[22300001] |No, it wasn't Black Monday.

[22300002] |But while the New York Stock Exchange didn't fall apart Friday as the Dow Jones Industrial Average plunged 190.58 points -- most of it in the final hour -- it barely managed to stay this side of chaos.

[22300003] |Some "circuit breakers" installed after the October 1987 crash failed their first test, traders say, unable to cool the selling panic in both stocks and futures.
[22300004] |The 49 stock specialist firms on the Big Board floor -- the buyers and sellers of last resort who were criticized after the 1987 crash -- once again couldn't handle the selling pressure.

[22300005] |Big investment banks refused to step up to the plate to support the beleaguered floor traders by buying big blocks of stock, traders say.
[22300006] |Heavy selling of Standard & Poor's 500-stock index futures in Chicago relentlessly beat stocks downward.

[22300007] |Seven Big Board stocks -- UAL, AMR, BankAmerica, Walt Disney, Capital Cities/ABC, Philip Morris and Pacific Telesis Group -- stopped trading and never resumed.

[22300008] |The finger-pointing has already begun.
[22300009] |"The equity market was illiquid.
[22300010] |Once again {the specialists} were not able to handle the imbalances on the floor of the New York Stock Exchange," said Christopher Pedersen, senior vice president at Twenty-First Securities Corp.

[22300011] |Countered James Maguire, chairman of specialists Henderson Brothers Inc.: "It is easy to say the specialist isn't doing his job.
[22300012] |When the dollar is in a free-fall, even central banks can't stop it.
[22300013] |Speculators are calling for a degree of liquidity that is not there in the market."

[22300014] |Many money managers and some traders had already left their offices early Friday afternoon on a warm autumn day -- because the stock market was so quiet.
[22300015] |Then in a lightning plunge, the Dow Jones industrials in barely an hour surrendered about a third of their gains this year, chalking up a 190.58-point, or 6.9%, loss on the day in gargantuan trading volume.
[22300016] |Final-hour trading accelerated to 108.1 million shares, a record for the Big Board.
[22300017] |At the end of the day, 251.2 million shares were traded.
[22300018] |The Dow Jones industrials closed at 2569.26.

[22300019] |The Dow's decline was second in point terms only to the 508-point Black Monday crash that occurred Oct. 19, 1987.
[22300020] |In percentage terms, however, the Dow's dive was the 12th-worst ever and the sharpest since the market fell 156.83, or 8%, a week after Black Monday.
[22300021] |The Dow fell 22.6% on Black Monday.

[22300022] |Shares of UAL, the parent of United Airlines, were extremely active all day Friday, reacting to news and rumors about the proposed $6.79 billion buy-out of the airline by an employee-management group.
[22300023] |Wall Street's takeover-stock speculators, or "risk arbitragers," had placed unusually large bets that a takeover would succeed and UAL stock would rise.

[22300024] |At 2:43 p.m. EDT, came the sickening news: The Big Board was halting trading in UAL, "pending news."
[22300025] |On the exchange floor, "as soon as UAL stopped trading, we braced for a panic," said one top floor trader.
[22300026] |Several traders could be seen shaking their heads when the news flashed.

[22300027] |For weeks, the market had been nervous about takeovers, after Campeau Corp.'s cash crunch spurred concern about the prospects for future highly leveraged takeovers.
[22300028] |And 10 minutes after the UAL trading halt came news that the UAL group couldn't get financing for its bid.
[22300029] |At this point, the Dow was down about 35 points.

[22300030] |The market crumbled.
[22300031] |Arbitragers couldn't dump their UAL stock -- but they rid themselves of nearly every "rumor" stock they had.
[22300032] |For example, their selling caused trading halts to be declared in USAir Group, which closed down 3 7/8 to 41 1/2, Delta Air Lines, which fell 7 3/4 to 69 1/4, and Philips Industries, which sank 3 to 21 1/2.

[22300033] |These stocks eventually reopened.
[22300034] |But as panic spread, speculators began to sell blue-chip stocks such as Philip Morris and International Business Machines to offset their losses.
[22300035] |When trading was halted in Philip Morris, the stock was trading at 41, down 3 3/8, while IBM closed 5 5/8 lower at 102.

[22300036] |Selling snowballed because of waves of automatic "stop-loss" orders, which are triggered by computer when prices fall to certain levels.
[22300037] |Most of the stock selling pressure came from Wall Street professionals, including computer-guided program traders.
[22300038] |Traders said most of their major institutional investors, on the other hand, sat tight.

[22300039] |Now, at 3:07, one of the market's post-crash "reforms" took hold as the S&P 500 futures contract had plunged 12 points, equivalent to around a 100-point drop in the Dow industrials.
[22300040] |Under an agreement signed by the Big Board and the Chicago Mercantile Exchange, trading was temporarily halted in Chicago.

[22300041] |After the trading halt in the S&P 500 pit in Chicago, waves of selling continued to hit stocks themselves on the Big Board, and specialists continued to notch prices down.
[22300042] |As a result, the link between the futures and stock markets ripped apart.
[22300043] |Without the guidepost of stock-index futures -- the barometer of where traders think the overall stock market is headed -- many traders were afraid to trust stock prices quoted on the Big Board.
[22300044] |The futures halt was even assailed by Big Board floor traders.
[22300045] |"It screwed things up," said one major specialist.

[22300046] |This confusion effectively halted one form of program trading, stock index arbitrage, that closely links the futures and stock markets, and has been blamed by some for the market's big swings.
[22300047] |(In a stock-index arbitrage sell program, traders buy or sell big baskets of stocks and offset the trade in futures to lock in a price difference.)

[22300048] |"When the airline information came through, it cracked every model we had for the marketplace," said a managing director at one of the largest program-trading firms.
[22300049] |"We didn't even get a chance to do the programs we wanted to do."

[22300050] |But stocks kept falling.
[22300051] |The Dow industrials were down 55 points at 3 p.m. before the futures-trading halt.
[22300052] |At 3:30 p.m., at the end of the "cooling off" period, the average was down 114.76 points.
[22300053] |Meanwhile, during the the S&P trading halt, S&P futures sell orders began piling up, while stocks in New York kept falling sharply.

[22300054] |Big Board Chairman John J. Phelan said yesterday the circuit breaker "worked well mechanically.
[22300055] |I just think it's nonproductive at this point to get into a debate if index arbitrage would have helped or hurt things."

[22300056] |Under another post-crash system, Big Board President Richard Grasso (Mr. Phelan was flying to Bangkok as the market was falling) was talking on an "inter-exchange hot line" to the other exchanges, the Securities and Exchange Commission and the Federal Reserve Board.
[22300057] |He camped out at a high-tech nerve center on the floor of the Big Board, where he could watch updates on prices and pending stock orders.

[22300058] |At about 3:30 p.m. EDT, S&P futures resumed trading, and for a brief time the futures and stock markets started to come back in line.
[22300059] |Buyers stepped in to the futures pit.
[22300060] |But the build-up of S&P futures sell orders weighed on the market, and the link with stocks began to fray again.

[22300061] |At about 3:45, the S&P market careened to still another limit, of 30 points down, and trading was locked again.
[22300062] |Futures traders say the S&P was signaling that the Dow could fall as much as 200 points.

[22300063] |During this time, small investors began ringing their brokers, wondering whether another crash had begun.
[22300064] |At Prudential-Bache Securities Inc., which is trying to cater to small investors, some demoralized brokers thought this would be the final confidence-crusher.

[22300065] |That's when George L. Ball, chairman of the Prudential Insurance Co. of America unit, took to the internal intercom system to declare that the plunge was only "mechanical."

[22300066] |"I have a hunch that this particular decline today is something `more ado about less.'
[22300067] |It would be my inclination to advise clients not to sell, to look for an opportunity to buy," Mr. Ball told the brokers.

[22300068] |At Merrill Lynch & Co., the nation's biggest brokerage firm, a news release was prepared headlined "Merrill Lynch Comments on Market Drop."
[22300069] |The release cautioned that "there are significant differences between the current environment and that of October 1987" and that there are still "attractive investment opportunities" in the stock market.

[22300070] |However, Jeffrey B. Lane, president of Shearson Lehman Hutton Inc., said that Friday's plunge is "going to set back" relations with customers, "because it reinforces the concern of volatility.
[22300071] |And I think a lot of people will harp on program trading.
[22300072] |It's going to bring the debate right back to the forefront."

[22300073] |As the Dow average ground to its final 190.58 loss Friday, the S&P pit stayed locked at its 30-point trading limit.
[22300074] |Jeffrey Yass of program trader Susquehanna Investment Group said 2,000 S&P contracts were for sale on the close, the equivalent of $330 million in stock.
[22300075] |But there were no buyers.

[22300076] |While Friday's debacle involved mainly professional traders rather than investors, it left the market vulnerable to continued selling this morning, traders said.
[22300077] |Stock-index futures contracts settled at much lower prices than indexes of the stock market itself.
[22300078] |At those levels, stocks are set up to be hammered by index arbitragers, who lock in profits by buying futures when futures prices fall, and simultaneously sell off stocks.
[22300079] |But nobody knows at what level the futures and stocks will open today.

[22300080] |The de-linkage between the stock and futures markets Friday will undoubtedly cause renewed debate about whether Wall Street is properly prepared for another crash situation.
[22300081] |The Big Board's Mr. Grasso said, "Our systemic performance was good."
[22300082] |But the exchange will "look at the performance of all specialists in all stocks.
[22300083] |Obviously we'll take a close look at any situation in which we think the dealer-community obligations weren't met," he said.

[22300084] |(See related story: "Fed Ready to Inject Big Funds" -- WSJ Oct. 16, 1989)

[22300085] |But specialists complain privately that just as in the 1987 crash, the "upstairs" firms -- big investment banks that support the market by trading big blocks of stock -- stayed on the sidelines during Friday's blood-letting.
[22300086] |Mr. Phelan said, "It will take another day or two" to analyze who was buying and selling Friday.

[22301001] |Concerning your Sept. 21 page-one article on Prince Charles and the leeches: It's a few hundred years since England has been a kingdom.
[22301002] |It's now the United Kingdom of Great Britain and Northern Ireland, comprising Wales, Northern Ireland, Scotland, and . . . oh yes, England, too.

[22301003] |Just thought you'd like to know.

[22301004] |George Morton

[22302001] |Ports of Call Inc. reached agreements to sell its remaining seven aircraft to buyers that weren't disclosed.

[22302002] |The agreements bring to a total of nine the number of planes the travel company has sold this year as part of a restructuring.
[22302003] |The company said a portion of the $32 million realized from the sales will be used to repay its bank debt and other obligations resulting from the currently suspended air-charter operations.

[22302004] |Earlier the company announced it would sell its aging fleet of Boeing Co. 707s because of increasing maintenance costs.

[22303001] |A consortium of private investors operating as LJH Funding Co. said it has made a $409 million cash bid for most of L.J. Hooker Corp.'s real-estate and shopping-center holdings.

[22303002] |The $409 million bid includes the assumption of an estimated $300 million in secured liabilities on those properties, according to those making the bid.

[22303003] |The group is led by Jay Shidler, chief executive officer of Shidler Investment Corp. in Honolulu, and A. Boyd Simpson, chief executive of the Atlanta-based Simpson Organization Inc.
[22303004] |Mr. Shidler's company specializes in commercial real-estate investment and claims to have $1 billion in assets; Mr. Simpson is a developer and a former senior executive of L.J. Hooker.

[22303005] |"The assets are good, but they require more money and management" than can be provided in L.J. Hooker's current situation, said Mr. Simpson in an interview. "
[22303006] |Hooker's philosophy was to build and sell.
[22303007] |We want to build and hold."

[22303008] |L.J. Hooker, based in Atlanta, is operating with protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.
[22303009] |Its parent company, Hooker Corp. of Sydney, Australia, is currently being managed by a court-appointed provisional liquidator.
[22303010] |Sanford Sigoloff, chief executive of L.J. Hooker, said yesterday in a statement that he has not yet seen the bid but that he would review it and bring it to the attention of the creditors committee.

[22303011] |The $409 million bid is estimated by Mr. Simpson as representing 75% of the value of all Hooker real-estate holdings in the U.S.
[22303012] |Not included in the bid are Bonwit Teller or B. Altman & Co., L.J. Hooker's department-store chains.

[22303013] |The offer covers the massive 1.8 million-square-foot Forest Fair Mall in Cincinnati, the 800,000 square-foot Richland Fashion Mall in Columbia, S.C., and the 700,000 square-foot Thornton Town Center mall in Thornton, Colo.
[22303014] |The Thornton mall opened Sept. 19 with a Bigg's hypermarket as its anchor; the Columbia mall is expected to open Nov. 15.

[22303015] |Other Hooker properties included are a 20-story office tower in midtown Atlanta, expected to be completed next February; vacant land sites in Florida and Ohio; L.J. Hooker International, the commercial real-estate brokerage company that once did business as Merrill Lynch Commercial Real Estate, plus other shopping centers.

[22303016] |The consortium was put together by Hoare Govett, the London-based investment banking company that is a subsidiary of Security Pacific Corp.
[22303017] |"We don't anticipate any problems in raising the funding for the bid," said Allan Campbell, the head of mergers and acquisitions at Hoare Govett, in an interview.
[22303018] |Hoare Govett is acting as the consortium's investment bankers.

[22303019] |According to people familiar with the consortium, the bid was code-named Project Klute, a reference to the film "Klute" in which a prostitute played by actress Jane Fonda is saved from a psychotic businessman by a police officer named John Klute.

[22303020] |L.J. Hooker was a small home-building company based in Atlanta in 1979 when Mr. Simpson was hired to push it into commercial development.
[22303021] |The company grew modestly until 1986, when a majority position in Hooker Corp. was acquired by Australian developer George Herscu, currently Hooker's chairman.

[22303022] |Mr. Herscu proceeded to launch an ambitious, but ill-fated, $1 billion acquisition binge that included Bonwit Teller and B. Altman & Co., as well as majority positions in Merksamer Jewelers, a Sacramento chain; Sakowitz Inc., the Houston-based retailer, and Parisian Inc., the Southeast department-store chain.

[22303023] |Eventually Mr. Simpson and Mr. Herscu had a falling out over the direction of the company, and Mr. Simpson said he resigned in 1988.
[22303024] |Since then, Hooker Corp. has sold its interest in the Parisian chain back to Parisian's management and is currently attempting to sell the B. Altman & Co. chain.
[22303025] |In addition, Robert Sakowitz, chief executive of the Sakowitz chain, is seeking funds to buy out the Hooker interest in his company.
[22303026] |The Merksamer chain is currently being offered for sale by First Boston Corp.

[22303027] |Reached in Honolulu, Mr. Shidler said that he believes the various Hooker malls can become profitable with new management.
[22303028] |"These aren't mature assets, but they have the potential to be so," said Mr. Shidler.
[22303029] |"Managed properly, and with a long-term outlook, these can become investment-grade quality properties.

[22304001] |Canadian steel-ingot production totaled 291,890 metric tons in the week ended Oct. 7, up 14.8% from the preceding week's total of 254,280 tons, Statistics Canada, a federal agency, said.

[22304002] |The week's total was up 6.2% from 274,963 tons a year earlier.

[22304003] |The year-to-date total was 12,006,883 tons, up 7.8% from 11,141,711 tons a year earlier.

[22305001] |The Treasury plans to raise $175 million in new cash Thursday by selling about $9.75 billion of 52-week bills and redeeming $9.58 billion of maturing bills.

[22305002] |The bills will be dated Oct. 26 and will mature Oct. 25, 1990.
[22305003] |They will be available in minimum denominations of $10,000.

[22305004] |Bids must be received by 1 p.m. EDT Thursday at the Treasury or at Federal Reserve banks or branches.

[22306001] |As small investors peppered their mutual funds with phone calls over the weekend, big fund managers said they have a strong defense against any wave of withdrawals: cash.

[22306002] |Unlike the weekend before Black Monday, the funds weren't swamped with heavy withdrawal requests.
[22306003] |And many fund managers have built up cash levels and say they will be buying stock this week.

[22306004] |At Fidelity Investments, the nation's largest fund company, telephone volume was up sharply, but it was still at just half the level of the weekend preceding Black Monday in 1987.
[22306005] |The Boston firm said stock-fund redemptions were running at less than one-third the level two years ago.
[22306006] |As of yesterday afternoon, the redemptions represented less than 15% of the total cash position of about $2 billion of Fidelity's stock funds.

[22306007] |"Two years ago there were massive redemption levels over the weekend and a lot of fear around," said C. Bruce Johnstone, who runs Fidelity Investments' $5 billion Equity-Income Fund.
[22306008] |"This feels more like a one-shot deal.
[22306009] |People aren't panicking."

[22306010] |The test may come today.
[22306011] |Friday's stock market sell-off came too late for many investors to act.
[22306012] |Some shareholders have held off until today because any fund exchanges made after Friday's close would take place at today's closing prices.
[22306013] |Stock fund redemptions during the 1987 debacle didn't begin to snowball until after the market opened on Black Monday.

[22306014] |But fund managers say they're ready.
[22306015] |Many have raised cash levels, which act as a buffer against steep market declines.
[22306016] |Mario Gabelli, for instance, holds cash positions well above 20% in several of his funds.
[22306017] |Windsor Fund's John Neff and Mutual Series' Michael Price said they had raised their cash levels to more than 20% and 30%, respectively, this year.

[22306018] |Even Peter Lynch, manager of Fidelity's $12.7 billion Magellan Fund, the nation's largest stock fund, built up cash to 7% or $850 million.
[22306019] |One reason is that after two years of monthly net redemptions, the fund posted net inflows of money from investors in August and September.

[22306020] |"I've let the money build up," Mr. Lynch said, who added that he has had trouble finding stocks he likes.

[22306021] |Not all funds have raised cash levels, of course.
[22306022] |As a group, stock funds held 10.2% of assets in cash as of August, the latest figures available from the Investment Company Institute.
[22306023] |That was modestly higher than the 8.8% and 9.2% levels in August and September of 1987.
[22306024] |Also, persistent redemptions would force some fund managers to dump stocks to raise cash.

[22306025] |But a strong level of investor withdrawals is much more unlikely this time around, fund managers said.
[22306026] |A major reason is that investors already have sharply scaled back their purchases of stock funds since Black Monday.
[22306027] |Stock-fund sales have rebounded in recent months, but monthly net purchases are still running at less than half 1987 levels.

[22306028] |"There's not nearly as much froth," said John Bogle, chairman of Vanguard Group Inc., a big Valley Forge, Pa., fund company.

[22306029] |Many fund managers argue that now's the time to buy.
[22306030] |Vincent Bajakian, manager of the $1.8 billion Wellington Fund, added to his positions in Bristol-Myers Squibb, Woolworth and Dun & Bradstreet Friday.
[22306031] |And today he'll be looking to buy drug stocks like Eli Lilly, Pfizer and American Home Products whose dividend yields have been bolstered by stock declines.

[22306032] |Fidelity's Mr. Lynch, for his part, snapped up Southern Co. shares Friday after the stock got hammered.
[22306033] |If the market drops further today, he said he'll be buying blue chips such as Bristol-Myers and Kellogg.
[22306034] |"If they croak stocks like that," he said, it presents an opportunity that is "the kind of thing you dream about."

[22306035] |Major mutual-fund groups said phone calls were arriving at twice the normal weekend pace yesterday.
[22306036] |But most investors were seeking share prices and other information.
[22306037] |Trading volume was only modestly higher than normal.

[22306038] |Still, fund groups aren't taking any chances.
[22306039] |They hope to avoid the jammed phone lines and other snags that infuriated some fund investors in October 1987.

[22306040] |Fidelity on Saturday opened its 54 walk-in investor centers across the country.
[22306041] |The centers normally are closed through the weekend.
[22306042] |In addition, East Coast centers will open at 7:30 EDT this morning, instead of the normal 8:30.

[22306043] |T. Rowe Price Associates Inc. increased its staff of phone representatives to handle investor requests.
[22306044] |The Baltimore-based group noted that some investors moved money from stock funds to money-market funds.
[22306045] |But most investors seemed to be "in an information mode rather than in a transaction mode," said Steven Norwitz, a vice president.

[22306046] |And Vanguard, among other groups, said it was adding more phone representatives today to help investors get through.

[22306047] |In an unusual move, several funds moved to calm investors with recordings on their toll-free phone lines.
[22306048] |"We view {Friday's} market decline as offering us a buying opportunity as long-term investors," a recording at Gabelli & Co. funds said over the weekend.
[22306049] |The Janus Group had a similar recording for investors.

[22306050] |Several fund managers expect a rough market this morning before prices stabilize.
[22306051] |Some early selling is likely to stem from investors and portfolio managers who want to lock in this year's fat profits.
[22306052] |Stock funds have averaged a staggering gain of 25% through September, according to Lipper Analytical Services Inc.

[22306053] |Elaine Garzarelli, who runs Shearson Lehman Hutton Inc.'s $335 million Sector Analysis Portfolio, predicts the market will open down at least 50 points on technical factors and "some panic selling."
[22306054] |But she expects prices to rebound soon and is telling investors she expects the stock market won't decline more than 10% to 15% from recent highs.
[22306055] |"This is not a major crash," she said.

[22306056] |Nevertheless, Ms. Garzarelli said she was swamped with phone calls over the weekend from nervous shareholders.
[22306057] |"Half of them are really scared and want to sell," she said, "but I'm trying to talk them out of it."
[22306058] |She added, "If they all were bullish, I'd really be upset."

[22306059] |The backdrop to Friday's slide was markedly different from that of the October 1987 crash, fund managers argue.
[22306060] |Two years ago, unlike today, the dollar was weak, interest rates were rising and the market was very overvalued, they say.

[22306061] |"From the investors' standpoint, institutions and individuals learned a painful lesson . . . by selling at the lows" on Black Monday, said Stephen Boesel, manager of the $580 million T. Rowe Price Growth and Income Fund.
[22306062] |This time, "I don't think we'll get a panic reaction.

[22307001] |Newport Corp. said it expects to report fiscal-first-quarter earnings of between 15 cents and 19 cents a share, somewhat below analysts' estimates of 19 cents to 23 cents.

[22307002] |The maker of scientific instruments and laser parts said orders fell below expectations in recent months.

[22307003] |A spokesman added that sales in the current quarter will about equal the yearearlier quarter's figure, when Newport reported net income of $1.7 million, or 21 cents a share, on $14.1 million in sales.

[22308001] |Ripples from the strike by 55,000 Machinists union members against Boeing Co. reached air carriers Friday as America West Airlines announced it will postpone its new service out of Houston because of delays in receiving aircraft from the Seattle jet maker.

[22308002] |Peter Otradovec, vice president for planning at the Phoenix, Ariz., carrier, said in an interview that the work stoppage at Boeing, now entering its 13th day, "has caused some turmoil in our scheduling" and that more than 500 passengers who were booked to fly out of Houston on America West would now be put on other airlines.

[22308003] |Mr. Otradovec said Boeing told America West that the 757 it was supposed to get this Thursday wouldn't be delivered until Nov. 7 -- the day after the airline had been planning to initiate service at Houston with four daily flights, including three nonstops to Phoenix and one nonstop to Las Vegas.
[22308004] |Now, those routes aren't expected to begin until Jan.

[22308005] |Boeing is also supposed to send to America West another 757 twin-engine aircraft as well as a 737 by year's end.
[22308006] |Those, too, are almost certain to arrive late.

[22308007] |At this point, no other America West flights -- including its new service at San Antonio, Texas; Newark, N.J.; and Palmdale, Calif. -- have been affected by the delays in Boeing deliveries.

[22308008] |Nevertheless, the company's reaction underscores the domino effect that a huge manufacturer such as Boeing can have on other parts of the economy.
[22308009] |It also is sure to help the machinists put added pressure on the company.

[22308010] |"I just don't feel that the company can really stand or would want a prolonged walkout," Tom Baker, president of Machinists' District 751, said in an interview yesterday.
[22308011] |"I don't think their customers would like it very much."

[22308012] |America West, though, is a smaller airline and therefore more affected by the delayed delivery of a single plane than many of its competitors would be.
[22308013] |"I figure that American and United probably have such a hard time counting all the planes in their fleets, they might not miss one at all," Mr. Otradovec said.

[22308014] |Indeed, a random check Friday didn't seem to indicate that the strike was having much of an effect on other airline operations.
[22308015] |Southwest Airlines has a Boeing 737-300 set for delivery at the end of this month and expects to have the plane on time.
[22308016] |"It's so close to completion, Boeing's told us there won't be a problem," said a Southwest spokesman.

[22308017] |A spokesman for AMR Corp. said Boeing has assured American Airlines it will deliver a 757 on time later this month.
[22308018] |American is preparing to take delivery of another 757 in early December and 20 more next year and isn't anticipating any changes in that timetable.

[22308019] |In Seattle, a Boeing spokesman explained that the company has been in constant communication with all of its customers and that it was impossible to predict what further disruptions might be triggered by the strike.

[22308020] |Meanwhile, supervisors and non-striking employees have been trying to finish some 40 aircraft -- mostly 747 and 767 jumbo jets at the company's Everett, Wash., plant -- that were all but completed before the walkout.
[22308021] |As of Friday, four had been delivered and a fifth plane, a 747-400, was supposed to be flown out over the weekend to Air China.

[22308022] |No date has yet been set to get back to the bargaining table.
[22308023] |"We want to make sure they know what they want before they come back," said Doug Hammond, the federal mediator who has been in contact with both sides since the strike began.

[22308024] |The investment community, for one, has been anticipating a speedy resolution.
[22308025] |Though Boeing's stock price was battered along with the rest of the market Friday, it actually has risen over the last two weeks on the strength of new orders.
[22308026] |"The market has taken two views: that the labor situation will get settled in the short term and that things look very rosy for Boeing in the long term," said Howard Rubel, an analyst at Cyrus J. Lawrence Inc.
[22308027] |Boeing's shares fell $4 Friday to close at $57.375 in composite trading on the New York Stock Exchange.

[22308028] |But Mr. Baker said he thinks the earliest a pact could be struck would be the end of this month, hinting that the company and union may resume negotiations as early as this week.
[22308029] |Still, he said, it's possible that the strike could last considerably longer.
[22308030] |"I wouldn't expect an immediate resolution to anything."

[22308031] |Last week, Boeing Chairman Frank Shrontz sent striking workers a letter, saying that "to my knowledge, Boeing's offer represents the best overall three-year contract of any major U.S. industrial firm in recent history."

[22308032] |But Mr. Baker called the letter -- and the company's offer of a 10% wage increase over the life of the pact, plus bonuses -- "very weak."
[22308033] |He added that the company miscalculated the union's resolve and the workers' disgust with being forced to work many hours overtime.

[22308034] |In separate developments: -- Talks have broken off between Machinists representatives at Lockheed Corp. and the Calabasas, Calif., aerospace company.
[22308035] |The union is continuing to work through its expired contract, however.
[22308036] |It had planned a strike vote for next Sunday, but that has been pushed back indefinitely.

[22308037] |-- United Auto Workers Local 1069, which represents 3,000 workers at Boeing's helicopter unit in Delaware County, Pa., said it agreed to extend its contract on a day-by-day basis, with a 10-day notification to cancel, while it continues bargaining.
[22308038] |The accord expired yesterday.

[22308039] |-- And Boeing on Friday said it received an order from Martinair Holland for four model 767-300 wide-body jetliners valued at a total of about $326 million.

[22308040] |The planes, long range versions of the medium-haul twin-jet, will be delivered with Pratt & Whitney PW4060 engines.
[22308041] |Pratt & Whitney is a unit of United Technologies Inc.
[22308042] |Martinair Holland is based in Amsterdam.

[22308043] |A Boeing spokeswoman said a delivery date for the planes is still being worked out "for a variety of reasons, but not because of the strike."

[22308044] |Bridget O'Brian contributed to this article.

[22309001] |Atco Ltd. said its utilities arm is considering building new electric power plants, some valued at more than one billion Canadian dollars (US$851 million), in Great Britain and elsewhere.

[22309002] |C.S. Richardson, Atco's senior vice president, finance, said its 50.1%-owned Canadian Utilities Ltd. unit is reviewing cogeneration projects in eastern Canada, and conventional electric power generating plants elsewhere, including Britain, where the British government plans to allow limited competition in electrical generation from private-sector suppliers as part of its privatization program.

[22309003] |"The projects are big.
[22309004] |They can be C$1 billion plus," Mr. Richardson said.
[22309005] |"But we wouldn't go into them alone," and Canadian Utilities' equity stake would be small, he said.
[22309006] |"Ideally, we'd like to be the operator {of the project} and a modest equity investor.
[22309007] |Our long suit is our proven ability to operate" power plants, he said.

[22309008] |Mr. Richardson wouldn't offer specifics regarding Atco's proposed British project, but he said it would compete for customers with two huge British power generating companies that would be formed under the country's plan to privatize its massive water and electric utilities.

[22309009] |Britain's government plans to raise about #20 billion ($31.05 billion) from the sale of most of its giant water and electric utilities, beginning next month.
[22309010] |The planned electric utility sale, scheduled for next year, is alone expected to raise #13 billion, making it the world's largest public offering.

[22309011] |Under terms of the plan, independent generators would be able to compete for 15% of customers until 1994, and for another 10% between 1994 and 1998.

[22309012] |Canadian Utilities had 1988 revenue of C$1.16 billion, mainly from its natural gas and electric utility businesses in Alberta, where the company serves about 800,000 customers.

[22309013] |"There seems to be a move around the world to deregulate the generation of electricity," Mr. Richardson said, and Canadian Utilities hopes to capitalize on it.
[22309014] |"This is a real thrust on our utility side," he said, adding that Canadian Utilities is also mulling projects in underdeveloped countries, though he would be specific.

[22309015] |Canadian Utilities isn't alone in exploring power generation opportunities in Britain, in anticipation of the privatization program.
[22309016] |"We're certainly looking at some power generating projects in England," said Bruce Stram, vice president, corporate strategy and corporate planning, with Enron Corp., Houston, a big natural gas producer and pipeline operator.

[22309017] |Mr. Stram said Enron is considering building gas-fired power plants in the U.K. capable of producing about 500 megawatts of power at a cost of about $300 million to $400 million.

[22310001] |PSE Inc. said it expects to report third earnings of $1.3 million to $1.7 million, or 14 cents to 18 cents a share.

[22310002] |In the year-ago quarter, the designer and operator of cogeneration and waste heat recovery plants had net income of $326,000, or four cents a share, on revenue of about $41.4 million.
[22310003] |The company said the improvement is related to additional cogeneration facilities that have been put into operation.

[22311001] |CONCORDE trans-Atlantic flights are $2,400 to Paris and $3,200 to London.
[22311002] |In a Centennial Journal article Oct. 5, the fares were reversed.

[22312001] |Diamond Shamrock Offshore Partners said it had discovered gas offshore Louisiana.

[22312002] |The well flowed at a rate of 2.016 million cubic feet of gas a day through a 16 64-inch opening at depths between 5,782 and 5,824 feet.

[22312003] |Diamond Shamrock is the operator, with a 100% interest in the well.

[22312004] |Diamond Shamrock Offshore's stock rose 12.5 cents Friday to close at $8.25 in New York Stock Exchange composite trading.

[22313001] |Kaufman & Broad Home Corp. said it formed a $53.4 million limited partnership subsidiary to buy land in California suitable for residential development.

