[22100001] |Consumers may want to move their telephones a little closer to the TV set.

[22100002] |Couch-potato jocks watching ABC's "Monday Night Football" can now vote during halftime for the greatest play in 20 years from among four or five filmed replays.
[22100003] |Two weeks ago, viewers of several NBC daytime consumer segments started calling a 900 number for advice on various life-style issues.
[22100004] |And the new syndicated "reality" show "Hard Copy" records viewers' opinions for possible airing on the next day's show.

[22100005] |Interactive telephone technology has taken a new leap in sophistication, and television programmers are racing to exploit the possibilities.
[22100006] |Eventually viewers may grow bored with the technology and resent the cost.
[22100007] |But right now programmers are figuring that viewers who are busy dialing up a range of services may put down their remote control zappers and stay tuned.

[22100008] |"We've been spending a lot of time in Los Angeles talking to TV production people," says Mike Parks, president of Call Interactive, which supplied technology for both ABC Sports and NBC's consumer minutes.
[22100009] |"With the competitiveness of the television market these days, everyone is looking for a way to get viewers more excited."

[22100010] |One of the leaders behind the expanded use of 900 numbers is Call Interactive, a joint venture of giants American Express Co. and American Telephone & Telegraph Co.
[22100011] |Formed in August, the venture weds AT&T's newly expanded 900 service with 200 voice-activated computers in American Express's Omaha, Neb., service center.

[22100012] |Other long-distance carriers have also begun marketing enhanced 900 service, and special consultants are springing up to exploit the new tool.
[22100013] |Blair Entertainment, a New York firm that advises TV stations and sells ads for them, has just formed a subsidiary -- 900 Blair -- to apply the technology to television.

[22100014] |The use of 900 toll numbers has been expanding rapidly in recent years.
[22100015] |For a while, high-cost pornography lines and services that tempt children to dial (and redial) movie or music information earned the service a somewhat sleazy image, but new legal restrictions are aimed at trimming excesses.

[22100016] |The cost of a 900 call is set by the originator -- ABC Sports, for example -- with the cheapest starting at 75 cents.
[22100017] |Billing is included in a caller's regular phone bill.
[22100018] |From the fee, the local phone company and the long-distance carrier extract their costs to carry the call, passing the rest of the money to the originator, which must cover advertising and other costs.

[22100019] |In recent months, the technology has become more flexible and able to handle much more volume.
[22100020] |Before, callers of 900 numbers would just listen and not talk, or they'd vote "yes" or "no" by calling one of two numbers.
[22100021] |(People in the phone business call this technology "900 click.")
[22100022] |Now, callers are led through complex menus of choices to retrieve information they want, and the hardware can process 10,000 calls in 90 seconds.

[22100023] |Up to now, 900 numbers have mainly been used on local TV stations and cable channels.
[22100024] |MTV used one to give away the house that rock star Jon Bon Jovi grew up in.
[22100025] |For several years, Turner Broadcasting System's Cable News Network has invited viewers to respond nightly to topical issues ("Should the U.S. military intervene in Panama?"), but even the hottest controversies on CNN log only about 10,000 calls.

[22100026] |The newest uses of the 900-interactive technology demonstrate the growing variety of applications.
[22100027] |Capital Cities/ABC Inc., CBS Inc. and General Electric Co.'s National Broadcasting Co. unit are expected to announce soon a joint campaign to raise awareness about hunger.
[22100028] |The subject will be written into the plots of prime-time shows, and viewers will be given a 900 number to call.
[22100029] |Callers will be sent educational booklets, and the call's modest cost will be an immediate method of raising money.

[22100030] |Other network applications have very different goals.
[22100031] |ABC Sports was looking for ways to lift deflated halftime ratings for "Monday Night Football."
[22100032] |Kurt Sanger, ABC Sports's marketing director, says that now "tens of thousands" of fans call its 900 number each week to vote for the best punt return, quarterback sack, etc.

[22100033] |Profit from the calls goes to charity, but ABC Sports also uses the calls as a sales tool: After thanking callers for voting, Frank Gifford offers a football videotape for $19.95, and 5% of callers stay on the line to order it.
[22100034] |Jackets may be sold next.

[22100035] |Meanwhile, NBC Sports recently began "Scores Plus," a year-round, 24-hour 900 line providing a complex array of scores, analysis and fan news.
[22100036] |A spokesman said its purpose is "to bolster the impression that NBC Sports is always there for people."

[22100037] |NBC's "On-Line" consumer minutes have increased advertiser spending during the day, the network's weakest period.
[22100038] |Each weekday matches a sponsor and a topic: On Mondays, Unilever N.V.'s Lever Bros. sponsors tips on diet and exercise, followed by a 30-second Lever Bros. commercial.

[22100039] |Viewers can call a 900 number for additional advice, which will be tailored to their needs based on the numbers they punch ("Press one if you're pregnant," etc.).
[22100040] |If the caller stays on the line and leaves a name and address for the sponsor, coupons and a newsletter will be mailed, and the sponsor will be able to gather a list of desirable potential customers.

[22100041] |Diane Seaman, an NBC-TV vice president, says NBC has been able to charge premium rates for this ad time.
[22100042] |She wouldn't say what the premium is, but it's believed to be about 40% above regular daytime rates.
[22100043] |"We were able to get advertisers to use their promotion budget for this, because they get a chance to do couponing," says Ms. Seaman.
[22100044] |"And we were able to attract some new advertisers because this is something new."

[22100045] |Mr. Parks of Call Interactive says TV executives are considering the use of 900 numbers for "talk shows, game shows, news and opinion surveys."
[22100046] |Experts are predicting a big influx of new shows in 1990, when a service called "automatic number information" will become widely available.
[22100047] |This service identifies each caller's phone number, and it can be used to generate instant mailing lists.

[22100048] |"Hard Copy," the new syndicated tabloid show from Paramount Pictures, will use its 900 number for additional purposes that include research, says executive producer Mark B. von S. Monsky.
[22100049] |"For a piece on local heroes of World War II, we can ask people to leave the name and number of anyone they know who won a medal," he says.
[22100050] |"That'll save us time and get people involved."

[22100051] |But Mr. Monsky sees much bigger changes ahead.
[22100052] |"These are just baby steps toward real interactive video, which I believe will be the biggest thing yet to affect television," he says.
[22100053] |Although it would be costly to shoot multiple versions, TV programmers could let audiences vote on different endings for a movie.
[22100054] |Fox Broadcasting experimented with this concept last year when viewers of "Married . . . With Children" voted on whether Al should say "I love you" to Peg on Valentine's Day.

[22100055] |Someday, viewers may also choose different depths of news coverage.
[22100056] |"A menu by phone could let you decide, `I'm interested in just the beginning of story No. 1, and I want story No. 2 in depth," Mr. Monsky says.
[22100057] |"You'll start to see shows where viewers program the program.

[22101001] |Integrated Resources Inc., the troubled financial-services company that has been trying to sell its core companies to restructure debt, said talks with a potential buyer ended.

[22101002] |Integrated didn't identify the party or say why the talks failed.
[22101003] |Last week another potential buyer, Whitehall Financial Group -- which had agreed in August to purchase most of Integrated's core companies for $310 million -- ended talks with Integrated.

[22101004] |Integrated said that it would continue to pursue "other alternatives" to sell the five core companies and that a group of senior executives plans to make a proposal to purchase three of the companies -- Integrated Resources Equity Corp., Resources Trust Co. and Integrated Resources Asset Management Corp.
[22101005] |A price wasn't disclosed.

[22101006] |Integrated also said it expects to report a second-quarter loss wider than the earlier estimate of about $600 million.
[22101007] |The company didn't disclose the new estimate but said the change was related to Integrated's failure to sell its core businesses, as well as "other events," which it didn't detail, that occurred after its announcement last week that it was in talks with the unidentified prospective buyer.

[22101008] |Meanwhile, a number of top sales producers from Integrated Resources Equity will meet this afternoon in Chicago to discuss their options.
[22101009] |The unit is a loosely constructed group of about 3,900 independent brokers and financial planners who sell insurance, annuities, limited partnerships, mutual funds and other investments for Integrated and other firms.

[22101010] |The sales force is viewed as a critical asset in Integrated's attempt to sell its core companies.
[22101011] |Whitehall cited concerns about how long Integrated would be able to hold together the sales force as one reason its talks with Integrated failed.

[22101012] |In composite trading on the New York Stock Exchange yesterday, Integrated closed at $1.25 a share, down 25 cents.
[22101013] |Integrated has been struggling to avoid a bankruptcy-law filing since June, when it failed to make interest payments on nearly $1 billion of debt.
[22101014] |Integrated senior and junior creditors are owed a total of about $1.8 billion.

[22102001] |AN EARTHQUAKE STRUCK Northern California, killing more than 50 people.

[22102002] |The violent temblor, which lasted about 15 seconds and registered 6.9 on the Richter scale, also caused the collapse of a 30-foot section of the San Francisco-Oakland Bay Bridge and shook Candlestick Park.
[22102003] |The tremor was centered near Hollister, southeast of San Francisco, and was felt as far as 200 miles away.
[22102004] |Numerous injuries were reported.
[22102005] |Some buildings collapsed, gas and water lines ruptured and fires raged.
[22102006] |The quake, which also caused damage in San Jose and Berkeley, knocked out electricity and telephones, cracked roadways and disrupted subway service in the Bay Area.

[22102007] |Major injuries weren't reported at Candlestick Park, where the third game of baseball's World Series was canceled and fans evacuated from the stadium.

[22102008] |Bush vowed to veto a bill allowing federal financing for abortions in cases of rape and incest, saying tax dollars shouldn't be used to "compound a violent act with the taking of an unborn life."
[22102009] |His pledge, in a letter to Democratic Sen. Byrd, came ahead of an expected Senate vote on spending legislation containing the provision.

[22102010] |East Germany's Politburo met amid speculation that the ruling body would oust hard-line leader Honecker, whose rule has been challenged by mass emigration and calls for democratic freedoms.
[22102011] |Meanwhile, about 125 refugees flew to Duesseldorf, West Germany, from Warsaw, the first airlift in East Germany's refugee exodus.

[22102012] |The World Psychiatric Association voted at an Athens parley to conditionally readmit the Soviet Union.
[22102013] |Moscow, which left the group in 1983 to avoid explusion over allegations that political dissidents were being certified as insane, could be suspended if the misuse of psychiatry against dissenters is discovered during a review within a year.

[22102014] |NASA postponed the liftoff of the space shuttle Atlantis because of rain near the site of the launch pad in Cape Canaveral, Fla.
[22102015] |The flight was rescheduled for today.
[22102016] |The spacecraft's five astronauts are to dispatch the nuclear-powered Galileo space probe on an exploratory mission to Jupiter.

[22102017] |Senate Democratic leaders said they had enough votes to defeat a proposed constitutional amendment to ban flag burning.
[22102018] |The amendment is aimed at skirting a Supreme Court ruling that threw out the conviction of a Texas flag-burner on grounds that his freedom of speech was violated.

[22102019] |Federal researchers said lung-cancer mortality rates for people under 45 years of age have begun to decline, particularly for white males.
[22102020] |The National Cancer Institute also projected that overall U.S. mortality rates from lung cancer should begin to drop in several years if cigarette smoking continues to abate.

[22102021] |Bush met with South Korean President Roh, who indicated that Seoul plans to further ease trade rules to ensure that its economy becomes as open as the other industrialized nations by the mid-1990s.
[22102022] |Bush assured Roh that the U.S. would stand by its security commitments "as long as there is a threat" from Communist North Korea.

[22102023] |The Bush administration is seeking an understanding with Congress to ease restrictions on U.S. involvement in foreign coups that might result in the death of a country's leader.
[22102024] |A White House spokesman said that while Bush wouldn't alter a longstanding ban on such involvement, "there's a clarification needed" on its interpretation.

[22102025] |India's Gandhi called for parliamentary elections next month.
[22102026] |The balloting, considered a test for the prime minister and the ruling Congress (I) Party, comes amid charges of inept leadership and government corruption.
[22102027] |Gandhi's family has ruled independent India for all but five years of its 42-year history.

[22102028] |The Soviet Union abstained from a U.N. General Assembly vote to reject Israel's credentials.
[22102029] |It was the first time in seven years that Moscow hasn't joined efforts, led by Moslem nations, to expel Israel from the world body, and was viewed as a sign of improving Soviet-Israeli ties.
[22102030] |Israel was seated by a vote of 95-37, with 15 abstentions.

[22102031] |Black activist Walter Sisulu said the African National Congress wouldn't reject violence as a way to pressure the South African government into concessions that might lead to negotiations over apartheid.
[22102032] |The 77-year-old Sisulu was among eight black political activists freed Sunday from prison.

[22102033] |London has concluded that Austrian President Waldheim wasn't responsible for the execution of six British commandos in World War II, although he probably was aware of the slayings.
[22102034] |The report by the Defense Ministry also rejected allegations that Britain covered up evidence of Waldheim's activities as a German army officer.

[22102035] |An international group approved a formal ban on ivory trade despite objections from southern African governments, which threatened to find alternative channels for selling elephant tusks.
[22102036] |The move by the Convention on Trade in Endangered Species, meeting in Switzerland, places the elephant on the endangered-species list.

[22102037] |An assassin in Colombia killed a federal judge on a Medellin street.
[22102038] |An anonymous caller to a local radio station said cocaine traffickers had slain the magistrate in retaliation for the extraditions of Colombians wanted on drug charges in the U.S.

[22102039] |Libyan leader Gadhafi met with Egypt's President Mubarak, and the two officials pledged to respect each other's laws, security and stability.
[22102040] |They stopped short of resuming diplomatic ties, severed in 1979.
[22102041] |The reconciliation talks in the Libyan desert town of Tobruk followed a meeting Monday in the Egyptian resort of Mersa Metruh.

[22103001] |Alpine Group Inc. revised its exchange offer for $43.7 million face amount of 13.5% senior subordinated debt due 1996 and extended the offer to Oct. 27 from Oct. 12.

[22103002] |The Hackensack, N.J., company said holders would receive for each $1,000 face amount, $750 face amount of a new issue of secured senior subordinated notes, convertible into common stock at an initial rate of $6.50 a share, and 50 common shares.
[22103003] |The new notes will bear interest at 5.5% through July 31, 1991, and thereafter at 10%.

[22103004] |Under the original proposal, the maker of specialty coatings and a developer of information-display technologies offered $400 of notes due 1996, 10 common shares and $175 in cash for each $1,000 face amount.

[22103005] |Completion of the exchange offer is subject to the tender of at least 80% of the debt, among other things.
[22103006] |Alpine, which said it doesn't plan to further extend the offer, said it received $615,000 face amount of debt under the original offer.

[22104001] |The stock of UAL Corp. continued to be pounded amid signs that British Airways may balk at any hasty reformulation of the aborted $6.79 billion buy-out of United Airlines' parent.

[22104002] |UAL stock plummeted a further $24.875 to $198 on volume of more than 2.8 million shares in New York Stock Exchange composite trading.
[22104003] |The plunge followed a drop of $56.875 Monday, amid indications the takeover may take weeks to be revived.

[22104004] |The stock has fallen $87.25, or 31%, in the three trading days since announcement of the collapse of the $300-a-share takeover jolted the entire stock market into its second-worst plunge ever.
[22104005] |"This is a total bloodbath" for takeover-stock traders, one investment banker said.

[22104006] |Los Angeles financier Marvin Davis, who put United in play with a $5.4 billion bid two months ago, last night proffered both a ray of hope and an extra element of uncertainty by saying he remains interested in acquiring UAL.
[22104007] |But he dropped his earlier $300-a-share back-up bid, saying he must first explore bank financing.

[22104008] |Even as Citicorp and Chase Manhattan Corp. scrambled to line up bank financing for a revised version of the lapsed labor-management bid, British Airways, a 15% partner in the buying group, indicated it wants to start from scratch.
[22104009] |Its partners are United's pilots, who were to own 75%, and UAL management at 10%.

[22104010] |Adding insult to injury, United's 25,000-member Machinists' union, which helped scuttle financing for the first bid, yesterday asked UAL Chairman Stephen Wolf and other UAL directors to resign.
[22104011] |A similar demand was made by a group that represents some of United's 26,000 noncontract employees.
[22104012] |John Peterpaul, Machinists union general vice president, attacked Mr. Wolf as "greedy and irresponsible" for pursuing the buy-out.
[22104013] |Although Mr. Wolf and John Pope, UAL's chief financial officer, stood to pocket $114.3 million for stock and options in the buy-out, UAL executives planned to reinvest only $15 million in the new company.

[22104014] |The blue-collar machinists, longtime rivals of the white-collar pilots, say the buyout would load the company with debt and weaken its finances.

[22104015] |Confusion about the two banks' hurried efforts to round up financing for a new bid that the UAL board hasn't even seen yet helped send UAL stock spiraling downward.
[22104016] |And rumors of forced selling by takeover-stock traders triggered a 25-point downdraft in the Dow Jones Industrial Average around 11:15 a.m. EDT yesterday.

[22104017] |Yesterday's selling began after a Japanese news agency reported that Japanese banks, which balked at the first bid, were ready to reject a revised version at around $250 a share, or $5.65 billion.
[22104018] |Several reports as the day progressed gave vague or conflicting indications about whether banks would sign up.

[22104019] |Citicorp, for example, said only that it had "expressions of interest of a transaction from both the borrowers and the banks," but didn't have an agreement.

[22104020] |Late in the day, Mr. Wolf issued a onepage statement calling Mr. Peterpaul's blast "divisive and uncalled for."
[22104021] |But he gave few details on the progress toward a new bid, saying only, "We are working toward a revised proposal for majority employee ownership."

[22104022] |Meanwhile, in another sign that a new bid isn't imminent, it was learned that the UAL board held a telephone meeting Monday to hear an update on the situation, but that a formal board meeting isn't likely to be convened until early next week.

[22104023] |In London, British Airways Chairman Lord King was quoted in the Times as declaring he is "not prepared to take my shareholders into a hasty deal."
[22104024] |Observers said it appeared that British Air was angered at the way the bid has degenerated into confusion, as well as by the banks' effort to round up financing for what one called "a deal that isn't a deal."

[22104025] |The effort to revive the bid was complicated by the unwieldy nature of the three-party buying group.
[22104026] |The pilots were meeting outside Chicago yesterday.
[22104027] |But British Air, which was to have supplied $750 million out of $965 million in equity financing, apparently wasn't involved in the second proposal and could well reject it even if banks obtain financing.

[22104028] |A group of United's noncontract employees said in a statement, "The fact that Wolf and other officers were going to line their pockets with literally millions of dollars while instituting severe pay cuts on the nonunion employees of United is not only deplorable but inexcusable."
[22104029] |The machinists also asked for an investigation by the Securities and Exchange Commission into possible securities-law violations in the original bid for UAL by Mr. Davis, as well as in the response by UAL.
[22104030] |Last week, just before the bank commitments were due, the union asked the U.S. Labor Department to study whether the bid violated legal standards of fairness governing employee investment funds.

[22104031] |In his statement, Mr. Wolf said, "We continue to believe our approach is sound, and that it is far better for all employees than the alternative of having an outsider own the company with employees paying for it just the same."

[22104032] |Mr. Wolf has eschewed merger advice from a major Wall Street securities firm, relying instead only on a takeover lawyer, Peter Atkins of Skadden Arps Slate Meagher & Flom.

[22104033] |The huge drop in UAL stock prompted one takeover stock trader, George Kellner, managing partner of Kellner, DiLeo & Co., to deny publicly rumors that his firm was going out of business.
[22104034] |Mr. Kellner said that despite losses on UAL stock, his firm's health is "excellent."

[22104035] |The stock's decline also has left the UAL board in a quandary.
[22104036] |Although it may not be legally obligated to sell the company if the buy-out group can't revive its bid, it may have to explore alternatives if the buyers come back with a bid much lower than the group's original $300-a-share proposal.

[22104037] |At a meeting Sept. 1 to consider the labor-management bid, the board also was informed by its investment adviser, First Boston Corp., of interest expressed by buy-out funds including Kohlberg Kravis Roberts & Co. and Forstmann Little & Co., as well as by Robert Bass, Morgan Stanley's buy-out fund, and Pan Am Corp.

[22104038] |The takeover-stock traders were hoping that Mr. Davis or one of the other interested parties might re-emerge with the situation in disarray, or that the board might consider a recapitalization.

[22104039] |Meanwhile, Japanese bankers said they were still hesitant about accepting Citicorp's latest proposal.

[22105001] |Macmillan Inc. said it plans a public offering of 8.4 million shares of its Berlitz International Inc. unit at $19 to $21 a share.

[22105002] |The offering for the language school unit was announced by Robert Maxwell, chairman and chief executive officer of London-based Maxwell Communication Corp., which owns Macmillan.

[22105003] |After the offering is completed, Macmillan will own about 56% of the Berlitz common stock outstanding.
[22105004] |Five million shares will be offered in the U.S., and 3.4 million additional shares will be offered in concurrent international offerings outside the U.S.
[22105005] |Goldman, Sachs & Co. will manage the offering.

[22105006] |Macmillan said Berlitz intends to pay quarterly dividends on the stock.
[22105007] |The company said it expects to pay the first dividend, of 12.5 cents a share, in the 1990 first quarter.

[22105008] |Berlitz will borrow an amount equal to its expected net proceeds from the offerings, plus $50 million, in connection with a credit agreement with lenders.
[22105009] |The total borrowing will be about $208 million, the company said.
[22105010] |Proceeds from the borrowings under the credit agreement will be used to pay an $80 million cash dividend to Macmillan and to lend the remainder of about $128 million to Maxwell Communications in connection with a promissory note.

[22105011] |Proceeds from the offering will be used to repay borrowings under the short-term parts of a credit agreement.

[22105012] |Berlitz, which is based in Princeton, N.J., provides language instruction and translation services through more than 260 language centers in 25 countries.
[22105013] |In the past five years, more than 68% of its sales have been outside the U.S.
[22105014] |Macmillan has owned Berlitz since 1966.

[22105015] |In the first six months of this year, Berlitz posted net income of $7.6 million on sales of $106.2 million, compared with net income of $8.2 million on sales of $90.6 million.

[22106001] |Right away you notice the following things about a Philip Glass concert.
[22106002] |It attracts people with funny hair (or with no hair -- in front of me a girl with spiked locks sat beside a boy who had shaved his).
[22106003] |Whoever constitute the local Left Bank come out in force, dressed in black, along with a smattering of yuppies who want to be on the cutting edge.
[22106004] |People in Glass houses tend to look stoned.
[22106005] |And, if still conscious at the evening's end, you notice something else: The audience, at first entranced and hypnotized by the music, releases its pent-up feelings in collective gratitude.

[22106006] |Currently in the middle of a four-week, 20-city tour as a solo pianist, Mr. Glass has left behind his synthesizers, equipment and collaborators in favor of going it alone.
[22106007] |He sits down at the piano and plays.
[22106008] |And plays.
[22106009] |Either one likes it or one doesn't.
[22106010] |The typical Glass audience, which is more likely to be composed of music students than their teachers, certainly does.

[22106011] |The work, though, sounds like Muzak for spaceships.
[22106012] |Philip Glass is the emperor, and his music the new clothes, of the avant-garde.
[22106013] |His success is easy to understand.
[22106014] |Softly introducing and explaining his pieces, Mr. Glass looks and sounds more like a shaggy poet describing his work than a classical pianist playing a recital.
[22106015] |The piano compositions, which have been labeled variously as minimalist, Oriental, repetitive, cyclical, monophonic and hypnotic, are relentlessly tonal (therefore unthreatening), unvaryingly rhythmic (therefore soporific), and unflaggingly harmonious but unmelodic (therefore both pretty and unconventional).
[22106016] |It is music for people who want to hear something different but don't want to work especially hard at the task.
[22106017] |It is E-Z listening for the now generation.

[22106018] |Mr. Glass has inverted the famous modernist dictum "less is more."
[22106019] |His more is always less.
[22106020] |Far from being minimalist, the music unabatingly torments us with apparent novelties not so cleverly disguised in the simplicities of 4/4 time, octave intervals, and ragtime or gospel chord progressions.
[22106021] |But the music has its charm, and Mr. Glass has constructed his solo program around a move from the simple to the relatively complex.
[22106022] |"Opening" (1981), from Glassworks, introduces the audience to the Glass technique: Never straying too far from the piano's center, Mr. Glass works in the two octaves on either side of middle C, and his fingers seldom leave the keys.
[22106023] |There is a recognizable musical style here, but not a particular performance style.
[22106024] |The music is not especially pianistic; indeed, it's hard to imagine a bad performance of it.
[22106025] |Nothing bravura, no arpeggios, no ticklish fingering problems challenge the performer.
[22106026] |We hear, we may think, inner voices, but they all seem to be saying the same thing.

