ALLEGHENY ENERGY

Allegheny Energy

Executive Summary

Allegheny Energy (NYSE: AYE) is a traditional public utility based in the Pittsburgh suburb of Greensburg. It services communities in Western Pennsylvania, Western Maryland, Northern West Virginia, and Northwest Virginia. The company is the region's biggest energy supplier, providing power to over 1.5 million customers, including many in suburban Pittsburgh, where it battles its chief rival, Duquesne Light for customers. This report analyses the company financial position. This report conducts swot analysis to gauge the external and internal market analysis. The different matrix analysis namely IFE Matrix with explanation of the total weighted score (TWS), EFE Matrix with explanation of the total weighted score (TWS), CPM Matrix with explanation of the total weighted scores (TWS) and IE Matrix using the scores from IFE and EFE matrices gives a comprehensive outlook od the company. The final is the financaila ratio analysis. This allows us to understand the finacaila standing of the company in the industry.

Introduction

Allegheny Energy is a utility holding company that provides energy related services. It offers electricity to customers in West Virginia, Maryland, Virginia, and Pennsylvania in the US. It is headquartered in Greensburg, Pennsylvania and employs about 4,362 people. The company recorded revenues of $3,121.5 million during the fiscal year ended December 2006, an increase of 2.8% over 2005. The increase was primarily attributable to an increase of $131.1 million in the revenues from generation and marketing segment(www.alleghenyenergy.com). The operating profit of the company during the fiscal year ended December 2006 was $732.3 million, compared with an operating profit of $536.8 million during the fiscal year ended December 2005. The net profit was $319.3 million during fiscal year 2006 compared with a net profit of $63.1 million during the fiscal year ended December 2005(www.alleghenyenergy.com). 

SWOT analysis

Allegheny Energy is a utility holding company that provides energy related services. It offers electricity to customers in West Virginia, Maryland, Virginia, and Pennsylvania in the US. The company refocused its strategy on its core generation, transmission and distribution businesses, and restoring its financial health(Sabatini 1999). In 2003, the company initiated its program on divestment its non-core assets and completed it in 2006 with the sale of its Gleason generation facility. Its increased focus on the core activities is a major growth driver for the company. However, compliance with various state and federal laws and regulations increases the cost for the company(www.alleghenyenergy.com). 

Strengths

Focus on core business

Following an unsuccessful strategy aiming at transforming Allegheny Energy into a leader in merchant generation and energy trading that ultimately increased leverage and created liquidity problems; in 2003(www.zibb.com), the company refocused its strategy on its core generation, transmission and distribution businesses, and restoring its financial health. Allegheny Energy reoriented its business to focus on its core businesses and assets. With the 2006 sale of its Gleason generation facility for approximately $23 million and of a related receivable for approximately $27(www.alleghenyenergy.com) million, Allegheny completed its initiative to sell its significant non-core assets. Since 2004, Allegheny has completed a number of other significant sales of non-core assets, including sale of West Virginia natural gas T&D business, Wheatland generation facility, Lincoln generation facility and electric T&D operations in ...