[22313002] |The partnership, Kaufman & Broad Land Development Venture Limited Partnership, is a 50-50 joint venture with a trust created by institutional clients of Heitman Advisory Corp., a unit of Heitman Financial Corp., a real estate advisory, management and development company with offices in Chicago and Beverly Hills, Calif.
[22313003] |Kaufman & Broad, a home building company, declined to identify the institutional investors.

[22313004] |The land to be purchased by the joint venture hasn't yet received zoning and other approvals required for development, and part of Kaufman & Broad's job will be to obtain such approvals.

[22313005] |The partnership runs the risk that it may not get the approvals for development, but in return, it can buy land at wholesale rather than retail prices, which can result in sizable savings, said Bruce Karatz, president and chief executive officer of Kaufman & Broad.

[22313006] |"There are really very few companies that have adequate capital to buy properties in a raw state for cash.
[22313007] |Typically, developers option property, and then once they get the administrative approvals, they buy it," said Mr. Karatz, adding that he believes the joint venture is the first of its kind.
[22313008] |"We usually operate in that conservative manner."

[22313009] |By setting up the joint venture, Kaufman & Broad can take the more aggressive approach of buying raw land, while avoiding the negative impacts to its own balance sheet, Mr. Karatz said.
[22313010] |The company is putting up only 10% of the capital, although it is responsible for providing management, planning and processing services to the joint venture.

[22313011] |"This is one of the best ways to assure a pipeline of land to fuel our growth at a minimum risk to our company," Mr. Karatz said.

[22314001] |When the price of plastics took off in 1987, Quantum Chemical Corp. went along for the ride.

[22314002] |The timing of Quantum's chief executive officer, John Hoyt Stookey, appeared to be nothing less than inspired, because he had just increased Quantum's reliance on plastics.
[22314003] |The company outpaced much of the chemical industry as annual profit grew fivefold in two years.
[22314004] |Mr. Stookey said of the boom, "It's going to last a whole lot longer than anybody thinks."

[22314005] |But now prices have nose-dived and Quantum's profit is plummeting.
[22314006] |Some securities analysts are looking for no better than break-even results from the company for the third quarter, compared with year-earlier profit of $99.8 million, or $3.92 a share, on sales of $724.4 million.
[22314007] |The stock, having lost nearly a quarter of its value since Sept. 1, closed at $34.375 share, down $1.125, in New York Stock Exchange composite trading Friday.

[22314008] |To a degree, Quantum represents the new times that have arrived for producers of the so-called commodity plastics that pervade modern life.
[22314009] |Having just passed through one of the most profitable periods in their history, these producers now see their prices eroding.

[22314010] |Pricing cycles, to be sure, are nothing new for plastics producers.
[22314011] |And the financial decline of some looks steep only in comparison with the heady period that is just behind them.
[22314012] |"We were all wonderful heroes last year," says an executive at one of Quantum's competitors.
[22314013] |"Now we're at the bottom of the heap."

[22314014] |At Quantum, which is based in New York, the trouble is magnified by the company's heavy dependence on plastics.
[22314015] |Once known as National Distillers & Chemical Corp., the company exited the wine and spirits business and plowed more of its resources into plastics after Mr. Stookey took the chief executive's job in 1986.
[22314016] |Mr. Stookey, 59 years old, declined to be interviewed for this article, but he has consistently argued that over the long haul -- across both the peaks and the troughs of the plastics market -- Quantum will prosper through its new direction.

[22314017] |Quantum's lot is mostly tied to polyethylene resin, used to make garbage bags, milk jugs, housewares, toys and meat packaging, among other items.
[22314018] |In the U.S. polyethylene market, Quantum has claimed the largest share, about 20%.
[22314019] |But its competitors -- including Dow Chemical Co., Union Carbide Corp. and several oil giants -- have much broader business interests and so are better cushioned against price swings.

[22314020] |When the price of polyethylene moves a mere penny a pound, Quantum's annual profit fluctuates by about 85 cents a share, provided no other variables are changing.
[22314021] |In recent months the price of polyethylene, even more than that of other commodity plastics, has taken a dive.
[22314022] |Benchmark grades, which still sold for as much as 50 cents a pound last spring, have skidded to between 35 cents and 40 cents.

[22314023] |Meanwhile, the price of ethylene, the chemical building block of polyethylene, hasn't dropped nearly so fast.
[22314024] |That discrepancy hurts Quantum badly, because its own plants cover only about half of its ethylene needs.

[22314025] |By many accounts, an early hint of a price rout in the making came at the start of this year.
[22314026] |China, which had been putting in huge orders for polyethylene, abruptly halted them.
[22314027] |Calculating that excess polyethylene would soon be sloshing around the world, other buyers then bet that prices had peaked and so began to draw down inventories rather than order new product.

[22314028] |Kenneth Mitchell, director of Dow's polyethylene business, says producers were surprised to learn how much inventories had swelled throughout the distribution chain as prices spiraled up.
[22314029] |"People were even hoarding bags," he says.

[22314030] |Now producers hope prices have hit bottom.
[22314031] |They recently announced increases of a few cents a pound to take effect in the next several weeks.
[22314032] |No one knows, however, whether the new posted prices will stick once producers and customers start to haggle.

[22314033] |One doubter is George Krug, a chemical-industry analyst at Oppenheimer & Co. and a bear on plastics stocks.
[22314034] |Noting others' estimates of when price increases can be sustained, he remarks, "Some say October.
[22314035] |Some say November.
[22314036] |I say 1992."
[22314037] |He argues that efforts to firm up prices will be undermined by producers' plans to expand production capacity.

[22314038] |A quick turnaround is crucial to Quantum because its cash requirements remain heavy.
[22314039] |The company is trying to carry out a three-year, $1.3 billion plant-expansion program started this year.
[22314040] |At the same time, its annual payments on long-term debt will more than double from a year ago to about $240 million, largely because of debt taken on to pay a $50-a-share special dividend earlier this year.

[22314041] |Quantum described the payout at the time as a way for it to share the bonanza with its holders, because its stock price wasn't reflecting the huge profit increases.
[22314042] |Some analysts saw the payment as an effort also to dispel takeover speculation.

[22314043] |Whether a cash crunch might eventually force the company to cut its quarterly dividend, raised 36% to 75 cents a share only a year ago, has become a topic of intense speculation on Wall Street since Mr. Stookey deflected dividend questions in a Sept. 29 meeting with analysts.

[22314044] |Some viewed his response -- that company directors review the dividend regularly -- as nothing more than the standard line from executives.
[22314045] |But others came away thinking he had given something less than his usual straight-from-the-shoulder performance.
[22314046] |In any case, on the day of the meeting, Quantum's shares slid $2.625 to $36.625 in Big Board trading.

[22314047] |On top of everything else, Quantum confronts a disaster at its plant in Morris, Ill.
[22314048] |After an explosion idled the plant in June, the company progressed in September to within 12 hours of completing the drawn-out process of restarting it.
[22314049] |Then a second explosion occurred.
[22314050] |Two workers died and six remain in the hospital.

[22314051] |This human toll adds the most painful dimension yet to the sudden change in Quantum's fortunes.
[22314052] |Until this year, the company had been steadily lowering its accident rate and picking up trade-group safety awards.

[22314053] |A prolonged production halt at the plant could introduce another imponderable into Quantum's financial future.
[22314054] |When a plant has just been running flat out to meet demand, calculating lost profit and thus claims under business-interruption insurance is straightforward.
[22314055] |But the numbers become trickier -- and subject to dickering between insured and insurer -- when demand is shifting.

[22314056] |"You say you could have sold X percent of this product and Y percent of that," recalls Theodore Semegran, an analyst at Shearson Lehman Hutton who went through this exercise during his former career as a chemical engineer.
[22314057] |"And then you still have to negotiate."

[22314058] |Quantum hopes the Morris plant, where limited production got under way last week, will resume full operation by year's end.
[22314059] |The plant usually accounts for 20% to 25% of Quantum's polyethylene production and 50% of its ethylene production.

[22314060] |Not everything looks grim for Quantum.
[22314061] |The plant expansion should strengthen the company's sway in the polyethylene business, where market share is often taken through sheer capacity.
[22314062] |By lifting ethylene production, the expansion will also lower the company's raw material costs.

[22314063] |Quantum is also tightening its grip on its one large business outside chemicals, propane marketing.
[22314064] |Through a venture with its investment banker, First Boston Corp., Quantum completed in August an acquisition of Petrolane Inc. in a transaction valued at $1.18 billion.
[22314065] |Petrolane is the second-largest propane distributor in the U.S.
[22314066] |The largest, Suburban Propane, was already owned by Quantum.

[22314067] |Still, Quantum has a crisis to get past right now.
[22314068] |Some analysts speculate the weakening stock may yet attract a suitor.
[22314069] |The name surfacing in rumors is British Petroleum Co., which is looking to expand its polyethylene business in the U.S.

[22314070] |Asked about a bid for Quantum, a BP spokesman says, "We pretty much have a policy of not commenting on rumors, and I think that falls in that category.

[22315001] |RJR Nabisco Inc. is disbanding its division responsible for buying network advertising time, just a month after moving 11 of the group's 14 employees to New York from Atlanta.

[22315002] |A spokesman for the New York-based food and tobacco giant, taken private earlier this year in a $25 billion leveraged buy-out by Kohlberg Kravis Roberts & Co., confirmed that it is shutting down the RJR Nabisco Broadcast unit, and dismissing its 14 employees, in a move to save money.
[22315003] |The spokesman said RJR is discussing its network-buying plans with its two main advertising firms, FCB/Leber Katz and McCann Erickson.

[22315004] |"We found with the size of our media purchases that an ad agency could do just as good a job at significantly lower cost," said the spokesman, who declined to specify how much RJR spends on network television time.
[22315005] |An executive close to the company said RJR is spending about $140 million on network television time this year, down from roughly $200 million last year.

[22315006] |The spokesman said the broadcast unit will be disbanded Dec. 1, and the move won't affect RJR's print, radio and spot-television buying practices.

[22315007] |The broadcast group had been based in New York until a year ago, when RJR's previous management moved it to Atlanta, the company's headquarters before this summer.
[22315008] |One employee with the group said RJR moved 11 employees of the group back to New York in September because "there was supposed to be a future."
[22315009] |He said the company hired three more buyers for the unit within the past two weeks, wooing them from jobs with advertising agencies.

[22315010] |The RJR spokesman said the company moved the 11 employees to New York last month because the group had then been in the midst of purchasing ad time for the networks' upcoming season.
[22315011] |"The studies {on closing the unit} couldn't be completed until now," he said.

[22315012] |The group's president, Peter Chrisanthopoulos, wasn't in his office Friday afternoon to comment.

[22316001] |The U.S., which is finalizing its steel-import quotas, is allocating a larger share of its steel market to developing and newly industrialized countries which have relatively unsubsidized steel industries.

[22316002] |Meanwhile, the U.S. has negotiated a significant cut in Japan's steel quota, and made only a minor increase to the steel allotment for the European Community.

[22316003] |Brazil, similar to Mexico and South Korea, is expected to negotiate a somewhat bigger share of the U.S. market than it had under the previous five-year steel quotas, which expired Sept. 30.
[22316004] |Brazil and Venezuela are the only two countries that haven't completed steel talks with the U.S. for the year ending Oct. 1, 1990.

[22316005] |In recent years, U.S. steelmakers have supplied about 80% of the 100 million tons of steel used annually by the nation.
[22316006] |Of the remaining 20% needed, the steel-quota negotiations allocate about 15% to foreign suppliers, with the difference supplied mainly by Canada -- which isn't included in the quota program.
[22316007] |Other countries that don't have formal steel quotas with the U.S., such as Taiwan, Sweden and Argentina, also have supplied steel.
[22316008] |Some of these countries have in recent years made informal agreements with the U.S. that are similar to quotas.

[22316009] |The Bush administration earlier this year said it would extend steel quotas, known as voluntary restraint agreements, until March 31, 1992.
[22316010] |It also said it would use that two-and-a-half year period to work toward an international consensus on freeing up the international steel trade, which has been notoriously managed, subsidized and protected by governments.
[22316011] |The U.S. termed its plan, a "trade liberalization program," despite the fact that it is merely an extension.

[22316012] |Mexico, which was one of the first countries to conclude its steel talks with the U.S., virtually doubled its quota to 0.95% of the U.S. steel market from 0.48% under the previous quotas.
[22316013] |South Korea, which had 1.9% under the previous quotas, is set to get a small increase to about 1.95%.
[22316014] |That increase rises to slightly more than 2% of the U.S. market if a joint Korean-U.S. steel project is included.
[22316015] |Meanwhile, Brazil is expected to increase its allowance from the 1.43% share it has had in recent years.

[22316016] |The EC and Japan -- the U.S.'s largest steel suppliers -- haven't been filling their quotas to the full extent.
[22316017] |The EC steel industry, which has been coping with strong European demand, has been supplying about 5% of the U.S. market compared with recent quotas of about 6.7%.
[22316018] |Japan has been shipping steel to total about 4.5% of the U.S. market compared with a quota of 5.9%.

[22316019] |In the recent talks, the EC had its quota increased about 300,000 tons, to 7% of the U.S. market from 6.7% in 1988.
[22316020] |But its quota has been as high as 6.9% in 1984.
[22316021] |Japan, however, has agreed to cut its quota to about 5% from 5.9% previously.

[22316022] |Japan, the EC, Brazil, Mexico and South Korea provide about 80% of the steel imported to the U.S. under the quota program.
[22316023] |The balance is supplied by a host of smaller exporters, such as Australia and Venezuela.

[22316024] |The U.S. had about an extra 2% of the domestic steel market to give to foreign suppliers in its quota talks.
[22316025] |That was essentially made up of a 1% increase in the overall quota program and 1% from cutting Japan's allowance.

[22316026] |Negotiators from the White House trade office will repeat these quota negotiations next year when they will have another 1% of the U.S. steel market to allocate.

[22316027] |These optional 1%-a-year increases to the steel quota program are built into the Bush administration's steel-quota program to give its negotiators leverage with foreign steel suppliers to try to get them to withdraw subsidies and protectionism from their own steel industries.

[22317001] |Elcotel Inc. expects fiscal second-quarter earnings to trail 1988 results, but anticipates that several new products will lead to a "much stronger" performance in its second half.

[22317002] |Elcotel, a telecommunications company, had net income of $272,000, or five cents a share, in its year-earlier second quarter, ended Sept. 30.
[22317003] |Revenue totaled $5 million.
[22317004] |George Pierce, chairman and chief executive officer, said in an interview that earnings in the most recent quarter will be about two cents a share on revenue of just under $4 million.

[22317005] |The lower results, Mr. Pierce said, reflect a 12-month decline in industry sales of privately owned pay telephones, Elcotel's primary business.
[22317006] |Although Mr. Pierce expects that line of business to strengthen in the next year, he said Elcotel will also benefit from moving into other areas.

[22317007] |Foremost among those is the company's entrance into the public facsimile business, Mr. Pierce said.
[22317008] |Within the next year, Elcotel expects to place 10,000 fax machines, made by Minolta in Japan, in hotels, municipal buildings, drugstores and other public settings around the country.
[22317009] |Elcotel will provide a credit-card reader for the machines to collect, store and forward billing data.

[22317010] |Mr. Pierce said Elcotel should realize a minimum of $10 of recurring net earnings for each machine each month.

[22317011] |Elcotel has also developed an automatic call processor that will make further use of the company's system for automating and handling credit-card calls and collect calls.
[22317012] |Automatic call processors will provide that system for virtually any telephone, Mr. Pierce said, not just phones produced by Elcotel.

[22317013] |The company will also be producing a new line of convenience telephones, which don't accept coins, for use in hotel lobbies, office lobbies, hospitality lounges and similar settings.

[22317014] |Mr. Pierce estimated that the processors and convenience phones would produce about $5 of recurring net earnings for each machine each month.

[22318001] |Britain's retail price index rose 0.7% in September from August and was up 7.6% for the year, the Central Statistical Office said.

[22319001] |Quest Medical Inc. said it adopted a shareholders' rights plan in which rights to purchase shares of common stock will be distributed as a dividend to shareholders of record as of Oct. 23.

[22319002] |The company said the plan wasn't adopted in response to any known offers for Quest, a maker and marketer of hospital products.

[22319003] |The rights allow shareholders to purchase Quest stock at a discount if any person or group acquires more than 15% of the company's common stock or announces a tender offer.

[22320001] |Measuring cups may soon be replaced by tablespoons in the laundry room.

[22320002] |Procter & Gamble Co. plans to begin testing next month a superconcentrated detergent that will require only a few spoonfuls per washload.

[22320003] |The move stems from lessons learned in Japan where local competitors have had phenomenal success with concentrated soapsuds.
[22320004] |It also marks P&G's growing concern that its Japanese rivals, such as Kao Corp., may bring their superconcentrates to the U.S.

[22320005] |The Cincinnati consumer-products giant got clobbered two years ago in Japan when Kao introduced a powerful detergent, called Attack, which quickly won a 30% stake in the Japanese markets.
[22320006] |"They don't want to get caught again," says one industry watcher.

[22320007] |Retailers in Phoenix, Ariz., say P&G's new powdered detergent -- to be called Cheer with Color Guard -- will be on shelves in that market by early November.
[22320008] |A P&G spokeswoman confirmed that shipments to Phoenix started late last month.
[22320009] |She said the company will study results from this market before expanding to others.

[22320010] |Superconcentrates aren't entirely new for P&G.
[22320011] |The company introduced a superconcentrated Lemon Cheer in Japan after watching the success of Attack.
[22320012] |When Attack hit the shelves in 1987, P&G's share of the Japanese market fell to about 8% from more than 20%.
[22320013] |With the help of Lemon Cheer, P&G's share is now estimated to be 12%.

[22320014] |While the Japanese have embraced the compact packaging and convenience of concentrated products, the true test for P&G will be in the $4 billion U.S. detergent market, where growth is slow and liquids have gained prominence over powders.
[22320015] |The company may have chosen to market the product under the Cheer name since it's already expanded its best-selling Tide into 16 different varieties, including this year's big hit, Tide with Bleach.
[22320016] |With superconcentrates, however, it isn't always easy to persuade consumers that less is more; many people tend to dump too much detergent into the washing machine, believing that it takes a cup of powder to really clean the laundry.

[22320017] |In the early 1980s, P&G tried to launch here a concentrated detergent under the Ariel brand name that it markets in Europe.
[22320018] |But the product, which wasn't as concentrated as the new Cheer, bombed in a market test in Denver and was dropped.

[22320019] |P&G and others also have tried repeatedly to hook consumers on detergent and fabric softener combinations in pouches, but they haven't sold well, despite the convenience.

[22320020] |But P&G contends the new Cheer is a unique formula that also offers an ingredient that prevents colors from fading.
[22320021] |And retailers are expected to embrace the product, in part because it will take up less shelf space.
[22320022] |"When shelf space was cheap, bigger was better," says Hugh Zurkuhlen, an analyst at Salomon Bros.
[22320023] |But with so many brands vying for space, that's no longer the case.
[22320024] |If the new Cheer sells well, the trend toward smaller packaging is likely to accelerate as competitors follow with their own superconcentrates.
[22320025] |Then retailers "will probably push the {less-established} brands out altogether," he says.

[22320026] |Competition is bound to get tougher if Kao introduces a product like Attack in the U.S.
[22320027] |To be sure, Kao wouldn't have an easy time taking U.S. market share away from the mighty P&G, which has about 23% of the market.

[22320028] |Kao officials previously have said they are interested in selling detergents in the U.S., but so far the company has focused on acquisitions, such as last year's purchase of Andrew Jergens Co., a Cincinnati hand-lotion maker.
[22320029] |It also has a product-testing facility in California.

[22320030] |Some believe P&G's interest in a superconcentrated detergent goes beyond the concern for the Japanese.
[22320031] |"This is something P&G would do with or without Kao," says Mr. Zurkuhlen.

[22321001] |With economic tension between the U.S. and Japan worsening, many Japanese had feared last week's visit from U.S. Trade Representative Carla Hills.
[22321002] |They expected a new barrage of demands that Japan do something quickly to reduce its trade surplus with the U.S.

[22321003] |Instead, they got a discussion of the need for the U.S. and Japan to work together and of the importance of the long-term view.
[22321004] |Mrs. Hills' first trip to Japan as America's chief trade negotiator had a completely different tone from last month's visit by Commerce Secretary Robert A. Mosbacher.

[22321005] |Mr. Mosbacher called for concrete results by next spring in negotiations over fundamental Japanese business practices that supposedly inhibit free trade.
[22321006] |He said such results should be "measurable in dollars and cents" in reducing the U.S. trade deficit with Japan.

[22321007] |But Mrs. Hills, speaking at a breakfast meeting of the American Chamber of Commerce in Japan on Saturday, stressed that the objective "is not to get definitive action by spring or summer, it is rather to have a blueprint for action."
[22321008] |She added that she expected "perhaps to have a down payment . . . some small step to convince the American people and the Japanese people that we're moving in earnest."

[22321009] |How such remarks translate into policy won't become clear for months.
[22321010] |American and Japanese officials offered several theories for the difference in approach betwen Mr. Mosbacher and Mrs. Hills.
[22321011] |Many called it simply a contrast in styles.
[22321012] |But some saw it as a classic negotiating tactic.
[22321013] |Others said the Bush administration may feel the rhetoric on both sides is getting out of hand.
[22321014] |And some said it reflected the growing debate in Washington over pursuing free trade with Japan versus some kind of managed trade.

[22321015] |Asked to compare her visit to Mr. Mosbacher's, Mrs. Hills replied: "I didn't hear every word he spoke, but as a general proposition, I think we have a very consistent trade strategy in the Bush administration."
[22321016] |Yet more than one American official who sat in with her during three days of talks with Japanese officials said her tone often was surprisingly "conciliatory."

[22321017] |"I think my line has been very consistent," Mrs. Hills said at a news conference Saturday afternoon.
[22321018] |"I am painted sometimes as ferocious, perhaps because I have a ferocious list of statutes to implement.
[22321019] |I don't feel very ferocious.
[22321020] |I don't feel either hard or soft.
[22321021] |I feel committed to the program of opening markets and expanding trade."

[22321022] |When she met the local press for the first time on Friday, Mrs. Hills firmly reiterated the need for progress in removing barriers to trade in forest products, satellites and supercomputers, three areas targeted under the Super 301 provision of the 1988 trade bill.
[22321023] |She highlighted exclusionary business practices that the U.S. government has identified.
[22321024] |But her main thrust was to promote the importance of world-wide free trade and open competition.
[22321025] |She said the trade imbalance was mainly due to macroeconomic factors and shouldn't be tackled by setting quantitative targets.

[22321026] |At her news conference for Japanese reporters, one economics journalist summed up the Japanese sense of relief.
[22321027] |"My impression was that you would be a scary old lady," he said, drawing a few nervous chuckles from his colleagues.
[22321028] |"But I am relieved to see that you are beautiful and gentle and intelligent and a person of integrity."

[22321029] |Mrs. Hills' remarks did raise questions, at least among some U.S. officials, about what exactly her stance is on U.S. access to the Japanese semiconductor market.
[22321030] |The U.S. share of the Japanese market has been stuck around 10% for years.
[22321031] |Many Americans have interpreted a 1986 agreement as assuring U.S. companies a 20% share by 1991, but the Japanese have denied making any such promise.

[22321032] |At one of her news conferences, Mrs. Hills said, "I believe we can do much better than 20%."
[22321033] |But she stressed, "I am against managed trade.
[22321034] |I will not enter into an agreement that stipulates to a percentage of the market.

[22322001] |Traditional Industries Inc. said it expects to report a net loss for the fourth quarter that ended June 30 and is seeking new financing.

[22322002] |The seller of photographic products and services said it is considering a number of financing alternatives, including seeking increases in its credit lines.

[22322003] |Traditional declined to estimate the amount of the loss and wouldn't say if it expects to show a profit for the year.
[22322004] |In the year ended June 30, 1988, Traditional reported net income of $4.9 million, or $1.21 a share.
[22322005] |The company didn't break out its fourth-quarter results.
[22322006] |In the latest nine months net income was $4.7 million, or $1.31 a share, on revenue of $44.3 million.

[22322007] |Separately, the company said it would file a delayed fiscal-year report with the Securities and Exchange Commission "within approximately 45 days."
[22322008] |It said the delay resulted from difficulties in resolving its accounting of a settlement with the Federal Trade Commission.
[22322009] |Under an agreement filed in federal court in August to settle FTC objections to some Traditional sales practices, Traditional said it would establish a $250,000 trust fund to provide refunds to certain customers.

[22323001] |Information International Inc. said it was sued by a buyer of its computerized newspaper-publishing system, alleging that the company failed to correct deficiencies in the system.

[22323002] |A spokesman for Information International said the lawsuit by two units of Morris Communications Corp. seeks restitution of the system's about $3 million purchase price and cancellation of a software license provided by the Morris units to Information International for alleged failure to pay royalties.

[22323003] |Information International said it believes that the complaints, filed in federal court in Georgia, are without merit.
[22323004] |Closely held Morris Communications is based in Augusta, Ga.
[22323005] |The units that filed the suit are Southeastern Newspapers Corp. and Florida Publishing Co.

[22324001] |Syms Corp. completed the sale of its A. Sulka & Co. subsidiary, a men's luxury haberdashery, to Luxco Investments.

[22324002] |Terms weren't disclosed.

[22324003] |As Syms's "core business of off-price retailing grows, a small subsidiary that is operationally unrelated becomes a difficult distraction," said Marcy Syms, president of the parent, in a statement.

[22324004] |A spokeswoman said Sulka operates a total of seven stores in the U.S. and overseas.
[22324005] |Syms operates 25 off-price apparel stores in the U.S.

[22325001] |The oil industry's middling profits could persist through the rest of the year.

[22325002] |Major oil companies in the next few days are expected to report much less robust earnings than they did for the third quarter a year ago, largely reflecting deteriorating chemical prices and gasoline profitability.
[22325003] |The gasoline picture may improve this quarter, but chemicals are likely to remain weak, industry executives and analysts say, reducing chances that profits could equal their year-earlier performance.

[22325004] |The industry is "seeing a softening somewhat in volume and certainly in price in petrochemicals," Glenn Cox, president of Phillips Petroleum Co., said in an interview.
[22325005] |"That change will obviously impact third and fourth quarter earnings" for the industry in general, he added.
[22325006] |He didn't forecast Phillips's results.

[22325007] |But securities analysts say Phillips will be among the companies hard-hit by weak chemical prices and will probably post a drop in third-quarter earnings.
[22325008] |So, too, many analysts predict, will Exxon Corp., Chevron Corp. and Amoco Corp.

[22325009] |Typical is what happened to the price of ethylene, a major commodity chemical produced in vast amounts by many oil companies.
[22325010] |It has plunged 13% since July to around 26 cents a pound.
[22325011] |A year ago ethylene sold for 33 cents, peaking at about 34 cents last December.

[22325012] |A big reason for the chemical price retreat is overexpansion.
[22325013] |Beginning in mid-1987, prices began accelerating as a growing U.S. economy and the weak dollar spurred demand.
[22325014] |Companies added capacity furiously.
[22325015] |Now, greatly increased supplies are on the market, while the dollar is stronger, and domestic economic growth is slower.

[22325016] |Third-quarter profits from gasoline were weaker.
[22325017] |"Refining margins were so good in the third quarter of last year and generally not very good this year," said William Randol, a securities analyst at First Boston Corp.

[22325018] |Oil company refineries ran flat out to prepare for a robust holiday driving season in July and August that didn't materialize.
[22325019] |The excess supply pushed gasoline prices down in that period.
[22325020] |In addition, crude oil prices were up some from a year earlier, further pressuring profitability.

[22325021] |Refiners say margins picked up in September, and many industry officials believe gasoline profits will rebound this quarter, though still not to the level of 1988's fourth quarter.
[22325022] |During the 1988 second half, many companies posted record gasoline and chemical profits.

[22325023] |Crude oil production may turn out to be the most surprising element of companies' earnings this year.
[22325024] |Prices -- averaging roughly $2 a barrel higher in the third quarter than a year earlier -- have stayed well above most companies' expectations.
[22325025] |Demand has been much stronger than anticipated, and it typically accelerates in the fourth quarter.
[22325026] |"We could see higher oil prices this year," said Bryan Jacoboski, an analyst at PaineWebber Inc.

[22325027] |That will translate into sharply higher production profits, particularly compared with last year when oil prices steadily fell to below $13 a barrel in the fourth quarter.

[22325028] |While oil prices have been better than expected, natural gas prices have been worse.
[22325029] |In the third quarter, they averaged about 5% less than they were in 1988.
[22325030] |The main reason remains weather.
[22325031] |Last summer was notable for a heat wave and drought that caused utilities to burn more natural gas to feed increased electrical demand from air conditioning use.
[22325032] |This summer, on the other hand, had milder weather than usual.

[22325033] |"We've been very disappointed in the performance of natural gas prices," said Mr. Cox, Phillips's president.
[22325034] |"The lagging gas price is not going to assist fourth quarter performance as many had expected."

[22325035] |Going into the fourth quarter, natural gas prices are anywhere from 8% to 17% lower than a year earlier.
[22325036] |For instance, natural gas currently produced along the Gulf Coast is selling on the spot market for around $1.47 a thousand cubic feet, down 13% from $1.69 a thousand cubic feet a year ago.

[22326001] |The Bush administration, trying to blunt growing demands from Western Europe for a relaxation of controls on exports to the Soviet bloc, is questioning whether Italy's Ing. C. Olivetti & Co. supplied militarily valuable technology to the Soviets.

[22326002] |Most of the Western European members of Coordinating Committee on Multilateral Export Controls, the unofficial forum through which the U.S. and its allies align their export-control policies, are expected to argue for more liberal export rules at a meeting to be held in Paris Oct. 25 and 26.
[22326003] |They plan to press specifically for a relaxation of rules governing exports of machine tools, computers and other high-technology products.

[22326004] |But the Bush administration says it wants to see evidence that all Cocom members are complying fully with existing export-control procedures before it will support further liberalization.
[22326005] |To make its point, it is challenging the Italian government to explain reports that Olivetti may have supplied the Soviet Union with sophisticated computer-driven devices that could be used to build parts for combat aircraft.

[22326006] |The London Sunday Times, which first reported the U.S. concerns, cited a U.S. intelligence report as the source of the allegations that Olivetti exported $25 million in "embargoed, state-of-the-art, flexible manufacturing systems to the Soviet aviation industry."
[22326007] |Olivetti reportedly began shipping these tools in 1984.

[22326008] |A State Department spokesman acknowledged that the U.S. is discussing the allegations with the Italian government and Cocom, but declined to confirm any details.
[22326009] |Italian President Francesco Cossiga promised a quick investigation into whether Olivetti broke Cocom rules.
[22326010] |President Bush called his attention to the matter during the Italian leader's visit here last week.

[22326011] |Olivetti has denied that it violated Cocom rules, asserting that the reported shipments were properly licensed by the Italian authorities.

[22326012] |Although the legality of these sales is still an open question, the disclosure couldn't be better timed to support the position of export-control hawks in the Pentagon and the intelligence community.
[22326013] |"It seems to me that a story like this breaks just before every important Cocom meeting," said a Washington lobbyist for a number of U.S. computer companies.

[22326014] |The Bush administration has sent conflicting signals about its export-control policies, reflecting unhealed divisions among several competing agencies.
[22326015] |Last summer, Mr. Bush moved the administration in the direction of gradual liberalization when he told a North Atlantic Treaty Organization meeting that he would allow some exceptions to the Cocom embargo of strategic goods.
[22326016] |But more recently, the Pentagon and the Commerce Department openly feuded over the extent to which Cocom should liberalize exports of personal computers to the bloc.