[22106027] |With "Planet News," music meant to accompany readings of Allen Ginsberg's "Wichita Vortex Sutra," Mr. Glass gets going.
[22106028] |His hands sit farther apart on the keyboard.
[22106029] |Seventh chords make you feel as though he may break into a (very slow) improvisatory riff.
[22106030] |The chords modulate, but there is little filigree even though his fingers begin to wander over more of the keys.
[22106031] |Contrasts predictably accumulate: First the music is loud, then it becomes soft, then (you realize) it becomes louder again.
[22106032] |"The Fourth Knee Play," an interlude from "Einstein on the Beach," is like a toccata but it doesn't seem to move much beyond its left-hand ground in "Three Blind Mice."

[22106033] |When Mr. Glass decides to get really fancy, he crosses his hands and hits a resonant bass note with his right hand.
[22106034] |He does this in at least three of his solo pieces.
[22106035] |You might call it a leitmotif or a virtuoso accomplishment.
[22106036] |In "Mad Rush," which came from a commission to write a piece of indeterminate length (Mr. Glass charmingly, and tellingly, confessed that "this was no problem for me"), an A section alternates with a B section several times before the piece ends unresolved.

[22106037] |Not only is the typical Glasswork open-ended, it is also often multiple in its context(s).
[22106038] |"Mad Rush" began its life as the accompaniment to the Dalai Lama's first public address in the U.S., when Mr. Glass played it on the organ at New York's Cathedral of St. John the Divine.
[22106039] |Later it was performed on Radio Bremen in Germany, and then Lucinda Childs took it for one of her dance pieces.
[22106040] |The point is that any piece can be used as background music for virtually anything.

[22106041] |The evening ended with Mr. Glass's "Metamorphosis," another multiple work.
[22106042] |Parts 1, 2, and 5 come from the soundtrack of Errol Morris's acclaimed film, "The Thin Blue Line," and the two other parts from incidental music to two separate dramatizations of the Kafka story of the same name.
[22106043] |When used as background in this way, the music has an appropriate eeriness, as when a two-note phrase, a descending minor third, accompanies the seemingly endless litany of reports, interviews and confessions of witnesses in the Morris film.
[22106044] |Served up as a solo, however, the music lacks the resonance provided by a context within another medium.

[22106045] |Admirers of Mr. Glass may agree with the critic Richard Kostelanetz's sense that the 1974 "Music in Twelve Parts" is as encyclopedic and weighty as "The Well-Tempered Clavier."
[22106046] |But while making the obvious point that both composers develop variations from themes, this comparison ignores the intensely claustrophobic nature of Mr. Glass's music.
[22106047] |Its supposedly austere minimalism overlays a bombast that makes one yearn for the astringency of neoclassical Stravinsky, the genuinely radical minimalism of Berg and Webern, and what in retrospect even seems like concision in Mahler.

[22106048] |Mr. Spiegelman is professor of English at Southern Methodist University and editor of the Southwest Review.

[22107001] |Honeywell Inc. said it hopes to complete shortly the first of two sales of shares in its Japanese joint venture, Yamatake-Honeywell, for about $280 million.

[22107002] |The company wouldn't disclose the buyer of the initial 16% stake.

[22107003] |Proceeds of the sale, expected to be completed next week, would be used to repurchase as many as 10 million shares of Honeywell stock, the company said.

[22107004] |Honeywell said it is negotiating the sale of a second stake in Yamatake-Honeywell, but indicated it intends to hold at least 20% of the joint venture's stock long term.
[22107005] |A 20% stake would allow Honeywell to include Yamatake earnings in its results.

[22107006] |Honeywell previously said it intended to reduce its holding in the Japanese concern as part of a restructuring plan which also calls for a reduction of dependence on weapons sales.
[22107007] |Yesterday a spokeswoman said the company was "pleased with our progress" in that regard and "hopes to provide additional details soon."

[22107008] |Honeywell said its Defense and Marine Systems group incurred delays in shipping some undisclosed contracts during the third quarter, resulting in lower operating profit for that business.

[22107009] |Overall, Honeywell reported earnings of $74.4 million, or $1.73 a share, for the three months ended Oct. 1 compared with a loss of $41.4 million, or 98 cents a share, a year earlier.
[22107010] |The previous period's results included a $108 million pretax charge related to unrecoverable contract costs and a $12.3 million pretax gain on real estate sales.
[22107011] |Sales for the latest quarter were flat, at $1.72 billion.

[22107012] |For the nine months, Honeywell reported earnings of $212.1 million, or $4.92 a share, compared with earnings of $47.9 million, or $1.13 a share, a year earlier.
[22107013] |Sales declined slightly to $5.17 billion.

[22108001] |Once again, your editorial page misstates the law to conform to your almost beatific misperceptions.
[22108002] |In an excursus of little relevance to his central point about private enforcement suits by environmental groups, Michael S. Greve informs your readers, ". . . the Clean Water Act is written upon the presumption -- the pretense, rather -- that nothing but zero risk will do; it establishes a legal standard of zero discharge" ("Congress's Environmental Buccaneers," Sept. 18).

[22108003] |This statement surely buttresses your editorial viewpoint that environmental protection is generally silly or excessive, but it is simply wrong.
[22108004] |The Clean Water Act contains no "legal standard" of zero discharge.
[22108005] |It requires that "discharges of pollutants" into the "waters of the United States" be authorized by permits that reflect the effluent limitations developed under section 301.
[22108006] |Whatever may be the problems with this system, it scarcely reflects "zero risk" or "zero discharge."

[22108007] |Perhaps Mr. Greve was confused by Congress's meaningless statement of "the national goal" in section 101, which indeed calls for the elimination of discharges -- by 1985, no less.
[22108008] |This fatuous statement was not taken seriously when enacted in 1972, and should not now be confused with the operative provisions of the statute.

[22108009] |Thus, you do the public a great disservice when Mr. Greve suggests, even facetiously, that the Clean Water Act prohibits the preparation of a scotch and water; your tippling readers may be led to believe that nothing but chance or oversight protects them, as they cower in the night with their scotch and waters, from the hairyknuckled knock of the Sierra Club at their doors.

[22108010] |Robert J. McManus

[22109001] |National Geographic, the sixth-largest U.S. magazine, is attracting more readers than ever and offers the glossy, high-toned pages that upscale advertisers love.

[22109002] |So why did advertising pages plunge by almost 10% and ad revenue by 7.2% in the first half?

[22109003] |To hear advertisers tell it, the magazine just hasn't kept up with the times.
[22109004] |Despite renewed interest by the public in such topics as the environment and the Third World, it hasn't been able to shake its reputation as a magazine boys like to flip through in search of topless tribe women.
[22109005] |Worse, it lagged behind competitors in offering now-standard gimmicks, from regional editions to discounts for frequent advertisers.

[22109006] |But now, the magazine is attempting to fight back, with an ambitious plan including a revamped sales strategy and a surprisingly aggressive ad campaign.
[22109007] |Advertisers don't think of the magazine first, says Joan McCraw, who joined in April as national advertising director.
[22109008] |"What we want to do is take a more aggressive stance.
[22109009] |People didn't believe we were in tune with the marketplace, and in many ways we weren't."

[22109010] |The 101-year-old magazine has never had to woo advertisers with quite so much fervor before.
[22109011] |It largely rested on its hard-to-fault demographics: 10.8 million subscribers in the first half, up from 10.5 million a year ago; an average age of 42 for readers -- at the height of their consuming years; loyalty to the tune of an 85% average subscription renewal rate.

[22109012] |The magazine had its best year yet in 1988, when it celebrated its centennial and racked up a 17% gain in ad pages, to 283.
[22109013] |But this year, when the hullabaloo surrounding its centennial died, so too did some advertiser interest.
[22109014] |The reason, ad executives say, is that the entire magazine business has been soft -- and National Geographic has some quirks that make it especially unattractive during a soft market.

[22109015] |Perhaps the biggest of those factors is its high ad prices -- $130,000 for a four-color page, vs. $47,000 for the Smithsonian, a comparable publication with a far smaller circulation.
[22109016] |When ad dollars are tight, the high page cost is a major deterrent for advertisers, who generally want to appear regularly in a publication or not at all.

[22109017] |Even though National Geographic offers far more readers than does a magazine like Smithsonian, "the page costs you an arm and a leg to develop any frequency,"says Harry Glass, New York media manager for Bozell Inc.

[22109018] |To combat that problem, National Geographic, like other magazines, began offering regional editions allowing advertisers to appear in only a portion of its magazines -- for example, ads can run only in the magazines sent to subscribers in the largest 25 markets.

[22109019] |But the magazine was slower than its competitors to come up with its regional editions, and until last year offered fewer of them than did competitors.
[22109020] |Time magazine, for example, has more than 100 separate editions going to different regions, top management, and other groups.

[22109021] |Another sticking point for advertisers was National Geographic's tradition of lumping its ads together, usually at the beginning or end of the magazine, rather than spreading ads out among its articles, as most magazines do.
[22109022] |And National Geographic's smaller-than-average size means extra production costs for advertisers.

[22109023] |But Ms. McCraw says the magazine is fighting back.
[22109024] |It now offers 30 regional editions, it very recently began running ads adjacent to articles, and it has been beefing up its sales force.
[22109025] |And it just launched a promotional campaign to tell chief executives, marketing directors, and media executives just that.

[22109026] |The centerpiece of the promotion is its new ad campaign, into which the magazine will pour about $500,000, mostly in the next few weeks.
[22109027] |The campaign, created by Omnicom Group's DDB Needham agency, takes advantage of the eye-catching photography that National Geographic is known for.
[22109028] |In one ad, a photo of the interior of the Sainte-Chapelle in Paris is paired with the headline, "The only book more respected than ours doesn't accept advertising."
[22109029] |Another ad pictures a tree ant, magnified 80 times, with the headline, "For impact far beyond your size consider our regional editions."

[22109030] |Ms. McCraw says she wants the campaign to help attract advertisers in 10 categories, including corporate, financial services, consumer electronics, insurance and food.
[22109031] |Her goal: to top 300 ad pages in 1990, up from about 274 this year.
[22109032] |Whether she can meet that ambitious goal is still far from certain.
[22109033] |"The ad campaign is meant to contemporize the thought of National Geographic," she says.
[22109034] |"We want it to be a '90s kind of image."

[22109035] |WCRS Plans Ad-Unit Sale

[22109036] |WCRS Group hopes to announce, perhaps today, an agreement to sell the majority of its ad unit to Paris-based Eurocom, a European ad executive said.

[22109037] |WCRS has been in discussions with Eurocom for several months.
[22109038] |However, when negotiations bogged down recently, WCRS's chief executive, Peter Scott, met in Paris with another French firm, Boulet Dru Dupuy Petit, or BDDP.

[22109039] |According to the executive, BDDP's involvement prompted renewed vigor in the WCRS-Eurocom talks and the two agencies were hoping to hammer out details by today.
[22109040] |Executives of the two agencies couldn't be reached last night.

[22109041] |Ad Notes. . . .

[22109042] |NEW ACCOUNT: Procter & Gamble Co., Cincinnati, awarded the ad accounts for its line of Professional Crisco vegetable shortening and oil products to Northlich, Stolley, LaWarre, Cincinnati.
[22109043] |Billings weren't disclosed.
[22109044] |Professional Crisco products are specially made for the foodservice industry.

[22109045] |WHO'S NEWS: Stephen Novick, 49, was named executive vice president, deputy creative director at Grey Advertising, New York.
[22109046] |He was executive vice president, director of broadcast production.

[22110001] |The Commodity Futures Trading Commission plans to restrict dual trading on commodity exchanges, a move almost certain to infuriate exchange officials and traders.

[22110002] |The CFTC said it will propose the restrictions after the release of a study that shows little economic benefit resulting from dual trading and cites "problems" associated with the practice.
[22110003] |Dual trading gives an exchange trader the right to trade both for his own account and for customers.

[22110004] |The issue exploded this year after a Federal Bureau of Investigation operation led to charges of widespread trading abuses at the Chicago Board of Trade and Chicago Mercantile Exchange.
[22110005] |While not specifically mentioned in the FBI charges, dual trading became a focus of attempts to tighten industry regulations.
[22110006] |Critics contend that traders were putting buying or selling for their own accounts ahead of other traders' customer orders.

[22110007] |Traders are likely to oppose such restrictions because dual trading provides a way to make money in slower markets where there is a shortage of customer orders.

[22110008] |The exchanges contend that dual trading improves liquidity in the markets because traders can buy or sell even when they don't have a customer order in hand.
[22110009] |The exchanges say liquidity becomes a severe problem for thinly traded contracts such as those with a long time remaining before expiration.

[22110010] |The CFTC may take those arguments into account by allowing exceptions to its restrictions.
[22110011] |The agency didn't cite specific situations where dual trading might be allowed, but smaller exchanges or contracts that need additional liquidity are expected to be among them.
[22110012] |Wendy Gramm, the agency's chairman, told the Senate Agriculture Committee that she expects the study to be released within two weeks and the rule changes to be completed by Thanksgiving.

[22110013] |The study, by the CFTC's division of economic analysis, shows that "a trade is a trade," a member of the study team said.
[22110014] |Whether a trade is done on a dual or non-dual basis, the member said, "doesn't seem to have much economic impact."

[22110015] |Currently, most traders on commodity exchanges specialize in trading either for customer accounts, which makes them brokers, or for their own accounts as socalled locals.
[22110016] |"The tests indicate that dual and non-dual traders are similar in terms of the trade executions and liquidity they provide to the market," Mrs. Gramm told the Senate panel.

[22110017] |Members of Congress have proposed restricting dual trading in bills to reauthorize CFTC operations.
[22110018] |The House's bill would prohibit dual trading in markets with daily average volume of 7,000 contracts or more, comprising those considered too difficult to track without a sophisticated computer system.
[22110019] |The Senate bill would force the CFTC to suspend dual trading if an exchange can't show that its oversight system can detect dual-trading abuses.

[22110020] |So far, one test of restricting dual trading has worked well.
[22110021] |The Chicago Merc banned dual trading in its Standard & Poor's 500-stock index futures pit in 1987.
[22110022] |Under the rules, traders decide before a session begins whether they will trade for their own account or for customers.
[22110023] |Traders who stand on the pit's top step, where most customer orders are executed, can't trade for themselves.

[22110024] |A Merc spokesman said the plan hasn't made much difference in liquidity in the pit.
[22110025] |"It's too soon to tell . . . but people don't seem to be unhappy with it," he said.
[22110026] |He said he wouldn't comment on the CFTC plan until the exchange has seen the full proposal.

[22110027] |But at a meeting last week, Tom Donovan, the Board of Trade's president, told commodity lawyers: "Dual trading is definitely worth saving.
[22110028] |It adds something to the market.

[22111001] |Japanese Firms Push Posh Car Showrooms

[22111002] |JAPANESE luxury-car makers are trying to set strict design standards for their dealerships.
[22111003] |But some dealers are negotiating looser terms, while others decline to deal at all.

[22111004] |Nissan Motor Co.'s Infiniti division likes to insist that every dealer construct and furnish a building in a Japanese style.
[22111005] |Specifications include a polished bronze sculpture at the center of each showroom and a tile bridge spanning a stream that flows into the building from outside.

[22111006] |"Infiniti has it down to the ashtrays," says Jay Ferron, a partner at J.D. Power & Associates, an auto research firm.

[22111007] |Toyota Motor Corp.'s Lexus division also provides specifications.
[22111008] |But only two-thirds of Lexus dealers are constructing new buildings according to the Lexus specs.
[22111009] |Some are even coming up with their own novel designs.
[22111010] |In Louisville, Ky., for example, David Peterson has built a Lexus dealership with the showroom on the second floor.

[22111011] |Yet some dealers have turned down Infiniti or Lexus franchises because they were unwilling or unable to meet the design requirements.
[22111012] |Lee Seidman of Cleveland says Infiniti "was a bear on interiors" but at least let him retrofit an existing building -- without the stream.
[22111013] |Mr. Seidman says he turned down a Lexus franchise in part because "the building was gorgeous but very expensive."

[22111014] |To head off arguments, Infiniti offers dealers cash bonuses and low-interest construction loans.

[22111015] |Dictation Device's Saga Plays Back a Lesson

[22111016] |PRODUCTS DON'T have to be first to be winners.
[22111017] |That's the lesson offered through one case study featured in a design exhibit.

[22111018] |Dictaphone Corp. was caught off guard in 1974 when its main competitor, Lanier Office Products of Japan, introduced a microcassette dictation recorder half the size of standard cassette devices.
[22111019] |Blocked by patent protection from following suit, Dictaphone decided to go a step further and cut the cassette in half again -- down to the length of a paperclip.
[22111020] |By 1979, designers and engineers at Dictaphone, a Pitney Bowes subsidiary, had produced a working model of a "picocassette" recorder.

[22111021] |By 1982, however, the patent status of the Lanier microcassette had changed, permitting Dictaphone to develop its own competitive micro system, which it did.
[22111022] |Marketing and sales departments then urged abandonment of the pico project.
[22111023] |But others said pico should proceed.
[22111024] |Both were right.

[22111025] |Dictaphone went ahead and introduced the pico in 1985, but it hasn't sold well.
[22111026] |To date, says Emil Jachmann, a Dictaphone vice president, it has "broken even or shown a small loss."

[22111027] |Nevertheless, the device has been successful in other ways.
[22111028] |It helped Dictaphone attract better engineers, and it provided new technology for other company products.
[22111029] |The picocassette recorder also helped transform the company's reputation from follower to leading-edge innovator.

[22111030] |"It gave me great pride to see the inventor of the microcassette in Japan look at the pico and shake his head and say `unbelievable,'" says Mr. Jachmann.

[22111031] |Dictaphone's picocassette recorder is one of 13 case studies in the TRIAD Design Project, sponsored by the Design Management Institute of Boston and Harvard Business School.
[22111032] |The studies are on exhibit at Harvard this month and will travel to Chicago's Institute of Design and the University of California at Berkeley.

[22111033] |A Rake's Progress Means Branching Out

[22111034] |ONE DAY Carl Barrett of Mobile, Ala., was raking some sycamore leaves, but the rake kept riding up over the piles.
[22111035] |The harder he tried to push them into large piles, the closer he came to breaking the rake and straining his back.

[22111036] |So Mr. Barrett, then vice president of the Alabama Steamship Association, took a steel-toothed garden rake and taped it to the underside of a leaf rake about nine inches up.
[22111037] |His crude device worked: The lower teeth gathered the leaves into a pile, while the higher, harder teeth moved the top of the pile.
[22111038] |Now incorporated into a polypropylene rake, the four-inch prongs, or "wonderbars," also are supposed to aid in picking up leaves.

[22111039] |One customer, Donald Blaggs of Mobile, says the Barrett Rake allowed him to do his lawn in 2 1/2 hours, two hours less than usual.

[22111040] |But other rake makers have their doubts.
[22111041] |Richard Mason, president of Ames Co. in Parkersburg, W. Va., says the Barrett rake "makes sense," but it would be "tough" to explain to consumers.

[22111042] |John Stoner, marketing director for True Temper Corp., a subsidiary of Black & Decker, says people don't want to move a leaf pile.
[22111043] |"They either pick it up," he says, "or they start pulling from a fresh direction."

[22111044] |Odds and Ends
[22111045] |NO MORE STUBBED toes or bruised shins, promises Geste Corp. of Goshen, Ind., the designer of a bed support to replace traditional frames.
[22111046] |Four tubular steel "Bedfellows," each roughly in the shape of a "W," are attached to the bottom of the box spring in a recessed position. . . .
[22111047] |Nearly half of U.S. consumers say they'll pay up to 5% more for packaging that can be recycled or is biodegradable, according to a survey commissioned by the Michael Peters Group, a design consultant.

[22112001] |The Pentagon is a haunted house.
[22112002] |Living there for six years was really scary.
[22112003] |The ghosts of the past are everywhere: They are kept at bay only by feeding them vast quantities of our defense budget.

[22112004] |Some can be bought off relatively cheaply.
[22112005] |During the Korean War, Gen. Douglas MacArthur demanded and got, in addition to his U.N. command in Korea, his own naval command in Japan, NavforJapan.
[22112006] |Those obsolete operations cost less than $2 billion a year, and keep Mac's ghost quiet.

[22112007] |That's about all it costs to appease Adm. Erich Raeder's ghost.
[22112008] |In 1941, Raeder and the German navy threatened to attack the Panama Canal, so we created the Southern Command in Panama.
[22112009] |The Southern Command has grown even bigger since the war because Raeder's ghost sometimes runs through the E ring dressed like Gen. Noriega.
[22112010] |The Command's huge bureaucracy is needed to analyze whether leaders of coups against Gen. Noriega meet the War Powers Act's six points, Cap Weinberger's seven points, the Intelligence Committee's 32 points and Woodrow Wilson's 14 points necessary to justify U.S. support.
[22112011] |So far no one has.

[22112012] |The ghost of the Soviet brigade discovered in Cuba back in the '70s costs just a few hundred million: the price of the Caribbean Command in Key West that President Carter created in 1980.
[22112013] |The brigade hasn't been heard from since, but we keep the staff around just in case.

[22112014] |George Marshall's ghost is much more difficult to keep happy.
[22112015] |We keep a lot of shrines to him around the Pentagon: statues, busts, relics and such.
[22112016] |The Army headquarters on the third deck of the Pentagon used to burn a lot of incense to him, but the Navy headquarters on the fourth deck made them stop it.
[22112017] |You see, Marshall had this thing about the Navy and the Marines -- he wanted to make them part of the Army but Secretary of the Navy James Forrestal blocked him.
[22112018] |Now his ghost won't let up till it's done.

[22112019] |To keep him quiet we invent a new unified command every year or so run by the Army or the Air Force and put more of the Navy and Marines under it.
[22112020] |But we still hear him moaning at night because the Navy has a few ships left, and to satisfy him the Navy's sea lift forces were given to a new Air Force bureaucracy in Illinois, its space operations to another command in Colorado, the frogmen to a new Army bureaucracy in Fort Bragg, and the Navy's Indian Ocean and Persian Gulf forces to an Army bureaucracy in Florida.

[22112021] |Which brings up the worst and meanest ghost of all -- the ghost of the shah of Iran.
[22112022] |When the shah died, President Carter was so scared that the shah's ghost would blame him for shoving him out to make way for the ayatollah that he declared the Carter Doctrine.
[22112023] |Mr. Carter said he would go to war to stop anyone from trying to grab Iran.
[22112024] |But that ghost wouldn't settle for words, he wanted money and people -- lots.
[22112025] |So Mr. Carter formed three new Army divisions and gave them to a new bureaucracy in Tampa called the Rapid Deployment Force.
[22112026] |But that ghost wasn't fooled; he knew the RDF was neither rapid nor deployable nor a force -- even though it cost $8 billion or $10 billion a year.

[22112027] |After Mr. Carter was defeated in 1980, the shah's ghost claimed the credit and then went after President Reagan and Cap Weinberger.
[22112028] |I saw what he did to them firsthand.
[22112029] |It made my shoelaces dance with terror.
[22112030] |Why, he used to lay in wait for Cap; suddenly he'd leap from behind some statue of Marshall onto Cap's chest and grab him by the throat and choke him till he coughed up an additional $2 billion or so.

[22112031] |Cap added four more divisions to the Army, two active and two reserve; two carrier groups to the Navy; a division -- equivalent to the Marines; and the C-5B, KC-10, C-17 and a thousand tactical aircraft to the Air Force.
[22112032] |He bought $4 billion in prepositioning ships and $7 billion in ammo and equipment to fill them, and parked them at a new $6 billion base at Diego Garcia in the middle of the Indian Ocean.
[22112033] |He dedicated all these new forces to the Persian Gulf.

[22112034] |One night both Marshall's ghost and the shah's ghost together caught Cap and threw him to the ground.
[22112035] |Before they let him go he added a thousand bureaucrats to the RDF in Tampa and renamed it Central Command.
[22112036] |He gave those bureaucrats charge of all naval operations in the Persian Gulf and Indian Ocean.

[22112037] |Marshall figured it would be good training for those soldiers -- someday maybe they would get the whole Navy.
[22112038] |They had fun moving the carriers around, but it turned out that they had forgotten all about mine sweepers.
[22112039] |But the shah still kept leaping out at Cap, so Cap bought a hundred merchant ships more and $7 billion of loading barges, ramps, etc., in order that those seven new Army divisions and three Marine brigades could unload from all those new ships and aircraft and go to war in the Zagros mountains.

