kenneth Lay. Skilling, who took the CEO post from Lay only in February, said he was leaving for unspecified personal reasons.

People close to Enron say Skilling, 47, isn't resigning for health reasons and won't receive a severance package, although he will remain as a paid consultant. Enron didn't comment on whether health issues led Skilling to quit.

Skilling's tenure at the helm has been tumultuous. Many investors considered him brash, especially next to the mild-mannered Lay. When questioned by a short-seller about some accounting data on the company's first-quarter conference call, Skilling called the questioner an "a--hole."

Making a Skilling? Enron's steady slide over a year

And, after strong stock performance last year under Lay's leadership, the company has disappointed investors since Skilling assumed the helm. Enron has lost nearly 50% of its value this year as the company has struggled in several businesses, from broadband trading to a political impasse at its Indian power operations. The stock rose 78 cents Tuesday to $42.93, but it remains at less than half its 52-week high.

Meanwhile, investors continue to remember Skilling mostly for his January tout that Enron's stock was undervalued and should trade over $120 in the coming year.

"There are a number of investors who remember Skilling's remarks like they were yesterday, and that weighed on his credibility," says one energy investment manager who asked not to be identified. "Investors were never as comfortable with Skilling as they were with Ken Lay."

And there will be concerns that Skilling's departure may signal deeper problems at Enron, something Lay emphatically denied on the Tuesday evening conference call. "The are no accounting issues, no trading issues associated with Jeff's departure," said Lay.

Still, as Lay has slowly been winding down his role in the company, many think Skilling's presence will be missed.

"Jeff Skilling is a very sharp guy," says Dan Pickering, director of research at Simmons & Co., a Houston energy investment boutique. "His resignation will be viewed as a disappointment."

Lay seemed to sense that on the conference call as he tried to assure investors his transition back to power will be seamless. "I'm prepared to stay here as long as it takes to get to our next level of succession," Lay said.