[22326017] |However, these agencies generally agree that the West should be cautious about any further liberalization.
[22326018] |"There's no evidence that the Soviet program to (illegally) acquire Western technology has diminished," said a State Department spokesman.

[22327001] |Salomon Brothers International Ltd., a British subsidiary of Salomon Inc., announced it will issue warrants on shares of Hong Kong Telecommunications Ltd.

[22327002] |The move closely follows a similar offer by Salomon of warrants for shares of Hongkong & Shanghai Banking Corp.

[22327003] |Under the latest offer, HK$62.5 million (US$8 million) of three-year warrants will be issued in London, each giving buyers the right to buy one Hong Kong Telecommunications share at a price to be determined Friday.

[22327004] |The 50 million warrants will be priced at HK$1.25 each and are expected to carry a premium to the share price of about 26%.
[22327005] |In trading on the Stock Exchange of Hong Kong, the shares closed Wednesday at HK$4.80 each.
[22327006] |At this price, the shares would have to rise above HK$6.05 for subscribers to Salomon's issue to profitably convert their warrants.

[22327007] |While Hong Kong companies have in the past issued warrants on their own shares, Salomon's warrants are the first here to be issued by a third party.
[22327008] |Salomon will "cover" the warrants by buying sufficient shares, or options to purchase shares, to cover its entire position.

[22327009] |Bankers said warrants for Hong Kong stocks are attractive because they give foreign investors, wary of volatility in the colony's stock market, an opportunity to buy shares without taking too great a risk.

[22327010] |The Hong Kong Telecommunications warrants should be attractive to buyers in Europe, the bankers added, because the group is one of a handful of blue-chip stocks on the Hong Kong market that has international appeal.

[22328001] |Financial Corp. of Santa Barbara filed suit against former stock speculator Ivan F. Boesky and Drexel Burnham Lambert Inc., charging they defrauded the thrift by concealing their relationship when persuading it to buy $284 million in high-yield, high-risk junk bonds.

[22328002] |In a suit filed in federal court Thursday, the S&L alleged that a "disproportionate number" of the bonds it purchased in 1984 declined in value.
[22328003] |Financial Corp. purchased the bonds, the suit alleged, after Mr. Boesky and Drexel negotiated an agreement for Vagabond Hotels to purchase a 51% stake in the thrift for about $34 million.

[22328004] |Vagabond Hotels was controlled by Mr. Boesky, who currently is serving a prison term for securities violations.
[22328005] |Officials at Drexel said they hadn't seen the suit and thus couldn't comment.

[22328006] |In addition to $33 million compensatory damages, the suit seeks $100 million in punitive damages.

[22328007] |Also named in the suit is Ivan F. Boesky Corp. and Northview Corp., the successor company to Vagabonds Hotels.
[22328008] |Northview officials couldn't be located.

[22328009] |Financial Corp. said it agreed to buy the bonds after a representative of Ivan F. Boesky Corp. visited it in November 1983 and said Financial Corp. could improve its financial condition by purchasing the bonds.
[22328010] |Shortly before the visit, Mr. Boesky and Drexel representives had met with Financial Corp. officials and had signed a letter of intent to acquire the 51% stake in the company.
[22328011] |However, the agreement was canceled in June 1984.

[22328012] |Financial Corp. purchased the bonds in at least 70 different transactions in 1984 and since then has realized $11 million in losses on them, the company said.

[22329001] |Ideal Basic Industries Inc. said its directors reached an agreement in principle calling for HOFI North America Inc. to combine its North American cement holdings with Ideal in a transaction that will leave Ideal's minority shareholders with 12.8% of the combined company.

[22329002] |HOFI, the North American holding company of Swiss concern Holderbank Financiere Glaris Ltd., previously proposed combining its 100% stake in St. Lawrence Cement Inc. and its 60% stake in Dundee Cement Co. with its 67% stake in Ideal.

[22329003] |But HOFI's first offer would have given Ideal's other shareholders about 10% of the combined company.
[22329004] |Ideal's directors rejected that offer, although they said they endorsed the merger proposal.

[22329005] |Under the agreement, HOFI will own 87.2% of the combined company.
[22329006] |Ideal's current operations will represent about 39.2% of the combined company.

[22329007] |The transaction is subject to a definitive agreement and approval by Ideal shareholders.
[22329008] |Ideal said it expects to complete the transaction early next year.

[22330001] |While corn and soybean prices have slumped well below their drought-induced peaks of 1988, wheat prices remain stubbornly high.
[22330002] |And they're likely to stay that way for months to come, analysts say.

[22330003] |For one thing, even with many farmers planting more winter wheat this year than last, tight wheat supplies are likely to support prices well into 1990, the analysts say.
[22330004] |And if rain doesn't fall soon across many of the Great Plains' wheat-growing areas, yields in the crop now being planted could be reduced, further squeezing supplies.
[22330005] |Also supporting prices are expectations that the Soviet Union will place substantial buying orders over the next few months.

[22330006] |By next May 31, stocks of U.S. wheat to be carried over into the next season -- before the winter wheat now being planted is harvested -- are projected to drop to 443 million bushels.
[22330007] |That would be the lowest level since the early 1970s.
[22330008] |Stocks were 698 million bushels on May 31 of this year.

[22330009] |In response to dwindling domestic supplies, Agriculture Secretary Clayton Yeutter last month said the U.S. government would slightly increase the number of acres farmers can plant in wheat for next year and still qualify for federal support payments.
[22330010] |The government estimates that the new plan will boost production next year by about 66 million bushels.
[22330011] |It now estimates production for next year at just under 2.6 billion bushels, compared with this year's estimated 2.04 billion and a drought-stunted 1.81 billion in 1988.

[22330012] |But the full effect on prices of the winter wheat now being planted won't be felt until the second half of next year.
[22330013] |Until then, limited stocks are likely to keep prices near the $4-a-bushel level, analysts say.
[22330014] |On the Chicago Board of Trade Friday, wheat for December delivery settled at $4.0675 a bushel, unchanged.

[22330015] |In theory at least, tight supplies next spring could leave the wheat futures market susceptible to a supply-demand squeeze, said Daniel Basse, a futures analyst with AgResource Co. in Chicago.
[22330016] |Such a situation can wreak havoc, as was shown by the emergency that developed in soybean futures trading this summer on the Chicago Board of Trade.

[22330017] |In July, the CBOT ordered Ferruzzi Finanziaria S.p.A. to liquidate futures positions equal to about 23 million bushels of soybeans.
[22330018] |The exchange said it feared that some members wouldn't be able to find enough soybeans to deliver and would have to default on their contractual obligation to the Italian conglomerate, which had refused requests to reduce its holdings.
[22330019] |Ferruzzi has denied it was trying to manipulate the soybean futures market.

[22330020] |Unseasonably hot, dry weather across large portions of the Great Plains and in wheat-growing areas in Washington and Oregon is threatening to reduce the yield from this season's winter wheat crop, said Conrad Leslie, a futures analyst and head of Leslie Analytical in Chicago.
[22330021] |For example, in the Oklahoma panhandle, 40% or more of the topsoil is short of moisture.
[22330022] |That figure climbs to about 47% in wheat-growing portions of Kansas, he said.

[22330023] |The Soviet Union hasn't given any clear indication of its wheat purchase plans, but many analysts expect Moscow to place sizable orders for U.S. wheat in the next few months, further supporting prices.
[22330024] |"Wheat prices will increasingly pivot off of Soviet demand" in coming weeks, predicted Richard Feltes, vice president, research, for Refco Inc. in Chicago.

[22330025] |Looking ahead to other commodity markets this week:

[22330026] |Orange Juice Traders will be watching to see how long and how far the price decline that began Friday will go.

[22330027] |Late Thursday, after the close of trading, the market received what would normally have been a bullish U.S. Department of Agriculture estimate of the 1989-90 Florida orange crop.
[22330028] |It was near the low range of estimates, at 130 million 90-pound boxes, compared with 146.6 million boxes last season.

[22330029] |However, as expected, Brazil waited for the crop estimate to come out and then cut the export price of its juice concentrate to about $1.34 a pound from around $1.55.
[22330030] |Friday's consequent selling of futures contracts erased whatever supportive effect the U.S. report might have had and sent the November orange juice contract down as much as 6.55 cents a pound at one time.
[22330031] |It settled with a loss of 4.95 cents at $1.3210 a pound.

[22330032] |Brazilian juice, after a delay caused by drought at the start of its crop season, is beginning to arrive in the U.S. in large quantities.
[22330033] |Brazil wants to stimulate demand for its product, which is going to be in plentiful supply.

[22330034] |The price cut, one analyst said, appeared to be aimed even more at Europe, where consumption of Brazilian juice has fallen.
[22330035] |It's a dollar-priced product, and the strong dollar has made it more expensive in Europe, the analyst said.

[22330036] |New York futures prices have dropped significantly from more than $2 a pound at midyear.
[22330037] |Barring a cold snap or other crop problems in the growing areas, downward pressure on prices is likely to continue into January, when harvesting and processing of oranges in Florida reach their peak, the analyst said.

[22330038] |Energy

[22330039] |Although some analysts look for profit-taking in the wake of Friday's leap in crude oil prices, last week's rally is generally expected to continue this week.

[22330040] |"I would continue to look for a stable crude market, at least in futures" trading, said William Hinton, an energy futures broker with Stotler & Co.

[22330041] |Friday capped a week of steadily rising crude oil prices in both futures and spot markets.
[22330042] |On the New York Mercantile Exchange, West Texas Intermediate crude for November delivery finished at $20.89 a barrel, up 42 cents on the day.
[22330043] |On European markets, meanwhile, spot prices of North Sea crudes were up 35 to 75 cents a barrel.

[22330044] |"This market still wants to go higher," said Nauman Barakat, a first vice president at Shearson Lehman Hutton Inc.
[22330045] |He predicted that the November contract will reach $21.50 a barrel or more on the New York Mercantile Exchange.

[22330046] |There has been little news to account for such buoyancy in the oil markets.
[22330047] |Analysts generally cite a lack of bearish developments as well as rumors of a possible tightening of supplies of some fuels and crudes.
[22330048] |There also are recurring reports that the Soviet Union is having difficulties with its oil exports and that Nigeria has about reached its production limit and can't produce as much as it could sell.
[22330049] |Many traders foresee a tightening of near-term supplies, particularly of high-quality crudes such as those produced in the North Sea and in Nigeria.

[22331001] |If a hostile predator emerges for Saatchi & Saatchi Co., co-founders Charles and Maurice Saatchi will lead a management buy-out attempt, an official close to the company said.

[22331002] |Financing for any takeover attempt may be problematic in the wake of Friday's stock-market sell-off in New York and turmoil in the junk-bond market.
[22331003] |But the beleaguered British advertising and consulting giant, which last week named a new chief executive officer to replace Maurice Saatchi, has been the subject of intense takeover speculation for weeks.

[22331004] |Last week, Saatchi's largest shareholder, Southeastern Asset Management, said it had been approached by one or more third parties interested in a possible restructuring.
[22331005] |And Carl Spielvogel, chief executive officer of Saatchi's big Backer Spielvogel Bates advertising unit, said he had offered to lead a management buy-out of the company, but was rebuffed by Charles Saatchi.
[22331006] |Mr. Spielvogel said he wouldn't launch a hostile bid.

[22331007] |The executive close to Saatchi & Saatchi said that "if a bidder came up with a ludicrously high offer, a crazy offer which Saatchi knew it couldn't beat, it would have no choice but to recommend it to shareholders.
[22331008] |But {otherwise} it would undoubtedly come back" with an offer by management.
[22331009] |The executive said any buy-out would be led by the current board, whose chairman is Maurice Saatchi and whose strategic guiding force is believed to be Charles Saatchi.
[22331010] |Mr. Spielvogel isn't part of the board, nor are any of the other heads of Saatchi's big U.S.-based ad agencies.

[22331011] |The executive didn't name any price, but securities analysts have said Saatchi would fetch upward of $1.3 billion.

[22331012] |The executive denied speculation that Saatchi was bringing in the new chief executive officer only to clean up the company financially so that the brothers could lead a buy-back.
[22331013] |That speculation abounded Friday as industry executives analyzed the appointment of the new chief executive, Robert Louis-Dreyfus, who joins Saatchi and becomes a member of its board on Jan. 1.
[22331014] |Mr. Louis-Dreyfus, formerly chief executive of the pharmaceutical research firm IMS International Inc., has a reputation as a savvy financial manager, and will be charged largely with repairing Saatchi's poor financial state.

[22331015] |Asked about the speculation that Mr. Louis-Dreyfus has been hired to pave the way for a buy-out by the brothers, the executive replied, "That isn't the reason Dreyfus has been brought in.
[22331016] |He was brought in to turn around the company."

[22331017] |Separately, several Saatchi agency clients said they believe the company's management shakeup will have little affect on them.

[22331018] |"It hasn't had any impact on us, nor do we expect it to," said a spokeswoman for Miller Brewing Co., a major client of Backer Spielvogel.
[22331019] |John Lampe, director of advertising at PaineWebber Inc., a Saatchi & Saatchi Advertising client, said: "We have no problem with the announcement, because we don't know what change it's going to bring about.
[22331020] |We aren't going to change agencies because of a change in London."

[22331021] |Executives at Backer Spielvogel client Avis Inc., as well as at Saatchi client Philips Lighting Co., also said they saw no effect.
[22331022] |Executives at Prudential-Bache Securities Inc., a Backer Spielvogel client that is reviewing its account, declined comment.
[22331023] |Mr. Spielvogel had said that Prudential-Bache was prepared to finance either a management buy-out and restructuring, or a buy-out of Backer Spielvogel alone, led by him.

[22331024] |Ad Notes. . . .

[22331025] |NEW ACCOUNT:
[22331026] |California's Glendale Federal Bank awarded its $12 million to $15 million account to the Los Angeles office of Omnicom Group's BBDO agency.
[22331027] |The account was previously handled by Davis, Ball & Colombatto Advertising Inc., a Los Angeles agency.

[22331028] |ACCOUNT REVIEW:
[22331029] |Royal Crown Cola Co. has ended its relationship with the Boston office of Hill, Holliday, Connors, Cosmopulos.
[22331030] |The account had billed about $6 million in 1988, according to Leading National Advertisers.

[22331031] |NOT-GUILTY PLEA:
[22331032] |As expected, Young & Rubicam Inc. along with two senior executives and a former employee, pleaded not guilty in federal court in New Haven, Conn., to conspiracy and racketeering charges.
[22331033] |The government has charged that they bribed Jamaican officials to win the Jamaica Tourist Board ad account in 1981.
[22331034] |A spokesman for the U.S. Attorney's office said extradition proceedings are "just beginning" for the other two defendants in the case, Eric Anthony Abrahams, former Jamaican tourism minister, and Jamaican businessman Arnold Foote Jr.

[22331035] |KOREAN AGENCY:
[22331036] |The Samsung Group and Bozell Inc. agreed to establish a joint venture advertising agency in South Korea.
[22331037] |Bozell Cheil Corp., as the new agency will be called, will be based in Seoul and is 70% owned by Samsung and 30% owned by Bozell.
[22331038] |Samsung already owns Korea First Advertising Co., that country's largest agency.
[22331039] |Bozell joins Backer Spielvogel Bates and Ogilvy Group as U.S. agencies with interests in Korean agencies.

[22332001] |Citing a payment from a supplier and strong sales of certain data-storage products, Maxtor Corp. said earnings and revenue jumped in its second quarter ended Sept. 24.

[22332002] |The maker of computer-data-storage products said net income rose to $4.8 million, or 23 cents a share, from year-earlier net of $1.1 million, or five cents a share.
[22332003] |Revenue soared to $117 million from $81.5 million.

[22332004] |Maxtor said its results were boosted by $2 million in payments received from a supplier, for a certain line of products that Maxtor isn't going to sell anymore.
[22332005] |Maxtor said effects from discontinuing the line may have a positive effect on future earnings and revenue.
[22332006] |A spokeswoman wouldn't elaborate, but the company said the discontinued product has never been a major source of revenue or profit.

[22332007] |Operationally, Maxtor benefited from robust sales of products that store data for high-end personal computers and computer workstations.

[22332008] |In the fiscal first half, net was $7 million, or 34 cents a share, up from the year-earlier $3.1 million, or 15 cents a share.
[22332009] |Revenue rose to $225.5 million from $161.8 million.

[22333001] |Robert G. Walden, 62 years old, was elected a director of this provider of advanced technology systems and services, increasing the board to eight members.
[22333002] |He retired as senior vice president, finance and administration, and chief financial officer of the company Oct. 1.

[22334001] |Southmark Corp. said that it filed part of its 10-K report with the Securities and Exchange Commission, but that the filing doesn't include its audited financial statements and related information.

[22334002] |The real estate and thrift concern, operating under bankruptcy-law proceedings, said it told the SEC it couldn't provide financial statements by the end of its first extension "without unreasonable burden or expense."
[22334003] |The company asked for a 15-day extension Sept. 30, when the financial reports were due.

[22334004] |Southmark said it plans to amend its 10K to provide financial results as soon as its audit is completed.

[22335001] |Alan Seelenfreund, 52 years old, was named chairman of this processor of prescription claims, succeeding Thomas W. Field Jr., 55, who resigned last month.
[22335002] |Mr. Field also had been chairman of McKesson Corp., resigning that post after a dispute with the board over corporate strategy.
[22335003] |Mr. Seelenfreund is executive vice president and chief financial officer of McKesson and will continue in those roles.
[22335004] |PCS also named Rex R. Malson, 57, executive vice president at McKesson, as a director, filling the seat vacated by Mr. Field.
[22335005] |Messrs. Malson and Seelenfreund are directors of McKesson, which has an 86% stake in PCS.

[22336001] |MedChem Products Inc. said a U.S. District Court in Boston ruled that a challenge by MedChem to the validity of a U.S. patent held by Pharmacia Inc. was "without merit."

[22336002] |Pharmacia, based in Upsala, Sweden, had charged in a lawsuit against MedChem that MedChem's AMVISC product line infringes on the Pharmacia patent.
[22336003] |The patent is related to hyaluronic acid, a rooster-comb extract used in eye surgery.
[22336004] |In its lawsuit, Pharmacia is seeking unspecified damages and a preliminary injunction to block MedChem from selling the AMVISC products.
[22336005] |A MedChem spokesman said the products contribute about a third of MedChem's sales and 10% to 20% of its earnings.

[22336006] |In the year ended Aug. 31, 1988, MedChem earned $2.9 million, or 72 cents a share, on sales of $17.4 million.

[22336007] |MedChem said the court's ruling was issued as part of a "first-phase trial" in the patent-infringement proceedings and concerns only one of its defenses in the case.
[22336008] |It said it is considering "all of its options in light of the decision, including a possible appeal."
[22336009] |The medical-products company added that it plans to "assert its other defenses" against Pharmacia's lawsuit, including the claim that it hasn't infringed on Pharmacia's patent.

[22336010] |MedChem said that the court scheduled a conference for next Monday -- to set a date for proceedings on Pharmacia's motion for a preliminary injunction.

[22337001] |Newspaper publishers are reporting mixed third-quarter results, aided by favorable newsprint prices and hampered by flat or declining advertising linage, especially in the Northeast.

[22337002] |Adding to unsteadiness in the industry, seasonal retail ad spending patterns in newspapers have been upset by shifts in ownership and general hardships within the retail industry.
[22337003] |In New York, the Bonwit Teller and B. Altman & Co. department stores have filed for protection from creditors under Chapter 11 of the federal Bankruptcy Code, while the R.H. Macy & Co., Bloomingdale's and Saks Fifth Avenue department-store chains are for sale.

[22337004] |Many papers throughout the country are also faced with a slowdown in classified-ad spending, a booming category for newspapers in recent years.

[22337005] |Until recently, industry analysts believed decreases in retail ad spending had bottomed out and would in fact increase in this year's third and fourth quarters.
[22337006] |All bets are off, analysts say, because of the shifting ownership of the retail chains.

[22337007] |"Improved paper prices will help offset weakness in linage, but the retailers' problems have affected the amount of ad linage they usually run," said Edward J. Atorino, industry analyst for Salomon Brothers Inc.
[22337008] |"Retailers are just in disarray."

[22337009] |For instance, Gannett Co. posted an 11% gain in net income, as total ad pages dropped at USA Today, but advertising revenue rose because of a higher circulation rate base and increased rates.
[22337010] |Gannett's 83 daily and 35 non-daily newspapers reported a 3% increase in advertising and circulation revenue.
[22337011] |Total advertising linage was "modestly" lower as classified-ad volume increased, while there was "softer demand" for retail and national ad linage, said John Curley, Gannett's chief executive officer.

[22337012] |At USA Today, ad pages totaled 785 for the quarter, down 9.2% from the 1988 period, which was helped by increased ad spending from the Summer Olympics.
[22337013] |While USA Today's total paid ad pages for the year to date totaled 2,735, a decrease of 4% from last year, the paper's ad revenue increased 8% in the quarter and 13% in the nine months.
[22337014] |In the nine months, Gannett's net rose 9.5% to $270 million, or $1.68 a share, from $247 million, or $1.52 a share.
[22337015] |Revenue gained 6% to $2.55 billion from $2.4 billion.

[22337016] |At Dow Jones & Co., third-quarter net income fell 9.9% from the year-earlier period.
[22337017] |Net fell to $28.8 million, or 29 cents a share, from $32 million, or 33 cents a share.
[22337018] |The year-earlier period included a one-time gain of $3.5 million, or four cents a share.
[22337019] |Revenue gained 5.3% to $404.1 million from $383.8 million.

[22337020] |The drop in profit reflected, in part, continued softness in financial advertising at The Wall Street Journal and Barron's magazine.
[22337021] |Ad linage at the Journal fell 6.1% in the third quarter.

[22337022] |Affiliated Publications Inc. reversed a year-earlier third quarter net loss.
[22337023] |The publisher of the Boston Globe reported net of $8.5 million, or 12 cents a share, compared with a loss of $26.5 million, or 38 cents a share, for the third quarter in 1988.

[22337024] |William O. Taylor, the parent's chairman and chief executive officer, said earnings continued to be hurt by softness in ad volume at the Boston newspaper.

[22337025] |Third-quarter profit estimates for several companies are being strongly affected by the price of newsprint, which in the last two years has had several price increases.
[22337026] |After a supply crunch caused prices to rise 14% since 1986 to $650 a metric ton, analysts are encouraged, because they don't expect a price increase for the rest of this year.

[22337027] |Companies with daily newspapers in the Northeast will need the stable newsprint prices to ease damage from weak ad linage.
[22337028] |Mr. Atorino at Salomon Brothers said he estimates that Times Mirror Co.'s earnings were down for the third quarter, because of soft advertising levels at its Long Island Newsday and Hartford Courant newspapers.
[22337029] |Trouble on the East Coast was likely offset by improved ad linage at the Los Angeles Times, which this week also unveiled a redesign.

[22337030] |New York Times Co. is expected to report lower earnings for the third quarter because of continued weak advertising levels at its flagship New York Times and deep discounting of newsprint at its affiliate, Forest Products Group.

[22337031] |"Times Co.'s regional daily newspapers are holding up well, but there is little sign that things will improve in the New York market," said Alan Kassan, an analyst with Shearson Lehman Hutton.

[22337032] |Washington Post Co. is expected to report improved earnings, largely because of increased cable revenue and publishing revenue helped by an improved retail market in the Washington area.
[22337033] |According to analysts, profits were also helped by successful cost-cutting measures at Newsweek.
[22337034] |The news-weekly has faced heightened competition from rival Time magazine and a relatively flat magazine advertising market.

[22337035] |Knight-Ridder Inc. is faced with continued uncertainty over the pending joint operating agreement between its Detroit Free Press and Gannett's Detroit News, and has told analysts that earnings were down in the third quarter.
[22337036] |However, analysts point to positive advertising spending at several of its major daily newspapers, such as the Miami Herald and San Jose Mercury News.

[22337037] |"The Miami market is coming back strong after a tough couple of years" when Knight-Ridder "was starting up a Hispanic edition and circulation was falling," said Bruce Thorp, an analyst for Provident National Bank.

[22338001] |General Motors Corp., in a series of moves that angered union officials in the U.S. and Canada, has signaled that as many as five North American assembly plants may not survive the mid-1990s as the corporation struggles to cut its excess vehicle-making capacity.

[22338002] |In announcements to workers late last week, GM effectively signed death notices for two full-sized van assembly plants, and cast serious doubt on the futures of three U.S. car factories.

[22338003] |GM is under intense pressure to close factories that became unprofitable as the giant auto maker's U.S. market share skidded during the past decade.
[22338004] |The company, currently using about 80% of its North American vehicle capacity, has vowed it will run at 100% of capacity by 1992.
[22338005] |Just a month ago, GM announced it would make an aging assembly plant in Lakewood, Ga., the eighth U.S. assembly facility to close since 1987.

[22338006] |Now, GM appears to be stepping up the pace of its factory consolidation to get in shape for the 1990s.
[22338007] |One reason is mounting competition from new Japanese car plants in the U.S. that are pouring out more than one million vehicles a year at costs lower than GM can match.
[22338008] |Another is that United Auto Workers union officials have signaled they want tighter no-layoff provisions in the new Big Three national contract that will be negotiated next year.
[22338009] |GM officials want to get their strategy to reduce capacity and the work force in place before those talks begin.

[22338010] |The problem, however, is that GM's moves are coming at a time when UAW leaders are trying to silence dissidents who charge the union is too passive in the face of GM layoffs.
[22338011] |Against that backdrop, UAW Vice President Stephen P. Yokich, who recently became head of the union's GM department, issued a statement Friday blasting GM's "flagrant insensitivity" toward union members.
[22338012] |The auto maker's decision to let word of the latest shutdowns and product reassignments trickle out in separate communiques to the affected plants showed "disarray" and an "inability or unwillingness to provide consistent information," Mr. Yokich said.

[22338013] |GM officials told workers late last week of the following moves: Production of full-sized vans will be consolidated into a single plant in Flint, Mich.
[22338014] |That means two plants -- one in Scarborough, Ontario, and the other in Lordstown, Ohio -- probably will be shut down after the end of 1991.
[22338015] |The shutdowns will idle about 3,000 Canadian assembly workers and about 2,500 workers in Ohio.
[22338016] |Robert White, Canadian Auto Workers union president, used the impending Scarborough shutdown to criticize the U.S.-Canada free trade agreement and its champion, Prime Minister Brian Mulroney.

[22338017] |But Canadian auto workers may benefit from a separate GM move that affects three U.S. car plants and one in Quebec.

[22338018] |Workers at plants in Van Nuys, Calif., Oklahoma City and Pontiac, Mich., were told their facilities are no longer being considered to build the next generation of the Pontiac Firebird and Chevrolet Camaro muscle cars.
[22338019] |GM is studying whether it can build the new Camaro-Firebird profitably at a plant in St. Therese, Quebec, company and union officials said.

[22338020] |That announcement left union officials in Van Nuys and Oklahoma City uncertain about their futures.
[22338021] |The Van Nuys plant, which employs about 3,000 workers, doesn't have a product to build after 1993.
[22338022] |Jerry Shrieves, UAW local president, said the facility was asked to draw up plans to continue working as a "flex plant," which could build several different types of products on short notice to satisfy demand.

[22338023] |At the Oklahoma City plant, which employs about 6,000 workers building the eight-year-old A-body mid-sized cars, Steve Featherston, UAW local vice president, said the plant has no new product lined up, and "none of us knows" when the A-body cars will die.
[22338024] |He said he believes GM has plans to keep building A-body cars into the mid-1990s.

[22338025] |At Pontiac, however, the Camaro-Firebird decision appears to erase UAW hopes that GM would reopen the shuttered assembly plant that last built the plastic-bodied, two-seater Pontiac Fiero model.

[22338026] |The Fiero plant was viewed as a model of union-management cooperation at GM before slow sales of the Fiero forced the company to close the factory last year.
[22338027] |Union officials have taken a beating politically as a result.
[22338028] |Dissident UAW members have used the Fiero plant as a symbol of labor-management cooperation's failure.

[22339001] |Institut Merieux S.A. of France said the Canadian government raised an obstacle to its proposed acquisition of Connaught BioSciences Inc. for 942 million Canadian dollars (US$801.6 million).

[22339002] |Merieux said the government's minister of industry, science and technology told it that he wasn't convinced that the purchase is likely to be of "net benefit" to Canada.
[22339003] |Canadian investment rules require that big foreign takeovers meet that standard.

[22339004] |The French company said the government gave it 30 days in which to submit information to further support its takeover plan.

[22339005] |Both Merieux and Connaught are biotechnology research and vaccine manufacturing concerns.

[22339006] |The government's action was unusual.
[22339007] |Alan Nymark, executive vice president of Investment Canada, which oversees foreign takeovers, said it marked the first time in its four-year history that the agency has made an adverse net-benefit decision about the acquisition of a publicly traded company.
[22339008] |He said it has reached the same conclusions about some attempts to buy closely held concerns, but eventually allowed those acquisitions to proceed.

[22339009] |"This isn't a change in government policy; this provision has been used before," said Jodi Redmond, press secretary for Harvie Andre, Canada's minister of industry, science and technology.
[22339010] |Mr. Andre issued the ruling based on a recommendation by Investment Canada.

[22339011] |Spokesmen for Merieux and Connaught said they hadn't been informed of specific areas of concern by either the government or Investment Canada, but added they hope to have more information early this week.

[22339012] |Investment Canada declined to comment on the reasons for the government decision.

[22339013] |Viren Mehta, a partner with Mehta & Isaly, a New York-based pharmaceutical industry research firm, said the government's ruling wasn't unexpected.

[22339014] |"This has become a very politicized deal, concerning Canada's only large, world-class bio-research or pharmaceutical company," Mr. Mehta said.

[22339015] |Mr. Mehta said the move that could allow the transaction to go ahead as planned could be an out-of-court settlement of Connaught's dispute with the University of Toronto.
[22339016] |The University is seeking to block the acquisition of Connaught by foreign interests, citing concerns about the amount of research that would be done in Canada.

[22339017] |The university is considering a settlement proposal made by Connaught.
[22339018] |While neither side will disclose its contents, Mr. Mehta expects it to contain more specific guarantees on research and development spending levels in Canada than Merieux offered to Investment Canada.

[22339019] |Some analysts, such as Murray Grossner of Toronto-based Richardson Greenshields Inc., believe the government ruling leaves the door open for other bidders, such as Switzerland's Ciba-Geigy and Chiron Corp. of Emeryville, Calif.
[22339020] |Officials for the two concerns, which are bidding C$30 a share for Connaught, couldn't be reached for comment.

[22339021] |French state-owned Rhone-Poulenc S.A. holds 51% of Merieux.

[22340001] |Weatherford International Inc. said it canceled plans for a preferred-stock swap but may resume payment of dividends on the stock, and added that it expects to publicly offer about 10 million common shares.

[22340002] |The company said it planned to offer an undetermined number of common shares in exchange for the 585,000 shares of its preferred stock outstanding.
[22340003] |The exchange ratio was never established.
[22340004] |Weatherford said market conditions led to the cancellation of the planned exchange.