[22112040] |Then suddenly Ike's ghost came to visit and said, "What the hell are you doing planning for a land war in Asia 12,000 miles away?
[22112041] |We'd get our asses kicked."
[22112042] |Lucky for Cap, Ike was easygoing and soon went away, while the shah -- he kept coming back.
[22112043] |So the U.S. found itself paying about $2 billion in baksheesh to various Arab potentates for basing rights around the Indian Ocean.

[22112044] |We had great success in Somalia.
[22112045] |But then it turned out that President Siad Barrah was not at all a nice person and the Navy pointed out that the base he promised us in Berbera had silted up about a hundred years ago and anyway was 1,244 miles from the mouth of the Gulf.
[22112046] |(But who's counting.)
[22112047] |Still, Berbera was the best we could get, so we stay in bed with President Barrah.
[22112048] |All these reports about him committing genocide are probably exaggerated anyway.

[22112049] |But wouldn't you know, now that we are spending jillions of dollars, and have built those new divisions and new air wings, and have positioned all these ships and supplies to fight the Russians in Iran, the Russians seem to have lost interest in the whole subject.
[22112050] |Meanwhile, Congress is cutting huge chunks out of the rest of the defense budget.

[22112051] |Predictably, some Navy guys said: "Do we still need to keep all 18 Army divisions on active duty and all those extra land-based aircraft without bases and all those Army guys playing admiral in Tampa?
[22112052] |Couldn't we save $20 billion or $30 billion a year by shifting that stuff to the reserves?
[22112053] |And why not save the costs of a thousand bureaucrats by abolishing Central Command and putting responsibility for Gulf naval operations back where it belongs, afloat with the task force commander in the Gulf?
[22112054] |And where were all our handsomely paid Indian Ocean allies last year when our convoys were being attacked?"

[22112055] |Questions like that really stir up Marshall's ghost.
[22112056] |He appeared late one night in the bedroom of the new defense secretary, Dick Cheney.
[22112057] |Marshall came clanking in like Marley's ghost dragging those chains of brigades and air wings and links with Arab despots.
[22112058] |He wouldn't leave until Mr. Cheney promised to do whatever the Pentagon systems analysts told him.

[22112059] |So next day Mr. Cheney went out and did just that: He canceled the 600-ship Navy and cut back one carrier and 20 frigates.
[22112060] |Then he canceled production of the Navy's most important carrier aircraft, the F-14 and the A-6.
[22112061] |On the other hand, Mr. Cheney retained all those new land forces.
[22112062] |Marshall's ghost is satisfied for now, but he'll be back.

[22112063] |What with Halloween coming and bigger defense cuts looming, more and more Pentagon bureaucrats are crawling under their desks.
[22112064] |They know that they can hold off the ghosts only a little while longer by cutting carriers and ships.
[22112065] |Then the whole thing will start to collapse, just as it did in the 1970s, and the ghosts and banshees will be howling through the place turning people's hair white.
[22112066] |Gives me the willies just thinking about it.

[22112067] |Mr. Lehman, a Reagan Navy secretary, is a managing director of PaineWebber.

[22113001] |The metal and marble lobby of CenTrust Bank's headquarters is grander than your average savings and loan.
[22113002] |For one thing, there is an old master on the wall -- "Samuel Anointing David," a big baroque canvas painted by Mattia Preti, a 17th-century Neapolitan.

[22113003] |At the moment, however, the painting is a nagging reminder of the problems that have engulfed CenTrust and its flamboyant chairman and chief executive, David L. Paul.
[22113004] |In an international buying spree that began barely two years ago, Mr. Paul amassed a collection of about 30 pre-18th-century works, including the Preti, at a total cost of $28 million.

[22113005] |By midnight Oct. 6, all of the paintings were supposed to have been sold off, under orders from Florida's comptroller, whose office regulates the state's S&Ls.
[22113006] |CenTrust didn't meet the deadline.

[22113007] |The collection was at the heart of a grandiose plan Mr. Paul had in which the art was to do double duty -- as an investment for CenTrust and as decoration for the S&L's new office tower, designed by I.M. Pei.
[22113008] |The rub is that the $28 million was plucked from the funds of this federally insured institution even as CenTrust was losing money hand over fist.
[22113009] |Mr. Paul had no right to buy art for the S&L in the first place -- it isn't on the comptroller's "permissible" list -- without seeking a special dispensation, which he did not do.
[22113010] |Besides that, some of the paintings that were to grace the walls of CenTrust actually ended up hanging in the chairman's estate on La Gorce Isle off Miami Beach.

[22113011] |Last spring, the comptroller's office called a halt to Mr. Paul's fling, giving him six months to sell the paintings.
[22113012] |The acquisitions, officials said in a letter to Mr. Paul, were "unsafe, unsound and unauthorized."
[22113013] |So far, Mr. Paul has unloaded but three of his masterpieces, he won't say to whom.
[22113014] |The comptroller's office says it is "monitoring the situation."
[22113015] |Though the agency could remove Mr. Paul, it has no current intention to do that.

[22113016] |"It's not like selling Chevrolets," Mr. Paul says, as he takes a drag on a goldbanded St. Moritz cigarette.
[22113017] |"The last six months has established the quality of the collection.
[22113018] |There's no fire sale here."

[22113019] |Despite Mr. Paul's characteristic hauteur, the 50-year-old, chain-smoking dynamo is finding that getting CenTrust -- Florida's largest thrift institution -- out of its riskiest investments is much tougher than getting into them had been.
[22113020] |Paintings are just part of the picture.
[22113021] |Although Mr. Paul has pared a $1.35 billion junk-bond portfolio to less than $900 million since April, the high-yield debt market has plummeted.
[22113022] |Divesting itself of what is left, as is required of all thrift institutions by July 1994 under the new federal S&L bailout law, may well prove difficult.

[22113023] |And CenTrust has other problems.
[22113024] |Late last week federal regulators ordered the thrift institution to stop paying dividends on its preferred stock -- a move that suggests deep concern about an institution.
[22113025] |Mr. Paul has a plan to bring in $150 million by selling off 63 of CenTrust's 71 branches, but it has yet to be approved by regulators.

[22113026] |It is Mr. Paul's art venture, however, that has drawn the most attention from investors and regulators, not to mention galleries throughout the world.
[22113027] |Embittered shareholders (some of whom are suing) say the chairman and his collection epitomize the excesses of speculation that set off the national S&L crisis.
[22113028] |(CenTrust shares have fallen sharply in price from a high of $15.125 in 1986 to close yesterday at $2.875.)
[22113029] |Gallery directors, meanwhile, say Mr. Paul and others of his ilk have left an indelible mark on the art world -- and not for the better.

[22113030] |Collectors don't say "It's a van Gogh" anymore, laments Harry Brooks, the president of Wildenstein & Co., a New York gallery.
[22113031] |"They say, `Johnny Payson got $53 million for his, so certainly $10 million isn't too much for mine.'
[22113032] |The great collectors we depended on, such as Paul Mellon or Norton Simon, have stopped buying, and the new buyers are brilliant men who made money in the stock market or in takeovers and rushed into collecting. . . ."
[22113033] |Mr. Payson, an art dealer and collector, sold Vincent van Gogh's "Irises" at a Sotheby's auction in November 1987 to Australian businessman Alan Bond.
[22113034] |(Trouble is, Mr. Bond has yet to pay up, and until he does, Sotheby's has the painting under lock and key.)

[22113035] |When Mr. Paul moved in on the art market, he let it be known that virtually no piece was too costly to be considered by CenTrust.

[22113036] |He established his reputation as a freespender in January last year at Sotheby's auction of the Linda and Gerald Guterman collection in New York.
[22113037] |There, on one of his first shopping trips, Mr. Paul picked up several paintings at stunning prices.
[22113038] |He paid $2.2 million, for instance, for a still life by Jan Jansz. den Uyl that was expected to fetch perhaps $700,000.
[22113039] |The price paid was a record for the artist.
[22113040] |(Some 64% of items offered at the Guterman auction were sold, at an average price of $343,333.
[22113041] |The rest were withdrawn for lack of acceptable bids.)
[22113042] |Afterward, Mr. Paul is said by Mr. Guterman to have phoned Mr. Guterman, the New York developer selling the collection, and gloated.

[22113043] |"He says he `stole them,'" recalls Mr. Guterman.
[22113044] |"And he tells me, `If you want to see your paintings, you'll have to come to my house in Florida.'"
[22113045] |Mr. Paul denies phoning and gloating.
[22113046] |"It's just not true," he says.

[22113047] |Mr. Paul quickly became more aggressive in his collecting, with the help of George Wachter, a Sotheby's expert in old masters whom he met at an exhibition of the Guterman items.
[22113048] |Mr. Wachter, who became his principal adviser, searched galleries in London, Paris and Monaco.
[22113049] |And, according to one dealer, Mr. Wachter had a penchant for introducing Mr. Paul with the phrase: "He can buy anything."

[22113050] |Nicholas Hall, the president of the Colnaghi U.S.A. Ltd. gallery in New York, sold Mr. Paul "Abraham and Sarah in the Wilderness" by Giovanni Battista Tiepolo.
[22113051] |Mr. Hall says Mr. Paul "was known to spend a lot of money.
[22113052] |People were interested in seeing him, but it was recognized that the route was through Sotheby's and particularly George Wachter."

[22113053] |Mr. Paul thus developed a close, symbiotic relationship with Sotheby's.
[22113054] |Mr. Paul was eager to assemble a collection for the headquarters CenTrust has been moving into for the greater part of a year.
[22113055] |Sotheby's, the auction house founded in London 1744 and now under the umbrella of Sotheby's Holdings Inc., was hoping to stir up interest in old masters as it strove to build its U.S. business.
[22113056] |European dealers continued to dominate the action in old masters, which Sotheby's North America had lately been touting in this country.

[22113057] |For several months, there was optimism all around.
[22113058] |Last October, Mr. Paul paid out $12 million of CenTrust's cash -- plus a $1.2 million commission -- for "Portrait of a Man as Mars."
[22113059] |The painting, attributed to Flemish artist Peter Paul Rubens, was purchased privately through Sotheby's, not at auction.

[22113060] |In March 1989, just 15 months into his campaign, Mr. Paul was named by Art & Antiques magazine as one of the top 100 individual collectors in the U.S.
[22113061] |"An unknown quantity to most of the art world, Paul is no stranger to lavish spending," the magazine said, noting that he doesn't stop at paint on canvas but also spends big on art you can eat.
[22113062] |"He recently bid $30,000 at a Paris charity auction for a dinner cooked by six of the world's great chefs, but the final party cost closer to $100,000."
[22113063] |(Mr. Paul says it wasn't that high.)

[22113064] |The art collection might have come to rival the Medicis' had the Florida comptroller's office not got wind of Mr. Paul's aesthetic adventure.

[22113065] |In its letter to him, dated March 2 and shared with reporters, Alex Hager, the chief of the thrift-institution bureau in the comptroller's office, expressed puzzlement that the S&L could be so profligate when it had reported losses of more than $13 million in its two preceding quarters.

[22113066] |The state gave CenTrust 30 days to sell the Rubens.
[22113067] |The comptroller's office eventually extended the deadline to six months but broadened its demands, ordering that the "book value of the collection {be} reduced to zero."
[22113068] |In other words: Get rid of all the pictures.
[22113069] |The state obliquely noted that unsafe banking practices are grounds for removing an officer or director and closed with the admonition to Mr. Paul: "Govern yourself accordingly."

[22113070] |The state agency was particularly vexed to learn that the Rubens and a half-dozen other paintings listed among the bank's "furniture and fixtures," were actually hanging in the chairman's house.

[22113071] |Mr. Paul says that at one point he did indeed have eight or nine of the paintings at home and that the rest were in storage at Sotheby's.
[22113072] |He explains that he was "merely storing the paintings at home -- with some display -- because of the special dehumidified environment" required for their safekeeping, until CenTrust's new building was ready for them.
[22113073] |Still, the incident was embarrassing.

[22113074] |It came on the heels of a number of local newspaper articles suggesting that Mr. Paul has benefited handsomely from his association with CenTrust.
[22113075] |For instance, he got a $3 million loan from the S&L, negotiated at a below-market rate.
[22113076] |He owns 43% of CenTrust's shares.

[22113077] |Adding to Mr. Paul's problems, dealers (some with vested interests) insist that he, relying rather too heavily on Sotheby's advice, paid much too much for several pieces in the CenTrust collection.
[22113078] |The $12 million lavished on the Rubens, for example, was a record price for the artist and maybe twice its value, given a dispute among scholars about its provenance.
[22113079] |David Tunick, the president of David Tunick Inc., a New York gallery, says scholars question the authenticity of the Rubens.
[22113080] |It may have been painted instead by a Rubens associate.

[22113081] |"The feeling among many experts on the commercial side is that the price paid at the time was excessive in any event," Mr. Tunick says.
[22113082] |"It sounds like with the Rubens he got absolutely taken to the cleaners."

[22113083] |Victor Wiener, the executive director of the Appraisers Association of America, agrees that Mr. Paul paid very dearly for the Rubens and adds that getting rid of it any time soon for a similar sum would be quite a feat.
[22113084] |"It's not beyond credibility the Rubens will someday be worth $12 million, but whether it could be sold for that amount tomorrow remains to be seen."

[22113085] |Still, predicting is tricky.
[22113086] |"I'm forever dumbfounded by what I see making these high prices."

[22113087] |Jonathan H. Kress, the son of the painting's former owner, Mrs. Rush Kress, dismisses the price talk as "sour grapes."
[22113088] |Dealers contemptuous of the purchase price, he says, were themselves interested in buying the Rubens but lost out.

[22113089] |Mr. Paul, for his part, defends the Rubens price, saying a lot of the experts have never seen the thing itself.
[22113090] |"Most of them weren't even born the last time the painting was displayed publicly," he says.

[22113091] |Art prices are skyrocketing, but a good deal of legerdemain is involved in compiling statistics on sales.
[22113092] |Salomon Brothers Inc., the investment-banking firm, in its annual tally of investment returns, reported that old masters appreciated 51% in the year ended June 1, the greatest return of any of 13 assets it tracked.
[22113093] |(Impressionist and modern paintings, not tracked by Salomon, are ranked even higher at 74% by Sotheby's.)

[22113094] |Salomon, moreover, gets its data on art appreciation from Sotheby's, whose prices go up with clients like Mr. Paul in its thrall.
[22113095] |The percentages omit from consideration the many paintings that go begging at auction.
[22113096] |Art indexes track winners, not losers.
[22113097] |But art that has fallen sharply in value is rarely put up for sale.
[22113098] |Also, at any of Sotheby's auctions of old masters, roughly one-third to one-fifth of what is offered doesn't sell at any price.
[22113099] |It's not that there aren't any bids, but the bids don't meet the minimum "reserve" prices set by the sellers.

[22113100] |In January, the Preti painting that now hangs at CenTrust was expected to bring no more than $700,000 at auction until Mr. Paul came along with his $1.15 million.

[22113101] |Mr. Hall of the Colnaghi gallery says $1.15 million "would have been an impossible price for anyone to ask for a Preti four years ago."
[22113102] |But from his vantage point, it isn't that Mr. Paul, a customer of his too, overpaid for the work, "a gargantuan painting by an artist who is not a household word."
[22113103] |(The painting is 10 feet wide, seven feet high.)
[22113104] |Rather, "It just shows things have changed."

[22113105] |Mr. Paul boasts that he spotted bargains in old masters just before they took an upward turn.
[22113106] |"They went up 51% last year, and they'll do it again this year," he declares.
[22113107] |"They were a sleeper.
[22113108] |Everybody was out buying Monets."
[22113109] |Sotheby's vice president Diana Levitt says the auction house has been "assisting" Mr. Paul in selling the paintings.
[22113110] |And while Sotheby's chief rivals in the art world, private art dealers, "won't be happy to hear it," she adds, "a number of {the artworks} have already been sold, and at a substantial profit."
[22113111] |Mr. Paul claims to have sold three paintings, at more than a 10% profit.
[22113112] |That isn't 51%, and the claim isn't documented.

[22113113] |He furthermore denies that he relied too heavily on Sotheby's or Mr. Wachter.
[22113114] |Mr. Paul says he had not one but four advisers and that he never bid impulsively.
[22113115] |After all, he had the counsel of "curators from the most reputable museums in the world."
[22113116] |He says he expects to sell the collection -- including the controversial Rubens -- "carefully and prudently, just as it was put together."

[22113117] |But in art-world parlance, Mr. Paul's holdings are "burnt."
[22113118] |That is, he is being compelled to put them on the market too soon, and has already gotten offers that are less than he paid for some of the art works.
[22113119] |"After a few years, you can argue there has been natural appreciation," says Susan Theran, the publisher of Leonard's Annual Price Index of Art Auctions.
[22113120] |But quick turnover in artwork is "like pawning your jewelry -- you end up with 50%.
[22113121] |People hold out and try to get a bargain."

[22113122] |Sotheby's defends itself and Mr. Paul in the matter.
[22113123] |Mr. Wachter says Mr. Paul was a quick study who worked intensely and bought the best pictures available at the moment.
[22113124] |"On occasion, he paid a high price," Mr. Wachter concedes, but he says those who bid less and dropped out were dealers who would then have marked up the paintings to resell them at a profit to collectors.

[22113125] |Naomi Bernhard Levinson, a fine-arts appraiser at Bernhard Associates in San Francisco, considers it "definite conflict of interest for an auction house to both advise a client on purchases and to set price estimates on the paintings to be purchased."
[22113126] |Sotheby's, she says, is "wearing both hats."

[22113127] |"I can't see why there would be a conflict of interest," says Sotheby's Ms. Levitt.
[22113128] |"Estimates are based on the previous price of similar works sold at auction and current market conditions, and are not affected by any knowledge of who the potential buyer could be."
[22113129] |Frequently, clients express interest in paintings but don't end up bidding, she adds, "so we don't know who the potential buyer will be."

[22113130] |Mr. Paul, in selling off his paintings, is seeking at least a 15% return on the bank's investment, so as to prove that the venture was sound.
[22113131] |Mr. Paul says that he has feelers out over much of the globe and that potential buyers from as far away as Japan and Italy have examined the collection.

[22113132] |Because of the pressure on CenTrust to sell, dealers and collectors have been trying to get the paintings at bargain-basement prices.
[22113133] |But so far, Mr. Paul and his advisers are holding fast.

[22113134] |One dealer, Martin Zimet of French & Co. in New York, says he "would have loved to buy" a Jan Davids de Heem painting from the bank.
[22113135] |"I tried to steal the picture -- to buy it attractively -- and {Sotheby's} wouldn't do it.
[22113136] |They were protecting his interests."

[22113137] |Meanwhile, Mr. Paul and CenTrust executives are getting squeamish about opulence.
[22113138] |Mr. Paul has been characterized as "the Great Gatsby or something," complains Karen E. Brinkman, an executive vice president of CenTrust.
[22113139] |The media, she says, have distorted his personal life.

[22113140] |Mr. Paul nods in agreement.
[22113141] |"I don't think I have a life style that is, frankly, so flamboyant," he says.
[22113142] |But at just that moment, he is interrupted in his office by a servant in tuxedo who pours coffee from silver into a cup of china and dabs the brim with linen.

[22113143] |Mr. Paul says, yes, the ceiling in his executive suite is gold-leaf inlay.
[22113144] |The offices are done in hardwood and oriental rugs, leatherbound books and, of course, a $12 million Rubens.
[22113145] |But he implores that the splendor be played down.

[22113146] |"Don't say it's a gold ceiling.
[22113147] |Just say the offices are tastefully appointed," he says.
[22113148] |"Otherwise, the regulators will take it for decadence, and nowadays everything's got to be pristine."

[22113149] |Figures don't include taxes or transaction costs.

[22114001] |Companies listed below reported quarterly profit substantially different from the average of analysts' estimates.
[22114002] |The companies are followed by at least three analysts, and had a minimum five-cent change in actual earnings per share.
[22114003] |Estimated and actual results involving losses are omitted.

[22114004] |The percent difference compares actual profit with the 30-day estimate where at least three analysts have issues forecasts in the past 30 days.
[22114005] |Otherwise, actual profit is compared with the 300-day estimate.

[22115001] |{During its centennial year, The Wall Street Journal will report events of the past century that stand as milestones of American business history.}

[22115002] |CREATIVE ACCOUNTING, mostly by conglomerates, forced CPAs to change their way of setting standards to be followed by corporations reporting financial results, standards that had become all too flexible.

[22115003] |The new Financial Accounting Standards Board (FASB) was created in 1972 to replace the Accounting Principles Board of the American Institute of Certified Public Accountants.
[22115004] |All of the former board's members were CPAs, provoking conflict-of-interest criticism because they were writing rules while handling clients' books at the same time.

[22115005] |The new board's seven-member structure kept four CPAs, but the others were from industry and academia.

[22115006] |Francis M. Wheat, a former Securities and Exchange Commission member, headed the panel that had studied the issues for a year and proposed the FASB on March 30, 1972.
[22115007] |The former board had produced "21 opinions and 1,000 critics" in its 12-year life, its chairman had conceded.

[22115008] |The climate was right for the new FASB.
[22115009] |In the late 1960s some CPAs failed to correct such abuses as clients picking permissive rules that hyped earnings and stock prices.
[22115010] |And in November 1970 Congress had passed a special act to overrule one board rule.
[22115011] |Also, James Needham, an SEC commissioner, in April 1972 had warned that the industry might face a "federal agency writing accounting rules" if they rejected the FASB idea.
[22115012] |Keepers of the books, dubbed "figure filberts," loathed the threat.

[22115013] |The FASB had its initial meeting on March 28, 1973.
[22115014] |On Dec. 13, 1973, it issued its first rule; it required companies to disclose foreign currency translations in U.S. dollars.
[22115015] |The FASB since then has issued 102 rules, and some still rile industry.
[22115016] |Since late 1987, for example, it has put off a rule dealing with deferred income taxes because of the continuing controversy over the issue.

[22116001] |Amcast Industrial Corp. said it plans to repurchase 500,000 shares, or about 7% of its shares outstanding, in open market transactions.
[22116002] |The metal products concern currently has 7.2 million common shares outstanding.

[22116003] |Amcast previously had said it planned to repurchase shares, but didn't disclose when or how many shares it intended to buy back.
[22116004] |The company named Dillon Read & Co. as its exclusive agent for the stock buy-back program.

[22117001] |A seat on the Chicago Board of Trade was sold for $390,000, down $5,000 from the previous sale last Tuesday.

[22117002] |Seats currently are quoted at $353,500 bid, $405,000 asked.

[22117003] |The record price for a full membership on the exchange is $550,000, set Aug. 31, 1987.

[22117004] |An associate member seat was sold for $228,000, up $8,000 from the previous sale Oct. 4.

[22117005] |Associate member seats currently are quoted at $225,000 bid, $256,000 asked.

[22117006] |The record price for associate membership is $275,000, set Aug. 30, 1988.

[22118001] |CAE Industries Ltd. said its Link Flight Simulation division was awarded a contract by the U.S. Army for two helicopter simulators, which the company valued at as much as 37 million Canadian dollars (US$31.5 million).

[22118002] |CAE said the fixed price for the first of the AH-64 Apache combat mission simulators is C$19 million.
[22118003] |It is scheduled for delivery in late 1991.
[22118004] |The price of the second simulator ranges between C$16.4 million and C$18 million, CAE said, depending on when the Army exercises its option.

[22118005] |CAE is a Toronto-based maker of commercial and military aircraft simulators and training equipment.

[22119001] |Helionetics Inc. said it agreed to team with a unit of Minneapolis-based Honeywell Inc. to provide power amplifiers for a new military sonar system being proposed by Honeywell.

[22119002] |Total value of the contract could be $100 million, Helionetics said, and work on the project would be about evenly divided.

[22119003] |As previously reported, Helionetics emerged from Chapter 11 bankruptcy-law protection in February.

[22120001] |This Los Angeles company and its Union Federal Savings Bank subsidiary said more than 99% of their 7 1/4% convertible subordinated debentures due 2011 were tendered for conversion into UnionFed common stock.
[22120002] |The conversion increased total equity capital by about $38.5 million to a total of $156.8 million.
[22120003] |Union Federal, a federally insured savings bank, has $2.4 billion in assets.

[22121001] |David D. Lung was appointed president and chief operating officer of this maker of building materials for manufactured homes and recreational vehicles.
[22121002] |As president, Mr. Lung, 42 years old, succeeds his father, Mervin D. Lung, 66, who founded the company in 1959.
[22121003] |Mervin Lung remains chairman and chief executive officer.
[22121004] |David Lung has been with Patrick since 1970, and has served as vice president for administration and purchasing since 1987.

