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Wednesday, November 08, 2006

Duke Energy's (DUK) Guidance & Updates

By Yaser Anwar, CSC of Equity Investment Ideas

DUK reported 3Q EPS of $0.45 vs The Street's $0.56. Disappointing results point to moderately lower earnings, but from a long-term view the firm's prospects remain bullish.

Guidance and Updates on behalf of the management:

• 06 incentive target is now $1.86, including $0.04 of foregone CMT earnings

• 07's EPS goal of $2.00 now looks too high. New, detailed guidance on ’07 will be revealed during the early December roadshow.

• The Board of Directors approved a buyback program of up to $500M beginning on Jan of 07. A program will be put in place such that purchases will take place if the stock hits predetermined price points.

• GasCo to be renamed Spectra (SE). The Board is recommending the issuance of one Spectra share for every two Duke shares. This implies a $0.84/share dividend for Duke Energy and $0.88/share for Spectra.

• Duke Energy’s EPS growth guidance was affirmed at 4-6% over three years, with Spectra growing at 5-7% over the same period.

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