[22340005] |The energy-services concern said, however, that in January 1990, it may resume payments of dividends on the preferred stock.
[22340006] |Weatherford suspended its preferred-dividend payment in October 1985 and said it hasn't any plans to catch up on dividends in arrears about $6 million, but will do so some time in the future.

[22340007] |Additionally, the company said it filed with the Securities and Exchange Commission for the proposed offering of 10 million shares of common stock, expected to be offered in November.

[22340008] |The company said Salomon Brothers Inc. and Howard, Weil, Labouisse, Friedrichs Inc., underwriters for the offering, were granted an option to buy as much as an additional 1.5 million shares to cover over-allotments.
[22340009] |Proceeds will be used to eliminate and restructure bank debt.
[22340010] |Weatherford currently has approximately 11.1 million common shares outstanding.

[22341001] |Earnings for most of the nation's major pharmaceutical makers are believed to have moved ahead briskly in the third quarter, as companies with newer, big-selling prescription drugs fared especially well.

[22341002] |For the third consecutive quarter, however, most of the companies' revenues were battered by adverse foreign-currency translations as a result of the strong dollar abroad.

[22341003] |Analysts said that Merck & Co., Eli Lilly & Co., Warner-Lambert Co. and the Squibb Corp. unit of Bristol-Myers Squibb Co. all benefited from strong sales of relatively new, higher-priced medicines that provide wide profit margins.
[22341004] |Less robust earnings at Pfizer Inc. and Upjohn Co. were attributed to those companies' older products, many of which face stiffening competition from generic drugs and other medicines.

[22341005] |Joseph Riccardo, an analyst with Bear, Stearns & Co., said that over the past few years most drug makers have shed their slow-growing businesses and instituted other cost savings, such as consolidating manufacturing plants and administrative staffs.
[22341006] |As a result, "major new products are having significant impact, even on a company with very large revenues," Mr. Riccardo said.

[22341007] |Analysts said profit for the dozen or so big drug makers, as a group, is estimated to have climbed between 11% and 14%.
[22341008] |While that's not spectacular, Neil Sweig, an analyst with Prudential Bache, said that the rate of growth will "look especially good as compared to other companies if the economy turns downward."

[22341009] |Mr. Sweig estimated that Merck's profit for the quarter rose by about 22%, propelled by sales of its line-up of fast-growing prescription drugs, including its anti-cholesterol drug, Mevacor; a high blood pressure medicine, Vasotec; Primaxin, an antibiotic, and Pepcid, an anti-ulcer medication.
[22341010] |Profit climbed even though Merck's sales were reduced by "one to three percentage points" as a result of the strong dollar, Mr. Sweig said.
[22341011] |In the third quarter of 1988, Merck earned $311.8 million, or 79 cents a share.

[22341012] |In Rahway, N.J., a Merck spokesman said the company doesn't make earnings projections.

[22341013] |Mr. Sweig said he estimated that Lilly's earnings for the quarter jumped about 20%, largely because of the performance of its new anti-depressant Prozac.
[22341014] |The drug, introduced last year, is expected to generate sales of about $300 million this year.
[22341015] |"It's turning out to be a real blockbuster," Mr. Sweig said.

[22341016] |In last year's third quarter, Lilly earned $171.4 million, or $1.20 a share.
[22341017] |In Indianapolis, Lilly declined comment.

[22341018] |Several analysts said they expected Warner-Lambert's profit also to increase by more than 20% from $87.7 million, or $1.25 a share, it reported in the like period last year.
[22341019] |The company is praised by analysts for sharply lowering its costs in recent years and shedding numerous companies with low profit margins.
[22341020] |The company's lean operation, analysts said, allowed sharp-rising sales from its cholesterol drug, Lopid, to power earnings growth.
[22341021] |Lopid sales are expected to be about $300 million this year, up from $190 million in 1988.
[22341022] |In Morris Plains, N.J., a spokesman for the company said the analysts' projections are "in the ballpark."

[22341023] |Squibb's profit, estimated by analysts to be about 18% above the $123 million, or $1.25 a share, it earned in the third quarter of 1988, was the result of especially strong sales of its Capoten drug for treating high blood pressure and other heart disease.
[22341024] |The company was officially merged with Bristol-Myers Co. earlier this month.
[22341025] |Bristol-Myers declined to comment.

[22341026] |Mr. Riccardo of Bear Stearns said that Schering-Plough Corp.'s expected profit rise of about 18% to 20%, and Bristol-Meyers's expected profit increase of about 13% are largely because "those companies are really managed well."
[22341027] |ScheringPlough earned $94.4 million, or 84 cents a share, while Bristol-Myers earned $232.3 million, or 81 cents a share, in the like period a year earlier.

[22341028] |In Madison, N.J., a spokesman for Schering-Plough said the company has "no problems" with the average estimate by a analysts that third-quarter earnings per share rose by about 19%, to $1.
[22341029] |The company expects to achieve the 20% increase in full-year earnings per share, as it projected in the spring, the spokesman said.

[22341030] |Meanwhile, analysts said Pfizer's recent string of lackluster quarterly performances continued, as earnings in the quarter were expected to decline by about 5%.
[22341031] |Sales of Pfizer's important drugs, Feldene for treating arthritis, and Procardia, a heart medicine, have shrunk because of increased competition.
[22341032] |"The (strong) dollar hurt Pfizer a lot, too," Mr. Sweig said.
[22341033] |In the third quarter last year, Pfizer earned $216.8 million, or $1.29 a share.
[22341034] |In New York, the company declined comment.

[22341035] |Analysts said they expected Upjohn's profit to be flat or rise by only about 2% to 4% as compared with $89.6 million, or 49 cents a share, it earned a year ago.
[22341036] |Upjohn's biggest-selling drugs are Xanax, a tranquilizer, and Halcion, a sedative.

[22341037] |Sales of both drugs have been hurt by new state laws restricting the prescriptions of certain tranquilizing medicines and adverse publicity about the excessive use of the drugs.
[22341038] |Also, the company's hair-growing drug, Rogaine, is selling well -- at about $125 million for the year, but the company's profit from the drug has been reduced by Upjohn's expensive print and television campaigns for advertising, analysts said.
[22341039] |In Kalamazoo, Mich., Upjohn declined comment.

[22342001] |Amid a crowd of crashing stocks, Relational Technology Inc.'s stock fell particularly hard Friday, dropping 23% because its problems were compounded by disclosure of an unexpected loss for its fiscal first quarter.

[22342002] |The database software company said it expects a $2 million net loss for the fiscal first quarter ended Sept. 30.
[22342003] |It said analysts had been expecting a small profit for the period.
[22342004] |Revenue is expected to be "up modestly" from the $26.5 million reported a year ago.
[22342005] |Relational Technology reported net income of $1.5 million, or 12 cents a share, in the year-earlier period.

[22342006] |"While our international operations showed strong growth, our domestic business was substantially below expectations," said Paul Newton, president and chief executive officer.
[22342007] |A spokesman said the company's first quarter is historically soft, and computer companies in general are experiencing slower sales.

[22342008] |Mr. Newton said he accepted the resignation of Thomas Wilson, vice president of corporate sales, and that his marketing responsibilities have been reassigned.
[22342009] |The company said Mr. Wilson's resignation wasn't related to the sales shortfall.

[22342010] |Relational Technology went public in May 1988 at $14 a share.
[22342011] |It fell $1.875 a share Friday, to $6.25, a new low, in over-the-counter trading.
[22342012] |Its high for the past year was $16.375 a share.

[22342013] |In the previous quarter, the company earned $4.5 million, or 37 cents a share, on sales of $47.2 million.

[22343001] |The Bronx has a wonderful botanical garden, a great zoo, its own charming Little Italy (on Arthur Avenue) and, of course, the Yankees.
[22343002] |However, most people, having been subjected to news footage of the devastated South Bronx, look at the borough the way Tom Wolfe's Sherman McCoy did in "Bonfire of the Vanities" -- as a wrong turn into hell.

[22343003] |But Laura Cunningham's Bronx, her childhood Bronx of the '50s, is something else altogether.
[22343004] |In a lovely, novelistic memoir, "Sleeping Arrangements" (Knopf, 195 pages, $18.95), she remembers an exotic playground, peopled mainly by Jewish eccentrics and the occasional Catholic (real oddballs like her sexpot friend, the hell-kitten Diana, age five).

[22343005] |Ms. Cunningham, a novelist and playwright, has a vivid and dramatically outsized sense of recall.
[22343006] |She transforms her "Bronx of the emotions, a place where the flats of mediocrity are only relieved by steep descents into hysteria" into the "Babylonian Bronx," a world simmering with sex and death and intrigue.
[22343007] |In the Babylonian Bronx, Jewish working-class people lived in drab, Soviet-style buildings "glamorized" with names like AnaMor Towers (after owners Anna and Morris Snezak), whose lobbies and hallways were decorated with murals of ancient Syrians and Greeks, friezes of Pompeii.

[22343008] |For Ms. Cunningham the architectural discombobulation matched the discrepancy she felt living in the AnaMor Towers as a little girl: ". . . outwardly ordinary, inwardly ornate, owing all inspiration to heathen cultures."
[22343009] |Sharp-witted and funny but never mean, she's a memorialist a bit like Truman Capote, if he'd been Jewish and female and less bitchy.

[22343010] |Little Lily, as Ms. Cunningham calls herself in the book, really wasn't ordinary.
[22343011] |She was raised, for the first eight years, by her mother, Rosie, whom she remembers as a loving liar, who realigned history to explain why Lily's father didn't live with them.
[22343012] |Rosie reinvented this man, who may or may not have known about his child, as a war hero for Lily's benefit.

[22343013] |Rosie died young and Lily has remembered her as a romantic figure, who didn't interfere much with her child's education on the streets.
[22343014] |The games Bronx children played (holding kids down and stripping them, for example) seem tame by today's crack standards, but Ms. Cunningham makes it all sound like a great adventure.
[22343015] |"Without official knowledge of sex or death, we flirted with both," she writes.
[22343016] |She analyzed families by their sleeping arrangements.
[22343017] |Her friend Susan, whose parents kept reminding her she was unwanted, slept on a narrow bed wedged into her parents' bedroom, as though she were a temporary visitor.
[22343018] |Her friend Diana's father was a professional thief; they didn't seem to have any bedrooms at all.

[22343019] |Maybe Lily became so obsessed with where people slept and how because her own arrangements kept shifting.
[22343020] |When Rosie died, her uncles moved in -- and let her make the sleeping and other household arrangements.
[22343021] |They painted the apartment orange, pink and white, according to her instructions.
[22343022] |With loving detail she recalls her Uncle Gabe, an Orthodox Jew and song lyricist (who rhymed river with liver in a love song); and Uncle Len, a mysterious part-time investigator who looked like Lincoln and carried a change of clothing in a Manila envelope, like an "undercover President on a good-will mission."

[22343023] |They came by their strangeness honestly.
[22343024] |Lily's grandmother, no cookie baker, excised the heads of disliked relatives from the family album, and lugged around her perennial work-in-progress, "Philosophy for Women."

[22343025] |The book loses some momentum toward the end, when Lily becomes more preoccupied with dating boys and less with her delightfully weird family.
[22343026] |For the most part, though, there's much pleasure in her saucy, poignant probe into the mysteries of the Babylonian Bronx.

[22343027] |The Bronx also figures in Bruce Jay Friedman's latest novel, which flashes back to the New York of the '50s.
[22343028] |But both the past and present worlds of "The Current Climate" (Atlantic Monthly Press, 200 pages, $18.95) feel cramped and static.

[22343029] |For his sixth novel, Mr. Friedman tried to resuscitate the protagonist of his 1972 work, "About Harry Towns."
[22343030] |Harry is now a 57-year-old writer, whose continuing flirtation with drugs and marginal types in Hollywood and New York seems quaintly out-of-synch.
[22343031] |Harry fondly remembers the "old" days of the early '70s, when people like his friend Travis would take a psychiatrist on a date to analyze what Travis was doing wrong.
[22343032] |"An L.A. solution," explains Mr. Friedman.

[22343033] |Line by line Mr. Friedman's weary cynicism can be amusing, especially when he's riffing on the Hollywood social scheme -- the way people size each other up, immediately canceling the desperate ones who merely almost made it.
[22343034] |Harry has avoided all that by living in a Long Island suburb with his wife, who's so addicted to soap operas and mystery novels she barely seems to notice when her husband disappears for drug-seeking forays into Manhattan.

[22343035] |But it doesn't take too many lines to figure Harry out.
[22343036] |He's a bore.

[22344001] |Gulf Resources & Chemical Corp. said it agreed to pay $1.5 million as part of an accord with the Environmental Protection Agency regarding an environmental cleanup of a defunct smelter the company formerly operated in Idaho.

[22344002] |In 1984 the EPA notified Gulf Resources, which was a part-owner of the smelter, that it was potentially liable for sharing cleanup costs at the site under the federal Superfund program.
[22344003] |The 21-square-mile area is contaminated with lead, zinc and other metals.

[22344004] |Gulf Resources earlier this year proposed a reorganization plan that would make it a unit of a Bermuda concern, potentially exempting it from liability for the smelter's cleanup costs.
[22344005] |The company said that as part of its agreement with the EPA, it "made certain voluntary undertakings with respect to intercorporate transactions entered into after the reorganization."
[22344006] |The company, which issued a statement on the agreement late Friday, said that $1 million of the payment was previously provided for in its financial statements and that $500,000 will be recognized in its 1989 third-quarter statement.
[22344007] |The agreement and consent decree are subject to court approval, the company said.

[22344008] |Gulf Resources added that it "will seek to recover equitable contribution from others for both the amount of the settlement and any other liabilities it may incur under the Superfund law."

[22344009] |Under the agreement, Gulf must give the U.S. government 45 days' advance written notice before issuing any dividends on common stock.
[22344010] |The company's net worth cannot fall below $185 million after the dividends are issued.
[22344011] |"The terms of that agreement only become effective the date of Gulf's reorganization, which we anticipate will occur sometime in early 1990," said Lawrence R. Mehl, Gulf's general counsel.

[22344012] |In addition, Gulf must give the government 20 days' advance written notice of any loans exceeding $50 million that are made to the Bermuda-based holding company.
[22344013] |Gulf's net worth after those transaction must be at least $150 million.
[22344014] |Separately, the company said it expects to hold a special meeting for shareholders in early 1990 to vote on its proposed reorganization.

[22345001] |Many of the nation's highest-ranking executives saluted Friday's market plunge as an overdue comeuppance for speculators and takeover players.

[22345002] |Assuming that the market doesn't head into a bottomless free fall, some executives think Friday's action could prove a harbinger of good news -- as a sign that the leveraged buy-out and takeover frenzy of recent years may be abating.
[22345003] |"This is a reaction to artificial LBO valuations, rather than to any fundamentals," said John Young, chairman of Hewlett-Packard Co., whose shares dropped $3.125 to $48.125.
[22345004] |"If we get rid of a lot of that nonsense, it will be a big plus."

[22345005] |A few of the executives here for the fall meeting of the Business Council, a group that meets to discuss national issues, were only too happy to personalize their criticism.
[22345006] |"People wish the government would do something about leveraged buy-outs, do something about takeovers, do something about Donald Trump," said Rand Araskog, chairman of ITT Corp., whose stock dropped $3.375.
[22345007] |"Where's the leadership?
[22345008] |Where's the guy who can say: `Enough is enough'"?

[22345009] |The executives were remarkably unperturbed by the plunge even though it lopped billions of dollars off the value of their companies -- and millions off their personal fortunes.

[22345010] |"I'm not going to worry about one day's decline," said Kenneth Olsen, Digital Equipment Corp. president, who was leisurely strolling through the bright orange and yellow leaves of the mountains here after his company's shares plunged $5.75 to close at $86.50.
[22345011] |"I didn't bother calling anybody; I didn't even turn on TV."

[22345012] |"There hasn't been any fundamental change in the economy," added John Smale, whose Procter & Gamble Co. took an $8.75 slide to close at $120.75.
[22345013] |"The fact that this happened two years ago and there was a recovery gives people some comfort that this won't be a problem."

[22345014] |Of course, established corporate managements often tend to applaud the setbacks of stock speculators and takeover artists.
[22345015] |Indeed, one chief executive who was downright delighted by Friday's events was Robert Crandall, chairman of AMR Corp., the parent of American Airlines and the target of a takeover offer by Mr. Trump.
[22345016] |Asked whether Friday's action could help him avoid being Trumped by the New York real estate magnate, Mr. Crandall smiled broadly and said: "No comment."

[22345017] |On Friday morning, before the market's sell-off, the business leaders issued a report predicting the economy would grow at roughly an inflation-adjusted 2% annual rate, through next year, then accelerate anew in 1991.
[22345018] |Of the 19 economists who worked on the Business Council forecast, only two projected periods of decline in the nation's output over the next two years, and in "both instances the declines are too modest to warrant the phrase recession," said Lewis Preston, chairman of J.P. Morgan & Co. and vice chairman of the Business Council.

[22346001] |The real estate slump that's pushing down the price of New York office space and housing is also affecting the city's retail real estate market.

[22346002] |In Manhattan, once-desirable store sites sit vacant and newly constructed space has been slow to fill.
[22346003] |Retail real estate brokers say tenants are reluctant to sign leases because of uncertainty about the local economy, turmoil in their own industries and a belief that rents have not yet hit bottom.

[22346004] |"There is an unbelievable amount of space available," says Faith Consolo, senior vice president at Garrick-Aug Associates Store Leasing Inc.
[22346005] |There are about 2,000 stores for rent, up from a more typical range of 1,200 to 1,500.
[22346006] |"This further confuses retailers," she says.
[22346007] |"They wonder should they sign a lease if prices are still coming down?
[22346008] |Is this the wrong time to open a store?
[22346009] |Who is going to be in the space next door?"

[22346010] |In addition, Ms. Consolo says, tenants usually can negotiate to pay rents that are about one-quarter lower than landlords' initial asking price.

[22346011] |A handful of hot retail locations, such as the 57th Street and Madison and Fifth Avenue areas, have been able to sustain what many see as astronomical rents.
[22346012] |And, in some neighborhoods, rents have merely hit a plateau.
[22346013] |But on average, Manhattan retail rents have dropped 10% to 15% in the past six months alone, experts say.
[22346014] |That follows a more subtle decline in the prior six months, after Manhattan rents had run up rapidly since 1986.

[22346015] |The same factors limiting demand for office space have affected retailing.
[22346016] |"As businesses contract or depart, the number of employees who might use retail services shrinks," says Edward A. Friedman, senior vice president of Helmsley Spear Inc.

[22346017] |He says financial problems plaguing electronics, fur and furniture companies -- key categories in the local retail economy -- have further deflated the market.
[22346018] |Hardest hit are what he calls "secondary" sites that primarily serve neighborhood residents.
[22346019] |In these locations, Mr. Friedman says, "Retailers are increasingly cautious about expanding and rents have remained steady or in some cases have declined."
[22346020] |Weakness in the restaurant industry, which is leaving retail space vacant, exacerbates the problem for landlords.

[22346021] |It is also no comfort to landlords and small New York retailers when the future of larger department stores, which anchor retail neighborhoods, are in doubt.
[22346022] |Hooker Corp., parent of Bonwit Teller and B. Altman's, is mired in bankruptcy proceedings and Bloomingdale's is for sale by its owner, Campeau Corp.

[22346023] |The trend toward lower rents may seem surprising given that some communities in New York are bemoaning the loss of favorite local businesses to high rents.
[22346024] |But, despite the recent softening, for many of these retailers there's still been too big a jump from the rental rates of the late 1970s, when their leases were signed.

[22346025] |Certainly, the recent drop in prices doesn't mean Manhattan comes cheap.
[22346026] |New York retail rents still run well above the going rate in other U.S. cities.
[22346027] |Madison and Fifth Avenues and East 57th Street can command rents of up to $500 a square foot, and $250 is not uncommon.
[22346028] |The thriving 34th Street area offers rents of about $100 a square foot, as do up-and-coming locations along lower Fifth Avenue.
[22346029] |By contrast, rentals in the best retail locations in Boston, San Francisco and Chicago rarely top $100 a square foot.
[22346030] |And rents on Beverly Hills' Rodeo Drive generally don't exceed about $125 a square foot.

[22346031] |The New York Stock Exchange said two securities will begin trading this week.

[22346032] |Precision Castparts Corp., Portland, Ore., will begin trading with the symbol PCP.
[22346033] |It makes investment castings and has traded over-the-counter.

[22346034] |Royal Bank of Scotland Group PLC, an Edinburgh, Scotland, financial services company, will list American depositary shares, representing preferred shares, with the symbol RBSPr.
[22346035] |It will continue to trade on the International Stock Exchange, London.

[22346036] |The American Stock Exchange listed shares of two companies.

[22346037] |AIM Telephones Inc., a Parsippany, N.J., telecommunications equipment supply company, started trading with the symbol AIM.
[22346038] |It had traded over-the-counter.

[22346039] |Columbia Laboratories Inc., Miami, began trading with the symbol COB.
[22346040] |The pharmaceuticals maker had traded over-the-counter.

[22346041] |The National Market System of the Nasdaq over-the-counter market listed shares of one company.

[22346042] |Employee Benefit Plans Inc., a Minneapolis health-care services company, was listed with the symbol EBPI.

[22347001] |When Justice William Brennan marks the start of his 34th year on the Supreme Court today, the occasion will differ sharply from previous anniversaries of his tenure.

[22347002] |For the first time, the 83-year-old justice finds his influence almost exclusively in dissent, rather than as a force in the high court's majority.
[22347003] |This role reversal holds true, as well, for his three liberal and moderate allies, Justices Thurgood Marshall, Harry Blackmun and John Stevens.

[22347004] |But are these four players, three of them in their 80s, ready to assume a different role after 88 years, collectively, of service on the high court?

[22347005] |Every indication is that the four are prepared to accept this new role, and the frustrations that go with it, but in different ways.
[22347006] |Justices Brennan and Stevens appear philosophical about it; Justices Marshall and Blackmun appear fighting mad.

[22347007] |The four justices are no newcomers to dissent, often joining forces in the past decade to criticize the court's conservative drift.
[22347008] |But always, in years past, they have bucked the trend and have been able to pick up a fifth vote to eke out a number of major victories in civil rights and liberties cases.
[22347009] |Now, however, as the court's new five-member conservative majority continues to solidify, victories for the liberals are rare.

[22347010] |The change is most dramatic for Justice Brennan, the last survivor of the mid-1960s liberal majority under Chief Justice Earl Warren.
[22347011] |In the seven Supreme Court terms from the fall of 1962 through the spring of 1967, the height of the Warren Court's power, Justice Brennan cast only 25 dissenting votes in 555 cases decided by the court.
[22347012] |Last term alone he cast 52 dissenting votes in 133 decisions, with the contentious flag-burning ruling as his only big victory.

[22347013] |But Justice Brennan foresaw his new role, strongly defending the importance of dissents in a 1985 speech.
[22347014] |"Each time the court revisits an issue, the justices will be forced by a dissent to reconsider the fundamental questions and to rethink the result," he said.
[22347015] |Moreover, in recent months he has said that when he was on the winning side in the 1960s, he knew that the tables might turn in the future.
[22347016] |He has said that he now knows how Justice John Harlan felt, a reference to the late conservative justice who was the most frequent dissenter from the Warren Court's opinions.

[22347017] |Associates of 81-year-old Justice Marshall say he was "depressed" about the court's direction last spring, but is feisty about his role and determined to speak out against the court's cutbacks in civil rights.
[22347018] |"We could sweep it under the rug and hide it, but I'm not going to do it," he said in a speech last month.

[22347019] |He, like Justice Brennan, considers dissents highly important for the future, a point that hasn't escaped legal scholars.
[22347020] |Harvard Law School Professor Laurence Tribe says there is a "generation-skipping" flavor to current dissents.
[22347021] |The dissenters in the Warren Court, he says, appeared to be writing for the short-term, suggesting that the court's direction might change soon.
[22347022] |"Brennan and Marshall are speaking in their dissents to a more distant future," he says.

[22347023] |Justice Blackmun, who will turn 81 next month, also seems feisty about his new role.
[22347024] |Associates say he takes some defeats more personally than his colleagues, especially attempts to curtail the right to abortion first recognized in his 1973 opinion, Roe vs. Wade.

[22347025] |Friends and associates who saw Justice Blackmun during the summer said he was no more discouraged about the court than in recent years.
[22347026] |And his outlook improved after successful cataract surgery in August.

[22347027] |But his level of frustration showed in a recent, impassioned speech to a group of hundreds of lawyers in Chicago.
[22347028] |He concluded his remarks by quoting, emotionally and at some length, according to those present, the late Martin Luther King's famous "I Have a Dream" speech from the 1963 March on Washington.

[22347029] |Justice Stevens, 69, is probably the most philosophical of the dissenters about his role, in part because he may be the least liberal of the four, but also because he enjoys the intellectual challenge of arguing with the majority more than the others.

[22347030] |If the role these four dissenters are assuming is a familiar one in modern Supreme Court history, it also differs in an important way from recent history, court watchers say.
[22347031] |"The dissenters of the Warren Court were often defending a legal legacy that they inherited," says Prof. A.E. Dick Howard of the University of Virginia Law School, "but the dissenters today are defending a legacy that they created.

[22348001] |The government sold the deposits of four savings-and-loan institutions, in its first wave of sales of big, sick thrifts, but low bids prevented the sale of a fifth.

[22348002] |The four S&Ls were sold to large banks, as was the case with most of the 28 previous transactions initiated by the Resolution Trust Corp. since it was created in the S&L bailout legislation two months ago.

[22348003] |Two of the four big thrifts were sold to NCNB Corp., Charlotte, N.C., which has aggressively expanded its markets, particularly in Texas and Florida.
[22348004] |A Canadian bank bought another thrift, in the first RTC transaction with a foreign bank.

[22348005] |Under these deals, the RTC sells just the deposits and the healthy assets.
[22348006] |These "clean-bank" transactions leave the bulk of bad assets, mostly real estate, with the government, to be sold later.
[22348007] |In these four, for instance, the RTC is stuck with $4.51 billion in bad assets.
[22348008] |Acquirers paid premiums ranging from 1.5% to 3.7% for the deposits and branch systems, roughly in line with what analysts were expecting.

[22348009] |The buyers will also be locked into deposit rates for just two weeks, as has been the case with previous deals.
[22348010] |After that, the buyers may repudiate the rates paid by the former thrifts.
[22348011] |But it's uncertain whether these institutions will take those steps.
[22348012] |NCNB, for example, has been one of the highest rate payers in the Texas market, and in Florida, rates are especially sensitive in retirement communities.

[22348013] |The RTC had previously targeted five thrifts for quick sales in order to spend cash by certain budgetary deadlines, but the delays illustrate the tough chore facing the agency.
[22348014] |"These thrifts are beached whales," said Bert Ely, an industry consultant based in Alexandria, Va.
[22348015] |For example, the delay in selling People's Heritage Savings, Salina, Kan., with $1.7 billion in assets, has forced the RTC to consider selling off the thrift branch-by-branch, instead of as a whole institution.

[22348016] |NCNB continued its foray into the Florida and Texas markets.
[22348017] |NCNB will acquire University Federal Savings Association, Houston, which had assets of $2.8 billion.
[22348018] |NCNB Texas National Bank will pay the RTC a premium of $129 million for $3.5 billion in deposits.
[22348019] |As a measure of the depths to which the Texas real estate market has sunk, the RTC will pay $3.8 billion to NCNB to take $750 million of bad assets.

[22348020] |NCNB also acquired Freedom Savings & Loan Association, Tampa, Fla., which had total assets of $900 million.
[22348021] |NCNB will pay the RTC a premium of $40.4 million for $1.1 billion in deposits.
[22348022] |NCNB will also acquire $266 million of Freedom's assets from the RTC, which will require $875 million in assistance.

[22348023] |Meridian Bancorp Inc., Reading, Pa., will acquire Hill Financial Savings Association, Red Hill, Pa., which had $2.3 billion in assets.
[22348024] |Meridian will pay a premium of $30.5 million to assume $2 billion in deposits.
[22348025] |It will also purchase $845 million of the thrift's assets, with $1.9 billion in RTC assistance.

[22348026] |In the first RTC transaction with a foreign buyer, Royal Trustco Ltd., Toronto, will acquire Pacific Savings Bank, Costa Mesa, Calif., which had $949 million in assets.
[22348027] |Royal Trustco will pay the RTC $25 million to assume $989 million in deposits.
[22348028] |It will also purchase $473 million in assets, and receive $550 million in assistance from the RTC.

[22349001] |The following issues were recently filed with the Securities and Exchange Commission:

[22349002] |American Cyanamid Co., offering of 1,250,000 common shares, via Merrill Lynch Capital Markets.

[22349003] |Limited Inc., offering of up to $300 million of debt securities and warrants.

[22349004] |Nuveen California Performance Plus Municipal Fund Inc., initial offering of five million common shares, via Alex. Brown & Sons Inc., John Nuveen & Co., Prudential-Bache Capital Funding, and Bateman Eichler, Hill Richards.

[22349005] |PacifiCare Health Systems Inc., proposed offering of 1.5 million common shares, of which 700,000 shares will be offered by PacifiCare and 800,000 shares by UniHealth America Inc.(PacifiCare's 71%), via Dillon, Read & Co. Inc., Goldman, Sachs & Co. and Dean Witter Reynolds Inc.

[22349006] |Pricor Inc., offering of one million new shares of common stock and 300,000 shares by holders, via Drexel Burnham Lambert Inc. and J.C. Bradford & Co.

[22349007] |Trans World Airlines Inc., offering of $150 million senior notes, via Drexel Burnham.

[22350001] |Time magazine, in a move to reduce the costs of wooing new subscribers, is lowering its circulation guarantee to advertisers for the second consecutive year, increasing its subscription rates and cutting back on merchandise giveaways.

[22350002] |In an announcement to its staff last week, executives at Time Warner Inc.'s weekly magazine said Time will "dramatically de-emphasize" its use of electronic giveaways such as telephones in television subscription drives; cut the circulation it guarantees advertisers by 300,000, to four million; and increase the cost of its annual subscription rate by about $4 to $55.

[22350003] |In a related development, the news-weekly, for the fourth year in a row, said it won't increase its advertising rates in 1990; a full, four-color page in the magazine costs about $120,000.
[22350004] |However, because the guaranteed circulation base is being lowered, ad rates will be effectively 7.5% higher per subscriber, according to Richard Heinemann, Time associate publisher.

[22350005] |Time is following the course of some other mass-circulation magazines that in recent years have challenged the publishing myth that maintaining artificially high, and expensive, circulations is the way to draw advertisers.
[22350006] |In recent years, Reader's Digest, New York Times Co.'s McCall's, and most recently News Corp.'s TV Guide, have cut their massive circulation rate bases to eliminate marginal circulation and hold down rates for advertisers.

[22350007] |Deep discounts in subscriptions and offers of free clock radios and watches have become accepted forms of attracting new subscribers in the hyper-competitive world of magazine news-weeklies.
[22350008] |But Time, as part of the more cost-conscious Time Warner, wants to wean itself away from expensive gimmicks.
[22350009] |Besides, Time executives think selling a news magazine with a clock radio is tacky.
[22350010] |"Giveaways just give people the wrong image," said Mr. Heinemann.
[22350011] |"That perception takes the focus off the magazine."

[22350012] |Time magazine executives predictably paint the circulation cut as a show of strength and actually a benefit to advertisers.
[22350013] |"What we are doing is screening out the readers who are only casually related to the magazine and don't really read it," said Mr. Heinemann.
[22350014] |"We are trying to create quality and involvement."