[22122001] |General Dynamics Services Co., a unit of General Dynamics Corp., won a $48.2 million Army contract to establish maintenance facilities for tracked vehicles in Pakistan.

[22122002] |Grumman Corp. was given a $15 million Navy contract for aircraft-electronics improvements.

[22122003] |Hughes Aircraft Co., a unit of General Motors Corp., got a $10.3 million Air Force contract for airborne-radar equipment.

[22123001] |Reynolds Metals Co. said third-quarter net income dropped nearly 10% to $123.7 million, or $2.10 a share, from $137.2 million, or $2.56 a share, a year earlier.
[22123002] |The latest earnings reflect an increase of about 5.5 million in common shares outstanding.
[22123003] |Revenue rose 3% to $1.52 billion from $1.48 billion.

[22123004] |Reynolds is the third big aluminum company since Friday to report disappointing earnings.
[22123005] |The No. 1 domestic aluminum producer, Aluminum Co. of America, Friday said its earnings fell 3.2% to $219 million, or $2.46 a share.
[22123006] |And Alcan Aluminium Ltd. yesterday reported net income slid 30% to $180 million, or 77 cents a share, from $258 million, or $1.07 a share.
[22123007] |Analysts on average had been expecting about $2.70 for Alcoa and $1 for Alcan.

[22123008] |"It's a good indication that level of profitability has peaked for the industry," says Vahid Fathi, metals analyst with Prescott, Ball & Turben Inc., who had estimated Reynolds would earn about $2.35 a share.

[22123009] |The nation's No. 2 aluminum company said earnings were hurt by lower prices for certain fabricated aluminum products, which typically follow price fluctuations of primary ingots.
[22123010] |The base metal price has dropped 30.3% from a year earlier to 78 cents a pound.
[22123011] |Much of the price decline has been blamed on a slowing economy and the third quarter is typically the industry's slowest period.

[22123012] |But William O. Bourke, chairman and chief executive officer, said the ingot price "appears to have bottomed out."
[22123013] |He said shipments are continuing at a "healthy" pace and the company has no excess inventory.
[22123014] |Aluminum shipments of 329,600 metric tons were nearly equal to the year-earlier period, the company said.

[22123015] |Nevertheless, the company said that in the latest quarter there were increased material and labor costs, including a new employee profit-sharing plan.

[22123016] |In composite trading on the New York Stock Exchange, Reynolds closed at $55.375, up $1.25.

[22124001] |No strikeout, but certainly no home run.

[22124002] |That's how the stock-picking game is shaping up for the months ahead, according to money managers and a few brokers.

[22124003] |Yesterday's 88-point recovery from Friday's megadrop in the Dow Jones industrials had many brokerage houses proclaiming that stocks are a good bargain again.
[22124004] |But quite a few money managers aren't buying it.
[22124005] |Weakening corporate earnings, they say, are no prescription for a bull market.

[22124006] |"The stock market ain't going to do much of anything" for a while, says John Neff of Wellington Management, who runs the $8.3 billion Windsor Fund.
[22124007] |He suspects that Friday's market decline may have a second leg, perhaps a 10% to 15% drop later on.

[22124008] |Mr. Neff says the stock market has lost some powerful driving forces, namely earnings growth and the "LBO sweepstakes" -- buy-out fever that induced investors to bid up whole groups of stocks, such as media and airlines.
[22124009] |After sitting with 20% of his fund in cash before Friday's sell-off, Mr. Neff says he bought "a narrow list of stocks" yesterday.

[22124010] |With flat corporate profits on the horizon for 1990, money managers say price-earnings multiples that look cheap today might go on being cheap for a long time.

[22124011] |"This is not a grossly overvalued market, but it's not cheap either," says George Collins, president of the mutual fund company T. Rowe Price Associates in Baltimore.

[22124012] |According to Institutional Brokers Estimate System, Wall Street market strategists see only a 2.4% jump in company profits in 1990 -- unlike in 1987, when profits a year out looked good (they did soar 36% in 1988).

[22124013] |Bulls say the market is an incredible bargain, priced at only about 12 times estimated 1989 earnings for stocks in the Standard & Poor's 500 index.
[22124014] |Before the 1987 crash, the P/E was more than 20.

[22124015] |The common view, says Abby Cohen, strategist for Drexel Burnham Lambert, is that there will be "mild economic growth, modest profit expansion, and things are going to be hunky-dory.
[22124016] |Our view is that we may see a profit decline."
[22124017] |Some think investors should sell into rallies.
[22124018] |The market "is going to wind down," says Gerald W. Perritt, a Chicago money manager.
[22124019] |"Things are a little less overpriced" after Friday's jolt in the market.
[22124020] |He expects stocks to decline an additional 5% to 30%, with the Dow perhaps bottoming out between 2000 and 2100 "between now and June."

[22124021] |After Friday's decline, Mr. Perritt's firm ran statistical tests on 100 high-quality stocks, using old-fashioned value criteria devised by Benjamin Graham, an analyst and author in the 1930s and 1940s who is widely considered to be the father of modern securities analysis.
[22124022] |He found 85 still overvalued and 15 fairly valued.

[22124023] |Nicholas Parks, a New York money manager, expects the market to decline about 15%.
[22124024] |"I've been two-thirds in cash since July, and I continue to think that having a defensive position is appropriate," he says.
[22124025] |Companies that piled on debt in leveraged buy-outs during the past two years "will continue to surface as business problems."

[22124026] |"Generalizations about value aren't useful," says New York money manager John LeFrere of Delta Capital Management.
[22124027] |For instance, he says, International Business Machines and Unisys might look cheap, but investors might continue to do better with stocks like Walt Disney, Procter & Gamble and Coca-Cola, strong performers in recent years.

[22124028] |Money manager Robert Ross, head of Duncan Ross Associates Ltd. in Vancouver, British Columbia, says stocks would have to fall 15% to 20% before they are competitive with less risky investment alternatives.
[22124029] |Fredric Russell, a money manager in Tulsa, Okla., says Friday's cave-in "is going to have more of a permanent impact on the psyche of many investors than Wall Street would want to admit."

[22124030] |There are still bulls out there.
[22124031] |"I still think we will have a 3000 Dow, whether it's six months or 12 months from now I don't know," says David Dreman, managing partner of Dreman Value Management in New York.
[22124032] |"We're doing a little buying" in some stocks "that have really been smashed down."

[22124033] |Many brokerage house officials also are optimistic.
[22124034] |Yesterday, Goldman Sachs, Merrill Lynch and Dean Witter all increased the proportion of assets they recommend investors commit to stocks.
[22124035] |Dean Witter now recommends 85%, Goldman 65% and Merrill Lynch 50%.

[22124036] |Some investors say Friday's sell-off was a good thing, because it deflated a lot of crazy takeover speculation.
[22124037] |"It was a healthy cleansing," says Michael Holland, who runs Salomon Brothers Asset Management in New York.

[22124038] |From here out, these investors see a return to old-fashioned investing, based on a company's ability to show profit growth.

[22124039] |"The fundamentals are pretty strong," Mr. Dreman says.
[22124040] |"I don't see this as a bear market at all.
[22124041] |It's a recognition that there was much too much fluff in the LBO market."

[22124042] |Friday's big fall was "just a blunder by the stock market," says John Connolly, chief strategist for Dean Witter.
[22124043] |"It was an overreaction to an event {the failure of a management and union group to get bank financing for a takeover of UAL} that doesn't mean that much to lots of stocks."
[22124044] |Many investors have nagging worries, however.
[22124045] |Newspapers are full of headlines about companies defaulting on their debts and banks writing off real estate loans.
[22124046] |That hurts investors' confidence in the economy and stocks.

[22124047] |Not even all the brokerage firms see clear sailing ahead.
[22124048] |"Disappointing profits are likely to get worse in the next two quarters," says Mary Farrell, a market strategist at PaineWebber.
[22124049] |She thinks the market could drop about 10% in the next few months, then recover and go higher.
[22124050] |Companies with steady earnings growth could do well, she says, while others with high debt or poor earnings could see their shares decline far more than 10%.

[22125001] |The turmoil on Wall Street may benefit some retailers attempting to lead leveraged buy-outs of their specialty and department-store chains, investment bankers and retailers said.

[22125002] |Managers at five chains have said in recent weeks that they intend to bid for their companies.
[22125003] |The chains include Bloomingdale's, owned by Campeau Corp., Toronto; Saks Fifth Avenue and Marshall Field's, owned by B.A.T Industries PLC, London; and B. Altman & Co. and Sakowitz Inc., owned by Hooker Corp., which is now being managed by a court-appointed provisional liquidator.
[22125004] |Hooker is based in Sydney, Australia.

[22125005] |The combination of so many chains available for sale, the recent failures of such retailing LBO's as Miller & Rhoads Inc. and declining investor confidence will drive down prices, retailing observers said.

[22125006] |"The pricing will become more realistic, which should help management," said Bruce Rosenthal, a New York investment banker with Nathan S. Jonas & Co.
[22125007] |"Investors aren't going to be throwing money at any of the proposed LBOs, but doing deals on the basis of ridiculous assumptions never made sense, either."

[22125008] |Earlier this year, bankers and other investors were willing to provide financing because they assumed there would be major gains in both profitability and sales, Mr. Rosenthal added.
[22125009] |Those days are over now, he believes.

[22125010] |"Competition from third parties who have cash and are prepared to buy has always existed and will continue," added Mr. Rosenthal.
[22125011] |"But when prices were crazy, it was even harder to do an LBO.
[22125012] |Bankers believed in the greater-fool theory that says somebody else is always willing to pay more.
[22125013] |This is no longer true today."

[22125014] |At Saks Fifth Avenue, Paul Leblang, senior vice president, marketing, agreed that lower prices will help his management team in their proposed LBO.

[22125015] |"Having to take on less debt would certainly be an advantage," said Mr. Leblang.
[22125016] |"It would also help us in our search for equity partners.
[22125017] |To make an LBO work, now we are going to need more than just junk bonds.
[22125018] |" None believe the proposed management LBOs will be easy to complete, especially at B. Altman & Co., which is under Chapter 11 bankruptcy protection.
[22125019] |Not only could the Wall Street gyrations damp Christmas sales if consumers lose confidence in the economy, but potential junk-bond buyers are sure to demand even stronger covenants and greater management equity participation.

[22125020] |Further, many institutions today holding troubled retailers' debt securities will be reticent to consider additional retailing investments.
[22125021] |"It's called bad money driving out good money," said one retailing observer.
[22125022] |"Institutions that usually buy retail paper have to be more concerned."

[22125023] |However, the lower prices these retail chains are now expected to bring should make it easier for managers to raise the necessary capital and pay back the resulting debt.
[22125024] |In addition, the fall selling season has generally been a good one, especially for those retailers dependent on apparel sales for the majority of their revenues.

[22125025] |"What's encouraging about this is that retail chains will be sold on the basis of their sales and earnings, not liquidation values," said Joseph E. Brooks, chairman and chief executive officer of Ann Taylor Inc., a specialty chain.
[22125026] |"Retailers who had good track records of producing profits will have a better chance to buy back their companies."

[22125027] |Still, most retailing observers expect that all the proposed retailing LBOs will depend partly on the sale of junk bonds, a market already in tumult, in part because of concerns associated with bonds issued by the Federated and Allied units of Campeau.

[22125028] |"Prices for retail chains are lower today than they were last week, which will help management," said Gilbert Harrison, chairman of Financo Inc., an investment-banking firm specializing in retailing acquisitions.
[22125029] |"But the hurdle of financing still has to be resolved.
[22125030] |Potential bondholders will either look for greater equity participation on behalf of management, or insist the equity component of the deals be substantially greater than in the past.

[22126001] |Sony Corp. won a pretrial order blocking U.S. sales of Justin Products Inc.'s "My Own" line of portable audio players for children.

[22126002] |Judge John E. Sprizzo issued the order in Manhattan federal court, where Sony has accused the tiny company of illegally knocking off the "My First Sony" line.
[22126003] |The judge held that the combination of colors used for the Sony products is distinctive and subject to protection under New York state law, rather than federal law.
[22126004] |The legal fight was the subject of a Wall Street Journal story yesterday.

[22126005] |Justin's attorney, Charles E. Baxley, said Justin would ask an appeals court to set aside the order temporarily, pending an expedited appeal.
[22126006] |He also repeated Justin's denial of Sony's charges.

[22126007] |"Their likelihood of reversing us is very slim," said Lewis H. Eslinger, Sony's attorney, who said he doubts Justin will go ahead with a trial.

[22127001] |CONTINENTAL MORTGAGE & EQUITY TRUST said it will resume dividend payments with a 10-cent-a-share payout on Nov. 6 to shares of record Oct. 25.
[22127002] |The Dallas real estate investment trust last paid a dividend on Dec. 31, 1987, when shareholders received $1 a share.
[22127003] |Despite continuing troubles with problem assets and nonperforming loans, the trust said it expects to be able to maintain or increase the rate of distributions because of operations of joint-venture properties.

[22128001] |A federal appeals court struck down a natural-gas regulation that had prevented pipeline companies from passing to customers part of $1 billion in costs from controversial "take-or-pay" contracts.

[22128002] |The court, in a 3-0 ruling, threw out a deadline set by the Federal Energy Regulatory Commission for settling old contract disputes over gas that the pipeline companies reserved but didn't use.

[22128003] |FERC's regulation had given pipelines until March 31, 1989, to pass on to customers as much as 50% of the costs of buying out their broken contracts, which were made with producers when gas prices were high and supplies short.

[22128004] |A majority of old contracts were renegotiated by the deadline and settled at steep discounts.
[22128005] |But pipeline companies estimate they still face $2.4 billion in liabilities from unresolved disputes, including $1 billion they fear they won't be able to pass on to customers.

[22128006] |According to industry lawyers, the ruling gives pipeline companies an important second chance to resolve remaining disputes and take advantage of the cost-sharing mechanism.
[22128007] |The court left open whether FERC could reimpose a new deadline later.

[22128008] |The court, agreeing with pipeline companies, found the March 31 deadline was "arbitrary and capricious" and "highly prejudicial to the bargaining power of pipelines" that were forced to negotiate settlement of the old take-or-pay contracts to meet the deadline.

[22128009] |A report last month by the Interstate Natural Gas Association of America found that pipelines' settlement costs had jumped in the three months before the deadline to 39 cents on the dollar, from 22 cents on the dollar in 1988.

[22128010] |The court ordered FERC to justify within 60 days not only its cost-sharing deadline, but other major elements of its proposed regulation for introducing more competition into natural-gas transportation.
[22128011] |The court also questioned a crediting mechanism that could be used to resolve take-or-pay liabilities.

[22128012] |The complex regulation, known in the industry as Order 500, has been hotly contested by all sides, including natural-gas producers, pipelines, local distribution companies and consumers.
[22128013] |The court's decision would allow FERC to change some of its provisions, but ensures it will be reviewed again quickly by the court.

[22129001] |MEDUSA Corp. said it voluntarily prepaid $7 million on its original $75 million term loan, bringing the total debt reduction for the year to $18 million.
[22129002] |After the payment, the Cleveland company owes $57 million on the loan.
[22129003] |The cement producer said the payment was made from excess cash flow.

[22130001] |NATIONAL INCOME REALTY TRUST said it will resume dividend payments with a 12-cent-a-share dividend to be paid Nov. 6 to shares of record Oct. 25.
[22130002] |The mortgage and equity real estate investment trust last paid a dividend on Aug. 1, 1988, when holders received 75 cents a share.
[22130003] |Despite continuing troubles with problem properties and nonperforming loans, the Dallas trust said it has rebuilt reserves, abandoned properties with little potential and experienced improved operating results from joint ventures.

[22131001] |MLX Corp. said it reached a preliminary agreement with senior lenders to its refrigeration and air-conditioning group to restructure the $188.5 million of credit facilities the lenders provide to the group.

[22131002] |MLX, which also makes aircraft and heavy-duty truck parts, said the debt was accumulated during its acquisition of nine businesses that make up the group, the biggest portion of which was related to the 1986 purchase of a Hillman Co. unit.

[22131003] |Among other things, the restructured facilities will substantially reduce the group's required amortization of the term loan portion of the credit facilities through September 1992, MLX said.
[22131004] |Certain details of the restructured facilities remain to be negotiated.
[22131005] |The agreement is subject to completion of a definitive amendment and appropriate approvals.

[22131006] |William P. Panny, MLX chairman and chief executive, said the pact "will provide MLX with the additional time and flexibility necessary to complete the restructuring of the company's capital structure."

[22131007] |MLX has filed a registration statement with the Securities and Exchange Commission covering a proposed offering of $120 million in long-term senior subordinated notes and warrants.

[22132001] |Dow Jones & Co. said it acquired a 15% interest in DataTimes Corp., a subsidiary of Oklahoma Publishing Co., Oklahoma City, that provides electronic research services.
[22132002] |Terms weren't disclosed.
[22132003] |Customers of either DataTimes or Dow Jones News/Retrieval are able to access the information on both services.
[22132004] |Dow Jones is the publisher of The Wall Street Journal.

[22133001] |Flowers Industries Inc. said it will report a charge of eight cents to 10 cents a share for its fiscal first quarter, ended Sept. 23, from the sale of two bakeries, in High Point, N.C., and Gadsden, Ala.

[22133002] |The convenience-food company said it sold the bakeries to Mills Family Bakery for an undisclosed amount.
[22133003] |It said the sales were part of a 1983 Federal Trade Commission Consent Order.

[22133004] |A year earlier, Flowers had fiscal first-quarter net income of $8 million, or 23 cents a share, on revenue of $170.4 million.

[22134001] |Raw-steel production by the nation's mills decreased 0.8% last week to 1,828,000 tons from 1,843,000 tons the previous week, the American Iron and Steel Institute said.

[22134002] |Last week's output rose 1.4% from the 1,802,000 tons produced a year earlier.

[22134003] |The industry used 82.2% of its capability last week, compared with 82.8% the previous week and 84% a year ago.

[22134004] |The capability utilization rate is a calculation designed to indicate at what percent of its production capability the industry is operating in a given week.

[22135001] |Selwyn B. Kossuth was named executive director of the commission, effective early November.
[22135002] |Mr. Kossuth, 52 years old, succeeds Ermanno Pascutto, 36, who resigned to join Hong Kong's Securities and Futures Commission.
[22135003] |Mr. Kossuth was vice president and director, corporate finance, of Nesbitt Thomson Deacon Inc., a Toronto investment dealer.

[22136001] |Dun & Bradstreet Corp.'s Market Data Retrieval unit said it acquired School and College Construction Reports service from Intelligence for Education Inc.
[22136002] |Terms weren't disclosed.

[22136003] |The service supplies weekly reports on school and college construction plans.

[22136004] |Market Data Retrieval is a compiler of educational information and provides related services.
[22136005] |Closely held Intelligence in Education, of Larchmont, N.Y., is an educational publisher and consultant.

[22136006] |A battle is raging in Venice over plans to have the 1,200-year-old Italian city be the site for a universal exposition in 2000.

[22136007] |The plans include a subway system, a congress center, floating trees, fanciful fountains -- and as many as 60,000 additional tourists a day.

[22136008] |Expo enthusiasts argue that holding the fair would attract businesses, create jobs and help renovate abandoned sections of town.
[22136009] |But opponents fear overcrowding.
[22136010] |"This city already has too many tourists, and it can't hold them all," says Pierluigi Beggiato, the president of the Venice hoteliers association.

[22136011] |About 40 Italian businesses, including Fiat S.p.A. and Ing. C. Olivetti & Co., have formed a consortium to lobby for holding the expo in Venice.

[22136012] |Three gambling casinos have opened in Poland.
[22136013] |The three establishments -- two in Warsaw and one in Krakow -- accept only foreign currency and are joint ventures between Polish firms and Western companies.
[22136014] |Not all Poles are pleased.
[22136015] |"What do we want casinos for when we haven't got anything in the shops?" one housewife asked.
[22136016] |But Bogdan Gumkowski, who runs the casino at Warsaw's Marriott Hotel, said the ventures would help Poland service its $39 billion foreign debt by pouring dollars into the state firms in the joint ventures -- the LOT airline and Orbis tourist organization.

[22136017] |Algeria plans to increase natural-gas sales to Europe and the U.S.
[22136018] |According to the Middle East Economic Survey, the North African nation is holding talks with Italy for adding a fourth pipe to a section of the Trans-Mediterranean pipeline, expanding capacity by up to six billion cubic meters a year from 12.5 billion.
[22136019] |Algeria also wants to build a pipeline through Morocco and across the Strait of Gibraltar to supply Spain, France and West Germany with up to 15 billion cubic meters a year by the late 1990s.

[22136020] |South Africa's National Union of Mineworkers agreed to suspend the strike by diamond workers and resume negotiations with De Beers Consolidated Mines Ltd. over their wage dispute, De Beers said.
[22136021] |It also said the union had agreed to meet the company for further talks tomorrow.
[22136022] |The strike at five De Beers mines began last Thursday, with 9,500 out of a total 10,000 NUM members employed on De Beers mines participating, according to the union, while De Beers said there were 7,800 participants.
[22136023] |The union has demanded a 37.6% increase in the minimum wage while De Beers's final offer was an increase of 17%.

[22136024] |A 35-nation environmental conference opened in Sofia, Bulgaria.
[22136025] |The gathering is expected to focus on curbing the fouling of rivers and lakes, limiting damage from industrial accidents and improving the handling of harmful chemicals.
[22136026] |West German Environment Minister Klaus Toepfer said Bonn is convinced of the need for cooperation, "especially with our neighbors in the East, because we are directly affected by their ecological progress or lack of it."
[22136027] |The U.S. and Canada joined every European country except Albania at the meeting.

[22136028] |The Swedish publishers of a new Estonian-language newspaper rushed an extra edition across the Baltic on Oct. 10 after the first run sold out in one day.
[22136029] |Editor Hasse Olsson said plans had called for 7,000 copies of the monthly Are Paev (Business Paper) to be sold at newsstands and an additional 3,000 promotion issues to be sent by direct mail.
[22136030] |He said 13,000 more copies were sent to Estonia because of strong sales.
[22136031] |The Swedish publishing company Bonniers owns 51% of Are Paev, and the Estonian management company Minor owns 49%.

[22136032] |Angel Gurria, Mexico's top debt negotiator, said the country's creditor banks are responding positively to Mexico's debt-reduction package.

[22136033] |Mr. Gurria's optimism contrasts with some bankers' views that the deal may require a lot of arm twisting by the U.S. Treasury in order to succeed.
[22136034] |Mr. Gurria, Mexico's under-secretary of the ministry of finance, met yesterday with European bankers in London, at the half-way point on a so-called road show to market the package around the world.

[22136035] |An increasing number of banks appear to be considering the option under the deal whereby they can swap their Mexican loans for 30-year bonds with a face value discounted by 35%, Mr. Gurria said.
[22136036] |The other two options consist of swapping loans for bonds with 6.25% interest rates, or providing fresh loans.

[22136037] |The accord, which covers $52.7 billion of Mexico's medium- and long-term debt, is expected to go into effect in early

[22136038] |China's top film actress, Liu Xiaoqing, paid $4,555 in back taxes and fines in Shandong province, the People's Daily reported.
[22136039] |The amount is equal to about 30 years earnings for the average peasant, who makes $145 a year. . . .
[22136040] |China will spend $9.45 million for urgent maintenance on Tibet's Potala Palace, former home of the Dalai Lama, the China News Service said.
[22136041] |The Dalai Lama, who was just awarded the Nobel Peace Prize, lives in exile in India.

[22137001] |George W. Koch, 63 years old, president and chief executive officer of Grocery Manufacturers of America Inc., was elected a director of this maker of spices, seasonings and specialty foods, succeeding Erskin N. White Jr., 65, who resigned.

[22138001] |American Business Computer Corp. said it privately placed 1,035,000 common shares at $2.50 a share.

[22138002] |The placement was made through Gray Seifert Securities, New York, to institutional investors.
[22138003] |Proceeds will be used to commercialize recently patented technology and support the company's international expansion.
[22138004] |The company develops and markets products for the food service industry.

[22139001] |THE R.H. MACY & CO. department-store chain isn't for sale.
[22139002] |In yesterday's edition, it was incorrectly included with a list of New York chains up for sale.

[22140001] |Korean car exports have slid about 40% so far this year, but auto makers here aren't panicking.

