CenterPoint

(CNP) - Get Report

kicked up the voltage at the end of 2003.

Blazing past analyst estimates, the Houston utility delivered fourth-quarter profit of $149 million, or 48 cents per share. Wall Street was looking for operating profit that totaled less than half that amount. CenterPoint posted a fourth-quarter loss a year ago.

"I'm pleased to report improved operating results," CenterPoint CEO David McClanahan announced on Thursday. "Our enhanced financial flexibility and liquidity, together with the improvements made in our core businesses this past year, have created a solid foundation for the future."

The news gave CenterPoint's stock an immediate jolt, sending the shares 2.9% higher to $10.55 Thursday morning. The stock, which touched a 52-week high at the open, has more than doubled in less than a year.

CenterPoint credited

Texas Genco

( TGN) -- a generating subsidiary it is attempting to sell -- for much of its fourth-quarter strength. Texas Genco, which is 81% owned by CenterPoint, posted a fourth-quarter profit of 58 cents a share that reversed a 54-cent loss a year earlier.

"Our improved quarterly earnings were impacted by higher wholesale electricity prices, which were driven by increased natural gas prices," Texas Genco CEO David Tees explained. "These higher prices, coupled with our large fleet of solid fuel baseload generating capacity, produced a significant turnaround in our financial performance for the entire year."

Texas Genco reported full-year profit of $1.89 a share, compared with a $1.16 loss in 2002. The company also raised the bar for 2004. It now expects to generate full-year profit of $3.35 to $3.75, up from earlier guidance of $2.75 to $3.25.

By then, Texas Genco could be in entirely different hands. CenterPoint originally had planned to sell its stake in Texas Genco to the merchant division it spun off as a separate company last year. But that company,

Reliant Resources

(RRI)

, confirmed last month that it had decided against exercising its option to buy Texas Genco and would use its excess cash to pay down debt instead.

Prudential analyst Carol Coale quickly raised her earnings estimate -- and target price -- on CenterPoint after learning that the company would retain the Texas Genco assets for a while longer. Still, most analysts hope to see CenterPoint shed the company this year so that it can reduce both its debt load and its risk of a credit downgrade.

"Selling the business whole is CenterPoint's best option," Deutsche Bank analyst James Dobson wrote last month. "But another scenario is individual plant sales through an auction process."

Coale, for one, suspects that CenterPoint may find a new home for the assets soon.

"Reading the 'body language' in a recent meeting with the company," she wrote, "we believe CenterPoint already has a financial buyer in the works."

CenterPoint itself has highlighted the transaction as a key target for the year. Meanwhile, Dobson recently noted, Reliant still could wind up buying some of Texas Genco's assets. Reliant has amended its bank agreement to allow for up to $1 billion in acquisitions, he said, although the company "would need to raise the funds from other sources." In the meantime, however, Reliant has actually laid out plans to shut down some of its existing plants.

On Thursday, Reliant said it will mothball or retire 20 peaking units in the PJM (Pennsylvania-New Jersey-Maryland) market. The company said the outdated units currently generate less than 1% of the market's total summer capacity. However, the company intends to review its plans with regulators before shutting the plants down.

"We have identified a number of peaking units that currently have revenues insufficient to cover operating expenses," Reliant CEO Bob Harvey explained. "These units are rarely dispatched due to newly added, more efficient generation capacity that has already come on line and, additionally, will be negatively impacted by new generation expected to come on-line in the near future."

Reliant said it may consider retiring additional capacity "should market conditions deteriorate further."

Reliant shares slipped 15 cents to $8.13 following the news.