[22350015] |However, Time executives used the same explanation when in October 1988 the magazine cut its guaranteed circulation from 4.6 million to 4.3 million.
[22350016] |And Time's paid circulation, according to Audit Bureau of Circulations, dropped 7.3% to 4,393,237 in the six months ended June 30, 1989.

[22350017] |Still, Time's move is being received well, once again.
[22350018] |"It's terrific for advertisers to know the reader will be paying more," said Michael Drexler, national media director at Bozell Inc. ad agency.
[22350019] |"A few drops in circulation are of no consequence.
[22350020] |It's not a show of weakness; they are improving the quality of circulation while insuring their profits."

[22350021] |Mr. Heinemann said the changes represent a new focus in the magazine industry: a magazine's net revenue per subscriber, or the actual revenue from subscribers after discounts and the cost of premiums have been stripped away.
[22350022] |"The question is how much are we getting from each reader," said Mr. Heinemann.

[22350023] |Time's rivals news-weeklies, Washington Post Co.'s Newsweek and U.S. News & World Report, are less reliant on electronic giveaways, and in recent years both have been increasing their circulation rate bases.
[22350024] |Both magazines are expected to announce their ad rates and circulation levels for 1990 within a month.

[22351001] |When the news broke of an attempted coup in Panama two weeks ago, Sen. Christopher Dodd called the State Department for a briefing.
[22351002] |"They said, `follow CNN,'" he told reporters.

[22351003] |That shows how far Ted Turner's Cable News Network has come since its birth nine years ago, when it was considered the laughingstock of television news.
[22351004] |It is bigger, faster and more profitable than the news divisions of any of the three major broadcast networks.
[22351005] |Its niche as the "network of record" during major crises draws elite audiences around the world.

[22351006] |But for all its success, CNN has hit a plateau.
[22351007] |Although viewership soars when big news breaks, it ebbs during periods of calm.
[22351008] |CNN executives worry that the network's punchy but repetitive news format may be getting stale and won't keep viewers coming back as the alternatives multiply for news and information on cable-TV.

[22351009] |"Just the fact we're on 24 hours is no longer bulletin," says Ed Turner, CNN's executive vice president, news gathering (and no relation to Ted Turner).
[22351010] |"You can't live on that."

[22351011] |So CNN, a unit of Atlanta-based Turner Broadcasting System Inc., is trying to reposition itself as a primary channel, or what people in the television industry call a "top of mind" network.
[22351012] |Tonight, to kick off the effort, CNN will premiere its first prime-time newscast in years, an hourlong show at 6 p.m. Eastern time to air head-to-head against the network newscasts.
[22351013] |The show will be co-anchored by Bernard Shaw and Catherine Crier, a 34-year-old former Texas judge and campus beauty queen who has never held a job in television or journalism.

[22351014] |The new show is perhaps the boldest in a number of steps the network is taking to build audience loyalty by shifting away from its current format toward more full-length "signature" programming with recognizable stars.
[22351015] |To distinguish itself, CNN is also expanding international coverage and adding a second global-news program.
[22351016] |It is paying higher salaries -- after years of scrimping -- to lure and keep experienced staffers.
[22351017] |And it is embarking on an expensive gamble to break major stories with a large investigative-reporting team.

[22351018] |"The next stage is to get beyond the opinion leaders who use us as a point of reference to become a point of reference at ordinary dinner tables," says Jon Petrovich, executive vice president of Headline News, CNN's sister network.

[22351019] |But that won't be easy.
[22351020] |Networks, like other consumer products, develop images in peoples' minds that aren't easy to change.
[22351021] |It also takes money that CNN has been reluctant to spend to make programs and hire talent that viewers will tune in specially to see.
[22351022] |And the cable-TV operators -- CNN's distributors and part owners -- like things just the way they are.

[22351023] |The repositioning bid is aimed at CNN's unsteady viewership -- and what may happen to it as the cable-TV news market grows more competitive.
[22351024] |Already, CNN is facing stronger competition from Financial News Network Inc. and General Electric Co.'s Consumer News and Business Channel, both of which are likely to pursue more general news in the future.
[22351025] |In addition, many cable-TV systems themselves are airing more local and regional news programs produced by local broadcast stations.

[22351026] |CNN wants to change its viewers' habits.
[22351027] |Its watchers are, on the whole, a disloyal group of channel-zapping "grazers" and news junkies, who spend an average of just 26 minutes a day watching CNN, according to audience research.
[22351028] |That's less than one-third the time that viewers watch the major broadcast networks.
[22351029] |The brief attention viewers give CNN could put it at a disadvantage as ratings data, and advertising, become more important to cable-TV channels.

[22351030] |CNN's viewer habits have been molded by its format.
[22351031] |Its strategy in the past has been to serve as a TV wire service.
[22351032] |It focused on building up its news bureaus around the world, so as events took place it could go live quicker and longer than other networks.
[22351033] |It filled its daily schedule with newscasts called "Daybreak," "Daywatch," "Newsday," and "Newsnight," but the shows varied little in content, personality or look.

[22351034] |Now, the push is on for more-distinctive shows.
[22351035] |"Our goal is to create more programs with an individual identity," says Paul Amos, CNN executive vice president for programming.

[22351036] |Accordingly, CNN is adding a world-affairs show in the morning because surveys show its global-news hour in the afternoon is among its most "differentiated" programs in viewers' minds, says Mr. Amos.
[22351037] |And it is exploring other original programs, similar to its "Larry King Live" and "Crossfire" talk shows, which executives hope will keep people tuned in.

[22351038] |Then there's "The World Today," the prime-time newscast featuring Mr. Shaw and Ms. Crier.
[22351039] |Until now, CNN has featured its Hollywood gossip show during the key evening period.
[22351040] |But 70% of the cable-television-equipped households that watch news do so between 6:30 p.m. and 7 p.m., the network discovered, so CNN wants in.
[22351041] |Mr. Amos says the Shaw-Crier team will probably do two live interviews a day, with most of the program, at least for now, appearing similar to CNN's other newcasts.

[22351042] |Some in the industry are skeptical.
[22351043] |"I find it hard to conceive of people switching over to CNN for what, at least in the public's mind, is the same news," says Reuven Frank, the former two-time president of NBC News and creator of the Huntley-Brinkley Report.

[22351044] |The evening news is also slated as CNN's stage for its big push into investigative journalism.
[22351045] |In August, the network hired award-winning producer Pamela Hill, the former head of news specials at ABC.
[22351046] |She's assembling a staff of about 35 investigative reporters who will produce weekly, in-depth segments, with an eye toward breaking big stories.
[22351047] |CNN executives hope the headlines created by such scoops will generate excitement for its "branded" programs, in the way "60 Minutes" did so well for CBS.

[22351048] |That's such a departure from the past that many in the industry are skeptical CNN will follow through with its investigative commitment, especially after it sees the cost of producing in-depth pieces.
[22351049] |"They've never shown any inclination to spend money on production," says Michael Mosettig, a senior producer with MacNeil-Lehrer NewsHour, who notes that CNN is indispensable to his job.

[22351050] |The network's salaries have always ranged far below industry standards, resulting in a less-experienced work force.
[22351051] |CNN recently gave most employees raises of as much as 15%, but they're still drastically underpaid compared with the networks.
[22351052] |Says Mr. Mosettig: "CNN is my wire service; they're on top of everything.
[22351053] |But to improve, they've really got to make the investment in people."

[22351054] |In any case, cable-TV-system operators have reason to fear any tinkering with CNN's format.
[22351055] |They market cable-TV on the very grazing opportunities CNN seeks to discourage.
[22351056] |"We would obviously be upset if those kinds of services evolved into more general-interest, long-format programming," says Robert Stengel, senior vice president, programming, of Continental Cablevision Inc., which holds a 2% stake in Turner Broadcasting.

[22352001] |The Second U.S. Circuit Court of Appeals opinion in the Arcadian Phosphate case did not repudiate the position Pennzoil Co. took in its dispute with Texaco, contrary to your Sept. 8 article "Court Backs Texaco's View in Pennzoil Case -- Too Late."

[22352002] |The fundamental rule of contract law applied to both cases was that courts will not enforce agreements to which the parties did not intend to be bound.
[22352003] |In the Pennzoil/Texaco litigation, the courts found Pennzoil and Getty Oil intended to be bound; in Arcadian Phosphates they found there was no intention to be bound.

[22352004] |Admittedly, the principle in the cases is the same.
[22352005] |But the outcome of a legal dispute almost always turns on the facts.
[22352006] |And the facts, as found by the various courts in these two lawsuits, were different.

[22352007] |When you suggest otherwise, you leave the realm of reporting and enter the orbit of speculation.

[22352008] |Charles F. Vihon

[22353001] |Valley Federal Savings & Loan Association said Imperial Corp. of America withdrew from regulators its application to buy five Valley Federal branches, leaving the transaction in limbo.

[22353002] |The broken purchase appears as additional evidence of trouble at Imperial Corp., whose spokesman said the company withdrew its application from the federal Office of Thrift Supervision because of an informal notice that Imperial's thrift unit failed to meet Community Reinvestment Act requirements.

[22353003] |The Community Reinvestment Act requires savings and loan associations to lend money in amounts related to areas where deposits are received.

[22353004] |The transaction, announced in August, included about $146 million in deposits at the five outlets in California's San Joaquin Valley.
[22353005] |Terms weren't disclosed, but Valley Federal had said it expected to post a modest pretax gain and to save about $2 million in operating costs annually.

[22353006] |Valley Federal said Friday that it is considering whether to seek another buyer for the branches or to pursue the transaction with Imperial Corp., which said it is attempting to meet Community Reinvestment Act requirements.

[22353007] |Valley Federal, with assets of $3.3 billion, is based in Van Nuys.
[22353008] |Imperial Corp., based in San Diego, is the parent of Imperial Savings & Loan.
[22353009] |In the first six months of the year it posted a net loss of $33.1 million.

[22354001] |Call it the "we're too broke to fight" defense.

[22354002] |Lawyers for dozens of insolvent savings and loan associations are trying a new tack in their efforts to defuse suits filed by borrowers, developers and creditors.

[22354003] |The thrifts' lawyers claim that the suits, numbering 700 to 1,000 in Texas alone, should be dismissed as moot because neither the S&Ls nor the extinct Federal Savings and Loan Insurance Corp. has the money to pay judgments.

[22354004] |Though the argument may have a common-sense ring to it, even the S&L lawyers concede there's little precedent to back their position.

[22354005] |Still, one federal appeals court has signaled it's willing to entertain the notion, and the lawyers have renewed their arguments in Texas and eight other states where the defense is permitted under state law.

[22354006] |The dismissal of the pending suits could go a long way toward clearing court dockets in Texas and reducing the FSLIC's massive legal bills, which topped $73 million last year.

[22354007] |The S&L lawyers were encouraged last month by an appellate-court ruling in two cases brought against defunct Sunbelt Savings & Loan Association of Dallas by the developers of the Valley Ranch, best known as the training center for the Dallas Cowboys football team.
[22354008] |Sunbelt foreclosed on the ranch.

[22354009] |Sunbelt and the FSLIC argued to the Fifth U.S. Circuit Court of Appeals "that there will never be any assets with which to satisfy a judgment against Sunbelt Savings nor any means to collect from any other party, including FSLIC."

[22354010] |"If true," the court wrote, "this contention would justify dismissal of these actions on prudential grounds."
[22354011] |But the court said it lacked enough financial information about Sunbelt and the FSLIC and sent the cases back to federal district court in Dallas.

[22354012] |Charles Haworth, a lawyer for Sunbelt, says he plans to file a brief this week urging the district judge to dismiss the suits, because Sunbelt's liabilities exceeded its assets by about $2 billion when federal regulators closed it in August 1988.

[22354013] |"This institution is just brain dead," says Mr. Haworth, a partner in the Dallas office of Andrews & Kurth, a Houston law firm.

[22354014] |But a lawyer for Triland Investment Group, the developer of Valley Ranch, dismisses such arguments as a "defense du jour."
[22354015] |Attorney Richard Jackson of Dallas says a judgment for Triland could be satisfied in ways other than a monetary award, including the reversal of Sunbelt's foreclosure on Valley Ranch.

[22354016] |"We're asking the court for a number of things he can grant in addition to the thrill of victory," he says.
[22354017] |"We'd take the Valley Ranch free and clear as a booby prize.

[22355001] |Kenneth J. Thygerson, who was named president of this thrift holding company in August, resigned, citing personal reasons.
[22355002] |Mr. Thygerson said he had planned to travel between the job in Denver and his San Diego home, but has found the commute too difficult to continue.
[22355003] |A new president wasn't named.

[22356001] |SOUTH AFRICA FREED the ANC's Sisulu and seven other political prisoners.

[22356002] |Thousands of supporters, many brandishing flags of the outlawed African National Congress, gave the anti-apartheid activists a tumultuous reception upon their return to black townships across the country.
[22356003] |Most of those freed had spent at least 25 years in prison.
[22356004] |The 77-year-old Sisulu, sentenced to life in 1964 along with black nationalist Nelson Mandela for plotting to overthrow the government, said equality for blacks in South Africa was in reach.
[22356005] |The releases, announced last week by President de Klerk, were viewed as Pretoria's tacit legalization of the ANC.

[22356006] |Mandela, considered the most prominent leader of the ANC, remains in prison.
[22356007] |But his release within the next few months is widely expected.

[22356008] |The Soviet Union reported that thousands of tons of goods needed to ease widespread shortages across the nation were piled up at ports and rail depots, and food shipments were rotting because of a lack of people and equipment to move the cargo.
[22356009] |Strikes and mismanagement were cited, and Premier Ryzhkov warned of "tough measures."

[22356010] |Bush indicated there might be "room for flexibility" in a bill to allow federal funding of abortions for poor women who are vicitims of rape and incest.
[22356011] |He reiterated his opposition to such funding, but expressed hope of a compromise.
[22356012] |The president, at a news conference Friday, also renewed a call for the ouster of Panama's Noriega.

[22356013] |The White House said minors haven't any right to abortion without the consent of their parents.
[22356014] |The administration's policy was stated in a friend-of-the-court brief urging the Supreme Court to give states more leeway to restrict abortions.
[22356015] |Ten of the nation's governors, meanwhile, called on the justices to reject efforts to limit abortions.

[22356016] |The Justice Department announced that the FBI has been given the authority to seize U.S. fugitives overseas without the permission of foreign governments.
[22356017] |Secretary of State Baker emphasized Friday that the new policy wouldn't be invoked by the Bush administration without full consideration of foreign-policy implications.

[22356018] |NASA pronounced the space shuttle Atlantis ready for launch tomorrow following a five-day postponement of the flight because of a faulty engine computer.
[22356019] |The device was replaced.
[22356020] |The spacecraft's five astronauts are to dispatch the Galileo space probe on an exploration mission to Jupiter.

[22356021] |South Korea's President Roh traveled to the U.S. for a five-day visit that is expected to focus on ties between Washington and Seoul.
[22356022] |Roh, who is facing calls for the reduction of U.S. military forces in South Korea, is to meet with Bush tomorrow and is to address a joint session of Congress on Wednesday.

[22356023] |China's Communist leadership voted to purge the party of "hostile and anti-party elements" and wealthy private businessmen, whom they called exploiters.
[22356024] |The decision, reported by the official Xinhua News Agency, indicated that the crackdown prompted by student-led pro-democracy protests in June is intensifying.

[22356025] |Hundreds of East Germans flocked to Bonn's Embassy in Warsaw, bringing to more than 1,200 the number of emigres expected to flee to the West beginning today.
[22356026] |More than 2,100 others escaped to West Germany through Hungary over the Weekend.
[22356027] |In Leipzig, activists vowed to continue street protests to demand internal change.

[22356028] |Zaire's President Mobutu met in southern France with Angolan rebel leader Savimbi and a senior U.S. envoy in a bid to revive an accord to end Angola's civil war.
[22356029] |Details of the talks, described by a Zairean official as "very delicate," weren't disclosed.

[22356030] |PLO leader Arafat insisted on guarantees that any elections in the Israeli-occupied territories would be impartial.
[22356031] |He made his remarks to a PLO gathering in Baghdad.
[22356032] |In the occupied lands, underground leaders of the Arab uprising rejected a U.S. plan to arrange Israeli-Palestinian talks as Shamir opposed holding such discussions in Cairo.

[22356033] |Lebanese Christian lawmakers presented to Arab mediators at talks in Saudi Arabia proposals for a new timetable for the withdrawal of Syria's forces from Lebanon.
[22356034] |A plan currently under study gives Damascus two years to pull back to eastern Lebanon, starting from the time Beirut's legislature increases political power for Moslems.

[22356035] |Hurricane Jerry threatened to combine with the highest tides of the year to swamp the Texas-Louisiana coast.
[22356036] |Thousands of residents of low-lying areas were ordered to evacuate as the storm headed north in the Gulf of Mexico with 80 mph winds.

[22357001] |A group of Arby's franchisees said they formed an association to oppose Miami Beach financier Victor Posner's control of the restaurant chain.

[22357002] |The decision is the latest move in an escalating battle between the franchisees and Mr. Posner that began in August.
[22357003] |At the time, a group called R.B. Partners Ltd., consisting of eight of Arby's largest franchisees, offered more than $200 million to buy Arby's Inc., which is part of DWG Corp.
[22357004] |DWG is a holding company controlled by Mr. Posner.
[22357005] |One week later, Leonard H. Roberts, president and chief executive officer of Arby's, was fired in a dispute with Mr. Posner.

[22357006] |Friday, 42 franchisees announced the formation of an association -- called A.P. Association Inc. -- to "preserve the integrity of the Arby's system."
[22357007] |The franchisees, owners or operators of 1,000 of the 1,900 franchised Arby's in the U.S., said: "We have concluded that continued control of Arby's by Victor Posner is totally unacceptable to us, because it is extremely likely to cause irreparable damage to the Arby's system.
[22357008] |We support all efforts to remove Victor Posner from control of Arby's Inc. and the Arby's system."

[22357009] |The group said it would consider, among other things, withholding royalty payments and initiating a class-action lawsuit seeking court approval for the withholdings.

[22357010] |In Florida, Renee Mottram, a senior vice president at DWG, responded: "We don't think any individual or group should disrupt a winning system or illegally interfere with existing contractual relationships for their own self-serving motives.

[22358001] |September's steep rise in producer prices shows that inflation still persists, and the pessimism over interest rates caused by the new price data contributed to the stock market's plunge Friday.

[22358002] |After falling for three consecutive months, the producer price index for finished goods shot up 0.9% last month, the Labor Department reported Friday, as energy prices jumped after tumbling through the summer.

[22358003] |Although the report, which was released before the stock market opened, didn't trigger the 190.58-point drop in the Dow Jones Industrial Average, analysts said it did play a role in the market's decline.
[22358004] |Analysts immediately viewed the price data, the grimmest inflation news in months, as evidence that the Federal Reserve was unlikely to allow interest rates to fall as many investors had hoped.

[22358005] |Further fueling the belief that pressures in the economy were sufficient to keep the Fed from easing credit, the Commerce Department reported Friday that retail sales grew 0.5% in September, to $145.21 billion.
[22358006] |That rise came on top of a 0.7% gain in August, and suggested there is still healthy consumer demand in the economy.

[22358007] |"I think the Friday report, combined with the actions of the Fed, weakened the belief that there was going to be an imminent easing of monetary policy," said Robert Dederick, chief economist at Northern Trust Co. in Chicago.

[22358008] |But economists were divided over the extent of the inflation threat signaled by the new numbers.

[22358009] |"The overall 0.9% increase is serious in itself, but what is even worse is that excluding food and energy, the producer price index still increased by 0.7%," said Gordon Richards, an economist at the National Association of Manufacturers.

[22358010] |But Sung Won Sohn, chief economist at Norwest Corp. in Minneapolis, blamed rising energy prices and the annual autumn increase in car prices for most of the September jump.
[22358011] |"I would say this is not bad news; this is a blip," he said.
[22358012] |"The core rate is not really out of line."

[22358013] |All year, energy prices have skewed the producer price index, which measures changes in the prices producers receive for goods.
[22358014] |Inflation unquestionably has fallen back from its torrid pace last winter, when a steep run-up in world oil prices sent the index surging at double-digit annual rates.
[22358015] |Energy prices then plummeted through the summer, causing the index to decline for three consecutive months.

[22358016] |Overall, the index has climbed at a 5.1% compound annual rate since the start of the year, the Labor Department said.
[22358017] |While far more restrained than the pace at the beginning of the year, that is still a steeper rise than the 4.0% increase for all of 1988.

[22358018] |Moreover, this year's good inflation news may have ended last month, when energy prices zoomed up 6.5% after plunging 7.3% in August.
[22358019] |Some analysts expect oil prices to remain relatively stable in the months ahead, leaving the future pace of inflation uncertain.

[22358020] |Analysts had expected that the climb in oil prices last month would lead to a substantial rise in the producer price index, but the 0.9% climb was higher than most anticipated.
[22358021] |"I think the resurgence {in inflation} is going to continue for a few months," said John Mueller, chief economist at Bell Mueller Cannon, a Washington economic forecasting firm.
[22358022] |He predicted that inflation will moderate next year, saying that credit conditions are fairly tight world-wide.

[22358023] |But Dirk Van Dongen, president of the National Association of Wholesaler-Distributors, said that last month's rise "isn't as bad an omen" as the 0.9% figure suggests.
[22358024] |"If you examine the data carefully, the increase is concentrated in energy and motor vehicle prices, rather than being a broad-based advance in the prices of consumer and industrial goods," he explained.

[22358025] |Passenger car prices jumped 3.8% in September, after climbing 0.5% in August and declining in the late spring and summer.
[22358026] |Many analysts said the September increase was a one-time event, coming as dealers introduced their 1990 models.
[22358027] |Although all the price data were adjusted for normal seasonal fluctuations, car prices rose beyond the customary autumn increase.

[22358028] |Prices for capital equipment rose a hefty 1.1% in September, while prices for home electronic equipment fell 1.1%.
[22358029] |Food prices declined 0.6%, after climbing 0.3% in August.

[22358030] |Meanwhile, the retail sales report showed that car sales rose 0.8% in September to $32.82 billion.
[22358031] |But at least part of the increase could have come from higher prices, analysts said.

[22358032] |Sales at general merchandise stores rose 1.7% after declining 0.6% in August, while sales of building materials fell 1.8% after rising 1.7%.

[22358033] |Producer prices for intermediate goods grew 0.4% in September, after dropping for three consecutive months.
[22358034] |Prices for crude goods, an array of raw materials, jumped 1.1% after declining 1.9% in August and edging up 0.2% in July.

[22358035] |Here are the Labor Department's producer price indexes (1982=100) for September, before seasonal adjustment, and the percentage changes from September, 1988.

[22359001] |CityFed Financial Corp. said it expects to report a loss of at least $125 million to $150 million for the third quarter.

[22359002] |In the year-earlier period, CityFed had net income of $485,000, but no per-share earnings.

[22359003] |CityFed's president and chief executive officer, John Atherton, said the loss stems from several factors.
[22359004] |He said nonperforming assets rose to slightly more than $700 million from $516 million between June and September.
[22359005] |Approximately 85% of the total consisted of nonperforming commercial real estate assets.
[22359006] |Accordingly, CityFed estimated that it will provide between $85 million and $110 million for credit losses in the third quarter.

[22359007] |CityFed added that significant additional loan-loss provisions may be required by federal regulators as part of the current annual examination of City Federal Savings Bank, CityFed's primary subsidiary, based in Somerset, N.J.
[22359008] |City Federal operates 105 banking offices in New Jersey and Florida.

[22359009] |Mr. Atherton said CityFed will also mark its portfolio of high-yield corporate bonds to market as a result of federal legislation requiring that savings institutions divest themselves of such bonds.
[22359010] |That action, CityFed said, will result in a charge against third-quarter results of approximately $30 million.

[22359011] |CityFed also said it expects to shed its remaining mortgage loan origination operations outside its principal markets in New Jersey and Florida and, as a result, is taking a charge for discontinued operations.

[22359012] |All these actions, Mr. Atherton said, will result in a loss of $125 million to $150 million for the third quarter.
[22359013] |He added, however: "Depending on the resolution of certain accounting issues relating to mortgages servicing and the outcome of the annual examination of City Federal currently in progress with respect to the appropriate level of loan loss reserves, the total loss for the quarter could significantly exceed this range.

[22360001] |CenTrust Savings Bank said federal thrift regulators ordered it to suspend dividend payments on its two classes of preferred stock, indicating that regulators' concerns about the troubled institution have heightened.

[22360002] |In a statement, Miami-based CenTrust said the regulators cited the thrift's operating losses and "apparent losses" in its junk-bond portfolio in ordering the suspension of the dividends.
[22360003] |Regulators also ordered CenTrust to stop buying back the preferred stock.

[22360004] |David L. Paul, chairman and chief executive officer, criticized the federal Office of Thrift Supervision, which issued the directive, saying it was "inappropriate" and based on "insufficient" reasons.
[22360005] |He said the thrift will try to get regulators to reverse the decision.

[22360006] |The suspension of a preferred stock dividend is a serious step that signals that regulators have deep concerns about an institution's health.

[22360007] |In March, regulators labeled CenTrust a "troubled institution," largely because of its big junk-bond holdings and its operating losses.
[22360008] |In the same month, the Office of Thrift Supervision ordered the institution to stop paying common stock dividends until its operations were on track.

[22360009] |For the nine months ended June 30, CenTrust had a net loss of $21.3 million, compared with year-earlier net income of $52.8 million.
[22360010] |CenTrust, which is Florida's largest thrift, holds one of the largest junk-bond portfolios of any thrift in the nation.
[22360011] |Since April, it has pared its high-yield bond holdings to about $890 million from $1.35 billion.
[22360012] |Mr. Paul said only about $150 million of the current holdings are tradeable securities registered with the Securities and Exchange Commission.
[22360013] |The remainder, he said, are commercial loan participations, or private placements, that aren't filed with the SEC and don't have a ready market.

[22360014] |CenTrust and regulators have been in a dispute over market valuations for the junk bonds.
[22360015] |The Office of Thrift Supervision has been hounding CenTrust to provide current market values for its holdings, but CenTrust has said it can't easily obtain such values because of the relative illiquidity of the bonds and lack of a ready market.

[22360016] |Regulators have become increasingly antsy about CenTrust's and other thrifts' junk-bond holdings in light of the recent federal thrift bailout legislation and the recent deep decline in the junk-bond market.
[22360017] |The legislation requires thrifts to divest themselves of junk bonds in the new, somber regulatory climate.

[22360018] |In American Stock Exchange composite trading Friday, CenTrust common shares closed at $3, down 12.5 cents.

[22360019] |In a statement Friday, Mr. Paul challenged the regulators' decision, saying the thrift's operating losses and "apparent" junk-bond losses "have been substantially offset by gains in other activities of the bank."
[22360020] |He also said substantial reserves have been set aside for possible losses from the junk bonds.
[22360021] |In the third quarter, for instance, CenTrust added $22.5 million to its general reserves.

[22360022] |Mr. Paul said the regulators should instead move ahead with approving CenTrust's request to sell 63 of its 71 branches to Great Western Bank, a unit of Great Western Financial Corp. based in Beverly Hills, Calif.

[22360023] |The branch sale is the centerpiece of CenTrust's strategy to transform itself into a traditional S&L from a high-flying institution that relied heavily on securities trading for profits, according to Mr. Paul.
[22360024] |Most analysts and thrift executives had expected a decision on the proposed transaction, which was announced in July, long before now.
[22360025] |Many interpret the delay as an indication that regulators are skeptical about the proposal.
[22360026] |Branches and deposits can be sold at a premium in the event federal regulators take over an institution.

[22360027] |CenTrust, however, touts the branch sale, saying it would bring in $150 million and reduce the thrift's assets to $6.7 billion from $9 billion.
[22360028] |It said the sale would give it positive tangible capital of $82 million, or about 1.2% of assets, from a negative $33 million as of Sept. 30, thus bringing CenTrust close to regulatory standards.

[22360029] |CenTrust said the branch sale would also reduce the company's large amount of good will by about $180 million.
[22360030] |Critics, however, say the branch sale will make CenTrust more dependent than ever on brokered deposits and junk bonds.

[22360031] |Mr. Paul counters that he intends to further pare the size of CenTrust by not renewing more than $1 billion of brokered certificates of deposit when they come due.
[22360032] |The thrift is also working to unload its junk-bond portfolio by continuing to sell off the bonds, and it plans to eventually place some of them in a separate affiliate, as required under the new thrift law.

[22361001] |On a recent Saturday night, in the midst of West Germany's most popular prime-time show, a contestant bet the host that she could name any of 100 different cheeses after just one nibble, while blindfolded.

[22361002] |The woman won the bet.
[22361003] |But perhaps even more remarkable, the three-hour-show, "Wetten Dass" (Make a Bet), regularly wins the top slot in the country's TV ratings, sometimes drawing as many as 50% of West German households.

[22361004] |As the 1992 economic integration approaches, Europe's cultural curators have taken to the ramparts against American "cultural imperialism," threatening to impose quotas against such pop invaders as "Dallas," "Miami Vice" and "L.A. Law."
[22361005] |But much of what the Europeans want to protect seems every bit as cheesy as what they are trying to keep out.

[22361006] |The most militant opposition to American TV imports has come from French television and movie producers, who have demanded quotas ensuring that a full 60% of Europe's TV shows be produced in Europe.
[22361007] |So far, the French have failed to win enough broad-based support to prevail.

[22361008] |A glance through the television listings and a few twists of the European television dial suggest one reason why.
[22361009] |While there are some popular action and drama series, few boast the high culture and classy production values one might expect.
[22361010] |More European air time is filled with low-budget game shows, variety hours, movies and talk shows, many of which are authorized knock-offs of their American counterparts.

[22361011] |One of France's most popular Saturday night programs features semi-celebrities seeking out their grammar-school classmates for on-air reunions.
[22361012] |A Flemish game show has as its host a Belgian pretending to be Italian.
[22361013] |One of Italy's favorite shows, "Fantastico," a tepid variety show, is so popular that viewers clamored to buy a chocolate product, "Cacao Fantastico," whose praises were sung each week by dancing showgirls -- even though the product didn't exist.

[22361014] |Topping the cheese stunt, on another typical evening of fun on "Wetten Dass," a contestant won a bet with the show's host, Thomas Gottschalk, that he could identify 300 German dialects over the telephone.
[22361015] |A celebrity guest, U.S. Ambassador to West Germany Richard Burt, also won a bet that someone could pile up $150 worth of quarters on a slanted coin.
[22361016] |Mr. Burt nonetheless paid the penalty as if he had lost, agreeing to spend a day with West German Foreign Minister Hans-Dietrich Genscher frying and selling their combined weight in potato pancakes.

[22361017] |If this seems like pretty weak stuff around which to raise the protectionist barriers, it may be because these shows need all the protection they can get.
[22361018] |European programs usually target only their own local audience, and often only a small portion of that.
[22361019] |Mega-hits in Germany or Italy rarely make it even to France or Great Britain, and almost never show up on U.S. screens.

[22361020] |Attempts to produce "pan-European" programs have generally resulted in disappointment.
[22361021] |One annual co-production, the three-hour-long "Eurovision Song Contest," featuring soft-rock songs from each of 20 European countries, has been described as the world's most boring TV show.
[22361022] |Another, "Jeux Sans Frontieres," where villagers from assorted European countries make fools of themselves performing pointless tasks, is a hit in France.
[22361023] |A U.S.-made imitation under the title "Almost Anything Goes" flopped fast.