[22140002] |They are enjoying domestic sales that are more than making up for lost overseas sales.
[22140003] |South Korean consumers are expected to buy almost 500,000 passenger cars this year, up 60% from 1988.
[22140004] |In fact, some auto executives suggest that slackened demand for their cars in the U.S. and Canada is a blessing; otherwise they wouldn't be able to keep up with demand in the more profitable local market.

[22140005] |"We are very lucky to easily change an export loss to domestic plus," says Hong Tu Pyo, managing director of domestic marketing for Hyundai Motor Co.

[22140006] |As it is, waiting lists of a month aren't unusual for popular models.
[22140007] |Demand is so strong that all of the domestic makers -- Hyundai, Kia Motors Corp., Daewoo Motor Co. and even upstart SsangYong Motor Co. -- plan to build more factories.
[22140008] |Industry analysts predict that by 1995, South Korea will be building three million cars a year -- about half of that for export.

[22140009] |It's an optimistic move in a industry already facing world-wide overcapacity.
[22140010] |But South Korean auto makers are confident that the export market will bounce back and that demand in Korea will stay strong.
[22140011] |Currently only one in 38 South Koreans owns a car, up from one in 200 a decade ago.
[22140012] |"In the year 2000 it will be one car per family.
[22140013] |At that point domestic sales will slow down," says Kim Yoon Kwon, director of marketing for Daewoo Motor.

[22140014] |The reason for the tremendous demand is simple: South Koreans suddenly have a lot more money.
[22140015] |"We never thought we'd own a car," says Kwang Ok Kyong, who just bought a Daewoo LeMans on a five-year loan.
[22140016] |She and her husband started a small printing business and need the car for work as well as for weekend jaunts.

[22140017] |Pay raises of 60% over the past three years have given many South Koreans the money to enjoy the things they were supplying the rest of the world.
[22140018] |The success of newcomer SsangYong Motor shows the strength of the auto market and its growing diversity.
[22140019] |A part of the construction-oriented conglomerate SsangYong Group, it took over the dying Dong-A Motor Co. in 1986.
[22140020] |SsangYong began making variations of the Jeep-like "Korando" vehicle.
[22140021] |(Dong-A had had a technology agreement with Jeep maker American Motors Corp., now a part of Chrysler Corp.)
[22140022] |The most popular style is the stretched "Family," which resembles a Ford Bronco or Chevy Blazer.
[22140023] |The four-wheel-drive vehicles start at $15,000; a Family can cost over $25,000.

[22140024] |SsangYong, which has only about 3% of the domestic market, will sell about 18,000 of its models this year, twice as many as last year.
[22140025] |It sees sales rising 45% to 26,000 units next year.

[22140026] |The company plans to expand plant capacity 50% by 1991.
[22140027] |By then it also hopes to begin producing a passenger car based on the Volvo 240 and selling for about $20,000.

[22140028] |Hyundai and Daewoo seem unconcerned about the SsangYong threat, but Kia, the scrappy No.3 auto maker, is selling four-wheel-drive vehicles through its Asia unit.
[22140029] |It plans to sell 1,700 units in 1989.

[22140030] |Kia, the only Korean car maker that has seen its overseas sales grow in 1989, aims at Korea's common man.
[22140031] |Its advantage has been the peppy little Pride, sold as the Ford Festiva in the U.S.
[22140032] |At 3.8 million won, or $5,700, the econobox is the lowest-priced car in South Korea.
[22140033] |Along with two larger models, the company claims 18% of the domestic market.
[22140034] |Ford Motor Co. and Japan's Mazda Motor Corp. have equity interests in Kia.

[22140035] |Kia is the most aggressive of the Korean Big Three in offering financing.
[22140036] |Loans for as long as five years make the cars very accessible, with monthly payments as low as 80,000 won, or $120.

[22140037] |Daewoo Motor, a 50-50 joint venture with General Motors Corp. and the Daewoo Group conglomerate, is the only auto maker that appears to be hurting.
[22140038] |Shipments of its Lemans to GM's Pontiac division are off about 65% from a year ago, versus a 44% decline for Hyundai and an 18% increase for Kia.
[22140039] |Moreover, Daewoo's domestic sales have grown half as fast as sales of its rivals.

[22140040] |The big problem for Daewoo, which holds about 21% of the market, is the long series of labor disruptions it suffered this year.
[22140041] |But Daewoo is expanding too.
[22140042] |In fact, a sister company, Daewoo Shipbuilding and Heavy Machinery, plans to build 240,000 minicars by the mid-1990s.

[22140043] |Hyundai, the Korean market leader with a 58% share, also plans to jump into minicars at the same time.
[22140044] |It has a similar project for 200,000 cars a year.
[22140045] |Kia is reportedly also considering such a plan.
[22140046] |Even giant Samsung Group is rumored in the Korean press to be considering getting into the auto-making business; a company spokesman had no comment.

[22141001] |Robert P. Bulseco, 44 years old, was named president and chief administrative officer of this regional commercial bank.
[22141002] |Both posts had been vacant.
[22141003] |Robert Robie, 51, was named to the new positions of vice chairman and chief credit officer.

[22142001] |Many skittish mutual fund investors picked up the phone yesterday, but decided not to cash in their chips after all.

[22142002] |As the stock market bounced back, withdrawals of money from stock funds amounted to a mere trickle compared with Black Monday, when investors dumped $2.3 billion, or about 2% of stock-fund assets.

[22142003] |Fidelity Investments, the nation's largest fund company, said phone volume was more than double its typical level, but still half that of Oct. 19, 1987.
[22142004] |Net outflows from Fidelity's stock funds stood at less than $300 million, or below 15% of the $2 billion cash position of the firm's stock portfolios.
[22142005] |Much of the money was switched into the firm's money market funds.
[22142006] |Outflows since the close of trading Friday remain below one-third their level of two years ago, Fidelity said.

[22142007] |Other mutual fund companies reported even lighter withdrawal requests.
[22142008] |And some investors at Fidelity and elsewhere even began buying stock funds during the day.

[22142009] |"Two years ago, there was a lot of redemption activity and trouble with people getting through on the phone," said Kathryn McGrath, head of the investment management division of the Securities and Exchange Commission.
[22142010] |This time, "We don't have that at all."

[22142011] |Of course, the relative calm could be jolted if the market plunges again.
[22142012] |And any strong surge in redemptions could force some funds to dump stocks to raise cash, as some did during Black Monday.

[22142013] |But funds generally are better prepared this time around.
[22142014] |As a group, their cash position of 10.2% of assets in August -- the latest figure available -- is 14% higher than two years earlier.
[22142015] |Many fund managers have boosted their cash levels in recent weeks.

[22142016] |The biggest flurry of investor activity came early in the day.
[22142017] |Vanguard Group Inc. saw heavy exchanges from stock funds into money market funds after the telephone lines opened at 8:30 a.m.
[22142018] |"In the first hour, the real nervous folks came along," a spokesman said.
[22142019] |"But the horrendous pace of call volume in the first half-hour slowed considerably."

[22142020] |At Scudder, Stevens & Clark Inc., phone calls came in at 40% more than the normal pace through early afternoon.
[22142021] |Most of that increase came in the first hour after the phone lines opened at 8 a.m.

[22142022] |As stocks rose, in fact, some investors changed course and reversed their sell orders.
[22142023] |Many funds allow investors to void orders before the close of trading.

[22142024] |At Scudder and at the smaller Ivy funds group in Hingham, Mass., for instance, some shareholders called early in the morning to switch money from stock funds to money market funds, but later called back to reverse the switches.
[22142025] |Because mutual fund trades don't take effect until the market close -- in this case, at 4 p.m. -- these shareholders effectively stayed put.

[22142026] |At Fidelity's office in downtown Boston, Gerald Sherman walked in shortly after 7:30 a.m. and placed an order to switch his retirement accounts out of three stock funds and into a money market fund.
[22142027] |But by 3:15 p.m., with the market comfortably ahead for the day, Mr. Sherman was preparing to undo his switch.

[22142028] |"It's a nice feeling to know that things stabilized," said Mr. Sherman, the 51-year-old co-owner of a discount department store.

[22142029] |But some investors continued to switch out of high-risk, high-yield junk funds despite yesterday's rebound from that market's recent price declines.

[22142030] |Shareholders have been steadily bailing out of several big junk funds the past several weeks as the $200 billion market was jolted by a cash crunch at Campeau Corp. and steadily declining prices.
[22142031] |Much of the money has been switched into money market funds, fund executives say.

[22142032] |Instead of selling bonds to meet redemptions, however, some funds have borrowed from banks to meet withdrawal requests.
[22142033] |This avoids knocking down prices further.
[22142034] |The $1.1 billion T. Rowe Price High Yield Fund was among the funds that borrowed during the Campeau crisis, says George J. Collins, president of T. Rowe Price Associates Inc.

[22142035] |That way, Mr. Collins says, "We didn't have to sell securities in a sloppy market."
[22142036] |When the market stabilized, he added, the firm sold the bonds and quickly paid the loans back.

[22142037] |Tom Herman contributed to this article.

[22143001] |Amcore Financial Inc. said it agreed to acquire Central of Illinois Inc. in a stock swap.

[22143002] |Shareholders of Central, a bank holding company based in Sterling, Ill., will receive Amcore stock equal to 10 times Central's 1989 earnings, Amcore said.
[22143003] |For the first nine months of 1989, Central earned $2 million.

[22143004] |Amcore, also a bank holding company, has assets of $1.06 billion.
[22143005] |Central's assets are $240 million.

[22144001] |(During its centennial year, The Wall Street Journal will report events of the past century that stand as milestones of American business history.)

[22144002] |SOFT CONTACT LENSES WON federal blessing on March 18, 1971, and quickly became eye openers for their makers.

[22144003] |The Food and Drug Administration that day said Bausch & Lomb could start selling them in the U.S.
[22144004] |The cornflake-size product was more comfortable and less prone to falling out than hard contact lenses, which had been around since 1939.
[22144005] |Bausch & Lomb sold the softies under a sublicense from National Patent Development, which had gained the rights from the Czechoslovakia Academy of Sciences.
[22144006] |Otto Wichterle, a Czech, invented them in 1962.

[22144007] |The plastic lens wraps itself over the cornea, absorbing eye moisture while permitting oxygen to pass through.

[22144008] |But the new lens became the eye of a storm.
[22144009] |In September 1971 California officials seized "bootlegged" lenses -- made by unlicensed companies -- after some showed traces of bacteria.
[22144010] |In October doctors were debating the product's safety, some claiming it caused infections.
[22144011] |And there were Senate hearings on the questions in July 1972.
[22144012] |The product overcame the bad publicity and kept evolving.

[22144013] |The early soft lenses, which cost $300 a set, were expected to last for a year.
[22144014] |In 1983 "extended wear" versions, designed to be worn for 30 days at a time, wree offered.
[22144015] |Eighteen months ago a "disposable" seven-day model bowed; a year's supply costs about $500.

[22144016] |Last month the FDA and Contact Lens Institute cautioned users that serious eye infections could result from wearing lenses more than seven days at a stretch.

[22144017] |Today 20 million of the 25 million Americans using contact lenses are using the soft type.
[22144018] |Including the accesory eye care products, contacts account for $2 billion in annual retail sales.
[22144019] |Although Bausch remains the leader among the six majors, Johnson & Johnson, with its new disposables, is coming on fast.

[22145001] |The roller-coaster stock market is making life tougher for small companies trying to raise money.

[22145002] |In the wake of Friday's plunge and yesterday's rebound, some companies are already postponing deals, and others wish they could.
[22145003] |As in other jittery times, many small businesses expect a particularly rough time raising funds as investors shun risky deals, seeking safety in bigger companies.

[22145004] |Even if stock prices fully recover from Friday's sharp decline, the unsettled conditions will frighten many investors.

[22145005] |"The implication of an unsettled situation is that the thing could drop dramatically," says Henry Linsert Jr., chairman of Martek Corp., a four-year-old biotechnology company that is planning a private placement of stock.
[22145006] |"The more variables that indicate risk, the more the investor is going to drive a hard bargain."

[22145007] |Earlier this month, Staples Inc., a Newton, Mass., office-supplies discounter, said it would accelerate expansion plans nationwide and offer more of its stock to the public.
[22145008] |At the time, its shares were selling above their initial offering price of $19, and bankers believed Staples would sell new stock without a hitch.

[22145009] |But with the company's shares standing at $15 yesterday, a new offering seems unlikely, company officials say.
[22145010] |Business, however, continues to be "robust," and the stock market hasn't affected the concern's expansion plans, says Todd Krasnow, a senior executive.

[22145011] |Other companies figure they can't avoid the market.
[22145012] |"We have capital requirements," says Mr. Linsert, "so we have to go ahead" with a planned $1.5 billion private placement.
[22145013] |Unless the market goes right back up, he says, "it may take us six to nine months to find the money, instead of three."
[22145014] |And the Columbia, Md., company may have to settle for a lower price, he adds.

[22145015] |Life is particularly nerve-racking for companies that had planned to go public this week.
[22145016] |Hand-holding is becoming an investment-banking job requirement.

[22145017] |Robertson, Stephens & Co., a San Francisco investment banking concern, has a client that looked forward to making its initial public offering yesterday.
[22145018] |Officers of the company, a health-care concern, "were very discouraged on Friday and felt they shouldn't go public; we felt they should," says Sanford Robertson, partner in the banking concern.

[22145019] |As the market dropped Friday, Robertson Stephens slashed the value of the offering by 7%.
[22145020] |Yesterday, when similar securities rebounded, it bumped the valuation up again.
[22145021] |As of late yesterday, the IPO was still on.

[22145022] |For many, the situation is especially discouraging because the market for IPOs was showing signs of strengthening after several years of weakness.
[22145023] |"We were just beginning to look at the increase in IPOs, seeing the light at the end of the tunnel," says Frank Kline Jr., partner in Lambda Funds, a Beverly Hills, Calif., venture capital concern.
[22145024] |"But the tunnel's just gotten longer."

[22145025] |Companies planning to go public "are definitely taking a second look," says Allen Hadhazy, senior analyst at the Institute for Econometric Research, Fort Lauderdale, Fla., which publishes the New Issues newsletter on IPOs.
[22145026] |He calculates that the recent market slide translated into a 5% to 7% reduction in IPO proceeds to companies.

[22145027] |Many companies are hesitating.
[22145028] |Exabyte Corp. had been planning to sell 10% of its stock this week in an IPO that would raise up to $28.5 million.
[22145029] |But now, Peter Behrendt, president, says, "We're making decisions on a day-to-day basis."
[22145030] |Debt-free and profitable, the Boulder, Colo., computer-products concern could borrow funds if it decides against an IPO now, he says.

[22145031] |KnowledgeWare Inc., an Atlanta computer-software concern, says it is still planning to go ahead with its IPO this week or next -- unless conditions change.
[22145032] |"It's a wait-and-see situation right now," says Terry McGowan, president.

[22145033] |Delayed financings also would affect the operations of many companies.
[22145034] |Sierra Tucson Cos., a Tucson, Ariz., operator of addiction-treatment centers, has a planned doubling of capacity riding on an IPO scheduled for next week.
[22145035] |William O'Donnell, president, says he still thinks the IPO will succeed.
[22145036] |If it doesn't, he says, the company would have to change its expansion timetable.

[22145037] |But the market turmoil could be partially beneficial for some small businesses.
[22145038] |In a sagging market, the Federal Reserve System "might flood the market with funds, and that should bring interest rates down," says Leonard T. Anctil, vice president of the Bank of New England, Boston.

[22145039] |James G. Zafris, president of Danvers Savings Bank, Danvers, Mass., says the market turmoil "is an absolute non-event for small business."
[22145040] |For small companies, he says, interest rates are far more important than what happens on stock exchanges.
[22145041] |Mr. Zafris thinks rates are heading down, helping small companies.

[22145042] |Peter Drake, biotechnology analyst for Vector Securities International, Chicago, thinks market uncertainty may encourage small companies to form more strategic alliances with big corporations.
[22145043] |Partly because the 1987 market crash made it harder for them to find financing, many high-technology concerns have made such alliances recently.
[22145044] |Some even see a silver lining in the dark clouds.
[22145045] |Alan Wells, president of Bollinger, Wells, Lett & Co., a New York merger specialist, thinks panicky investors may lose their enthusiasm for leveraged buy-out and giant takeover deals.
[22145046] |Instead, they could turn to investing in smaller deals involving smaller companies, he says.

[22145047] |And William E. Wetzel Jr., a University of New Hampshire management professor and director of Venture Capital Network Inc., says the market's gyrations will underline the investors' lack of control in big stock investments.
[22145048] |This will add to the appeal of small business, he says, where investors often have a degree of influence.

[22146001] |Bay Financial Corp., hurt by high debts and deteriorating real estate investments, reported a wider loss for the fourth quarter and said it might be forced to seek a bankruptcy-court reorganization if it can't renegotiate its borrowings.

[22146002] |Bay said a "substantial part" of its debt outstanding is in default as a result of inability to sell certain properties quickly and lower-than-expected prices for sales made.
[22146003] |The company said its real estate portfolio is "highly leveraged," while about two-thirds of its investments aren't income-producing.
[22146004] |Thus it is coming up short on a big bet that quick sales at higher prices would enable it to keep up with mortgage and other debt payments.

[22146005] |According to its latest annual report, about a quarter of the company's holdings are in Massachusetts, in the midst of a real-estate slump.

[22146006] |The company said it had a net loss in its fourth quarter ended June 30 of $36.2 million, or $9.33 a share, on revenue of $13.1 million.
[22146007] |A year earlier, the company had a loss of $10.8 million, or $3.04 a share, on revenue of $10.8 million.
[22146008] |For the year, it had a net loss of $62 million, or $15.97 a share, on revenue of $44.3 million.
[22146009] |In the previous year, it had a loss of $22.5 million, or $6.52 a share, on revenue of $41.1 million.

[22146010] |Although it is having serious cash-flow problems, Bay said the fair-market value of its holdings, minus debt, was equal to $6.02 a share at June 30 based on a recent appraisal.
[22146011] |Book value per share, which is based on investments at cost, was a negative $6.69 a share.
[22146012] |A year earlier, fair-market value per share was $26.02 and book value was $9.43 a share.

[22147001] |Annualized interest rates on certain investments as reported by the Federal Reserve Board on a weekly-average basis: 1989 and Wednesday October 4, 1989.
[22147002] |c-Yields, adjusted for constant maturity.

[22148001] |TRW Inc. reported a 12% decline in third-quarter net income, but the company said that excluding unusual gains in both quarters, operating profit rose 16%.

[22148002] |The electronics, automotive and aerospace concern said third-quarter net was $60 million, or 98 cents a share, down from $68 million, or $1.11 a share, a year earlier.
[22148003] |Share earnings are reported on a fully diluted basis, by company tradition.

[22148004] |Results for the 1988 quarter included a gain of $1.05 a share from sale of the Reda Pump and Oilwell Cable units, partly offset by a charge of 69 cents a share for recall of faulty truck steering systems.
[22148005] |The latest quarter included a gain of 11 cents a share as a partial reversal of the recall charge, because the reserve established last year exceeded the actual recall costs.

[22148006] |Sales for the quarter rose 8.3% to $1.79 billion, from $1.65 billion, with all three major product groups reporting gains.

[22148007] |The company said aerospace and defense sales were up 2% for the quarter to $802 million, and operating profit climbed 6% to $61 million, mainly because of improved program performance in spacecraft and advanced-technology contracts.

[22148008] |Automotive sales jumped 16% to $791 million, mainly because of higher sales of air bags and other passenger restraint systems, TRW said.
[22148009] |The group had an operating profit of $65 million, against a loss of $13 million a year earlier.
[22148010] |However, excluding the year-earlier charge for recall of steering gear, operating profit in the latest quarter declined 14%, reflecting higher start-up and product development expenses in passenger-restraint systems.
[22148011] |Materials and production costs also rose, TRW said.

[22148012] |The information systems segment had a 44% jump sales to $196 million.
[22148013] |An acquisition accounted for half the sales rise, TRW said.
[22148014] |Operating profit rose threefold to $18 million, from $6 million.

[22148015] |For the nine months, TRW's net was $199 million, or $3.22 a share, down 3% from $205 million, or $3.33 a share, a year earlier.
[22148016] |Sales rose 2.9% to $5.42 billion, from $5.27 billion.

[22149001] |a tragicomic monologue by an idealistic, not unheroic, though sadly self-deceived English butler in his sixties -- proceeds as if the realistic English novel of manners, like Britannia herself, still ruled the waves.
[22149002] |In fact, Kazuo Ishiguro's "The Remains of the Day" (Knopf, 245 pages, $18.95) is both an homage to traditional English forms and a dramatic critique of them.
[22149003] |It implies that the British Empire was rooted in its subjects' minds, manners and morals, and argues, tacitly, that its self-destructive flaws were embodied in the defensive snobbery, willful blindness, role-playing and especially the locutions of its domestic servants.

[22149004] |As the narrator Stevens, the solitary butler of Darlington Hall, mulls over such hallowed terms as "greatness," "dignity," "service" and "loyalty," we see how pious cant subverts the soul.
[22149005] |Stevens's dutiful conflation of the public and private realms -- like his beloved master's -- destroys all it was designed to preserve.
[22149006] |Such armor crushes the soldier.
[22149007] |The mask cuts to the quick.

[22149008] |It's 1956, the year the Suez crisis marked the final end of Empire.
[22149009] |As he stands on a hill at the beginning of a six-day motor expedition from Oxfordshire to Cornwall, where a former housekeeper resides, perhaps the victim of an unhappy 20-year marriage, perhaps (he hopes with more fervor than he will ever acknowledge) not disinclined to return to domestic service, Stevens surveys the view and thereby provides a self-portrait, a credo and the author's metaphor for the aesthetic of the novel we're reading:

[22149010] |"We call this land of ours Great Britain, and there may be those who believe this a somewhat immodest practice.
[22149011] |Yet I would venture that the landscape of our country alone would justify the use of this lofty adjective. . . .
[22149012] |It is the very lack of obvious drama or spectacle that sets the beauty of our land apart.
[22149013] |What is pertinent is the calmness of that beauty, its sense of restraint.
[22149014] |It is as though the land knows of its own beauty, of its own greatness, and feels no need to shout it.
[22149015] |In comparison, the sorts of sights offered in such places as Africa and America, though undoubtedly very exciting, would, I am sure, strike the objective viewer as inferior on account of their unseemly demonstrativeness."

[22149016] |An effusive landscape?
[22149017] |An ill-mannered mountain?
[22149018] |But let Stevens continue in his unwitting comic manner (his conscious efforts at "banter" always fail -- most comically): "This whole question is very akin to the question that has caused much debate in our profession over the years: what is a `great' butler?"
[22149019] |His answer is one "possessed of a dignity in keeping with his position."
[22149020] |Such dignity "has to do crucially with a butler's ability not to abandon the professional being he inhabits."
[22149021] |He "will not be shaken out by external events, however surprising, alarming or vexing. . . .
[22149022] |Continentals are unable to be butlers because they are as a breed incapable of the emotional restraint which only the English race are capable of."

[22149023] |Despite his racial advantage, to be a great butler is a heroic calling; one's pantry is "not unlike general's headquarters during a battle."
[22149024] |If, for example, in the midst of a great social occasion (such as an international conference on revising the Versailles Treaty in 1923), one's 72-yearold father, himself a great butler once, should happen to die of a stroke, one must continue to serve the port: "Please don't think me unduly improper in not ascending to see my father in his deceased condition just at this moment.
[22149025] |You see, I know my father would have wished me to carry on just now."
[22149026] |It is this kind of dignity and restraint that allows Stevens to declare: "For all its sad associations, whenever I recall that evening today, I find I do so with a large sense of triumph."
[22149027] |We note the imperial public word used to deny private rage and sorrow.
[22149028] |That Stevens himself is not grotesque or repellent, but funny and sad and enlightening, is entirely the author's triumph.

[22149029] |Mr. Ishiguro's ability to create a fallible narrative voice that permits him to explore such intertwining domestic, cultural and political themes was abundantly clear in his previous novel, "An Artist of the Floating World," set in Japan after the war.
[22149030] |Now shifting his scene from the country he left at five to the England he has lived in for nearly 30 years, he has fashioned a novel in the mode of Henry James and E.M. Forster.
[22149031] |With great aplomb he considers not only filial devotion and (utterly repressed) sexual love, but British anti-Semitism, the gentry's impatience with democracy and support of Hitler, and the moral problematics of loyalty: "It is, in practice, simply not possible to adopt such a critical attitude towards an employer and at the same time provide good service. . . .
[22149032] |`This employer embodies all that I find noble and admirable.
[22149033] |I will hereafter devote myself to serving him.
[22149034] |' This is loyalty intelligently bestowed."

