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Subject:  Wall Street Likes Strategic Initiative Date:  6/9/2001  7:02 PM
Author:  minesweep Number:  59 of 117

Wall Street Likes Strategic Initiative

Here is a sampling of opinions from financial analysts who wrote research reports for their firms' investment clients following the announcement of PPL's strategic initiative:

“An elegant solution, PPL announced its long-awaited restructuring plan.”

“Overall, we view the plan, which must be approved by state regulators, positively. We expect the financings to allow PPL to enhance the growth of its unregulated operations and its earnings. (But) we still view these estimates (for PPL's earnings in 2001 and 2002) as conservative.”

“While we view this strategy as an innovative plan to fund generation growth, we believe that the market anticipated PPL's strategic decision to be more substantial and may be underwhelmed. We note that this capital redeployment does not preclude more aggressive options such as a business separation (for example, an IPO).”

“We like it (the plan). Investors have wondered why PPL chose not to go the more typical routes of a full spin (separation of the generation and electric utilities companies) or an IPO. We believe that politically achieving either one of those options would have been much more difficult.”

“We value PPL common shares at $65 (through 2002) based on a 14 times 2002 EPS, still a discount (significantly below) the competitive producers selling at 24 times but at a premium to the integrated groups (of traditional electric utilities) selling at 12 times.”

“With the stock at 12x our 2002E PPL looks attractive and fails to reflect full appreciation of the generation growth story.”

“PPL remains one of the best positioned companies in our universe, with its geographically diverse and strategically located low-cost plans, to leverage off the high price of power and substantially grow its earnings in this environment. We continue to view the company as an excellent investment with significant growth potential in its wholesale and international businesses.”

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