[22361024] |For the most part, what's made here stays here, and for good reason.
[22361025] |The cream of the British crop, the literary dramas that are shown on U.S. public television as "Masterpiece Theater," make up a relatively small part of British air time.
[22361026] |Most British programming is more of an acquired taste.
[22361027] |There is, for instance, "One Man and His Dog," a herding contest among sheep dogs.
[22361028] |Also riveting to the British are hours of dart-throwing championships, even more hours of lawn bowling contests and still more hours of snooker marathons.

[22361029] |European drama has had better, though still mixed, fortunes.
[22361030] |The most popular such shows focus on narrow national concerns.
[22361031] |A French knock-off of "Dallas," called "Chateauvallon" and set in a French vineyard, had a good run in France, which ended after the female lead was injured in a real-life auto accident.
[22361032] |"Schwarzwaldklinik," (Black Forest Clinic), a kind of German "St. Elsewhere" set in a health spa, is popular in Germany, and has spread into France.

[22361033] |Italy's most popular series is a drama called "La Piovra," or "The Octopus," which chronicles the fight of an idealistic young investigator in Palermo against the Mafia.
[22361034] |It was front-page news in Italy earlier this year when the fictional inspector was gunned down in the series.
[22361035] |Spain's most popular mini-series this year was "Juncal," the story of an aging bullfighter.

[22361036] |"The trend is pretty well established now that local programs are the most popular, with American programs second," says Brian Wenham, a former director of programs for the British Broadcasting Corp.
[22361037] |"Given a choice, everybody will watch a home-produced show."

[22361038] |But frequently there isn't much choice.
[22361039] |Thus, Europe has begun the recent crusade to produce more worthy shows of its own, programs with broader appeal.
[22361040] |"We've basically got to start from scratch, to train writers and producers to make shows that other people will want to see," concedes Colin Young, head of Britain's National Film Theatre School.

[22361041] |While some in the U.S. contend that advertising is the bane of television, here many believe that its absence is to blame for the European TV industry's sluggish development.
[22361042] |Until recently, national governments in Europe controlled most of the air time and allowed little or no advertising.
[22361043] |Since production costs were guaranteed, it didn't matter that a program couldn't be sold abroad or put into syndication, as most American programs are.
[22361044] |But not much money was spent on the shows, either, a situation that encouraged cheap-to-make talk and game shows, while discouraging expensive-to-produce dramas.

[22361045] |Now, however, commercial channels are coming to most European countries, and at the same time, satellite and cable technology is spreading rapidly.
[22361046] |Just last week, Greece authorized two commercial channels for the first time; Spain earlier began to allow commercial television alongside its state channels.
[22361047] |The result is a new and huge appetite for programming.

[22361048] |But perhaps to the consternation of those calling for quotas, most of this void is likely to be filled with the cheapest and most plentiful programming now available -- reruns -- usually of shows made in the U.S.

[22361049] |Sky Channel, a British-based venture of Australian-American press tycoon Rupert Murdoch, offers what must be a baffling cultural mix to most of its audience.
[22361050] |The financially struggling station offers programs obviously made available cheaply from its boss's other ventures.
[22361051] |In a Madrid hotel room recently, a viewer caught the end of a badly acted series about a fishing boat on Australia's Great Barrier Reef, only to be urged by the British announcer to "stay tuned for the further adventures of Skippy the Kangaroo."

[22361052] |Lisa Grishaw-Mueller in Bonn, Laura Colby in Milan, Tim Carrington in London and Carlta Vitzhum in Madrid contributed to this article.

[22362001] |British Aerospace PLC and France's Thomson-CSF S.A. said they are nearing an agreement to merge their guided-missile divisions, greatly expanding collaboration between the two defense contractors.

[22362002] |The 50-50 joint venture, which may be dubbed Eurodynamics, would have combined annual sales of at least #1.4 billion ($2.17 billion) and would be among the world's largest missile makers.
[22362003] |After two years of talks, plans for the venture are sufficiently advanced for the companies to seek French and British government clearance.
[22362004] |The companies hope for a final agreement by year-end.

[22362005] |The venture would strengthen the rapidly growing ties between the two companies, and help make them a leading force in European defense contracting.
[22362006] |In recent months, a string of cross-border mergers and joint ventures have reshaped the once-balkanized world of European arms manufacture.

[22362007] |Already, British Aerospace and French government-controlled Thomson-CSF collaborate on a British missile contract and on an air-traffic control radar system.
[22362008] |Just last week they announced they may make a joint bid to buy Ferranti International Signal PLC, a smaller British defense contractor rocked by alleged accounting fraud at a U.S. unit.

[22362009] |The sudden romance of British Aerospace and Thomson-CSF -- traditionally bitter competitors for Middle East and Third World weapons contracts -- is stirring controversy in Western Europe's defense industry.
[22362010] |Most threatened by closer British Aerospace-Thomson ties would be their respective national rivals, including Matra S.A. in France and Britain's General Electric Co. PLC.
[22362011] |But neither Matra nor GEC -- unrelated to Stamford, Conn.-based General Electric Co. -- are sitting quietly by as their competitors join forces.

[22362012] |Yesterday, a source close to GEC confirmed that his company may join the Ferranti fight, as part of a possible consortium that would bid against British Aerospace and Thomson-CSF.
[22362013] |Companies with which GEC has had talks about a possible joint Ferranti bid include Matra, Britain's Dowty Group PLC, West Germany's Daimler-Benz AG, and France's Dassault group.

[22362014] |But it may be weeks before GEC and its potential partners decide whether to bid, the source indicated.
[22362015] |GEC plans first to study Ferranti's financial accounts, which auditors recently said included #215 million in fictitious contracts at a U.S. unit, International Signal & Control Group, with which Ferranti merged last year.
[22362016] |Also, any GEC bid might be blocked by British antitrust regulators; Ferranti is GEC's main competitor on several key defense-electronics contracts, and its purchase by GEC may heighten British Defense Ministry worries about concentration in the country's defense industry.
[22362017] |A consortium bid, however, would diminish GEC's direct role in Ferranti and might consequently appease ministry officials.

[22362018] |A British Aerospace spokeswoman appeared unperturbed by the prospect of a fight with GEC for Ferranti: "Competition is the name of the game," she said.

[22362019] |At least one potential GEC partner, Matra, insists it isn't interested in Ferranti.
[22362020] |"We have nothing to say about this affair, which doesn't concern us," a Matra official said Sunday.

[22362021] |The missile venture, the British Aerospace spokeswoman said, is a needed response to the "new environment" in defense contracting.
[22362022] |For both Thomson and British Aerospace, earnings in their home markets have come under pressure from increasingly tight-fisted defense ministries; and Middle East sales, a traditional mainstay for both companies' exports, have been hurt by five years of weak oil prices.

[22362023] |The venture's importance for Thomson is great.
[22362024] |Thomson feels the future of its defense business depends on building cooperation with other Europeans.
[22362025] |The European defense industry is consolidating; for instance, West Germany's Siemens AG recently joined GEC in a takeover of Britain's Plessey Co., and Daimler-Benz agreed to buy Messerschmitt-Boelkow Blohm G.m.b.H.

[22362026] |In missiles, Thomson is already overshadowed by British Aerospace and by its home rival, France's Aerospatiale S.A.; to better compete, Thomson officials say, they need a partnership.
[22362027] |To justify 50-50 ownership of the planned venture, Thomson would make a cash payment to British Aerospace.

[22362028] |Annual revenue of British Aerospace's missile business is about #950 million, a Thomson spokesman said.
[22362029] |British Aerospace's chief missile products include its 17-year-old family of Rapier surface-to-air missiles.
[22362030] |Thomson missile products, with about half British Aerospace's annual revenue, include the Crotale surface-to-air missile family.

[22363001] |Interprovincial Pipe Line Co. said it will delay a proposed two-step, 830 million Canadian-dollar (US$705.6 million) expansion of its system because Canada's output of crude oil is shrinking.

[22363002] |Interprovincial, Canada's biggest oil pipeline operator and a major transporter of crude to the U.S., said revised industry forecasts indicate that Canadian oil output will total about 1.64 million barrels a day by 1991, 8% lower than a previous estimate.
[22363003] |Canadian crude production averaged about 1.69 million barrels a day during 1989's first half, about 1% below the 1988 level.

[22363004] |"The capability of existing fields to deliver oil is dropping," and oil exploration activity is also down dramatically, as many producers shift their emphasis to natural gas, said Ronald Watkins, vice president for government and industry relations with Interprovincial's parent, Interhome Energy Inc.
[22363005] |Mr. Watkins said volume on Interprovincial's system is down about 2% since January and is expected to fall further, making expansion unnecessary until perhaps the mid-1990s.

[22363006] |"There has been a swing of the pendulum back to the gas side," he said.

[22363007] |Many of Canada's oil and gas producers say the outlook for natural gas is better than it is for oil, and have shifted their exploration and development budgets accordingly.
[22363008] |The number of active drilling rigs in Canada is down 30% from a year ago, and the number of completed oil wells is "down more than that, due to the increasing focus on gas exploration," said Robert Feick, manager of crude oil with Calgary's Independent Petroleum Association of Canada, an industry group.

[22363009] |Mr. Watkins said the main reason for the production decline is shrinking output of light crude from mature, conventional fields in western Canada.
[22363010] |Interprovincial transports about 75% of all crude produced in western Canada, and almost 60% of Interprovincial's total volume consists of light crude.

[22363011] |Nearly all of the crude oil that Canada exports to the U.S. is transported on Interprovincial's system, whose main line runs from Edmonton to major U.S. and Canadian cities in the Great Lakes region, including Chicago, Buffalo, Toronto and Montreal.

[22363012] |Canada's current oil exports to the U.S. total about 600,000 barrels a day, or about 9.1% of net U.S. crude imports, said John Lichtblau, president of the New York-based Petroleum Industry Research Foundation.
[22363013] |That ranks Canada as the fourth-largest source of imported crude, behind Saudi Arabia, Nigeria and Mexico.

[22363014] |Mr. Lichtblau said Canada's declining crude output, combined with the fast-shrinking output of U.S. crude, will help intensify U.S. reliance on oil from overseas, particularly the Middle East.
[22363015] |"It's very much a growing concern.
[22363016] |But when something is inevitable, you learn to live with it," he said.

[22363017] |Mr. Lichtblau stressed that the delay of Interprovincial's proposed expansion won't by itself increase U.S. dependence on offshore crude, however, since Canadian imports are limited in any case by Canada's falling output.

[22363018] |Under terms of its proposed two-step expansion, which would have required regulatory approval, Interprovincial intended to add 200,000 barrels a day of additional capacity to its system, beginning with a modest expansion by 1991.
[22363019] |The system currently has a capacity of 1.55 million barrels a day.

[22364001] |Inland Steel Industries Inc. expects to report that third-quarter earnings dropped more than 50% from the previous quarter as a result of reduced sales volume and increased costs.

[22364002] |In the second quarter, the steelmaker had net income of $45.3 million or $1.25 a share, including a pretax charge of $17 million related to the settlement of a suit, on sales of $1.11 billion.

[22364003] |The company said normal seasonal softness and lost orders caused by prolonged labor talks reduced shipments by 200,000 tons in the latest quarter, compared with the second quarter.

[22364004] |At the same time, the integrated-steel business was hurt by continued increases in materials costs and repair and maintenance expenses, as well as higher labor costs under its new contract.
[22364005] |The service-center business was hurt by reduced margins and start-up costs associated with its Joseph T. Ryerson & Son unit.

[22364006] |The company said it is beginning to see some shipping-rate improvements in both the intergrated-steel and steel-service-center segments, which should result in improved results for the fourth quarter.

[22364007] |Inland said its third-quarter results will be announced later this week.
[22364008] |In the year-earlier third quarter, when the industry was in the midst of a boom, the company had net of $61 million, or $1.70 a share, on sales of $1.02 billion.

[22365001] |Predicting the financial results of computer firms has been a tough job lately.

[22365002] |Take Microsoft Corp., the largest maker of personal computer software and generally considered an industry bellwether.
[22365003] |In July, the company stunned Wall Street with the prediction that growth in the personal computer business overall would be only 10% in 1990, a modest increase when compared with the sizzling expansion of years past.

[22365004] |Investors -- taking this as a sign that a broad industry slump was in the offing -- reacted by selling the company's stock, which lost $3.25 that day to close at $52 in national over-the-counter trading.

[22365005] |But that was all of three months ago.

[22365006] |Last week, Microsoft said it expects revenue for its first quarter ended Sept. 30 to increase 34%.
[22365007] |The announcement caused the company's stock to surge $6.50 to close at $75.50 a share.

[22365008] |Microsoft's surprising strength is one example of the difficulty facing investors looking for reassurances about the financial health of the computer firms.
[22365009] |"It's hard to know what to expect at this point," said Peter Rogers, an analyst at Robertson Stephens & Co.
[22365010] |"The industry defies characterization."

[22365011] |To illustrate, Mr. Rogers said that of the 14 computer-related firms he follows, half will report for their most recent quarter earnings below last year's results, and half above those results.

[22365012] |Among those companies expected to have a down quarter are Hewlett-Packard Co., Amdahl Corp. and Sun Microsystems Inc., generally solid performers in the past.
[22365013] |International Business Machines Corp. also is expected to report disappointing results.
[22365014] |Apple Computer Inc., meanwhile, is expected to show improved earnings for the period ended Sept.

[22365015] |Another contradictory message comes from Businessland Inc., a computer retailer.
[22365016] |In July, the company reported that booming sales of new personal computers from Apple and IBM had resulted in net income more than doubling for its fourth quarter ended June 30 to $7.4 million, or 23 cents a share.

[22365017] |This month, however, Businessland warned investors that results for its first quarter ended Sept. 30 hadn't met expectations.
[22365018] |The company said it expects earnings of 14 to 17 cents a share, down from 25 cents a share in the year-earlier period.

[22365019] |While the earnings picture confuses, observers say the major forces expected to shape the industry in the coming year are clearer.

[22365020] |Companies will continue to war over standards.
[22365021] |In computer publishing, a battle over typefaces is hurting Adobe Systems Inc., which sells software that controls the image produced by printers and displays.
[22365022] |Until recently, Adobe had a lock on the market for image software, but last month Apple, Adobe's biggest customer, and Microsoft rebelled.
[22365023] |Now the two firms are collaborating on an alternative to Adobe's approach, and analysts say they are likely to carry IBM, the biggest seller of personal computers, along with them.

[22365024] |The short-term outlook for Adobe's business, however, appears strong.
[22365025] |The company is beginning to ship a new software program that's being heralded as a boon for owners of low-end printers sold by Apple.
[22365026] |The program is aimed at improving the quality of printed material.
[22365027] |John Warnock, Adobe's chief executive officer, said the Mountain View, Calif., company has been receiving 1,000 calls a day about the product since it was demonstrated at a computer publishing conference several weeks ago.

[22365028] |Meanwhile, competition between various operating systems, which control the basic functions of a computer, spells trouble for software firms generally.
[22365029] |"It creates uncertainty and usually slows down sales," said Russ Crabs, an analyst at Soundview Financial Group.

[22365030] |Mr. Crabs said this probably is behind the expected weak performance of Aldus Corp., maker of a widely used computer publishing program.
[22365031] |He expects Aldus to report earnings of 21 cents a share on revenues of $19.5 million for its third quarter, compared with earnings of 30 cents a share on revenue of 20.4 million in the year-earlier period.
[22365032] |Aldus officials couldn't be reached for comment.

[22365033] |On the other hand, the battle of the bus is expected to grow increasingly irrelevant.
[22365034] |A bus is the data highway within a computer.
[22365035] |IBM is backing one type of bus called microchannel, while the nine other leading computer makers, including H-P and Compaq Computer Corp., have chosen another method.

[22365036] |"Users don't care about the bus," said Daniel Benton, an analyst at Goldman, Sachs & Co.
[22365037] |He said Apple's family of Macintosh computers, for instance, uses four different buses "and no one seems to mind."

[22365038] |The gap between winners and laggards will grow.
[22365039] |In personal computers, Apple, Compaq and IBM are expected to tighten their hold on their business.
[22365040] |At the same time, second-tier firms will continue to lose ground.

[22365041] |Some lagging competitors even may leave the personal computer business altogether.
[22365042] |Wyse Technology, for instance, is considered a candidate to sell its troubled operation.
[22365043] |"Wyse has done well establishing a distribution business, but they haven't delivered products that sell," said Kimball Brown, an analyst at Prudential-Bache Securities.
[22365044] |Mr. Brown estimates Wyse, whose terminals business is strong, will report a loss of 12 cents a share for its quarter ended Sept.

[22365045] |Personal-computer makers will continue to eat away at the business of more traditional computer firms.
[22365046] |Ever-more powerful desk-top computers, designed with one or more microprocessors as their "brains," are expected to increasingly take on functions carried out by more expensive minicomputers and mainframes.

[22365047] |"The guys that make traditional hardware are really being obsoleted by microprocessor-based machines," said Mr. Benton.

[22365048] |As a result of this trend, longtime powerhouses H-P, IBM and Digital Equipment Corp. are scrambling to counterattack with microprocessor-based systems of their own.
[22365049] |But they will have to act quickly.
[22365050] |Mr. Benton expects Compaq to unveil a family of high-end personal computers later this year that are powerful enough to serve as the hub for communications within large networks of desk-top machines.

[22365051] |A raft of new computer companies also has targeted this "server" market.

[22366001] |Population Drain Ends For Midwestern States

[22366002] |IOWA IS MAKING a comeback.
[22366003] |So are Indiana, Ohio and Michigan.
[22366004] |The population of all four states is on the upswing, according to new Census Bureau estimates, following declines throughout the early 1980s.

[22366005] |The gains, to be sure, are rather small.
[22366006] |Iowa, for instance, saw its population grow by 11,000 people, or 0.4%, between 1987 and 1988, the Census Bureau says.
[22366007] |Still, even that modest increase is good news for a state that hadn't grown at all since 1981.

[22366008] |Between 1987 and 1988, North Dakota was the only state in the Midwest to lose population, a loss of 4,000 people.
[22366009] |Six of the 12 midwestern states have been growing steadily since 1980 -- Illinois, Kansas, Minnesota, Missouri, South Dakota and Wisconsin.

[22366010] |The Northeast has been holding its own in the population race.
[22366011] |Seven of nine states have grown each year since 1980, including New York, which lost 4% of its population during the 1970s.
[22366012] |And although Pennsylvania and Massachusetts suffered slight declines earlier in the decade, they are growing again.

[22366013] |At the same time, several states in the South and West have had their own population turnaround.
[22366014] |Seven states that grew in the early 1980s are now losing population -- West Virginia, Mississippi, Louisiana, Oklahoma, Montana, Wyoming and Alaska.

[22366015] |Overall, though, the South and West still outpace the Northeast and Midwest, and fast-growing states like Florida and California ensure that the pattern will continue.
[22366016] |But the growth gap between the Sun Belt and other regions has clearly started narrowing.

[22366017] |More Elderly Maintain Their Independence

[22366018] |THANKS TO modern medicine, more couples are growing old together.
[22366019] |And even after losing a spouse, more of the elderly are staying independent.
[22366020] |A new Census Bureau study of the noninstitutionalized population shows that 64% of people aged 65 to 74 were living with a spouse in 1988, up from 59% in 1970.

[22366021] |This doesn't mean they're less likely to live alone, however.
[22366022] |That share has remained at about 24% since 1970.
[22366023] |What has changed is that more of the young elderly are living with spouses rather than with other relatives, such as children.
[22366024] |In 1988, 10% of those aged 65 to 74 lived with relatives other than spouses, down from 15% in 1970.

[22366025] |As people get even older, many become widowed.
[22366026] |But even among those aged 75 and older, the share living with a spouse rose slightly, to 40% in 1988 from 38% in 1970.

[22366027] |Like their younger counterparts, the older elderly are less likely to live with other relatives.
[22366028] |Only 17% of those aged 75 and older lived with relatives other than spouses in 1988, down from 26% in 1970.

[22366029] |The likelihood of living alone beyond the age of 75 has increased to 40% from 32%.
[22366030] |More people are remaining independent longer presumably because they are better off physically and financially.

[22366031] |Careers Count Most For the Well-to-Do

[22366032] |MANY AFFLUENT people place personal success and money above family.

[22366033] |At least that's what a survey by Ernst & Young and Yankelovich, Clancy, Shulman indicates.
[22366034] |Two-thirds of respondents said they strongly felt the need to be successful in their jobs, while fewer than half said they strongly felt the need to spend more time with their families.
[22366035] |Being successful in careers and spending the money they make are top priorities for this group.

[22366036] |Unlike most studies of the affluent market, this survey excluded the super-rich.
[22366037] |Average household income for the sample was $194,000, and average net assets were reported as $775,000.

[22366038] |The goal was to learn about one of today's fastest-growing income groups, the upper-middle class.
[22366039] |Although they represent only 2% of the population, they control nearly one-third of discretionary income.

[22366040] |Across the board, these consumers value quality, buy what they like rather than just what they need, and appreciate products that are distinctive.

[22366041] |Despite their considerable incomes and assets, 40% of the respondents in the study don't feel financially secure, and one-fourth don't feel that they have made it.
[22366042] |Twenty percent don't even feel they are financially well off.

[22366043] |Many of the affluent aren't comfortable with themselves, either.
[22366044] |About 40% don't feel they're more able than others.
[22366045] |While twothirds feel some guilt about being affluent, only 25% give $2,500 or more to charity each year.

[22366046] |Thirty-five percent attend religious services regularly; at the same time, 60% feel that in life one sometimes has to compromise one's principles.

[22366047] |Odds and Ends

[22366048] |THE NUMBER of women and minorities who hold jobs in top management in the nation's largest banks has more than doubled since 1978.
[22366049] |The American Bankers Association says that women make up 47% of officials and managers in the top 50 banks, up from 33% in 1978.
[22366050] |The share of minorities in those positions has risen to 16% from 12%. . . .
[22366051] |Per-capita personal income in the U.S. grew faster than inflation last year, according to the Bureau of Economic Analysis.
[22366052] |The amount of income divvied up for each man, woman and child was $16,489 in 1988, up 6.6% from $15,472 in 1987.
[22366053] |Per capita personal income ranged from $11,116 in Mississippi to $23,059 in Connecticut. . . .
[22366054] |There are 13.1 million students in college this fall, up 2% from 1988, the National Center for Education Statistics estimates.
[22366055] |About 54% are women, and 44% are part-time students.

[22367001] |This small Dallas suburb's got trouble.
[22367002] |Trouble with a capital T and that rhymes with P and that stands for pool.

[22367003] |More than 30 years ago, Prof. Harold Hill, the con man in Meredith Willson's "The Music Man," warned the citizens of River City, Iowa, against the game.
[22367004] |Now kindred spirits on Addison's town council have barred the town's fanciest hotel, the Grand Kempinski, from installing three free pool tables in its new lounge.

[22367005] |Mayor Lynn Spruill and two members of the council said they were worried about setting a precedent that would permit pool halls along Addison's main street.
[22367006] |And the mayor, in an admonition that bears a rhythmic resemblance to Prof. Hill's, warned that "alcohol leads to betting, which leads to fights."

[22367007] |The council's action is yet another blow to a sport that its fans claim has been maligned unjustly for years.
[22367008] |"Obviously they're not in touch with what's going on," says Tom Manske, vice president of the National Pocket Billiards Association.
[22367009] |Pool is hot in New York and Chicago, he insists, where "upscale, suit-and-tie places" are adding tables.
[22367010] |With today's tougher drunk driving laws, he adds, "people don't want to just sit around and drink."

[22367011] |Besides, rowdy behavior seems unlikely at the Grand Kempinski, where rooms average $200 a night and the cheap mixed drinks go for $3.50 a pop.
[22367012] |At the lounge, manager Elizabeth Dyer won't admit patrons in jeans, T-shirts or tennis shoes.

[22367013] |But a majority of the Addison council didn't buy those arguments.
[22367014] |Introducing pool, argued Councilwoman Riley Reinker, would be "dangerous.
[22367015] |It would open a can of worms."

[22367016] |Addison is no stranger to cans of worms, either.
[22367017] |After its previous mayor committed suicide last year, an investigation disclosed that town officials regularly voted on their own projects, gave special favors to developer friends and dipped into the town's coffers for trips and retreats.

[22367018] |The revelations embarrassed town officials, although they argued that the problems weren't as severe as the media suggested.
[22367019] |Now comes the pool flap.

[22367020] |"I think there's some people worried about something pretty ridiculous," Councilman John Nolan says.
[22367021] |"I thought this was all taken care of in `The Music Man.

[22368001] |The only thing Robert Goldberg could praise about CBS's new show "Island Son" (Leisure & Arts, Sept. 25) was the local color; unfortunately neither he nor the producers of the show have done their homework.
[22368002] |For instance: "Haole" (white) is not the ultimate insult; "Mainland haole" is.
[22368003] |Richard Chamberlain dresses as a "Mainland haole," tucking in a Hawaiian shirt and rolling up its long sleeves.
[22368004] |And the local expression for brother is "brah," not "bruddah."
[22368005] |And even if a nurse would wear flowers in her hair while on duty, if she were engaged she would know to wear them behind her left, not right, ear.
[22368006] |Sorry, the show does not even have the one redeeming quality of genuine local color.

[22368007] |Anita Davis

[22369001] |Of all the ethnic tensions in America, which is the most troublesome right now?
[22369002] |A good bet would be the tension between blacks and Jews in New York City.
[22369003] |Or so it must seem to Jackie Mason, the veteran Jewish comedian appearing in a new ABC sitcom airing on Tuesday nights (9:30-10 p.m. EDT).
[22369004] |Not only is Mr. Mason the star of "Chicken Soup," he's also the inheritor of a comedic tradition dating back to "Duck Soup," and he's currently a man in hot water.

[22369005] |Here, in neutral language, is the gist of Mr. Mason's remarks, quoted first in the Village Voice while he was a paid spokesman for the Rudolph Giuliani mayoral campaign, and then in Newsweek after he and the campaign parted company.
[22369006] |Mr. Mason said that many Jewish voters feel guilty toward blacks, so they support black candidates uncritically.
[22369007] |He said that many black voters feel bitter about racial discrimination, so they, too, support black candidates uncritically.
[22369008] |He said that Jews have contributed more to black causes over the years than vice versa.

[22369009] |Of course, Mr. Mason did not use neutral language.
[22369010] |As a practitioner of ethnic humor from the old days on the Borscht Belt, live television and the nightclub circuit, Mr. Mason instinctively reached for the vernacular.
[22369011] |He said Jews were "sick with complexes"; and he called David Dinkins, Mr. Giuliani's black opponent, "a fancy shvartze with a mustache."

[22369012] |If Mr. Mason had used less derogatory language to articulate his amateur analysis of the voting behavior of his fellow New Yorkers, would the water be quite so hot?
[22369013] |It probably would, because few or none of the people upset by Mr. Mason's remarks have bothered to distinguish between the substance of his comments and the fact that he used insulting language.
[22369014] |In addition, some of Mr. Mason's critics have implied that his type of ethnic humor is itself a form of racism.

[22369015] |For example, the New York state counsel for the NAACP said that Mr. Mason is "like a dinosaur.
[22369016] |People are fast leaving the place where he is stuck."

[22369017] |These critics fail to distinguish between the type of ethnic humor that aims at disparaging another group, such as "Polish jokes"; and the type that is double-edged, aiming inward as well as outward.
[22369018] |The latter typically is the humor of the underdog, and it was perfected by both blacks and Jews on the minstrel and vaudeville stage as a means of mocking their white and gentile audiences along with themselves.

[22369019] |In the hands of a zealot like Lenny Bruce, this double-edged blade could cut both the self and the audience to ribbons.
[22369020] |But wielded by a pro like Jackie Mason, it is a constructive form of mischief.
[22369021] |Why constructive?
[22369022] |Because despite all the media prattle about comedy and politics not mixing, they are similar in one respect: Both can serve as mechanisms for easing tensions and facilitating the co-existence of groups in conflict.
[22369023] |That's why it's dangerous to have well-intentioned thought police, on college campuses and elsewhere, taboo all critical mention of group differences.

[22369024] |As Elizabeth Kristol wrote in the New York Times just before the Mason donnybrook, "Perhaps intolerance would not boil over with such intensity if honest differences were allowed to simmer."
[22369025] |The question is, if group conflicts still exist (as undeniably they do), and if Mr. Mason's type of ethnic humor is passe, then what other means do we have for letting off steam?

[22369026] |Don't say the TV sitcom, because that happens to be a genre that, in its desperate need to attract everybody and offend nobody, resembles politics more than it does comedy.
[22369027] |It is true that the best sitcoms do allow group differences to simmer: yuppies vs. blue-collar Bostonians in "Cheers"; children vs. adults in "The Cosby Show."
[22369028] |But these are not the differences that make headlines.

[22369029] |In "Chicken Soup," Mr. Mason plays Jackie, a Jewish bachelor courting Maddie (Lynn Redgrave), an Irish widow and mother of three, against the wishes of his mother (Rita Karin) and her brother Michael (Brandon Maggart).
[22369030] |It's worth noting that both disapproving relatives are immigrants.
[22369031] |At least, they both speak with strong accents, as do Jackie and Maddie.
[22369032] |It couldn't be more obvious that "Chicken Soup" is being made from an old recipe.
[22369033] |And a safe one -- imagine if the romance in question were between an Orthodox Jew and a member of the Nation of Islam.

[22369034] |Back in the 1920s, the play and movie versions of "Abie's Irish Rose" made the theme of courtship between the assimilated offspring of Jewish and Irish immigrants so popular that its author, Anne Nichols, lost a plagiarism suit on the grounds that the plot has entered the public domain.
[22369035] |And it has remained there, as evidenced by its reappearance in a 1972 CBS sitcom called "Bridget Loves Bernie," whose sole distinction was that it led to the real-life marriage of Meredith Baxter and David Birney.

[22369036] |Clearly, the question with "Chicken Soup" is not whether the pot will boil over, but whether it will simmer at all.
[22369037] |So far, the bubbles have been few and far between.
[22369038] |Part of the problem is the tendency of all sitcoms, ever since the didactic days of Norman Lear, to preach about social issues.
[22369039] |To some extent, this tendency emerges whenever the show tries to enlighten us about ethnic stereotypes by reversing them.

[22369040] |For instance, Michael dislikes Jackie not because he's a shrewd Jewish businessman, but because he quits his well-paying job as a salesman in order to become a social worker.
[22369041] |Even more problematic is the incompatibility between sitcom preachiness and Mr. Mason's comic persona.
[22369042] |The best moments in the show occur at the beginning and the end (and occasionally in the middle), when Mr. Mason slips into his standup mode and starts meting out that old-fashioned Jewish mischief to other people as well as to himself.
[22369043] |But too often, these routines lack spark because this sitcom, like all sitcoms, is timid about confronting Mr. Mason's stock in trade-ethnic differences.

[22369044] |I'm not suggesting that the producers start putting together episodes about topics like the Catholic-Jewish dispute over the Carmelite convent at Auschwitz.
[22369045] |That issue, like racial tensions in New York City, will have to cool down, not heat up, before it can simmer.
[22369046] |But I am suggesting that they stop requiring Mr. Mason to interrupt his classic shtik with some line about "caring for other people" that would sound shmaltzy on the lips of Miss America.
[22369047] |At your age, Jackie, you ought to know that you can't make soup without turning up the flame.