[22149035] |In the end, after meeting with the former housekeeper, Stevens sits by the seashore at dusk, thinking of her and of his employer, and declares "I trusted.
[22149036] |I trusted in his lordship's wisdom. . . .
[22149037] |I can't even say I made my own mistakes.
[22149038] |Really -- one has to ask oneself -- what dignity is there in that?"
[22149039] |The loyal servant has come full circle.
[22149040] |What is greatness?
[22149041] |What is dignity?
[22149042] |We understand such rueful wisdom must be retrospective: The owl of Minerva only spreads her wings at dusk.
[22149043] |But as "The Remains of the Day" so eloquently demonstrates with quiet virtuosity, such wisdom can be movingly embodied in art.

[22149044] |Mr. Locke teaches English and comparative literature at Columbia University.

[22150001] |UGI Corp. said its AmeriGas subsidiary completed the previously announced sale of its air separation plant and related assets in Waukesha, Wis., to AGA Gas Inc., Cleveland.
[22150002] |The price wasn't disclosed.

[22150003] |The transaction is part of UGI's continuing program to shed AmeriGas's industrial gas interests and expand the subsidiary's propane business.
[22150004] |Since June, AmeriGas has netted more than $100 million from industrial gas divestitures and reinvested more than $50 million to acquire three propane distributors.

[22150005] |UGI is a gas and electric utility and distributes propane nationally through its AmeriGas subsidiary.

[22151001] |Stanislav Ovcharenko, who represents the Soviet airline Aeroflot here, has some visions that are wild even by the current standards of perestroika.

[22151002] |In his office overlooking the runway of Shannon Airport, Mr. Ovcharenko enthusiastically throws out what he calls "just ideas":

[22151003] |First, he suggests, GPA Group Ltd., the international aircraft leasing company based in Ireland, could lease some of its Boeing jetliners to the Soviet airline.
[22151004] |Then Aer Lingus, the Irish flag carrier, could teach Aeroflot pilots to fly the Boeings, and the fleet could be based here at Shannon Airport.

[22151005] |That's not all, he says.
[22151006] |Aer Rianta, the Irish airport authority, could build a cargo terminal in the Soviet Union.
[22151007] |Aeroflot could lease some of its cargo planes to Aer Lingus, through GPA, for a joint-venture cargo airline.
[22151008] |And then there is his notion of an Irish-Soviet charter airline to ferry Armenians to Los Angeles via Shannon.

[22151009] |Have the freedoms of glasnost gone to Mr. Ovcharenko's head?

[22151010] |Hardly.
[22151011] |The Irish-Soviet aviation connection is alive and well here at Shannon Airport.
[22151012] |GPA is indeed talking about leasing Western planes to Aeroflot and even about buying Soviet-built Tupolev 204s.
[22151013] |Aer Lingus is in discussions with the Soviet carrier about a cargo venture and other possibilities.
[22151014] |Aer Rianta already has so many ventures with Aeroflot that its chief executive is studying Russian.

[22151015] |Unlikely as it may seem, tiny, politically neutral Ireland has penetrated the mighty Soviet airline bureaucracy.
[22151016] |And as Aeroflot struggles to boost its service standards, upgrade its fleet and pursue commercial opportunities, the Irish aviation industry seems poised to benefit.

[22151017] |"Irish and Soviet people are similar," says Mr. Ovcharenko.
[22151018] |"They look the same.
[22151019] |They're very friendly."
[22151020] |Moreover, he says, Irish companies are small but spunky.
[22151021] |"We have to study their experience very well," he says.
[22151022] |"We must find any way to get business."
[22151023] |The two groups have been working together since the late 1970s, long before Soviet joint ventures were the rage in the West.
[22151024] |Aeroflot carried about 125 million passengers last year, and Shannon Airport, the airline's largest transit airport outside the Soviet Union, saw 1,400 Aeroflot flights and 250,000 passengers pass through.
[22151025] |An apartment complex down the road is the crew-rest and staging area for more than 130 Aeroflot pilots and flight attendants.

[22151026] |The airport's biggest supplier of aircraft fuel is the Soviet Union.
[22151027] |Tankers from the Latvian port of Ventspils each year unload 25 million gallons of fuel into a special tank farm at the airport.
[22151028] |What Aeroflot doesn't pour into its own gas-guzzling Ilyushins is bartered to the airport authority, which resells it to 11 Western carriers including Air France, Trans World Airlines and Pakistan International Airlines.
[22151029] |Aeroflot thus pays its landing fees, ground-handling and catering bills with fuel, preserving its hard currency.

[22151030] |That isn't all.
[22151031] |Last year, the Irish airport authority, in a joint venture with Aeroflot, opened four hard-currency duty-free shops at Moscow's Sheremetyevo Airport.
[22151032] |Aer Rianta now manages duty-free sales on all Aeroflot international flights out of Moscow.
[22151033] |Duty-free shops in Leningrad's Pulkova Airport opened in July, and hard-currency shops in Leningrad hotels and on the Soviet-Finnish frontier are coming soon.

[22151034] |Aer Rianta is talking about similar joint ventures in Tashkent and in Sochi, a Black Sea resort, and even has a computer-assembly project cooking with the Georgian city of Tbilisi.

[22151035] |Aeroflot's international fleet of 285 planes is being repainted and refurbished at Shannon Airport.
[22151036] |Thanks to a new air-traffic agreement and the ability of Irish travel agents to issue Aeroflot tickets, tourists here are taking advantage of Aeroflot's reasonable prices to board flights in Shannon for holidays in Havana, Kingston and Mexico City.
[22151037] |The round-trip fare to Havana is 410 Irish punts ($578).
[22151038] |Jamaica costs 504 punts.

[22151039] |A formal blessing of sorts was bestowed on this friendship in April when Mikhail and Raisa Gorbachev stopped here for talks with Irish Prime Minister Charles Haughey.
[22151040] |New trade accords were signed.

[22151041] |It all started with geography.
[22151042] |When it opened in 1939, Shannon was the first landfall in Europe for thirsty airplanes flying from North America.
[22151043] |Advances in aircraft fuel efficiency over the years made a Shannon stop unnecessary for most Western air fleets, but Aeroflot still flies inefficient Ilyushins that can't make it from Moscow to Managua on one hop.

[22151044] |As a result, Ireland didn't spurn the Soviets after they shot down a Korean Air Lines jetliner over the Sea of Japan in 1983, though it suspended direct Moscow-Shannon flights for two months.
[22151045] |In fact, Aer Lingus started ferrying Russians from Shannon to New York when Washington stripped Aeroflot of its U.S. landing rights.

[22151046] |Today, Aer Rianta is making a heap of money from its Soviet friendship.
[22151047] |And, with those contacts in place, it could be relatively simple to add Aer Lingus and GPA to the team.
[22151048] |Then, perhaps, Mr. Ovcharenko's ideas wouldn't sound like so much blarney.

[22152001] |Britain's industrial production rose 1.5% in August from July and was up 0.9% from August 1988, according to provisional data from the Central Statistical Office.

[22152002] |Output in the energy sector, which can vary greatly with swings in the oil market, rose 3.8% in August from May but was down 7.1% from a year earlier.
[22152003] |The latest figures compare with July's 4.5% month-to-month rise and 11.3% year-to-year fall.

[22153001] |When Nucor Corp. begins shipping steel from the world's first thin-slab plant this month, it will begin testing the competitive mettle of its giant competitors.

[22153002] |The new technology, which creates a very thin piece of steel, radically reduces the costs of making flat-rolled sheets.
[22153003] |An ebullient Kenneth Iverson, Nucor's chairman, says the company's plant eventually will make a ton of steel in 1.5 man hours, compared with four to six man hours at a conventional mill.

[22153004] |"We've had the Russians and Chinese, and people from India visiting us," Mr. Iverson beams.
[22153005] |"Everyone in the world is watching us very closely."

[22153006] |Especially his neighbors, the major U.S. steelmakers.
[22153007] |Already, USX Corp. and Armco Inc. are studying Nucor's technology to see if they can adopt it.
[22153008] |Says the chief executive officer of a major Midwest steel company: "It's damn worrisome."

[22153009] |The once-staid steel industry is about to be turned topsy-turvy by a 1990s technology revolution.
[22153010] |New, efficient and sophisticated processes make it easier for smaller, less cash-rich companies to make steel at a fraction of what Big Steel paid decades ago.
[22153011] |It also enables minimills finally to get a toehold in the flat-rolled steel market -- the major steelmakers' largest, most prized, and until now, untouchable, market.

[22153012] |But such thin-slab technology is only the beginning.
[22153013] |Eager engineers espouse direct-steelmaking and direct casting, which by the end of the 1990s will enable production without coke ovens and blast furnaces.
[22153014] |Those massive structures, while posing cost and environmental headaches, effectively locked out all but deep-pocketed giants from steelmaking.

[22153015] |"There's a revolution ahead of us that will ultimately change the way we market and distribute steel," says William Dennis, vice president, manufacturing and technology, for the American Iron Ore and Steel Institute.

[22153016] |It isn't that major steelmakers have blithely ignored high technology.
[22153017] |In fact, they've spent billions of dollars to boost the percentage of continously cast steel to 60.9% in 1988, from 39.6% five years before.
[22153018] |Moreover, their balance sheets are rich with diversity, their old plants shuttered, and work forces lean.

[22153019] |But that won't suffice.
[22153020] |"It's no longer enough to beat the guy down the street.
[22153021] |You have to beat everyone around the world," says Mr. Dennis.
[22153022] |He wants to see steelmakers more involved in computers and artificial intelligence.

[22153023] |The problem: They're saddled with huge plants that require costly maintenance.
[22153024] |And try plying new dollars free in a market that is softening, hurt by a strong dollar and concerned about overcapacity -- the industry's Darth Vadar.

[22153025] |"The technology revolution is going to be very threatening to established producers," says Peter Marcus, an analyst with PaineWebber Inc.
[22153026] |"They've got too much invested in the old stuff and they can't get their workers to be flexible."

[22153027] |No one expects minimills to eclipse major integrated steelmakers, who remain the undisputed kings of highest-quality steel used for autos and refrigerators.
[22153028] |Nucor's plant in Crawfordsville, Ind., ultimately will produce only one million tons annually, a drop in the 40-million-ton-a-year flat-rolled steel bucket, and it will be years before such plants can compete in the high-profit market.
[22153029] |Still, flat-rolled is the steel industry's bread and butter, representing about half of the 80 million tons of steel expected to be shipped this year.

[22153030] |Moreover, the process isn't without its headaches.
[22153031] |Because all operations are connected, one equipment failure forces a complete plant shutdown.
[22153032] |On some days, the Nucor plant doesn't produce anything.

[22153033] |"At this point, the minimill capacity won't make a great dent in the integrated market, but it does challenge them to develop new markets," says James McCall, vice president, materials, at Battelle, a technology and management-research giant based in Columbus, Ohio.

[22153034] |Indeed, with demand for steel not growing fast enough to absorb capacity, steelmakers will have to change the way they do business.
[22153035] |In the past, says Armco's chief economist John Corey, steelmakers made a product and set it out on the loading dock.
[22153036] |"We said: `We've got a product: if you want it, you can buy it,'" he says, adding: "Now we're figuring out what people need, and are going back to make it."

[22153037] |Armco's sales representatives visit the General Motors Corp.'s Fairfax assembly plant in Kansas City, Mo., two or three days a week.
[22153038] |When they determined that GM needed parts more quickly, Armco convinced a steel service center to build a processing plant nearby so shipments could be delivered within 15 minutes.

[22153039] |Cementing such relationships with major clients -- car and appliance makers -- is a means of survival, especially when those key clients are relying on a smaller pool of producers and flirting with plastic and aluminum makers.

[22153040] |For example, when Detroit began talking about plastic-bodied cars, the American Iron and Steel Institute began a major lobbying effort to show auto makers how they could use steel more efficiently by simply redesigning how a car door is assembled.

[22153041] |But steelmakers must also find new markets.
[22153042] |After letting aluminum-makers take the recycling lead, a group of the nation's largest steelmakers started a recycling institute to promote steel cans to an environmentally conscious nation.

[22153043] |Battelle's Mr. McCall thinks steelmakers should concentrate more on construction.
[22153044] |Weirton Steel Corp., Weirton, W. Va., for example, is touting to homeowners fashionable steel doors, with leaded glass inserts, as a secure and energy-efficient alternative to wooden or aluminum ones.
[22153045] |Other steelmakers envision steel roofs covering suburbia.

[22153046] |Still others are looking at overseas markets.
[22153047] |USX is funneling drilling pipe to steel-hungry Soviet Union.
[22153048] |This year, the nation's largest steelmaker reactivated its overseas sales operation.

[22153049] |Producers also are trying to differentiate by concentrating on higher-profit output, such as coated and electrogalvanized products, which remain beyond the reach of minimills.
[22153050] |Almost all capital-improvement programs announced by major steelmakers within the past year involve building electrogalvanizing lines, used to produce steel for such products as household appliances and car doors.

[22153051] |But unfortunately, that segment is much smaller than the bread-and-butter flat-rolled steel.
[22153052] |"It's like everyone climbing out of the QE II and getting into a lifeboat," says John Jacobson, an analyst with AUS Consultants.
[22153053] |"After a while, someone has to go over the side."
[22153054] |Although he doesn't expect any bankruptcies, he does see more plants being sold or closed.

[22153055] |Robert Crandall, with the Brookings Institute, agrees.
[22153056] |"Unless there is an enormous rate of economic growth or a further drop in the dollar, it's unlikely that consumption of U.S. produced steel will grow sufficiently to offset the growth of minimills."

[22153057] |Not to mention the incursion of imports.
[22153058] |Japanese and European steelmakers, which have led the recent technology developments, are anxiously awaiting the lifting of trade restraints in 1992.
[22153059] |Moreover, the U.S. can expect more competition from low-cost producing Pacific Rim and Latin American countries.
[22153060] |A Taiwanese steelmaker recently announced plans to build a Nucor-like plant.

[22153061] |"People think of the steel business as an old and mundane smokestack business," says Mr. Iverson.
[22153062] |"They're dead wrong."

[22153063] |*USX, LTV, Bethlehem, Inland, Armco, National Steel

[22153064] |**Projected

[22154001] |Polaroid Corp.'s patent-infringement damages case against Eastman Kodak Co., one of the highest stakes corporate trials ever, is getting scant attention on Wall Street.

[22154002] |After 78 days of mind-numbing testimony in federal court in Boston, the trial is being all but ignored by analysts and patent attorneys.
[22154003] |Most have read the pre-trial documents, however, and estimate Kodak will be ordered to pay $1 billion to $1.5 billion for infringing on seven Polaroid patents.
[22154004] |That may be the largest patent award ever, but it is well below the $12 billion Polaroid seeks.

[22154005] |The highest patent damage award to date was in 1986, when Smith International Inc. was ordered to pay $205 million to Baker Hughes Inc. for infringing on a patent on an oil drilling bit seal.
[22154006] |The two companies later agreed to settle for $95 million.

[22154007] |Few analysts think it is worth their time to slog through the Polaroid trial testimony.
[22154008] |"It's like panning for gold outside of Grand Central Station.
[22154009] |You might find something, but the chances are low," said Michael Ellman, an analyst at Wertheim Schroder & Co.

[22154010] |And Eugene Glazer, an analyst at Dean Witter Reynolds Inc., said: "If you hired an attorney to be there all the time and give you a (prediction) of the eventual award, I would be willing to bet that he would be off" by a lot.

[22154011] |A 75-day trial in the early 1980s determined that Kodak, based in Rochester, N.Y., infringed on patents of Polaroid, of Cambridge, Mass.
[22154012] |The main issues remaining are how to calculate damages and whether the infringement was "willful and deliberate."
[22154013] |If so, the damages could be tripled.

[22154014] |Two analysts who have read the transcripts, David Nelson of Shearson Lehman Hutton Inc. and Calvert D. Crary, a litigation analyst at Labe, Simpson & Co., think Judge A. David Mazzone will decide in Kodak's favor on the "willful and deliberate" issue.

[22154015] |Mr. Crary said testimony by Kodak's patent counsel, Francis T. Carr of Kenyon & Kenyon, showed that "he worked with Kodak continuously from the outset of the project" in an effort to avoid infringement.
[22154016] |"Carr told Kodak on many occasions to avoid various features because of Polaroid's patent positions," and Kodak followed his advice in every instance, Mr. Crary said.

[22154017] |But Irving Kayton, a patent expert at George Mason University School of Law who is familiar with the case, said the fact that seven patents were infringed "suggests that infringement was willful.
[22154018] |It's difficult to be that consistently wrong."

[22154019] |Observers also wonder whether Judge Mazzone will use the lost-profits method of determining damages, which Polaroid favors because it would result in a larger award, or the reasonable royalty method.
[22154020] |Polaroid claims it could have manufactured and sold all the instant cameras and film sold by Kodak if Kodak hadn't entered the market.
[22154021] |Moreover, Polaroid contends it could have sold them at a higher price -- and thus made higher profits -- because it wouldn't have been forced to match Kodak's lower prices.

[22154022] |Each side has called a Harvard Business School professor to testify on that issue.
[22154023] |Kodak hired Robert Buzzell and Polaroid brought in Robert J. Dolan.
[22154024] |"There's nothing that says that people at Harvard Business school have to agree with each other," said Mr. Buzzell.

[22154025] |Testimony is expected to continue until early December.
[22154026] |A decision isn't expected until some time next year.

[22155001] |International Business Machines Corp. said earnings tumbled 30% in the third quarter, even a bit further than expected, rendering the outlook doubtful for the next few quarters.

[22155002] |The main reason was a delay in shipment of new high-end disk drives, a business that accounts for some 10% of IBM's $60 billion of annual revenue.

[22155003] |IBM, which telegraphed the poor results three weeks ago, also cited an increase in its leasing business, which tends to lock in business long-term but cut revenue in the near term.
[22155004] |In addition, IBM noted that the stronger dollar has cut the value of overseas revenue and earnings when they are translated into dollars.

[22155005] |Earnings fell to $877 million, or $1.51 a share, somewhat below securities analysts' revised expectations of around $1.60 a share.
[22155006] |That compared with the year-earlier $1.25 billion, or $2.10 a share -- which was inflated by a 15-cents-a-share gain from the sale of some MCI Communications Corp. stock and by an unspecified amount from a payment by Fujitsu Ltd. relating to a software dispute.
[22155007] |Revenue climbed 4.3% to $14.31 billion from $13.71 billion.

[22155008] |IBM, Armonk, N.Y., remained upbeat.
[22155009] |The computer giant, whose U.S. results have been dismal for years, noted that revenue rose again in the U.S. in the third quarter, following an increase in the second period.
[22155010] |The company said in a statement that "demand for IBM products and services continues to be good world-wide.
[22155011] |We do not see anything in the fundamentals of our business that would cause us to change our strategy of investing for profitable growth."

[22155012] |Securities analysts, however, remained downbeat.
[22155013] |"I think 1990 will be another mediocre year," said Steve Milunovich of First Boston.

[22155014] |Jay Stevens of Dean Witter actually cut his per-share earnings estimate to $9 from $9.50 for 1989 and to $9.50 from $10.35 in 1990 because he decided sales would be even weaker than he had expected.
[22155015] |Both estimates would mark declines from the 1988 net of $5.81 billion, or $9.80 a share, which itself was well below the record IBM set in 1984.

[22155016] |Mr. Stevens said he kept a "buy/hold" recommendation on the stock only because "all the damage has been done."
[22155017] |He said the stock hasn't traded below 1 1/2 times book value over the past 10 years, which at the moment computes to a stock price of $100.
[22155018] |The stock closed yesterday at $103 a share, up just $1 in composite trading on the New York Stock Exchange as the market surged.

[22155019] |Analysts worry that the disk-drive and leasing problems will last at least through the first quarter.

[22155020] |"A key part of the question is, how soon does this disk-drive come and how soon does production ramp up?" said Steve Cohen at SoundView Financial Group.
[22155021] |"And the input I've had from customers is that it still could be a while."

[22155022] |On leasing, Bob Djurdjevic at Annex Research said he thinks IBM has hurt itself unnecessarily.
[22155023] |He said IBM has priced its leases aggressively, thinking that would help win business.
[22155024] |But he said IBM would have won the business anyway as a sale to a third party that would have then leased the equipment to the customer.
[22155025] |He said IBM has not only hurt its short-term revenue outlook but has also been losing money on its leases.

[22155026] |Bob Bardagy, executive vice president of marketing at Comdisco Inc., a huge leasing firm, said: "To put it mildly, IBM Credit has been doing some of the worst economic deals of any leasing company we have ever seen."

[22155027] |IBM is expected to get a boost soon when it announces some new versions of its mainframes.
[22155028] |But the basic technology in the line is almost five years old, which means it is long in the tooth, and competitors are rolling out strong products of their own.

[22155029] |IBM is gaining momentum in the personal-computer market, and is expected to introduce some impressive workstations early next year.
[22155030] |But it's hard to squeeze much profit out of the personal-computer business these days, and the workstation market, while important, is too small to rely on for much growth.

[22155031] |The disk drives will doubtless sell well when they finally become available.
[22155032] |But the AS/400, IBM's highly successful minicomputer line, is losing its momentum, and some analysts said sales could even decline in the fourth quarter.
[22155033] |In addition, IBM's growth in software in the third quarter was just 8.8%, well below historical levels even when adjusted to reflect last year's payment from Fujitsu and the stronger dollar.
[22155034] |And expenses, up 7.9% in the quarter, have stayed stubbornly high.

[22155035] |In the nine months, IBM earned $3.17 billion, or $5.43 a share, down 8.4% from the year-earlier $3.46 billion, or $5.83 a share.
[22155036] |Revenue increased 6.5% to $42.25 billion from $39.68 billion.

[22156001] |PepsiCo Inc.'s chairman said he is "more than comfortable with" analysts' estimates that third-quarter earnings rose to at least 98 cents to $1 a share from 91 cents the year earlier.

[22156002] |D. Wayne Calloway, also chief executive officer of the company, indicated that he expects analysts to raise their forecasts for 1989 after the company releases its earnings today.
[22156003] |So far, analysts have said they are looking for $3.30 to $3.35 a share.
[22156004] |After today's announcement, that range could increase to $3.35 to $3.40 a share.
[22156005] |The official said he also would be comfortable with that new range.
[22156006] |In 1988, the soft-drink giant earned $2.90 a share.
[22156007] |Results for 1989 will include about 40 cents a share from the dilutive effects of snack-food and bottling company acquisitions.

[22156008] |In composite trading on the New York Stock Exchange, the company closed yesterday at $57.125 a share, up $3.125.

[22156009] |The company said third-quarter sales are expected to increase 25% from $3.12 billion of last year's third quarter.

[22156010] |Domestic soft-drink bottler case sales are estimated to have risen only 1% in the third quarter -- well below the 4% to 5% growth of recent years -- but about in line with the rest of the soft-drink industry.

[22156011] |Mr. Calloway blamed the slower volume on rainier weather, a dearth of new products in the industry and -- to a much lesser extent -- pricing.
[22156012] |PepsiCo said its soft-drink prices were about 2% higher in the quarter.
[22156013] |Mr. Calloway also noted that soft-drink volume rose a hefty 9% in last year's third quarter, making the comparison more difficult.
[22156014] |International soft-drink volume was up about 6%.

[22156015] |Snack-food tonnage increased a strong 7% in the third quarter, while domestic profit increased in double digits, Mr. Calloway said.
[22156016] |Excluding the British snack-food business acquired in July, snack-food international tonnage jumped 40%, with sales strong in Spain, Mexico and Brazil.
[22156017] |Total snack-food profit rose 30%.

[22156018] |Led by Pizza Hut and Taco Bell, restaurant earnings increased about 25% in the third quarter on a 22% sales increase.
[22156019] |Same-store sales for Pizza Hut rose about 13%, while Taco Bell's increased 22%, as the chain continues to benefit from its price-value strategy.
[22156020] |Taco Bell has turned around declining customer counts by permanently lowering the price of its tacos.
[22156021] |Same store-sales for Kentucky Fried Chicken, which has struggled with increased competition in the fast-food chicken market and a lack of new products, rose only 1%.

[22156022] |The operation, which has been slow to respond to consumers' shifting tastes away from fried foods, has been developing a grilled-chicken product that may be introduced nationally at the end of next year.
[22156023] |The new product has performed well in a market test in Las Vegas, Nev., Mr. Calloway said.