[22370001] |The official White House reaction to a plunge in stock prices has a 60-year history of calm, right up through Friday.

[22370002] |Treasury Secretary Nicholas Brady said in a statement Friday that the stock-market decline "doesn't signal any fundamental change in the condition of the economy."

[22370003] |"The economy," he added, "remains well-balanced and the outlook is for continued moderate growth."

[22370004] |Sound familiar?
[22370005] |Here's what Ronald Reagan said after the 1987 crash: "The underlying economy remains sound.
[22370006] |There is nothing wrong with the economy . . . all the indices are up."

[22370007] |Heard that before?
[22370008] |After the 1929 crash, Herbert Hoover said: "The fundamental business of the country . . . is on a sound and prosperous basis.

[22371001] |James Robinson, 57 years old, was elected president and chief executive officer of this maker of magnetic recording heads for disk drives.
[22371002] |He has been president and chief executive officer of Amperex Electronics Corp., a division of North American Philips Corp., itself a subsidiary of N.V. Philips of the Netherlands.
[22371003] |Charles J. Lawson Jr., 68, who had been acting chief executive since June 14, will continue as chairman.
[22371004] |The former president and chief executive, Eric W. Markrud, resigned in June.

[22372001] |The Senate's decision to approve a bare-bones deficit-reduction bill without a capital-gains tax cut still leaves open the possibility of enacting a gains tax reduction this year.

[22372002] |Late Friday night, the Senate voted 87-7 to approve an estimated $13.5 billion measure that had been stripped of hundreds of provisions that would have widened, rather than narrowed, the federal budget deficit.
[22372003] |Lawmakers drastically streamlined the bill to blunt criticism that it was bloated with special-interest tax breaks and spending increases.

[22372004] |"We're putting a deficit-reduction bill back in the category of being a deficit-reduction bill," said Senate Budget Committee Chairman James Sasser (D., Tenn.).

[22372005] |But Senate supporters of the trimmer legislation said that other bills would soon be moving through Congress that could carry some of the measures that had been cast aside, including a capital-gains tax cut.
[22372006] |In addition, the companion deficit-reduction bill already passed by the House includes a capital-gains provision.
[22372007] |House-Senate negotiations are likely to begin at midweek and last for a while.

[22372008] |"No one can predict exactly what will happen on the House side," said Senate Minority Leader Robert Dole (R., Kan.).
[22372009] |But, he added, "I believe Republicans and Democrats will work together to get capital-gains reform this year."

[22372010] |White House Budget Director Richard Darman told reporters yesterday that the administration wouldn't push to keep the capital-gains cut in the final version of the bill.
[22372011] |"We don't need this as a way to get capital gains," he said.

[22372012] |House Budget Committee Chairman Leon Panetta (D., Calif.) said in an interview, "If that's the signal that comes from the White House, that will help a great deal."

[22372013] |The Senate's decision was a setback for President Bush and will make approval of a capital-gains tax cut less certain this year.
[22372014] |Opponents of the cut are playing hardball.
[22372015] |Senate Majority Leader George Mitchell (D., Maine) said he was "confident" that any House-Senate agreement on the deficit-reduction legislation wouldn't include a capital-gains tax cut.
[22372016] |And a senior aide to the House Ways and Means Committee, where tax legislation originates, said there aren't any "plans to produce another tax bill that could carry a gains tax cut this year."

[22372017] |One obvious place to attach a capital-gains tax cut, and perhaps other popular items stripped from the deficit-reduction bill, is the legislation to raise the federal borrowing limit.
[22372018] |Such legislation must be enacted by the end of the month.

[22372019] |The Senate bill was pared back in an attempt to speed deficit-reduction through Congress.
[22372020] |Because the legislation hasn't been completed, President Bush has until midnight tonight to enact across-the-board spending cuts mandated by the Gramm-Rudman deficit-reduction law.

[22372021] |Senators hope that the need to avoid those cuts will pressure the House to agree to the streamlined bill.
[22372022] |The House appears reluctant to join the senators.
[22372023] |A key is whether House Republicans are willing to acquiesce to their Senate colleagues' decision to drop many pet provisions.

[22372024] |"Although I am encouraged by the Senate action," said Chairman Dan Rostenkowski (D., Ill.) of the House Ways and Means Committee, "it is uncertain whether a clean bill can be achieved in the upcoming conference with the Senate."

[22372025] |Another big question hovering over the debate is what President Bush thinks.
[22372026] |He has been resisting a stripped-down bill without a guaranteed vote on his capital-gains tax cut.
[22372027] |But Republican senators saw no way to overcome a procedural hurdle and garner the 60 votes needed to win the capital-gains issue on the floor, so they went ahead with the streamlined bill.

[22372028] |The Senate bill was stripped of many popular, though revenue-losing, provisions, a number of which are included in the House-passed bill.
[22372029] |These include a child-care initiative and extensions of soon-to-expire tax breaks for low-income housing and research-and-development expenditures.
[22372030] |Also missing from the Senate bill is the House's repeal of a law, called Section 89, that compels companies to give rank-and-file workers comparable health benefits to top paid executives.

[22372031] |One high-profile provision that was originally in the Senate bill but was cut out because it lost money was the proposal by Chairman Lloyd Bentsen (D., Texas) of the Senate Finance Committee to expand the deduction for individual retirement accounts.
[22372032] |Mr. Bentsen said he hopes the Senate will consider that measure soon.

[22372033] |To the delight of some doctors, the bill dropped a plan passed by the Finance Committee that would have overhauled the entire physician-reimbursement system under Medicare.
[22372034] |To the detriment of many low-income people, efforts to boost Medicaid funding, especially in rural areas, also were stricken.

[22372035] |Asked why senators were giving up so much, New Mexico Sen. Pete Domenici, the ranking Republican on the Senate Budget Committee, said, "We're looking like idiots.
[22372036] |Things had just gone too far."

[22372037] |Sen. Dole said that the move required sacrifice by every senator.
[22372038] |It worked, others said, because there were no exceptions: all revenue-losing provisions were stricken.

[22372039] |The Senate also dropped a plan by its Finance Committee that would have increased the income threshold beyond which senior citizens have their Social Security benefits reduced.
[22372040] |In addition, the bill dropped a plan to make permanent a 3% excise tax on long-distance telephone calls.
[22372041] |It no longer includes a plan that would have repealed what remains of the completed-contract method of accounting, which is used by military contractors to reduce their tax burden.
[22372042] |It also drops a provision that would have permitted corporations to use excess pension funds to pay health benefits for current retirees.

[22372043] |Also stricken was a fivefold increase in the maximum Occupational Safety and Health Administration penalties, which would have raised $65 million in fiscal 1990.
[22372044] |A provision that would have made the Social Security Administration an independent agency was excised.

[22372045] |The approval of the Senate bill was especially sweet for Sen. Mitchell, who had proposed the streamlining.
[22372046] |Mr. Mitchell's relations with Budget Director Darman, who pushed for a capital-gains cut to be added to the measure, have been strained since Mr. Darman chose to bypass the Maine Democrat and deal with other lawmakers earlier this year during a dispute over drug funding in the fiscal 1989 supplemental spending bill.

[22372047] |The deficit reduction bill contains $5.3 billion in tax increases in fiscal 1990, and $26 billion over five years.
[22372048] |The revenue-raising provisions, which affect mostly corporations, would:

[22372049] |-- Prevent companies that have made leveraged buy-outs from getting federal tax refunds resulting from losses caused by interest payments on debt issued to finance the buy-outs, effective Aug. 2, 1989.

[22372050] |-- Require mutual funds to include in their taxable income dividends paid to them on the date that the dividends are declared rather than received, effective the day after the tax bill is enacted.

[22372051] |-- Close a loophole regarding employee stock ownership plans, effective June 6, 1989, that has been exploited by investment bankers in corporate takeovers.
[22372052] |The measure repeals a 50% exclusion given to banks on the interest from loans used to acquire securities for an ESOP, if the ESOP owns less than 30% of the employer's stock.

[22372053] |-- Curb junk bonds by ending tax benefits for certain securities, such as zero-coupon bonds, that postpone cash interest payments.

[22372054] |-- Raise $851 million by suspending for one year an automatic reduction in airport and airway taxes.

[22372055] |-- Speed up the collection of the payroll tax from large companies, effective August 1990.

[22372056] |-- Impose a tax on ozone-depleting chemicals, such as those used in air conditioners and in Styrofoam, beginning at $1.10 a pound starting next year.

[22372057] |-- Withhold income taxes from the paychecks of certain farm workers currently exempt from withholding.

[22372058] |-- Change the collection of gasoline excise taxes to weekly from semimonthly, effective next year.

[22372059] |-- Restrict the ability of real estate owners to escape taxes by swapping one piece of property for another instead of selling it for cash.

[22372060] |-- Increase to $6 a person from $3 the international air-passenger departure tax, and impose a $3-a-person tax on international departures by commercial ships.

[22372061] |The measure also includes spending cuts and increases in federal fees.
[22372062] |Among its provisions:

[22372063] |-- Reduction of Medicare spending in fiscal 1990 by some $2.8 billion, in part by curbing increases in reimbursements to physicians.
[22372064] |The plan would impose a brief freeze on physician fees next year.

[22372065] |-- Removal of the U.S. Postal Service's operating budget from the federal budget, reducing the deficit by $1.77 billion.
[22372066] |A similar provision is in the House version.

[22372067] |-- Authority for the Federal Aviation Administration to raise $239 million by charging fees for commercial airline-landing rights at New York's LaGuardia and John F. Kennedy International Airports, O'Hare International Airport in Chicago and National Airport in Washington.

[22372068] |-- Increases in Nuclear Regulatory Commission fees totaling $54 million.

[22372069] |-- Direction to the U.S. Coast Guard to collect $50 million from users of Coast Guard services.

[22372070] |-- Raising an additional $43 million by increasing existing Federal Communications Commission fees and penalties and establishing new fees for amateur radio operators, ship stations and mobile radio facilities.

[22372071] |John E. Yang contributed to this article.

[22373001] |In response to your overly optimistic, outdated piece on how long unemployment lasts (People Patterns, Sept. 20): I am in the communications field, above entry level.
[22373002] |I was laid off in August 1988, and after a thorough and exhausting job search, was hired in August 1989.
[22373003] |My unemployment insurance ran out before I found a job; I found cutbacks and layoffs in many companies.

[22373004] |The statistics quoted by the "new" Census Bureau report (garnered from 1984 to 1986) are out of date, certainly as an average for the Northeast, and possibly for the rest of the country.

[22373005] |I think what bothered me most about the piece was that there seemed to be an underlying attitude to tell your readers all is well -- if you're getting laid off don't worry, and if you're unemployed, it's a seller's market.

[22373006] |To top it off, you captioned the graph showing the average number of months in a job search as "Time Off."
[22373007] |Are you kidding?
[22373008] |Looking for a job was one of the most anxious periods of my life -- and is for most people.
[22373009] |Your paper needs a serious reality check.

[22373010] |Reva Levin

[22373011] |Cambridge, Mass.

[22374001] |BULL HN INFORMATION SYSTEMS Inc. is a U.S. majority-owned unit of Cie. des Machines Bull.
[22374002] |In Friday's edition, the name of the unit was misstated.

[22375001] |Moody's Investors Service said it reduced its rating on $165 million of subordinated debt of this Beverly Hills, Calif., thrift, citing turmoil in the market for low-grade, high-yield securities.
[22375002] |The agency said it reduced its rating on the thrift's subordinated debt to B-2 from Ba-2 and will keep the debt under review for possible further downgrade.
[22375003] |Columbia Savings is a major holder of so-called junk bonds.
[22375004] |New federal legislation requires that all thrifts divest themselves of such speculative securities over a period of years.
[22375005] |Columbia Savings officials weren't available for comment on the downgrade.

[22375006] |FRANKLIN SAVINGS ASSOCIATION (Ottawa, Kan.) --
[22375007] |Moody's Investors Service Inc. said it downgraded its rating to B-2 from Ba-3 on less than $20 million of this thrift's senior subordinated notes.
[22375008] |The rating concern said Franklin's "troubled diversification record in the securities business" was one reason for the downgrade, citing the troubles at its L.F. Rothschild subsidiary and the possible sale of other subsidiaries.
[22375009] |"They perhaps had concern that we were getting out of all these," said Franklin President Duane H. Hall.
[22375010] |"I think it was a little premature on their part.

[22376001] |Just when it seemed safe to go back into stocks, Wall Street suffered another severe attack of nerves.

[22376002] |Does this signal another Black Monday is coming?
[22376003] |Or is this an extraordinary buying opportunity, just like Oct. 19, 1987, eventually turned out to be?

[22376004] |Here's what several leading market experts and money managers say about Friday's action, what happens next and what investors should do.

[22376005] |Joseph Granville.
[22376006] |"I'm the only one who said there would be an October massacre, all through late August and September," says Mr. Granville, once a widely followed market guru and still a well-known newsletter writer.

[22376007] |"Everyone will tell you that this time is different from 1987," he says.
[22376008] |"Well, in some ways it is different, but technically it is just the same.
[22376009] |If you're a technician, you obey the signals.
[22376010] |Right now they're telling me to get the hell out and stay out.
[22376011] |I see no major support until 2200.
[22376012] |I see a possibility of going to 2200 this month."

[22376013] |Mr. Granville says he wouldn't even think of buying until at least 600 to 700 stocks have hit 52-week lows; about 100 stocks hit new lows Friday.
[22376014] |"Most people," he says, "have no idea what a massacre pattern looks like."

[22376015] |Elaine Garzarelli.
[22376016] |A quantitative analyst with Shearson Lehman Hutton Inc., Ms. Garzarelli had warned clients to take their money out of the market before the 1987 crash.

[22376017] |Friday's big drop, she says, "was not a crash.
[22376018] |This was an October massacre" like those that occurred in 1978 and 1979.
[22376019] |Now, as in those two years, her stock market indicators are positive.
[22376020] |So she thinks the damage will be short-lived and contained.

[22376021] |"Those corrections lasted one to four weeks and took the market 10%-12% down," she says.
[22376022] |"This is exactly the same thing, as far as I'm concerned."
[22376023] |Thus, she says, if the Dow Jones Industrial Average dropped below 2450, "It would just be a fluke.
[22376024] |My advice is to buy."

[22376025] |As she calculates it, the average stock now sells for about 12.5 times companies' earnings.
[22376026] |She says that ratio could climb to 14.5, given current interest rates, and still be within the range of "fair value."

[22376027] |Ned Davis.
[22376028] |Friday's fall marks the start of a bear market, says Mr. Davis, president of Ned Davis Research Inc.
[22376029] |But Mr. Davis, whose views are widely respected by money managers, says he expects no 1987-style crash.

[22376030] |"There was a unique combination in 1987," he says.
[22376031] |"Margin debt was at a record high.
[22376032] |There was tremendous public enthusiasm for stock mutual funds.
[22376033] |The main thing was portfolio insurance," a mechanical trading system intended to protect an investor against losses. "
[22376034] |A hundred billion dollars in stock was subject" to it.
[22376035] |In 1987, such selling contributed to a snowball effect.

[22376036] |Today could even be an up day, Mr. Davis says, if major brokerage firms agree to refrain from program trading.
[22376037] |Over the next several months, though, he says things look bad.

[22376038] |"I think the market will be heading down into November," he says.
[22376039] |"We will probably have a year-end rally, and then go down again.
[22376040] |Sort of a two-step bear market."
[22376041] |He expects the downturn to carry the Dow Jones Industrial Average down to around 2000 sometime next year.
[22376042] |"That would be a normal bear market," he says.
[22376043] |"I guess that's my forecast."

[22376044] |Leon G. Cooperman.
[22376045] |"I don't think the market is going through another October '87.
[22376046] |I don't think that's the case at all," says Mr. Cooperman, a partner at Goldman, Sachs & Co. and chairman of Goldman Sachs Asset Management.

[22376047] |Mr. Cooperman sees this as a good time to pick up bargains, but he doesn't think there's any need to rush.
[22376048] |"I expect the market to open weaker Monday, but then it should find some stability."

[22376049] |He ticks off several major differences between now and two years ago.
[22376050] |Unlike 1987, interest rates have been falling this year.
[22376051] |Unlike 1987, the dollar has been strong.
[22376052] |And unlike 1987, the economy doesn't appear to be in any danger of overheating.

[22376053] |But the economy's slower growth this year also means the outlook for corporate profits "isn't good," he says.
[22376054] |"So it's a very mixed bag."

[22376055] |Thus, he concludes, "This is not a good environment to be fully invested" in stocks.
[22376056] |"If I had come into Friday on margin or with very little cash in the portfolios, I would not do any buying.
[22376057] |But we came into Friday with a conservative portfolio, so I would look to do some modest buying" on behalf of clients. "
[22376058] |We're going to look for some of the better-known companies that got clocked" Friday.

[22376059] |John Kenneth Galbraith.
[22376060] |"This is the latest manifestation of the capacity of the financial community for recurrent insanity," says Mr. Galbraith, an economist.

[22376061] |"I see this as a reaction to the whole junk bond explosion," he says.
[22376062] |"The explosion of junk bonds and takeovers has lodged a lot of insecure securities in the hands of investors and loaded the corporations that are the objects of takeovers or feared takeovers with huge amounts of debt rather than equity.
[22376063] |This has both made investors uneasy and the corporations more vulnerable."

[22376064] |Nevertheless, he says a depression doesn't appear likely.
[22376065] |"There is more resiliency in the economy at large than we commonly suppose," he says.
[22376066] |"It takes more error now to have a major depression than back in the Thirties -- much as the financial community and the government may try."

[22376067] |Mario Gabelli.
[22376068] |New York money manager Mario Gabelli, an expert at spotting takeover candidates, says that takeovers aren't totally gone.

[22376069] |"Companies are still going to buy companies around the world," he says.
[22376070] |Examples are "Ford looking at Jaguar, BellSouth looking at LIN Broadcasting."
[22376071] |These sorts of takeovers don't require junk bonds or big bank loans to finance them, so Mr. Gabelli figures they will continue.

[22376072] |"The market was up 35% since {President} Bush took office," Mr. Gabelli says, so a correction was to be expected.
[22376073] |He thinks another crash is "unlikely," and says he was "nibbling at" selected stocks during Friday's plunge.

[22376074] |"Stocks that were thrown out just on an emotional basis are a great opportunity {this} week for guys like me," he says.

[22376075] |Jim Rogers.
[22376076] |"It seems to me that this is the pin that has finally pricked the balloon," says Mr. Rogers, a professor of finance at Columbia University and former co-manager of one of the most successful hedge funds in history, Quantum Fund.

[22376077] |He sees "economic problems, financial problems" ahead for the U.S., with a fairly strong possibility of a recession.
[22376078] |"Friday you couldn't sell dollars," he says.
[22376079] |Dealers "would give you a quote, but then refuse to make the trade."
[22376080] |If the dollar stays weak, he says, that will add to inflationary pressures in the U.S. and make it hard for the Federal Reserve Board to ease interest rates very much.

[22376081] |Mr. Rogers won't decide what to do today until he sees how the London and Tokyo markets go.
[22376082] |He recommends that investors sell takeover-related stocks, but hang on to some other stocks -- especially utilities, which often do well during periods of economic weakness.

[22376083] |Frank Curzio.
[22376084] |Many people now claim to have predicted the 1987 crash.
[22376085] |Queens newsletter writer Francis X. Curzio actually did it: He stated in writing in September 1987 that the Dow Jones Industrial Average was likely to decline about 500 points the following month.

[22376086] |Mr. Curzio says what happens now will depend a good deal on the Federal Reserve Board.
[22376087] |If it promptly cuts the discount rate it charges on loans to banks, he says, "That could quiet things down."
[22376088] |If not, "We could go to 2200 very soon."

[22376089] |Frank W. Terrizzi.
[22376090] |Stock prices "would still have to go down some additional amount before we become positive on stocks," says Mr. Terrizzi, president and managing director of Renaissance Investment Management Inc. in Cincinnati.

[22376091] |Renaissance, which manages about $1.8 billion, drew stiff criticism from many clients earlier this year because it pulled entirely out of stocks at the beginning of the year and thus missed a strong rally.

[22376092] |Renaissance is keeping its money entirely in cash equivalents, primarily U.S. Treasury bills.
[22376093] |"T-bills probably are the right place to be," he says.

[22377001] |Regarding the Oct. 3 letter to the editor from Rep. Tom Lantos, chairman of the House Subcommittee on Employment and Housing, alleging:

[22377002] |1. That your Sept. 28 editorial "Kangaroo Committees" was factually inaccurate and deliberately misleading.

[22377003] |I thought your editorial was factually accurate and deliberately elucidative.

[22377004] |2. That Mr. Lantos supported the rights of the witnesses to take the Fifth Amendment.

[22377005] |Yes, he did.
[22377006] |As I watched him on C-Span, I heard him speak those lovely words about the Bill of Rights, which he quotes from the transcript of the hearings.
[22377007] |He did repeat those nice platitudes several times as an indication of his support for the Constitution.
[22377008] |He used about 56 words defending the witnesses' constitutional rights.

[22377009] |Unfortunately, by my rough guess, he used better than 5,000 words heaping scorn on the witnesses for exercising the Fifth.
[22377010] |He sandwiched his praise of constitutional meat between large loaves of bilious commentary.
[22377011] |As your editorial rightly pointed out, Samuel Pierce, former HUD secretary, and Lance Wilson, Mr. Pierce's former aide, "are currently being held up to scorn for taking the Fifth Amendment.
[22377012] |" That certainly is not the supposed "distorted reading" indicated by Mr. Lantos.

[22377013] |3. That his "committee does not deal with any possible criminal activity at HUD.
[22377014] |My colleagues and I fully realize we are not a court . . . etc."

[22377015] |Absolute rubbish.
[22377016] |By any "reasonable man" criterion, Mr. Lantos and his colleagues have a whole bunch of people tried and convicted.
[22377017] |Apparently, their verdict is in.
[22377018] |Right now they're pursuing evidence.
[22377019] |That's not a bad way to proceed, just somewhat different from standard American practice.

[22377020] |How was that practice referred to when I was in school?
[22377021] |Ah, yes, something called a Star Chamber.

[22377022] |Of course, Mr. Lantos doth protest that his subcommittee simply seeks information for legislative change.
[22377023] |No doubt that's partially true.
[22377024] |Everything that Mr. Lantos says in his letter is partially true.
[22377025] |He's right about his subcommittee's responsibilities when it comes to obtaining information from prior HUD officials.
[22377026] |But if his explanation of motivation is true, why is his investigation so oriented as to identify criminal activity?
[22377027] |Why not simply questions designed to identify sources and causes of waste and inefficiency?
[22377028] |Such as, what happened when Congress wanted to know about $400 toilet seats or whatever they supposedly cost?
[22377029] |No, Mr. Lantos's complaints simply won't wash.

[22377030] |4. That the Journal defends "the sleaze, fraud, waste, embezzlement, influence-peddling and abuse of the public that took place while Mr. Pierce was secretary of HUD," etc. and so forth.

[22377031] |No, to my mind, the Journal did not "defend sleaze, fraud, waste, embezzlement, influence-peddling and abuse of the public trust . . ."
[22377032] |it defended appropriate constitutional safeguards and practical common sense.

[22377033] |The problem, which the Journal so rightly pointed out in a number of articles, is not the likes of Mr. Lantos, who after all is really a bit player on the stage, but the attempt by Congress to enhance itself into a quasi-parliamentary/judicial body.
[22377034] |(Of course, we've also got a judiciary that seeks the same objective.)
[22377035] |The system is the problem, not an individual member.
[22377036] |Individuals can always have their hands slapped.
[22377037] |It's when such slapping doesn't occur that we've got trouble.

[22377038] |I do not by any means defend HUD management.
[22377039] |But I think the kind of congressional investigation that has been pursued is a far greater danger to American notions of liberty and freedom than any incompetency (and, yes, maybe criminality) within HUD could possibly generate.
[22377040] |The last time I saw a similar congressional hearing was when "Tail Gunner Joe" McCarthy did his work.

[22377041] |Raymond Weber

[22377042] |Parsippany, N.J.

[22377043] |I disagree with the statement by Mr. Lantos that one should not draw an adverse inference against former HUD officials who assert their Fifth Amendment privilege against self-incrimination in congressional hearings.

[22377044] |The Fifth Amendment states in relevant part that no person "shall be compelled, in any criminal case, to be a witness against himself."
[22377045] |This privilege against self-incrimination precludes the drawing of an adverse inference against a criminal defendant who chooses not to testify.
[22377046] |Thus, in a criminal case, a prosecutor cannot comment on a defendant's failure to testify nor can the defendant be compelled to take the stand as a witness, thus forcing him to "take the Fifth."
[22377047] |The privilege, however, has been limited in accordance with its plain language to protect the defendant in criminal matters only.

[22377048] |The Supreme Court and some states have specifically recognized that "the Fifth Amendment does not preclude the inference where the privilege is claimed by a party to a civil cause."
[22377049] |Baxter v. Palmingiano, 425 U.S. 308 (1976).
[22377050] |Thus, in a civil case, a defendant may be called as a witness, he may be forced to testify or take the Fifth, and his taking of the Fifth may permit the drawing of an adverse inference against him in the civil matter.
[22377051] |He may take the Fifth in a civil matter only if he has a good faith and justifiable belief that his testimony may subject him to criminal prosecution.
[22377052] |Allowing the defendant to take the Fifth in a civil matter is not based on a constitutional right to refuse to testify where one's testimony harms him in the civil matter, but because the testimony in the civil matter could be unconstitutionally used against him in a subsequent criminal prosecution.
[22377053] |Absent the risk of such prosecution, a court may order the defendant to testify.

[22377054] |Thus, when Mr. Pierce asserted the Fifth in a noncriminal proceeding, particularly after presumably receiving extensive advice from legal counsel, one must conclude that he held a good-faith, justifiable belief that his testimony could be used against him in a subsequent criminal prosecution.
[22377055] |The subcommittee, Congress and the American public have every right to draw the adverse inference and to concur with Mr. Pierce's own belief that his testimony could help convict him of a crime.
[22377056] |Drawing the adverse inference in a noncriminal congressional hearing does not offend the Fifth Amendment shield against self-incrimination.

[22377057] |Clark S. Spalsbury Jr.

[22377058] |Estes Park, Colo.

[22378001] |It was Friday the 13th, and the stock market plummeted nearly 200 points.
[22378002] |Just a coincidence?
[22378003] |Or is triskaidekaphobia -- fear of the number 13 -- justified?

[22378004] |In academia, a so-called Friday the 13th effect has been set up and shot down by different professors.

[22378005] |Robert Kolb and Ricardo Rodriguez, professors of finance at the University of Miami, found evidence that the market is spooked by Friday the 13th.
[22378006] |But their study, which spanned the 1962-85 period, has since been shown to be jinxed by an unlucky choice of data.

[22378007] |In the '70s, the market took falls nine times in a row on Friday the you-know-what.
[22378008] |But the date tends to be a plus, not a minus, for stocks, according to Yale Hirsch, a collector of stock market lore.

[22378009] |Another study found that the 82 Fridays the 13th in the 1940-1987 period had higher than average returns -- higher even than Fridays in general, which tend to be strong days for stock prices.

[22378010] |On the only other Friday the 13th this year, the Dow Jones Industrial Average rose about four points.

[22378011] |Professor Kolb says the original study, titled Friday the 13th, Part VII, was published tongue-in-cheek.
[22378012] |In a similar vein, he adds that the anniversary of the 1987 crash and Saturday's full moon could have played a part, too, in Friday's market activity.

[22379001] |reminiscent of those during the 1987 crash -- that as stock prices plummeted and trading activity escalated, some phone calls to market makers in over-the-counter stocks went unanswered.

[22379002] |"We couldn't get dealers to answer their phones," said Robert King, senior vice president of OTC trading at Robinson-Humphrey Co. in Atlanta.
[22379003] |"It was {like} the Friday before Black Monday" two years ago.

[22379004] |Whether unanswered phone calls had any effect or not, Nasdaq stocks sank far less than those on the New York and American exchanges.
[22379005] |Nonetheless, the Nasdaq Composite Index suffered its biggest point decline of the year and its sixth worst ever, diving 14.90, or 3%, to 467.29.
[22379006] |Ten points of the drop occurred during the last 45 minutes of trading.
[22379007] |By comparison, the New York Stock Exchange Composite tumbled 5.8% Friday and the American Stock Exchange Composite fell 4%.

[22379008] |On Oct. 16, 1987, the Nasdaq Composite fell 16.18 points, or 3.8%, followed by its devastating 46.12-point, or 11% slide, three days later.

[22379009] |Nasdaq volume Friday totaled 167.7 million shares, which was only the fifth busiest day so far this year.
[22379010] |The single-day record of 288 million shares was set on Oct. 21,

[22379011] |"There wasn't a lot of volume because it was just impossible to get stock moved," said E.E. "Buzzy" Geduld, president of Herzog, Heine, Geduld, a New York company that makes markets in thousands of OTC issues.

[22379012] |Most of the complaints about unanswered phone calls came from regional brokers rather than individual investors.
[22379013] |Mr. King of Robinson-Humphrey and others were quick to add that they believe the problem stemmed more from traders' inability to handle the volume of calls, rather than a deliberate attempt to avoid making trades.

[22379014] |The subject is a sore one for Nasdaq and its market-making companies, which were widely criticized two years ago following complaints from investors who couldn't reach their brokers or trade in the chaos of the crash.

[22379015] |Peter DaPuzzo, head of retail equity trading at Shearson Lehman Hutton, declared: "It was the last hour of trading on a Friday.
[22379016] |There were too many phones ringing and too many things happening to expect market makers to be as efficient as robots.
[22379017] |It wasn't intentional, we were all busy."

[22379018] |James Tarantino, head of OTC trading at Hambrecht & Quist in San Francisco, said, "It was just like two years ago.
[22379019] |Everybody was trying to do the same thing at the same time."

[22379020] |Jeremiah Mullins, the OTC trading chief at Dean Witter Reynolds in New York, said proudly that his company executed every order it received by the close of trading.
[22379021] |But, he added, "you can only take one call at a time."

[22379022] |Market makers keep supplies of stock on hand to maintain orderly trading when imbalances occur.
[22379023] |On days like Friday, that means they must buy shares from sellers when no one else is willing to.
[22379024] |When selling is so frenzied, prices fall steeply and fast.
[22379025] |Two years ago, faced with the possibility of heavy losses on the stocks in their inventories, market makers themselves began dumping shares, exacerbating the slide in OTC stock prices.

[22379026] |On Friday, some market makers were selling again, traders said.
[22379027] |But, with profits sagging on Wall Street since the crash, companies have kept smaller share stockpiles on hand.

[22379028] |Mr. Tarantino of Hambrecht & Quist said some prices fell without trades taking place, as market makers kept dropping the prices at which they would buy shares.
[22379029] |"Everyone was hitting everyone else's bid," he said.

[22379030] |So, while OTC companies incurred losses on Friday, trading officials said the damage wasn't as bad as it was in 1987.
[22379031] |"Two years ago we were carrying huge inventories and that was the big culprit.
[22379032] |I don't know of anyone carrying big inventories now," said Mr. King of Robinson-Humphrey.