[22156024] |After a four-year, $7.7 billion acquisition binge that brought a major soft-drink company, soda bottlers, a fast-food chain and an overseas snack-food giant to Pepsi, Mr. Calloway said he doesn't expect any major acquisition in the next year or so.
[22156025] |But, "You never can tell," he added, "you have to take advantage of opportunities.

[22157001] |President Bush chose Martin Allday, a longtime friend from Texas, to be chairman of the Federal Energy Regulatory Commission.

[22157002] |Mr. Allday would succeed Martha Hesse, who is resigning.
[22157003] |The White House said Ms. Hesse, a Chicago businesswoman who previously held posts at the Energy Department and FERC, is leaving to become a vice president of First Chicago Corp.

[22157004] |Mr. Allday, an attorney in Midland, Texas, has been solicitor at the Interior Department.
[22157005] |He met Mr. Bush in the 1950s, when the president was a young oil man in Midland and Mr. Allday was a lawyer for an oil firm.

[22157006] |The FERC is a five-member commission that regulates billions of dollars of interstate wholesale energy transactions.
[22157007] |Mr. Allday's appointment is subject to confirmation by the Senate.
[22157008] |Administration officials said a date for Ms. Hesse's departure hasn't been set.

[22158001] |CALIFORNIA REAL ESTATE INVESTMENT Corp. said its directors declared a dividend of five cents per Class A common stock payable Nov. 6 to stock of record Oct. 16.
[22158002] |The dividend represents the balance of its regular quarterly payout of 10 cents a share, of which half was paid July 17 in a final distribution prior to its merger with B.B. Real Estate Investment Corp., also in July.
[22158003] |The company said it hopes to resume its schedule of regular quarterly dividends at the end of this year.

[22159001] |Hydro-Quebec said it notified Central Maine Power Co. it will cancel a $4 billion contract to supply electricity to the Maine utility.

[22159002] |The provincially owned utility said it is tearing up the deal because "the contract's objectives can't be fulfilled."
[22159003] |Hydro-Quebec said Maine regulators' refusal to approve the contract earlier this year halted work on transmission lines and stopped negotiations for resale of electricity carried through Maine to other utilities.
[22159004] |"It would now be physically impossible to begin deliveries in 1992," a Hydro-Quebec official said.
[22159005] |The contract was to run from 1992 to 2020.

[22159006] |Under the contract Hydro-Quebec was to supply 400 megawatts of power to Central Maine Power starting in 1992, 600 megawatts starting in 1995 and 900 megawatts starting in

[22159007] |Hydro-Quebec said Maine regulators' refusal to approve the contract means Central Maine Power has lost its place in line.
[22159008] |"We won't sign any new contracts {with deliveries} beginning earlier than 2000," the Hydro-Quebec official said.
[22159009] |He said Hydro-Quebec already has some "customers in mind" for the power that was to be delivered to Maine.
[22159010] |"Nothing has happened since we signed the contract to undermine our conviction that Hydro-Quebec was the lowest-cost, most environmentally acceptable choice for meeting a part of our customers' energy needs through the year 2020," said Central Maine senior vice president Donald F. Kelly.

[22159011] |Central Maine said it is evaluating "many energy options" to make up for the lost future power, including new energy generation and management proposals from New England, and possibly new Canadian purchases.

[22160001] |CHICAGO - Options traders were among the big victims of Friday's plunging stock market, including one small firm that required an emergency $50 million bailout.

[22160002] |While Monday's rebounding markets helped other investors recoup losses, many options customers and professional traders in stock-index options and the options on takeover stocks were left with multimillion-dollar losses, traders here and in New York said.

[22160003] |Options traders were hurt worse than others on Friday because of the highly volatile nature of options, which often rise or fall in value several times the amount of the price change in the individual stock or index of stocks on which they are based.
[22160004] |Thus, options traders Friday were stuck with losses that also were several times larger than those suffered by many stock traders in New York.

[22160005] |Jeffrey Miller of Miller Tabak Hirsch & Co. said that given the high degree of leverage in the options market, it is "very easy for these guys to get wiped out.
[22160006] |That may just be the nature of these highly leveraged little creatures."

[22160007] |An options contract gives the holder the right to buy (call) or sell (put) a specific amount of stock, or in this case the value of a stock index, based on a predetermined price within a given time period.
[22160008] |Options traders who, in return for a small fee, or premium, had previously sold put options on stocks or stock indexes were forced on Friday to buy those contracts back at the previously agreed prices, which were substantially above those in the market as it was falling.
[22160009] |They then had no choice in many cases but to sell the contracts at prevailing prices -- in most cases at a substantial loss.

[22160010] |The latest round of losses is likely to be a serious blow to the Chicago Board Options Exchange, which has never fully recovered from the aftershock of Black Monday, when investors fled the market because of huge losses.

[22160011] |Making matters worse was the fact that late Friday afternoon the CBOE halted stock-index options trading in step with the Chicago Mercantile Exchange's halt in stock-index futures.
[22160012] |But while the Merc reopened a half hour later, the CBOE remained closed, leaving many options traders unable to make trades that might have reduced the losses.

[22160013] |CBOE Chairman Alger "Duke" Chapman, said that, unlike the futures market, the options exchange has to open in a rotation that allows each different options series to trade.
[22160014] |Exchange officials reasoned that they wouldn't have been able to make such a rotation with the time remaining Friday afternoon, and with the stock-index futures on the verge of closing for a second and final time, the CBOE reasoned that its best course was to remain closed.

[22160015] |The damage was so bad at Fossett Corp., an options trading firm here, that it was forced to transfer its accounts to First Options of Chicago, a unit of Continental Bank Corp., as a result of options trading losses.
[22160016] |Fosset so far is the only member of a financial exchange to be forced to be taken over by another firm as a result of Friday's rout.

[22160017] |Fossett still had several million dollars in capital left after Friday's close of trading, but not enough that regulators, worried about another potential market plunge yesterday, would let it reopen for trading, options exchange officials said.

[22160018] |Thus, in an unprecedented arrangement underscoring the seriousness of the transfer, the CBOE, the American Stock Exchange and the Options Clearing Corp., as well as the firm's owner, Stephen Fossett, put up a total of $50 million to guarantee the customer positions being transferred to the bank holding company subsidiary in case the market plunged again yesterday.

[22160019] |S. Waite Rawls III, vice chairman of Continental Bank, First Options' parent company, said the firm took on about 160 accounts formerly held by Fossett, almost all of them belonging to professional floor traders.

[22160020] |"Steve and his firm were still worth a lot of money," Mr. Rawls said.
[22160021] |"A package of credit support was put together -- including the assets of Steve and his firm."

[22160022] |The bailout was cobbled together over the weekend, with officials from the Federal Reserve Board, Securities and Exchange Commission, Comptroller of the Currency and Treasury as well as the options exchanges.
[22160023] |"It was great to have the luxury of time," Mr. Rawls said.

[22160024] |At one point, an options industry official had to talk the Federal Reserve Bank of Chicago's night watchman into giving him the home phone number of Silas Keene, Chicago Fed president.

[22160025] |First Options didn't have to put any money into the bailout.

[22160026] |Yesterday's rally in the stock, futures and options markets led CBOE and Amex officials to conclude that the $50 million in guarantees almost certainly won't need to be tapped by First Options.

[22160027] |The Fossett firm had some losses and liquidity problems during the October 1987 crash as well, Mr. Rawls said.

[22160028] |A federal official said that Continental Bank worked with securities and banking regulators over the weekend to fashion the Fossett bailout, but that conditions weren't dictated by those agencies.
[22160029] |"It was their business decision," the official said.

[22160030] |Officials at Options Clearing Corp., which processes all options trades for U.S. exchanges, said that the $50 million guarantee was unprecedented, but was necessary to help insure the integrity of the options markets.
[22160031] |"It was an extraordinary situation that needed extraordinary steps," said Paul Stevens, OCC president and chief operating officer.

[22160032] |Mr. Stevens declined to give the specific contributions to the $50 million guarantee from each participant.
[22160033] |But CBOE and Amex officials said that Options Clearing Corp. contributed $20 million to the guarantee, the CBOE put up $8 million, the Amex added $4 million and $18 million came from Mr. Fossett's own assets.

[22160034] |Mr. Fossett couldn't be reached to comment.

[22161001] |Debora Foster takes off her necklace, settles herself on a padded chair and gently leans forward.
[22161002] |With a jazz-piano tape playing softly in the background, the soothing hands of Sabina Vidunas begin to work on Ms. Foster's neck and shoulders.
[22161003] |"It's like an oasis in this room," Ms. Foster purrs.
[22161004] |The room in question is the directors' lounge of H.J. Heinz Co., 60 floors above the bustle of Pittsburgh.
[22161005] |There, amid oil paintings and marble tables, massages are administered every Wednesday.

[22161006] |"On days that I'm really busy," says Ms. Foster, who works in public relations for the company, "it seems decadent to take time off for a massage."

[22161007] |Although such sessions may never replace coffee breaks, on-site massage, as it is known in the trade, is certainly infiltrating corporate America.
[22161008] |In some companies middle managers sneak massage therapists into the office, fearful that upper-level executives won't approve.

[22161009] |Ms. Foster's indulgence is nothing like the oily, hour-long rubfests enjoyed by spa visitors.
[22161010] |Nor does it at all resemble (despite what some executives think) the more intimate variety offered at specialty parlors in bad parts of town.
[22161011] |On the contrary, office rubdowns usually take place in dimly lighted conference rooms, where stressed-out employees relax in specially designed chairs, fully clothed.
[22161012] |The massages last 15 minutes and typically cost about $10.

[22161013] |Some companies, including Heinz, even pay part of the fee.
[22161014] |Ms. Vidunas has been seeing some 15 clients a visit since the program was started at Heinz last year.
[22161015] |Anthony J.F. O'Reilly, the company's chairman, swears by her firm touch, saying regular massages are a balm for his old football injuries.

[22161016] |Massage advocates say that kneading the head, shoulders, neck and back can go a long way toward easing tension and improving morale.
[22161017] |They also insist that touching is a basic need, as powerful as the need for food or sleep, and that the office is as good a place as any to do it.
[22161018] |"The blood flows to your head, you feel lightheaded and you don't feel tension around the head or neck," says Minnie Morey, an operations supervisor at the Social Security office in Grand Rapids, Mich., where massages began last month.
[22161019] |"When you leave the room after your massage, people say you look like you're glowing."
[22161020] |Adds Candice Ohlman, the 35-year-old masseuse who plies her trade in the Grand Rapids office, "They fall in love with my hands."

[22161021] |Not everyone, however, is at ease with office massage.
[22161022] |Three years ago, the Internal Revenue Service's office in San Jose, Calif., opened its doors to on-site massage.
[22161023] |And even though employees paid the bill, taxpayers grumbled.

[22161024] |"Sometimes, with the release of stress, you hear `oohs' and `ahs' coming out of the room," explains Morgan Banks, the agency's health specialist.
[22161025] |"And you can't have taxpayers coming into an audit hearing `oohs' and `ahs.'"

[22161026] |Last month, the complaints intensified and the massages ended.
[22161027] |"Now we're looking for a room with thicker walls," Ms. Banks says.

[22161028] |Massage also has an image problem to contend with.
[22161029] |Some masseurs have tried to get around this by calling themselves "bodyworkers" and describing their office visits as "reinvigoration breaks."
[22161030] |But massage, no matter how chaste, is still associated in many minds with seedy fronts for prostitution, and that makes some executives nervous.

[22161031] |Last year, the research and development division of Weyerhaeuser Co., the large wood-products concern, invited a masseuse to its Tacoma, Wash., offices.
[22161032] |Phil Harms, a software engineer, was an eager customer.
[22161033] |"You build up a lot of tension working at a terminal all day," he says.

[22161034] |But after about eight months, the vice president of the division, Ed Soule, learned about the sessions and brought them to a halt.
[22161035] |Mr. Soule says his only beef was that the massages were being given in a company conference room; the department's supervised health facility would have been fine.
[22161036] |"In my view, {massages} should be managed with an appropriate mixture of males and females around," he says.

[22161037] |Given such attitudes, some corporate masseurs prefer to go about their business quietly.
[22161038] |Russell Borner of Park Ridge, N.J., says he has been working for the past year at a huge chemical and manufacturing concern in New York -- unbeknownst to the company's executives.
[22161039] |He visits the same department every two or three weeks.
[22161040] |His massage chair is kept in a closet, and a secretary escorts him past security.

[22161041] |"This is common with a lot of large companies," says Mr. Borner, who worked for American Telephone & Telegraph Co. for 23 years before choosing his current trade.
[22161042] |Managers, he contends, "are afraid how they're going to look in the eyes of their peers.
[22161043] |My vision is to change human consciousness towards touch.
[22161044] |My attitude is: Let's come out of the closet."

[22161045] |Occasionally, all that's needed is a little coaxing.
[22161046] |Elisa Byler, a St. Louis masseuse, won over officials at Emerson Electric Co., a maker of electrical and electronic equipment, by providing documents and other articles trumpeting the therapeutic benefits of massage.
[22161047] |She notes that she also stresses professionalism during her weekly visits.

[22161048] |"I pull my hair back, wear a little makeup and look corporate," says Ms. Byler, who has been visiting Emerson since January.
[22161049] |"If I go in there as I normally dress, they'd ask, `Who is this hippie?'"

[22161050] |The self-proclaimed father of on-site massage is David Palmer, a 41-year-old San Francisco masseur whose mission is to save the touch-starved masses.
[22161051] |To help do this, Mr. Palmer developed a portable massage chair three years ago that he hopes will bring "structured touching" into mainstream America.

[22161052] |"The culture is not ready to take off its clothes, lie down and be touched for an hour for $45," he says.
[22161053] |"The idea is to keep the clothes on and to keep people seated.
[22161054] |The chair is a way to package massage."

[22161055] |Sitting in one of Mr. Palmer's chairs, which cost $425 and have since been copied by others, is a bit like straddling a recliner.
[22161056] |Customers lean forward, rest their knees on side supports and bury their face in padding on the back of the chair.
[22161057] |(Ms. Ohlman, the Grand Rapids masseuse, says she has heard the odd-looking contraption compared to something out of the Spanish Inquisition.)

[22161058] |Mr. Palmer, who serves as president of the On-Site Massage Association and writes an industry newsletter, says some 4,000 practitioners -- out of about 50,000 certified masseurs across the country -- now use massage chairs in the workplace, as well as on street corners, in airports and malls, and at conventions and other gatherings where weary people can be found.

[22161059] |Scot MacInnis, a masseur in Boulder, Colo., had a scary experience while massaging a man in a natural-foods supermarket as part of a store promotion.
[22161060] |Three minutes into the massage, the man curled up, began shaking and turned red.
[22161061] |Paramedics were called.

[22161062] |A week later, the man told Mr. MacInnis he had suffered a mild heart attack unrelated to the massage.

[22161063] |"It was a powerful point in my career," says the 31-year-old Mr. MacInnis, who has since taken out a $1 million liability policy for his business.
[22161064] |"But he pulled through, and after the ambulance left, there were still six people in line waiting for a massage.
[22161065] |The next woman was older, and I was afraid to touch her.
[22161066] |But it's like falling off a horse and getting back on."

[22161067] |Despite the number of fans that office massage has won, some purists look down on it, arguing that naked, full-body rubs are the only way to go.
[22161068] |Linda Aldridge, who does full-body work in Pittsburgh, says that while on-site massage is better than nothing, tired workers should realize it is only the tip of the iceberg.

[22161069] |"Whole areas of their bodies are neglected," she says, adding that clothes ruin the experience.
[22161070] |"There's nothing like skin to skin.

[22162001] |In what is believed to be the first cancellation of a loan to China since the June 4 killings in Beijing, an international bank syndicate has terminated a $55 million credit for a Shanghai property project.

[22162002] |The syndicate, led by Schroders Asia Ltd., agreed last November to provide the loan to Asia Development Corp., a U.S. property developer.
[22162003] |But several weeks ago, in the wake of the Beijing killings, the loan was canceled, according to bankers and executives close to the project.
[22162004] |Asia Development and Schroders declined to comment on the move.

[22162005] |Lenders had doubts about the project even before June 4, but the harsh crackdown, which caused many businesses to reassess their China transactions, "gave the banks the out they wanted," says an official close to the Shanghai venture.

[22162006] |The decision to cancel the loan exemplifies the tough attitude bankers have taken toward China since June 4.
[22162007] |While some commercial lending has resumed, international lenders remain nervous about China's economic troubles and foreign debt -- $40 billion at the end of 1988.

[22162008] |Many loans are being renegotiated, especially those tied to the hotel sector, which has been hit hard by a post-June 4 tourism slump.
[22162009] |Many bankers view property-sector loans as particularly risky.

[22162010] |The canceled Shanghai loan leaves Asia Development, a small concern, saddled with a half-completed 32-story apartment building and heavy debts.
[22162011] |The company owes $11 million to the Shui On Group, the project's Hong Kong contractor, and a significant, though unspecified, amount in legal fees to Coudert Brothers, a U.S. law firm, the sources say.

[22162012] |The project, known as Lotus Mansion, has been mired in controversy.
[22162013] |When the loan agreement was announced, it was hailed as one of the first Western-style financing transactions ever used in China.
[22162014] |Unlike most loans to China, there was no Chinese guarantor.
[22162015] |Instead, the banks secured a promise from state-owned Bank of Communications that it would lend Asia Development the entire $55 million at maturity to finance repayment of the original borrowing.
[22162016] |The loan was to have matured in just two to three years, as soon as construction was completed.

[22162017] |But in a letter sent in August to Asia Development, Schroders said the loan was terminated because the developer had failed to deliver adequate financial data and pay certain fees to the loan-management committee on time, according to officials close to the project.
[22162018] |Creditors involved in the project contend, however, that the termination actually had nothing to do with these technical violations.

[22162019] |Instead, the creditors say, the loan fell victim to nervousness about China's political turmoil, as well as to concern about the loan's security.
[22162020] |The bank syndicate is made up mostly of European banks, but it includes China's state-owned Citic Industrial Bank.

[22162021] |The 11 banks in the syndicate sustained no monetary losses because none of the credit facility had been drawn down.

[22163001] |K mart Corp. agreed to acquire Pace Membership Warehouse Inc. for $23 a share, or $322 million, in a move to expand its presence in the rapidly growing warehouse-club business.

[22163002] |The proposed merger comes as K mart's profit is declining and sales at its core discount stores are rising more slowly than at such competitors as Wal-Mart Stores Inc.
[22163003] |K mart, based in Troy, Mich., recently said net income would fall for the third consecutive quarter, after a 16% drop in the first half of its current fiscal year.

[22163004] |"The membership warehouse-club concept has great potential," the company's chairman, Joseph E. Antonini, said in a statement.
[22163005] |Warehouse clubs typically carry general merchandise and food products, which they sell for close to wholesale prices in no-frills stores.
[22163006] |Shoppers, many of whom operate small businesses, pay annual membership fees, which provide an income base for the stores.

[22163007] |K mart tested the warehouse-club sector last year with its acquisition of a 51% interest in Makro Inc.
[22163008] |But the Makro chain, which operates as a joint venture between K mart and SHV Holdings N.V. of the Netherlands, has only six stores and annual sales that one analyst estimated at about $300 million.

[22163009] |Six-year-old Pace, based in Aurora, Colo., operates 41 warehouse-club stores.
[22163010] |The company had losses for several years before turning profitable in fiscal 1988.
[22163011] |In the year ended Jan. 31, Pace rang up profit of $9.4 million, or 72 cents a share, after a tax-loss carry-forward, on sales of $1.3 billion, and analysts expect its results to continue to improve.

[22163012] |"The company turned the corner fairly recently in profitability," said Margo McGlade of PaineWebber Inc., who had been forecasting a 46% jump in Pace's net income from operations this year and another 42% increase next year.
[22163013] |"Warehouse productivity is really beginning to take off."

[22163014] |But some analysts contend K mart has agreed to pay too much for Pace.
[22163015] |"Even if you look at it as a turnaround situation, it's expensive," said Wayne Hood of Prudential-Bache Securities Inc.
[22163016] |"In my opinion, you would only pay that kind of price if you were getting a premier player in the industry."

[22163017] |Ms. McGlade of PaineWebber raised a more fundamental question about the deal.
[22163018] |"If K mart can't get its act together in discounting, why is it spending time worrying about other growing markets?"
[22163019] |She said, "I would say K mart's number one job is to address its market-share loss {in discount stores}, which longer-term will lead to improved profit margins.
[22163020] |At that point, perhaps diversification would be appropriate."

[22163021] |But K mart's Mr. Antonini is intent on pushing the company into new retail businesses.
[22163022] |For instance, K mart is opening big food and general merchandise stores, called hypermarkets, and warehouse-type stores specializing in office products and sporting goods.
[22163023] |It also operates Waldenbooks, Pay Less Drug Stores and Builders Square home improvement stores.

[22163024] |In composite trading on the New York Stock Exchange, K mart closed yesterday at $36 a share, up 12.5 cents.
[22163025] |Pace rose $2.625 to close at $22.125 a share in national over-the-counter trading.

[22163026] |A K mart spokesman said the acquisition would be financed with short-term borrowings.

[22163027] |Under terms of the agreement, a K mart subsidiary will soon make a tender offer for Pace shares.
[22163028] |Among the conditions of the offer is that Pace shareholders tender a majority of the company's shares outstanding.
[22163029] |The companies said Pace would ill continue to operate under its present management.

[22164001] |G. William Ryan, president of Post-Newsweek Stations, was named chief executive officer of the unit of this media company, effective Jan. 1.
[22164002] |He will succeed Joel Chaseman, who will remain a vice president of the company and continue to represent Post-Newsweek stations in several industry organizations, the company said.

[22165001] |literally.

[22165002] |Traders nervously watching their Quotron electronic-data machines yesterday morning were stunned to see the Dow Jones Industrial Average plummet 99 points in seconds.
[22165003] |A minute later it soared 128 points, then zoomed back down 113 points, 69 below Friday's close.

[22165004] |"It was crazy," said Neil Weisman, general partner of Chilmark Capital Corp.
[22165005] |"It was like flying without a pilot in the front of the plane."

[22165006] |But those who said "This can't be happening" were right.
[22165007] |The Quotrons were wrong.

[22165008] |Quotron Systems Inc., a Citicorp unit, blamed the 30-minute foul-up on "a timing problem in our software" caused by the enormous early volume -- about 145 million shares in the first hour of New York Stock Exchange trading.
[22165009] |The prices of the individual stocks that make up the average were correct, Quotron said, but the average was wrong.

[22165010] |Meanwhile, there was an awful lot of confusion.
[22165011] |At about 10:40 a.m. on the over-the-counter trading desk at a major brokerage firm, a veteran trader who buys and sells some of the most active stocks looked at a senior official and asked, "What's going on?
[22165012] |Is the market up or down?"

[22165013] |At the time, Quotron was reporting that the industrial average was down 70 points.
[22165014] |In fact, it was up 24.

[22165015] |Holly Stark, a vice president who heads the trading desk at Dillon Read Capital Corp., said that once she figured out the Quotron numbers were wrong, she called brokers to tell them.
[22165016] |"It's been kind of annoying, to say the least," she said.
[22165017] |To confuse matters further, when UAL Corp. stock finally opened on the New York Stock Exchange at 11:08 a.m., the price was listed at $324.75 a share, up about $45 from Friday; in fact, its true price was $224.75, down $55.

[22165018] |That was the New York Stock Exchange's blooper.
[22165019] |A spokesman cited a "technical error" and declined to elaborate.

[22165020] |And there were other blunders.
[22165021] |When the market opened at 9:30 a.m. EST, a reporter for the Reuters newswire miscalculated the industrial average's drop as a 4% decline when it really was down 0.7%.
[22165022] |"It was a case of human error, which we found almost immediately and corrected," a spokesman for Reuter in New York said.

[22165023] |Meanwhile, some currency traders at West German banks in Frankfurt said they sold dollars on the news and had to buy them back later at higher prices.

[22165024] |But it was the Quotron problems that had lingering effects.
[22165025] |Dillon Read's Ms. Stark said in early afternoon that she was still viewing prices and other data as subject to verification, and she said portfolio managers continued to question the numbers they saw on the screen.

[22165026] |It was the second time in less than a week that Quotron has had problems calculating the industrial average.
[22165027] |At the start of trading last Wednesday, the average appeared to plunge more than 200 points.
[22165028] |Actually, it was down only a few points at the time.

[22165029] |Quotron said that snafu, which lasted nine minutes, resulted from a failure to adjust for a 4-for-1 stock split at Philip Morris Cos.

[22165030] |A Quotron spokeswoman said recent software changes may have contributed to yesterday's problems.
[22165031] |She said Quotron switched to a backup system until the problems were corrected.

[22165032] |"Today of all days," she lamented.
[22165033] |"The eyes of the world were watching us.

[22166001] |Steven F. Kaplan was named a senior vice president of this graphics equipment company.
[22166002] |He retains his current positions as chief strategic officer of AM International and president of AM Ventures.

[22167001] |Houston attorney Dale Friend, representing a plaintiff in a damage suit, says he has negotiated a settlement that will strike a blow for his client.
[22167002] |Literally.

[22167003] |It turns out Mr. Friend's client, Machelle Parks of Cincinnati, didn't like the way defense attorney Tom Alexander acted during the legal proceedings.
[22167004] |So she has agreed to forgo monetary damages against Mr. Alexander's client in return for the right to punch the attorney.
[22167005] |Ms. Parks's mother also gets to cuff Mr. Alexander.
[22167006] |So does Mr. Friend and his law partner, Nick Nichols.

[22167007] |The bizarre arrangement grows out of Mr. Alexander's representation of Derr Construction Co., one of several defendants in a wrongful death lawsuit brought by Ms. Parks, the widow of a construction worker killed in January 1987 while working on a new Houston convention center.
[22167008] |Last month, Mr. Friend says, Mr. Alexander's associate agreed that Derr would pay $50,000 as part of an overall settlement.

[22167009] |But Mr. Alexander scuttled the deal at the last minute, angering the plaintiff's side.
[22167010] |"I never agreed to it," Mr. Alexander says, adding that "it's not necessary to pay these nuisance settlements."

[22167011] |When Ms. Parks and her mother heard about what had happened, Mr. Friend says, they volunteered that they would like to give Mr. Alexander a good walloping.
[22167012] |Mr. Friend says he passed that along to his adversary, and soon they were talking about the ground rules under which Derr could keep its money and the plaintiffs could take a shot at Mr. Alexander.

[22167013] |Although time and place have yet to be determined, some details are in place.
[22167014] |Mr. Friend says he agreed to strike Mr. Alexander above the belt.
[22167015] |Ms. Parks and her mother indicated they want to "catch him unawares from behind," he says.
[22167016] |Mr. Alexander, for his part, insisted that the punchers can't assign their pummeling rights to anyone else, can't use a blunt instrument and can't take a running start.

[22167017] |Mr. Alexander says he regards the agreement, which hasn't been submitted to a judge, as something of a joke.
[22167018] |However, he acknowledges they "have the option of taking a swat at me if they really want to."
[22167019] |Mr. Friend says his side is "dead serious."
[22167020] |Although they don't contemplate delivering any disabling blows, he says that Mr. Alexander will be asked to sign a release from liability, just in case.

[22168001] |After two years of drought, it rained money in the stock-index futures markets yesterday.

[22168002] |As financial markets rebounded, trading volume in the Chicago Mercantile Exchange's huge Standard & Poor's 500 stock-index futures pit soared, reaching near-record levels for the first time since October 1987.

[22168003] |The sudden influx of liquidity enabled several traders to reap six-figure windfalls in a matter of minutes as prices soared, traders said.

[22168004] |"Guys were minting money in there today," said John Legittino, a futures broker for Elders Futures Inc. in Chicago.

[22168005] |The S&P 500 futures contract, which moves in fractions of an index point under normal conditions, jumped two to three points in seconds early yesterday after an initial downturn, then moved strongly higher the rest of the day.
[22168006] |Each index point represents a $500 profit for each S&P 500 contract held.
[22168007] |For the first time since the 1987 crash, traders said that they were able to trade several hundred S&P 500 contracts at a time in a highly liquid market.

[22168008] |Many institutions and individual investors have shied away from stock-index futures, blaming them for speeding the stock market crash on Black Monday two years ago.
[22168009] |Since the crash, many futures traders haven't assumed large positions for fear that the S&P 500 market, with much of its customer order flow missing, would dry up if prices turned against them.

[22168010] |More than 400 traders jammed the S&P 500 futures pit to await the opening bell.
[22168011] |Traders were shouting bids and offers a full five minutes before the start of trading at 8:30 am

[22168012] |The contract fell five points at the open to 323.85, the maximum opening move allowed under safeguards adopted by the Merc to stem a market slide.
[22168013] |But several traders quickly stepped up and bid for contracts, driving prices sharply higher.
[22168014] |The market hovered near Friday's closing price of 328.85 for about a half hour, moving several index points higher or lower in seconds, then broke higher and didn't look back.

[22168015] |The S&P 500 contract that expires in December closed up a record 15.65 points on volume of nearly 80,000 contracts.

[22168016] |"Traders five feet from each other were making bids and offers that were a full point apart," said one S&P 500 broker.
[22168017] |"You could buy at the bid and sell at the offer and make a fortune," he marveled.

[22168018] |Several of Wall Street's largest securities firms, including Salomon Brothers Inc. and PaineWebber Inc., were also large buyers, traders said.
[22168019] |Salomon Brothers was among the largest sellers of stock-index futures last week, traders said.
[22168020] |Brokerage firms as a rule don't comment on their market activity.

[22168021] |Unlike the week following Black Monday two years ago, individual traders in the S&P 500 pit were also being uncharacteristically circumspect about their one-day profits.

[22168022] |"With the FBI around here, bragging rights are a thing of the past," said one trader, referring to the federal investigation of futures trading that so far has resulted in 46 indictments lodged against individuals on the Merc and the Chicago Board of Trade.

[22169001] |The market for $200 billion of high-yield junk bonds regained some of its footing as the Dow Jones Industrial Average rebounded from Friday's plunge.

[22169002] |But the junk recovery, led by the bellwether RJR Holdings bonds, was precarious.
[22169003] |No trading existed for the vast majority of junk bonds, securities industry officials said.
[22169004] |On Friday, trading in practically every issue ground to a halt as potential buyers fled and brokerage firms were unwilling to provide bid and offer prices for most issues.

[22169005] |"Nothing traded on Friday, and people weren't really sure where the market should have opened" yesterday, said Raymond Minella, co-head of merchant banking at Merrill Lynch & Co.
[22169006] |"But we had a fairly active day yesterday."

[22169007] |At Drexel Burnham Lambert Inc., the leading underwriter of junk bonds, "I was prepared to be in a very bad mood tonight," said David Feinman, a junk bond trader.
[22169008] |"Now, I feel maybe there's a little bit of euphoria."
[22169009] |But before the stock market rebounded from a sharp early sell-off yesterday, he said, "You couldn't buy {junk bonds} and you couldn't give them away."

[22169010] |Yesterday's rally was led by RJR Holdings 13 3/4% bonds, which initially tumbled three points, or $30 for each $1,000 face amount, to 96 1/4 before rebounding to 99 3/4.
[22169011] |Bonds issued by Kroger, Duracell, Safeway and American Standard also showed big gains, recovering almost all their losses from Friday and early yesterday.

[22169012] |But traders said the junk bond market increasingly is separating into a top-tier group, in which trades can be executed easily, and a larger group of lower-quality bonds in which liquidity -- or the ability to trade without too much difficulty -- has steadily deteriorated this year.

[22169013] |"Liquidity hasn't returned to the vast middle ground of the market," said Mr. Minella of Merrill.

[22169014] |"The deadbeats are still deadbeats," said Mr. Feinman of Drexel.

[22169015] |Analysts are concerned that much of the high-yield market will remain treacherous for investors.
[22169016] |Paul Asquith, associate professor at the Massachusetts Institute of Technology's Sloan School of Management, citing a pattern of junk-bond default rates that are low in the early years after issuance and rise later, says, "We're now in a period where we're starting to see defaults from the big issue years of 1984 to 1986."

[22169017] |Mark Bachmann, a senior vice president at Standard & Poor's Corp., confirms that there is "increasing concern about the future liquidity of the junk bond market."

[22169018] |"Junk bonds are a highly stratified market," said Lewis Glucksman, vice chairman of Smith Barney, Harris Upham & Co.
[22169019] |"There's a whole bunch of stuff that's money good and a whole bunch of stuff that's not so good."

[22169020] |Analysts at Standard & Poor's say junk bond offerings by "tightly stretched" issuers seem to be growing.
[22169021] |Almost $8 billion of junk bonds that are considered untradeable include issues from SCI TV, Gillette Holdings (not related to Gillette Co.), Interco, Seaman Furniture, Allied Stores, Federated Department Stores, National Gypsum, M.D.C. Holdings, Micropolis, Leaseway Transportation and Price Communications.

[22169022] |"You could still have some very bad times ahead," said Mr. Bachmann.
[22169023] |"It's possible to have a 10% default rate in one year, because we're already seeing big problems in the midst of a pretty strong economy.
[22169024] |I'm certainly not comfortable saying we've seen the bottom."

[22169025] |But yesterday's rally among "good" junk was a badly needed tonic for the market.
[22169026] |Many issues "bounced off the floor," Mr. Minella said, and benchmark junk issues "recovered all of their losses" from Friday and early yesterday.
[22169027] |In contrast, he says, "The stock market gained back only about half what it lost Friday, and the {government} bond market lost about half what it gained Friday."

[22169028] |Traders said yesterday's rally was fueled by insurance companies looking for bargains after a drastic slide in prices the past month.
[22169029] |In addition, mutual funds didn't appear to be major sellers of high-yield securities as was expected.

[22169030] |"Sometimes a shakeout is healthy," said Drexel's Mr. Feinman.
[22169031] |"People will learn to be more circumspect.
[22169032] |If they do good credit analysis, they will avoid the hand grenades.
[22169033] |I think the market is in good shape.

[22170001] |Should you really own stocks?

[22170002] |That's a question a lot of people are asking, following the stock market's stunning display of volatility.
[22170003] |Whipsawed financially and emotionally by Friday's heartstopping 190-point drop in the Dow Jones Industrial Average and yesterday's 88-point rebound, they're wondering if an individual has any business being in the market.

[22170004] |The answer, say academic researchers, money managers and investment specialists, is yes -- as long as you approach the stock market as an investor.
[22170005] |But, they say, people shouldn't try to be traders, who buy and sell in an effort to ride the latest economic trend or catch the next hot stock.

[22170006] |The case for owning stocks over the long-term is compelling.

[22170007] |"If you look at 75 years worth of investment history -- including the Great Depression and every bear market since -- stocks have outperformed almost everything an individual could have owned by a long shot," says Barry Berlin, vice president at First Wachovia Capital Management.

[22170008] |A dollar invested in the stock market in 1926 would have grown to $473.29 by the end of last June, according to Laurence Siegel, managing director at Ibbotson Associates Inc.
[22170009] |But a dollar invested in long-term bonds in 1926 would have grown to only $16.56, and a dollar put in Treasury bills would equal a meager $9.29.

[22170010] |The longer the time period, the less risk there is of losing money in the stock market.
[22170011] |Over time, the odds increasingly favor the investor with a diversified portfolio.
[22170012] |For instance, Ken Gregory, a San Francisco money manager, calculates that if an investor holds a basket of stocks that tracks the Standard & Poor's 500-stock index, the chance of losing money is 3% to 4% over a 10-year period, compared with 15% over three years and 30% over one year.

[22170013] |"If you don't need the money for 10 years, there's a clear-cut case for sticking to a steady core of stocks," Mr. Gregory says.

[22170014] |Stock-market investments also help balance the other assets an individual owns, says John Blankenship Jr., president of the Institute of Certified Financial Planners.
[22170015] |Stocks have a place in an investors' portfolio along with real estate, bonds, international securities and cash, he says.

[22170016] |There are some important caveats: Before investing in stocks, individuals should have at least three to six months of living expenses set aside in the bank, most investment advisers say.
[22170017] |Individuals also should focus on building equity in a home, which provides some protection against inflation, as well as a nest-egg that can be cashed in late in life to help cover the cost of retirement living.

[22170018] |People also shouldn't invest money in stocks that they'll need in the near future -- for example, for college tuition payments or retirement expenses.
[22170019] |"You may have to sell your stocks at a time when the market takes a plunge," says Mr. Blankenship, a Del Mar, Calif. financial planner.

[22170020] |But once the basics are covered, "then I would start to invest, even if it's as little as $1,000," says Michael Lipper, president of Lipper Analytical Services Inc.
[22170021] |He says individuals should consider not just stocks, but other long-term investments, such as high-quality bonds.

[22170022] |Despite the strong case for stocks, however, most pros warn that individuals shouldn't try to profit from short-term developments.
[22170023] |"It's very difficult to do," says Donald Holt, a market strategist for Wedbush Morgan Securities, a Los Angeles brokerage firm.
[22170024] |"Our markets move so fast and they are so volatile, there's no way the average investor can compete with the pros."

[22170025] |Individual investors face high transaction costs of moving in and out of the market.
[22170026] |The cost of executing stock orders varies from brokerage to brokerage and with the size of the order, but 2% of the order's value is an average, says Stephen Boesel, manager of T. Rowe Price's Growth and Income mutual fund.

[22170027] |And assuming their first investment is successful, investors will have to pay taxes on their gains.
[22170028] |That can reduce returns by a third or more, once local taxes are included, Mr. Lipper says.
[22170029] |After that, individual traders face the risk that the new investment they choose won't perform well -- so their trading costs could be sustained for nothing.

[22170030] |"It's very tough for most individuals to out-trade the mutual funds or the market," says Mr. Lipper.
[22170031] |"You should really think twice if you think you can out-smart the system."

[22170032] |Then, too, many individual investors lack the sturdy emotional makeup professionals say is needed to plunge in and out of the market.

[22170033] |So what's the best way to buy stocks?
[22170034] |"Unless an individual has a minimum of between $50,000 and $100,000 to invest in stocks, he's still better off in mutual funds than in individual stocks, in terms of getting enough attention from a competent broker," says Mr. Lipper.

[22170035] |Still, he adds, "I could see owning both, given that individuals often have an advantage over big investors in spotting special situations based on their own insights," he adds.

[22170036] |George Douglas, first vice president at Drexel Burnham Lambert Inc., says that individuals have a particular edge now in "small to medium-size niche companies with exciting earnings prospects" -- a traditional stomping ground for small investors.
[22170037] |This growth sector, which usually carries a price/earnings multiple about twice that of the Standard & Poor's 500, happens to include some of the market's most attractive bargains right now.
[22170038] |"It's now selling at a multiple about even with the market," says Mr. Douglas.

[22170039] |Moreover, Mr. Douglas sees a revival of institutional interest in smaller growth stocks that could boost the performance of these stocks in the medium term.
[22170040] |Many big Wall Street brokerage firms who eliminated their research effort in stocks of emerging growth companies a few years ago are now resuming coverage of this area, he notes.
[22170041] |"We're seeing a real turnaround in interest in small growth stocks," he says.

[22170042] |The pros strenuously advise individuals to stay away from the latest investment fad.
[22170043] |They say that's especially important this late in the growth phase of the economic cycle, when there's no robust bull market to bail investors out of their mistakes.

[22170044] |Friday's correction presents "a pretty good buying opportunity, but let's not speculate at this point in the business cycle," says Carmine Grigoli, chief equity portfolio strategist at First Boston Corp.
[22170045] |"Buy stocks on weakness for their long-term fundamentals," he says.

[22170046] |In the long run, investment advisers say, most investors will be better off using the dollar-cost averaging method of buying stocks.
[22170047] |In this method, a person invests a regular amount every month or quarter into the stock market whether the market is up or down.
[22170048] |That cuts the risk, Mr. Gregory, the San Francisco money manager, points out.

[22170049] |"When the market is low, you are buying more shares, and when it's high, you're buying fewer shares," he says.
[22170050] |Otherwise, if you put all your money in at one time, by sheer bad luck, you might pick a terrible time, and have to wait three years to get even, Mr. Gregory says.

[22170051] |A disciplined program will work the best, Mr. Boesel says.
[22170052] |"One of the hardest things to do is to buy stocks when the market is down," he says.
[22170053] |"But that's just the time when you should be buying them."

[22170054] |Compound annual returns, including price changes and income from interest and dividends

[22170055] |*Actual performance, not annualized

[22170056] |Source: Ibbotson Associates Inc.

[22171001] |The following issues were recently filed with the Securities and Exchange Commission: Gehl Co., initial public offering of two million shares of common stock, of which 1,450,635 shares are being offered by the company and 549,365 shares by holders, via Blunt, Ellis & Loewi Inc. and Robert W. Baird & Co.

[22171002] |Giant Industries Inc., initial public offering of 3,111,000 common shares, of which 2,425,000 will be sold by the company, and the rest by holders, via Shearson Lehman Hutton Inc. and Hanifen, Imhoff Inc.

[22171003] |Inefficient-Market Fund Inc., initial offering of five million common shares, via Smith Barney, Harris Upham & Co.

[22171004] |Jason Overseas Ltd., initial offering of four million common shares, of which 3.2 million will be sold in the U.S., and the balance outside the U.S., via Smith Barney, Harris Upham & Co. and Mabon, Nugent & Co.

[22172001] |Donald Trump, who faced rising doubt about his bid for American Airlines parent AMR Corp. even before a United Airlines buy-out came apart Friday, withdrew his $7.54 billion offer.

[22172002] |Separately, bankers representing the group trying to buy United's parent UAL Corp. met with other banks about reviving that purchase at a lower price, possibly around $250 a share, or $5.65 billion.
[22172003] |But a lower bid could face rejection by the UAL board.

[22172004] |Mr. Trump, who vowed Wednesday to "go forward" with the bid, said he was dropping it "in light of the recent change in market conditions."
[22172005] |He said he might now sell his AMR stake, buy more shares, or make another offer at a lower price.

[22172006] |The Manhattan real-estate developer acted after the UAL buyers failed to obtain financing for their earlier $300-a-share bid, which sparked a selling panic among that snowballed into a 190-point drop Friday in the Dow Jones Industrial Average.

[22172007] |News about UAL and AMR, whose shares never reopened after trading was halted Friday for the UAL announcement, sent both stocks nosediving in composite trading on the New York Stock Exchange.

[22172008] |UAL tumbled $56.875 to $222.875 on volume of 2.3 million shares, and AMR declined by $22.125 to $76.50 as 4.7 million shares changed hands.
[22172009] |Together, the two stocks wreaked havoc among takeover stock traders, and caused a 7.3% drop in the Dow Jones Transportation Average, second in size only to the stock-market crash of Oct. 19, 1987.

[22172010] |Some said Friday's market debacle had given Mr. Trump an excuse to bail out of an offer that showed signs of stalling even before problems emerged with the UAL deal.
[22172011] |After reaching an intraday high of $107.50 the day Mr. Trump disclosed his bid Oct. 5, AMR's stock had retreated as low as $97.75 last week.

[22172012] |Some takeover stock traders had been betting against Mr. Trump because he has a record of disclosing stakes in companies that are potential takeover targets, then selling at a profit without making a bid.

[22172013] |"He still hasn't proven his mettle as a big-league take-out artist," said airline analyst Kevin Murphy of Morgan Stanley & Co.
[22172014] |"He's done this thing where he'll buy a little bit of a company and then trade out of it.
[22172015] |He's written this book, `The Art of the Deal.'
[22172016] |Why doesn't he just follow through on one of these things?"

[22172017] |Mr. Trump withdrew his bid before the AMR board, which is due to meet tomorrow, ever formally considered it.
[22172018] |AMR had weighed a wide range of possible responses, from flat rejection to recapitalizations and leveraged buy-outs that might have included either employees, a friendlier buyer such as Texas billionaire Robert Bass, or both.

[22172019] |AMR had also sought to foil Mr. Trump in Congress by lobbying for legislation that would have bolstered the authority of the Transportation Department to reject airline buy-outs.
[22172020] |Yesterday, Mr. Trump tried to put the blame for the collapse of the UAL deal on Congress, saying it was rushing through a bill to protect AMR executives.

[22172021] |"I believe that the perception that legislation in this area may be hastily approved contributed to the collapse of the UAL transaction, and the resulting disruption in the financial markets experienced this past Friday," Mr. Trump wrote members of Congress.

[22172022] |AMR declined to comment, and Mr. Trump didn't respond to requests for interviews.

[22172023] |Mr. Trump never said how much AMR stock he had bought, only that his holdings were "substantial."
[22172024] |However, he only received federal clearance to buy more than $15 million of the stock on Sept. 20, when the price rose $2 a share to $78.50.
[22172025] |Between then and his bid on Oct. 5, the price fluctuated between $75.625 and $87.375.

[22172026] |In an attempt to persuade investors that his bid wasn't just "a stock play," Mr. Trump promised last week to notify the market before selling any shares.
[22172027] |AMR was trading at around $84 yesterday before his withdrawal announcement, then immediately fell to about $76.

[22172028] |Assuming that he paid a rough average price of $80 a share, and assuming he didn't sell before his announcement reached the market, Mr. Trump could be sitting with a modest loss with the stock at $76.50.

[22172029] |Some analysts said AMR Chairman Robert Crandall might seize the opportunity presented by the stock price drop to protect the nation's largest airline with a defensive transaction, such as the sale of stock to a friendly holder or company employees.
[22172030] |However, other knowledgeable observers said they believed Mr. Crandall and the AMR board might well decide to tough it out without taking any extra steps.

[22172031] |Some analysts said they believed Mr. Trump, whose towering ego had been viewed by some as a reason to believe he wouldn't back out, might come back with a lower bid.
[22172032] |Ray Neidl of Dillon Read & Co. said Mr. Trump "is stepping back and waiting for the dust to settle.
[22172033] |I'm sure he still wants AMR."

[22172034] |But others remained skeptical.
[22172035] |"I was never sure Donald Trump really wanted to take AMR," said John Mattis, a bond analyst with Shearson Lehman Hutton Inc.
[22172036] |"What happened with United was a gracious way for him to bow out."
[22172037] |Mr. Trump never obtained financing for his bid.

[22172038] |That skepticism would leave him with an even greater credibility problem should he return that would handicap him in any effort to oust the board in a proxy fight.

[22172039] |Meanwhile, Citicorp and Chase Manhattan Corp., the two lead lenders on the UAL buy-out, met with other banks yesterday to determine if they would be willing to finance the buy-out at a lower price.
[22172040] |Officials familiar with the talks said Citicorp had discussed lowering the offer to $250 a share, but said that price was a talking point and that no decision has been made.

[22172041] |At $250 a share, the group would have to borrow about $6.1 billion from banks.
[22172042] |The first UAL deal unraveled after Citibank and Chase couldn't raise $7.2 billion.
[22172043] |Citibank and Chase had agreed to commit $3 billion, and said they were "highly confident" of raising another $4.2 billion.

[22172044] |Together, Citicorp and Chase received $8 million in fees to raise the rest of the financing.
[22172045] |But other banks balked at the low interest rate and banking fees the UAL group was willing to pay them.
[22172046] |Officials familiar with the bank talks said the UAL buy-out group -- UAL pilots, management, and British Airways PLC -- is now willing to pay higher bank fees and interest, but isn't likely to boost its $965 million equity contribution.

[22172047] |Nor is the group likely to come forward with a revised offer within the next 48 hours despite the hopes of many traders.
[22172048] |The group's advisers want to make certain they have firm bank commitments the second time around.

[22172049] |Even if the buy-out group is able to obtain financing, the transaction still faces obstacles.

[22172050] |UAL's board could reject the new price as too low, especially since there aren't any competing bids.
[22172051] |Los Angeles investor Marvin Davis, whose $275-a-share offer was rejected by UAL's board, hasn't shown signs of pursuing a $300-a-share back-up bid he made last month.

[22172052] |In addition, the coalition of labor and management, longtime enemies who joined forces only under the threat of Mr. Davis's bid, could break apart now.
[22172053] |The group's resilience gets its first test today when 30 top pilot union leaders convene outside Chicago in a previously scheduled meeting.
[22172054] |Union Chairman F.C. (Rick) Dubinsky faces the tough task of explaining why banks refused to finance a buy-out the members approved overwhelmingly last week.

[22172055] |The pilot union is vowing to pursue an acquisition whatever the board decides.
[22172056] |But if the board rejects a reduced bid and decides to explore other alternatives, it could transform what has been a harmonious process into an adversarial one.

[22172057] |The pilots could play hardball by noting they are crucial to any sale or restructuring because they can refuse to fly the airplanes.
[22172058] |If they were to insist on a low bid of, say $200 a share, the board mightn't be able to obtain a higher offer from other bidders because banks might hesitate to finance a transaction the pilots oppose.

[22172059] |Also, because UAL Chairman Stephen Wolf and other UAL executives have joined the pilots' bid, the board might be forced to exclude him from its deliberations in order to be fair to other bidders.
[22172060] |That could cost him the chance to influence the outcome and perhaps join the winning bidder.