[22379033] |Tony Cecin, head of equity trading at Piper, Jaffray & Hopwood in Minneapolis, said that Piper Jaffray actually made money on Friday.
[22379034] |It helped that his inventory is a third smaller now than it was two years ago, he said.

[22379035] |Joseph Hardiman, president of the National Association of Securities Dealers, which oversees the Nasdaq computerized trading system, said that despite the rush of selling, he never considered the situation an "emergency."

[22379036] |"The pace of trading was orderly," he said.
[22379037] |Nasdaq's Small Order Execution System "worked beautifully," as did the automated system for larger trades, according to Mr. Hardiman.

[22379038] |Nevertheless, the shock of another steep plunge in stock prices undoubtedly will shake many investors' confidence.
[22379039] |In the past, the OTC market thrived on a firm base of small-investor participation.
[22379040] |Because Nasdaq's trading volume hasn't returned to pre-crash levels, traders and OTC market officials hope the damage won't be permanent.

[22379041] |But they are worried.
[22379042] |"We were just starting to get the public's confidence back," lamented Mr. Mullins of Dean Witter.

[22379043] |More troubling is the prospect that the overall collapse in stock prices could permanently erode the base of small-investor support the OTC market was struggling to rebuild in the wake of the October 1987 crash.

[22379044] |Mr. Cecin of Piper Jaffray says some action from government policy makers would allay investor fears.
[22379045] |It won't take much more to "scare the hell out of retail investors," he says.

[22379046] |The sellers on Friday came from all corners of the OTC market -- big and small institutional investors, as well as individual investors and market makers.
[22379047] |But grateful traders said the sell orders generally ranged from 20,000 shares to 50,000 shares, compared with blocks of 500,000 shares or more two years ago.

[22379048] |Shearson's Mr. DaPuzzo said retail investors nervously sold stock Friday and never returned to bargain-hunt.
[22379049] |Institutional investors, which had been selling stock throughout last week to lock in handsome gains made through the third quarter, were calmer.

[22379050] |"We had a good amount of selling from institutions, but not as much panic," Mr. DaPuzzo said.
[22379051] |"If they couldn't sell, some of them put the shares back on the shelf."
[22379052] |In addition, he said, some bigger institutional investors placed bids to buy some OTC stocks whose prices were beaten down.

[22379053] |In addition, Mr. DaPuzzo said computer-guided program selling of OTC stocks in the Russell Index of 2000 small stocks and the Standard & Poor's 500-stock Index sent occasional "waves " through the market.

[22379054] |Nasdaq's biggest stocks were hammered.
[22379055] |The Nasdaq 100 Index of the largest nonfinancial issues, including the big OTC technology issues, tumbled 4.2%, or 19.76, to 449.33.
[22379056] |The Nasdaq Financial Index of giant insurance and banking stocks dropped 2%, or 9.31, to 462.98.

[22379057] |The OTC market has only a handful of takeover-related stocks.
[22379058] |But they fell sharply.
[22379059] |McCaw Cellular Communications, for instance, has offered to buy LIN Broadcasting as well as Metromedia's New York City cellular telephone interests, and in a separate transaction, sell certain McCaw properties to Contel Cellular.
[22379060] |McCaw lost 8%, or 3 1/2, to 40.
[22379061] |LIN Broadcasting, dropped 5 1/2, or 5%, to 107 1/2.
[22379062] |The turnover in both issues was roughly normal.

[22379063] |On a day when negative takeover-related news didn't sit well with investors, Commercial Intertech, a maker of engineered metal parts, said Haas & Partners advised it that it doesn't plan to pursue its previously reported $27.50-a-share bid to buy the company.
[22379064] |Commercial Intertech plummeted 6 to 26.

[22379065] |The issues of companies with ties to the junk bond market also tumbled Friday.
[22379066] |On the OTC market, First Executive, a big buyer of the high-risk, high-yield issues, slid 2 to 12 1/4.

[22379067] |Among other OTC issues, Intel, dropped 2 1/8 to 33 7/8; Laidlaw Transportation lost 1 1/8 to 19 1/2; the American depositary receipts of Jaguar were off 1/4 to 10 1/4; MCI Communications slipped 2 1/4 to 43 1/2; Apple Computer fell 3 to 45 3/4 and Nike dropped 2 1/4 to 66 3/4.

[22380001] |Friday, October 13, 1989

[22380002] |The key U.S. and foreign annual interest rates below are a guide to general levels but don't always represent actual transactions.

[22380003] |PRIME RATE:
[22380004] |10 1/2%.
[22380005] |The base rate on corporate loans at large U.S. money center commercial banks.

[22380006] |FEDERAL FUNDS:
[22380007] |8 13/16% high, 8 1/2% low, 8 5/8% near closing bid, 8 3/4% offered.
[22380008] |Reserves traded among commercial banks for overnight use in amounts of $1 million or more.
[22380009] |Source: Fulton Prebon (U.S.A.) Inc.

[22380010] |DISCOUNT RATE:
[22380011] |7%.
[22380012] |The charge on loans to depository institutions by the New York Federal Reserve Bank.

[22380013] |CALL MONEY:
[22380014] |9 3/4% to 10%.
[22380015] |The charge on loans to brokers on stock exchange collateral.

[22380016] |COMMERCIAL PAPER placed directly by General Motors Acceptance Corp.:
[22380017] |8.60% 30 to 44 days; 8.55% 45 to 59 days; 8.375% 60 to 79 days; 8.50% 80 to 89 days; 8.25% 90 to 119 days; 8.125% 120 to 149 days; 8% 150 to 179 days; 7.625% 180 to 270 days.

[22380018] |COMMERCIAL PAPER:
[22380019] |High-grade unsecured notes sold through dealers by major corporations in multiples of $1,000:
[22380020] |8.65% 30 days; 8.55% 60 days; 8.55% 90 days.

[22380021] |CERTIFICATES OF DEPOSIT:
[22380022] |8.15% one month; 8.15% two months; 8.13% three months; 8.11% six months; 8.08% one year.
[22380023] |Average of top rates paid by major New York banks on primary new issues of negotiable C.D.s, usually on amounts of $1 million and more.
[22380024] |The minimum unit is $100,000.
[22380025] |Typical rates in the secondary market:
[22380026] |8.65% one month; 8.65% three months; 8.55% six months.

[22380027] |BANKERS ACCEPTANCES:
[22380028] |8.52% 30 days; 8.37% 60 days; 8.15% 90 days; 7.98% 120 days; 7.92% 150 days; 7.80% 180 days.
[22380029] |Negotiable, bank-backed business credit instruments typically financing an import order.

[22380030] |LONDON LATE EURODOLLARS:
[22380031] |8 13/16% to 8 11/16% one month; 8 13/16% to 8 11/16% two months; 8 13/16% to 8 11/16% three months; 8 3/4% to 8 5/8% four months; 8 11/16% to 8 9/16% five months; 8 5/8% to 8 1/2% six months.

[22380032] |LONDON INTERBANK OFFERED RATES (LIBOR):
[22380033] |8 3/4% one month; 8 3/4% three months; 8 9/16% six months; 8 9/16% one year.
[22380034] |The average of interbank offered rates for dollar deposits in the London market based on quotations at five major banks.

[22380035] |FOREIGN PRIME RATES:
[22380036] |Canada 13.50%; Germany 8.50%; Japan 4.875%; Switzerland 8.50%; Britain 15%.
[22380037] |These rate indications aren't directly comparable; lending practices vary widely by location.

[22380038] |TREASURY BILLS:
[22380039] |Results of the Tuesday, October 10, 1989, auction of short-term U.S. government bills, sold at a discount from face value in units of $10,000 to $1 million:
[22380040] |7.63% 13 weeks; 7.60% 26 weeks.

[22380041] |FEDERAL HOME LOAN MORTGAGE CORP. (Freddie Mac):
[22380042] |Posted yields on 30-year mortgage commitments for delivery within 30 days.
[22380043] |9.91%, standard conventional fixedrate mortgages; 7.875%, 2% rate capped one-year adjustable rate mortgages.
[22380044] |Source: Telerate Systems Inc.

[22380045] |FEDERAL NATIONAL MORTGAGE ASSOCIATION (Fannie Mae):
[22380046] |Posted yields on 30 year mortgage commitments for delivery within 30 days (priced at par)
[22380047] |9.86%, standard conventional fixed-rate mortgages; 8.85%, 6/2 rate capped one-year adjustable rate mortgages.
[22380048] |Source: Telerate Systems Inc.

[22380049] |MERRILL LYNCH READY ASSETS TRUST:
[22380050] |8.33%.
[22380051] |Annualized average rate of return after expenses for the past 30 days; not a forecast of future returns.

[22381001] |Pension funds, insurers and other behemoths of the investing world said they began scooping up stocks during Friday's market rout.
[22381002] |And they plan to buy more today.

[22381003] |Rightly or wrongly, many giant institutional investors appear to be fighting the latest war by applying the lesson they learned in the October 1987 crash: Buying at the bottom pays off.

[22381004] |To be sure, big investors might put away their checkbooks in a hurry if stocks open sharply lower today.
[22381005] |They could still panic and bail out of the market.
[22381006] |But their 1987 performance indicates that they won't abandon stocks unless conditions get far worse.

[22381007] |"Last time, we got rewarded for going out and buying stocks when the panic was the worst," said John W. Rogers, president of Chicago-based Ariel Capital Management Inc., which manages $1.1 billion of stocks.

[22381008] |Mr. Rogers spent half his cash on hand Friday for "our favorite stocks that have fallen apart."
[22381009] |He expects to invest the rest if the market weakens further.

[22381010] |Denver-based portfolio manager James Craig wasn't daunted when Friday's rout shaved $40 million from the value of the $752 million Janus Fund he oversees.
[22381011] |"I waited to make sure all the program trades had kicked through," he said.
[22381012] |Then he jumped into the market:
[22381013] |"I spent $30 million in the last half-hour."

[22381014] |Other money managers also opened their wallets.
[22381015] |"I was buying at the close (Friday) and I'll be buying again because I know we're getting good value," said Frederick A. Moran, president of Moran Asset Management Inc., Greenwich, Conn.
[22381016] |"There is no justification on the fundamental level for this crash."

[22381017] |Unlike mutual funds, which can be forced to sell stockholdings when investors rush to withdraw money, big investors such as pension funds and insurance companies can decide to ride out market storms without jettisoning stock.
[22381018] |Most often, they do just that, because stocks have proved to be the best-performing long-term investment, attracting about $1 trillion from pension funds alone.

[22381019] |"If you bought after the crash, you did very very well off the bottom," said Stephen B. Timbers, chief investment officer of Chicago-based Kemper Financial Services Inc.
[22381020] |The $56 billion California Public Employees Retirement System, for one, added $1 billion to its stock portfolio two years ago.

[22381021] |"The last crash taught institutional investors that they have to be long-term holders, and that they can't react to short-term events, good or bad," said Stephen L. Nesbitt, senior vice president for the pension consultants Wilshire Associates in Santa Monica, Calif.
[22381022] |"Those that pulled out (of stocks) regretted it," he said, "so I doubt you'll see any significant changes" in institutional portfolios as a result of Friday's decline.

[22381023] |Stocks, as measured by the Standard & Poor's 500-stock index, have been stellar performers this year, rising 27.97% before Friday's plunge, excluding dividends.
[22381024] |Even Friday's slump leaves investors ahead more than 20%, well above the annual average for stocks over several decades.

[22381025] |"You could go down 400 points and still have a good year in the market," said James D. Awad, president of New York-based BMI Capital Corp.

[22381026] |Mr. Awad, however, worries that the market "could go down 800 or 900 points in the next few days.
[22381027] |It can happen before you can turn around."
[22381028] |He said he discerns many parallels with 1987, including the emphasis on takeover stocks and the re-emergence of computerized program trading.
[22381029] |"The only thing you don't have," he said, "is the `portfolio insurance' phenomenon overlaid on the rest."

[22381030] |Most institutional investors have abandoned the portfolio insurance hedging technique, which is widely thought to have worsened the 1987 crash.
[22381031] |Not really insurance, this tactic was designed to soften the blow of declining stock prices and generate an offsetting profit by selling waves of S&P futures contracts.
[22381032] |In its severest test, the $60 billion of portfolio insurance in effect in the 1987 crash didn't work, as stock buyers disappeared and stock and futures prices became disconnected.

[22381033] |Even without portfolio insurance, market conditions were grim Friday, money managers said.
[22381034] |Neil Weisman, whose New York-based Chilmark Capital Partners had converted 85% of its $220 million investment pool to cash in recent months, said he was besieged by Wall Street firms Friday asking him to take stock off their hands.

[22381035] |"We got calls from big block houses asking us if we want to make bids on anything," said Mr. Weisman, who, happy with his returns on investments chalked up earlier, declined the offers.

[22381036] |Mr. Weisman predicts stocks will appear to stabilize in the next few days before declining again, trapping more investors.
[22381037] |"I think it will be a rigor mortis rally," he said.
[22381038] |Meanwhile, Friday brought a reprieve for money managers whose investment styles had put them at odds with the market rally.
[22381039] |Especially gleeful were the short sellers, who have been pounded by this year's market climb.

[22381040] |The shorts sell borrowed shares, hoping to profit by replacing them later at a lower price.
[22381041] |The nation's largest short-selling operation is Feshbach Brothers, Palo Alto, Calif., which said last May that its short positions had shown losses of 10% for the year up to that point.

[22381042] |All that now has changed.
[22381043] |"We're ahead for the year because of Friday," said the firm's Kurt Feshbach.
[22381044] |"We're not making a killing, but we had a good day.

[22382001] |Food and Drug Administration spokesman Jeff Nesbit said the agency has turned over evidence in a criminal investigation concerning Vitarine Pharmaceuticals Inc. to the U.S. Attorney's office in Baltimore.

[22382002] |Neither Vitarine nor any of the Springfield Gardens, N.Y., company's officials or employees have been charged with any crimes.
[22382003] |Vitarine won approval to market a version of a blood pressure medicine but acknowledged that it substituted a SmithKline Beecham PLC product as its own in tests.

[22382004] |Mr. Nesbit also said the FDA has asked Bolar Pharmaceutical Co. to recall at the retail level its urinary tract antibiotic.
[22382005] |But so far the company hasn't complied with that request, the spokesman said.

[22382006] |Bolar, the subject of a criminal investigation by the FDA and the Inspector General's office of the Health and Human Services Department, only agreed to recall two strengths of its version of Macrodantin "as far down as direct customers, mostly wholesalers," Mr. Nesbit said.

[22382007] |Bolar, of Copiague, N.Y., earlier began a voluntary recall of both its 100 milligram and 50 milligram versions of the drug.

[22382008] |The FDA has said it presented evidence it uncovered to the company indicating that Bolar substituted the brand-name product for its own to gain government approval to sell generic versions of Macrodantin.
[22382009] |Bolar has denied that it switched the brand-name product for its own in such testing.

[22383001] |The West German retailer ASKO Deutsche Kaufhaus AG plans to challenge the legality of a widely employed anti-takeover defense of companies in the Netherlands.

[22383002] |The eventual court decision could become a landmark in Dutch corporate law because the lawsuit ASKO plans to file would be the first to challenge the entire principle and practice of companies issuing voting preferred shares to management-controlled trusts to dilute voting power of common stockholders.

[22383003] |Up to now only specific aspects of these defenses have been challenged, though unsuccessfully, ASKO's Dutch lawyers noted.

[22383004] |Should the courts uphold the validity of this type of defense, ASKO will then ask the court to overturn such a vote-diluting maneuver recently deployed by Koninklijke Ahold NV.
[22383005] |ASKO says the Dutch-based international food retailer hadn't reasonable grounds to issue preferred stock to a friendly trust and thus dilute the worth and voting power of ASKO and other shareholders.

[22383006] |Speaking through its Dutch lawyers, ASKO also disclosed it holds a 15% stake in Ahold.
[22383007] |It was previously thought ASKO held a 13.6% stake that was accumulated since July.

[22383008] |A spokesman for Ahold said his company is confident of its own position and the propriety of the preferred-share issue.
[22383009] |He termed ASKO's legal actions as "unproductive" to international cooperation among European retailers.

[22384001] |Chase Manhattan Bank Chairman Willard Butcher is a conservative banker and a loyal Republican, but on Friday morning he had few kind words for President Bush's economic policy-making.

[22384002] |"There are some very significant issues out there, such as the fiscal deficit, the trade deficit, our relations with Japan, that have to be the subject of major initiatives," he said in an interview.
[22384003] |"I'd like to see that initiative, and I haven't.
[22384004] |There isn't a big shot, an agenda."

[22384005] |A few hours later, the stock market dropped 190 points.

[22384006] |Politicians tried to finger each other for the blame, although many analysts doubt that Washington was singly responsible for Wall Street's woes.
[22384007] |But Mr. Butcher's comments make one thing clear: Some on Wall Street wonder if anyone is in charge of economic policy.

[22384008] |Consider this:

[22384009] |-- By 11:59 p.m. tonight, President Bush must order $16 billion of automatic, across-the-board cuts in government spending to comply with the Gramm-Rudman budget law.
[22384010] |The cuts are necessary because Congress and the administration have failed to reach agreement on a deficit-cutting bill.
[22384011] |"We simply don't have strong leadership to try to reduce the deficit and make tough choices," House Budget Committee Chairman Leon Panetta (D., Calif.) said yesterday on NBC News's "Meet the Press."

[22384012] |-- For the last two weeks, the Bush administration and the Federal Reserve have been engaged in a semi-public battle over international economic policy.
[22384013] |The administration has been trying to push the dollar lower; the Fed has been resisting.
[22384014] |"One of the things that continues to worry me is this monetary warfare between the Treasury Department and the Federal Reserve Board," said Lawrence Kudlow, a Bear, Stearns & Co. economist, on ABC's "This Week."

[22384015] |-- The administration has sent out confusing signals about its response to a recent spate of airline takeovers.

[22384016] |Last month, Transportation Secretary Sam Skinner forced Northwest Airlines to reduce a stake held by KLM Royal Dutch Airlines.
[22384017] |But he has since run into opposition from the Treasury and the White House over that decision.
[22384018] |And he has kept mum on how his decision might affect a bid for United Airlines, which includes a big stake by British Airways PLC.
[22384019] |Some analysts say uncertainty about Washington's anti-takeover policy was one reason that financing for the United Airlines takeover fell through -- the event that triggered the market drop.

[22384020] |In many ways, the backdrop to Friday's stock decline is eerily similar to that of October 1987's 508-point crash.
[22384021] |Then, as now, the budget debate was behind schedule and automatic spending cuts were within days of taking hold.
[22384022] |The Treasury was locked in a battle over international economic policy, although at that time it was with West German officials rather than the Federal Reserve.
[22384023] |And concern about official actions aimed at takeovers -- then by the tax-writing House Ways and Means Committee rather than the Transportation Department -- were making markets nervous.

[22384024] |The 1987 crash brought the Reagan administration and Democratic lawmakers to the table for the first budget summit, resulting in a two-year plan to reduce the deficit by more than $76 billion -- even though the deficit actually rose by nearly $12 billion during that period.

[22384025] |But, barring further drops in the market this week, a similar outcome doesn't seem likely this year.
[22384026] |Lawmakers and administration officials agree that Friday's drop, by itself, isn't enough to force both sides back to the table to try to reach a deficit-reduction agreement that would be more serious and more far-reaching than last spring's gimmick-ridden plan, which still isn't fully implemented.

[22384027] |One of the biggest reasons that new talks aren't likely to come about is that, as everyone learned in 1987, the economy and the market can survive a one-day 508-point tumble.
[22384028] |"Everybody thought we were looking at a repetition of 1929, that we were looking at a recession," Rep. Panetta said yesterday in an interview.
[22384029] |"That did not happen.
[22384030] |They learned they could survive it without much problem."

[22384031] |But administration officials privately agree with Mr. Panetta, who said a precipitous drop this week "is going to force the president and Congress to take a much harder look at fiscal policy."

[22384032] |In that case, there will be plenty of blame to go around.
[22384033] |"There is an underlying concern on the part of the American people -- and there should be-that the administration has not gone far enough in cutting this deficit and that Congress has been unwilling to cut what the administration asked us to cut," said Senate Finance Committee Chairman Lloyd Bentsen (D., Texas).

[22384034] |Nevertheless, it clearly will take more than Friday's 190-point decline to overcome the bitter feelings that have developed between lawmakers and White House Budget Director Richard Darman over the capital-gains fight.
[22384035] |Hill Democrats are particularly angry over Mr. Bush's claim that the capital-gains cut was part of April's budget accord and his insistence on combining it with the deficit-reduction legislation.

[22384036] |"There is no prospect of any so-called grand compromise or deal next year because the administration simply didn't live up to this year's deal," Senate Majority Leader George Mitchell (D., Maine) said yesterday on CBS News's "Face the Nation."

[22384037] |During last week's maneuverings on the deficit-cutting bill and the capital-gains issue, there were signs that Senate Republicans and the administration were at odds.
[22384038] |At the very moment that Senate Republicans were negotiating a deal to exclude capital gains from the deficit-reduction legislation, White House spokesman Marlin Fitzwater told reporters that it was the president's policy to include it.

[22384039] |When an agreement was reached to strip capital gains from the legislation, Oregon Sen. Bob Packwood, the ranking GOP member of the tax-writing Senate Finance Committee, hailed it.
[22384040] |Asked if the administration agreed, he curtly replied: "The adminstration will have to speak for itself."

[22384041] |Friday's market tumble could spur action on reconciling the House and Senate versions of the deficit-reduction measure, a process that isn't expected to begin until tomorrow at the soonest.

[22384042] |Senate Republicans expressed the hope that the House would follow the lead of the Senate, which on Friday agreed to drop a variety of spending measures and tax breaks that would have increased the fiscal 1990 deficit.

[22384043] |"The market needs a strong signal that we're serious about deficit reduction, and the best way to do that is for the House of Representatives to strip their bill" of similar provisions, Sen. Warren Rudman (R., N.H.). said yesterday.

[22384044] |The White House Office of Management and Budget, whose calculations determine whether the Gramm-Rudman targets are met, estimated that the House-passed deficit-reduction measure would cut the fiscal 1990 shortfall by $6.2 billion, almost half of the Congressional Budget Office's estimate of $11.0 billion.
[22384045] |Rep. Panetta said that OMB's figure would still be enough to avoid permanent across-the-board cuts, but added: "We're getting very close to the margins here."

[22384046] |No one in Washington was willing to take the blame for provoking Friday's drop in the stock market.
[22384047] |But some players were quick to seize the moment.
[22384048] |Before the sun had set on Friday, Richard Rahn, the supply-side chief economist of the U.S. Chamber of Commerce, issued a statement attributing the drop in stock prices to the Senate decision to postpone action on capital gains.
[22384049] |"Investors, who had been holding assets in anticipation of a more favorable time to sell, were spooked," he said.

[22384050] |"There have been many preposterous reasons advanced to support a capital-gains tax cut," Sen. Mitchell said during his television appearance, "but I suggest that is perhaps more than any of the others.

[22385001] |The following U.S. Treasury, corporate and municipal offerings are tentatively scheduled for sale this week, according to Dow Jones Capital Markets Report:

[22385002] |$15.2 billion of three-month and six-month bills.

[22385003] |Two-year notes, refinancing about $9.6 billion in maturing debt.

[22385004] |$9.75 billion of 52-week bills.

[22385005] |Connecticut Light & Power Co. --
[22385006] |Three million shares of $25 preferred, via competitive bidding.

[22385007] |B&H Crude Carriers Ltd. --
[22385008] |Four million common shares, via Salomon Brothers Inc.

[22385009] |Baldwin Technology Co. --
[22385010] |2.6 million Class A shares, via Smith Barney Harris Upham & Co.

[22385011] |Blockbuster Entertainment Corp. --
[22385012] |$250 million (face amount) Liquid Yield Option Notes, via Merrill Lynch Capital Markets.

[22385013] |Chase Manhattan Corp. --
[22385014] |14 million common shares, via Goldman, Sachs & Co.

[22385015] |Comcast Corp. --
[22385016] |$150 million convertible debentures, via Merrill Lynch.

[22385017] |CSS Industries --
[22385018] |1.3 million common shares, via Merrill Lynch.

[22385019] |Eastern Utilities Associates --
[22385020] |1.5 million common shares, via PaineWebber Inc.

[22385021] |Employee Benefit Plans Inc. --
[22385022] |Two million common shares, via Dean Witter Capital Markets.

[22385023] |Exabyte Corp. --
[22385024] |2,850,000 common shares, via Goldman Sachs.

[22385025] |Knowledgeware Inc. --
[22385026] |2.4 million common shares, via Montgomery Securities.

[22385027] |Oregon --
[22385028] |$100 million of general obligation veterans' tax notes, Series 1989, via competitive bid.

[22385029] |Washington, D.C. --
[22385030] |$200 million of 1990 general obligation tax revenue notes (Series 1990A), via competitive bid.

[22385031] |Virginia Public School Authority --
[22385032] |$55,730,000 of school financing bonds, 1989 Series B (1987 resolution), via competitive bid.

[22385033] |Austin, Texas --
[22385034] |$68,230,000 of various bonds, including $32 million hotel occupancy tax revenue bonds, Series 1989A, and $36.23 million convention center revenue bonds, Series 1989B, via a Morgan Stanley & Co. group.

[22385035] |California Health Facilities Financing Authority --
[22385036] |$144.5 million of Kaiser Permanente revenue bonds, via a PaineWebber group.

[22385037] |Connecticut --
[22385038] |$100 million of general obligation capital appreciation bonds, College Savings Plan, 1989 Series B, via a Prudential-Bache Capital Funding group.

[22385039] |Pennsylvania Higher Education Facilities Authority --
[22385040] |$117 million of revenue bonds for Hahnemann University, Series 1989, via a Merrill Lynch group.

[22385041] |Tennessee Valley Authority --
[22385042] |Three billion of power bonds, via First Boston Corp.

[22385043] |University of Medicine And Dentistry of New Jersey --
[22385044] |$55 million of Series C bonds, via a Prudential-Bache group.

[22385045] |West Virginia Parkways, Economic Development And Tourism Authority --
[22385046] |$143 million of parkway revenue bonds, Series 1989, via a PaineWebber group.

[22385047] |San Antonio, Texas --
[22385048] |$640 million of gas and electric revenue refunding bonds, via a First Boston group.

[22385049] |South Dakota Health & Education Facility Authority --
[22385050] |$51.1 million of Rapid City Regional Hospital bonds, via a Dougherty, Dawkins, Strand & Yost Inc. group.

[22386001] |Small investors matched their big institutional brethren in anxiety over the weekend, but most seemed to be taking a philosophical approach and said they were resigned to riding out the latest storm in the stock market.

[22386002] |"I'm not losing faith in the market," said Boston lawyer Christopher Sullivan as he watched the market plunge on a big screen in front of a brokerage firm.
[22386003] |But he's not so sure about everyone else.

[22386004] |"I think on Monday the small (investors) are going to panic and sell," predicted Mr. Sullivan, whose investments include AMR Corp.'s American Airlines unit and several mutual funds.
[22386005] |"And I think institutions are going to come in and buy . . .
[22386006] |I'm going to hold on.
[22386007] |If I sell now, I'll take a big loss."

[22386008] |Some evinced an optimism that had been rewarded when they didn't flee the market in 1987.
[22386009] |"Oh, I bet it'll be up 50 points on Monday," said Lucy Crump, a 78-year-old retired housewife in Lexington, Ky.
[22386010] |Mrs. Crump said her Ashwood Investment Club's portfolio lost about one-third of its value following the Black Monday crash, "but no one got discouraged, and we gained that back -- and more."

[22386011] |At the annual congress of the National Association of Investors Corp. at the Hyatt Regency hotel in Minneapolis, the scene was calm.
[22386012] |Some 500 investors representing investor clubs from around the U.S. were attending when the market started to slide Friday.
[22386013] |But Robert Showalter, an official of the association, said no special bulletins or emergency meetings of the investors' clubs are planned.

[22386014] |In fact, some of the association's members -- long-term, buy-and-hold investors -- welcomed the drop in prices.
[22386015] |"We hope to take advantage of it," said John Snyder, a member of a Los Angeles investors' club.
[22386016] |He has four stocks in mind to buy if the prices drop to the level he wants.
[22386017] |Not everyone is reacting so calmly, however, and many wonder about the long-term implications of what is widely viewed as the cause of Friday's slide, reluctance by banks to provide financing for a buy-out of UAL Corp., parent of United Airlines.

[22386018] |Marc Perkins, a Tampa, Fla., investment banker, said the market drop is one of "a tremendous number of signs that the leveraged take-out era is ending.
[22386019] |There's no question that there's a general distaste for leverage among lenders.
[22386020] |" Mr. Perkins believes, however, that the market could be stabilized if California investor Marvin Davis steps back in to the United bidding with an offer of $275 a share.

[22386021] |Sara Albert, a 34-year-old Dallas law student, says she's generally skittish about the stock market and the takeover activity that seems to fuel it.
[22386022] |"I have this feeling that it's built on sand," she says, that the market rises "but there's no foundation to it."
[22386023] |She and her husband pulled most of their investments out of the market after the 1987 crash, although she still owns some Texaco stock.
[22386024] |Partly because of concern about the economy and partly because she recently quit her job as a legal assistant to go to school, "I think at this point we want to be a lot more liquid."

[22386025] |Others wonder how many more of these shocks the small investor can stand.
[22386026] |"We all assumed October '87 was a one-time shot," said San Francisco attorney David Greenberg.
[22386027] |"We told the little guy it could only happen once in a lifetime, come on back.
[22386028] |Now it's happening again."
[22386029] |Mr. Greenberg got out just before the 1987 crash and, to his regret, never went back even as the market soared.
[22386030] |This time he's ready to buy in "when the panic wears off."
[22386031] |Still, he adds: "We can't have this kind of thing happen very often.
[22386032] |When the little guy gets frightened, the big guys hurt badly.
[22386033] |Merrill Lynch can't survive without the little guy."

[22386034] |Small investors have tiptoed back into the market following Black Monday, but mostly through mutual funds.
[22386035] |Discount brokerage customers "have been in the market somewhat but not whole hog like they were two years ago," says Leslie Quick Jr., chairman of the Quick & Reilly discount brokerage firm.
[22386036] |Hugo Quackenbush, senior vice president at Charles Scwhab Corp., says Schwab customers "have been neutral to cautious recently about stocks."
[22386037] |Individual investors are still angry about program trading, Mr. Quackenbush says.

[22386038] |Avner Arbel, a Cornell University finance professor, says government regulators will have to more closely control program trading to "win back the confidence of the small investor."

[22386039] |But it's not only the stock market that has some small investors worried.
[22386040] |Alan Helfman, general sales manager of a Chrysler dealership in Houston, said he and his mother have some joint stock investments, but the overall economy is his chief worry.

[22386041] |"These high rollers took a big bath today," he said in his showroom, which is within a few miles of the multi-million dollar homes of some of Houston's richest citizens.
[22386042] |"And I can tell you that a high roller isn't going to come in tomorrow and buy a Chrysler TC by Maserati."
[22386043] |And, finally, there were the gloaters.
[22386044] |"I got out in 1987.
[22386045] |Everything," said Pascal Antori, an Akron, Ohio, plumbing contractor who was visiting Chicago and stopped by Fidelity Investments' LaSalle Street office.
[22386046] |"I just stopped by to see how much I would have lost."

[22386047] |Would Mr. Antori ever get back in?
[22386048] |"Are you kidding!
[22386049] |When it comes to money: Once bitten, 2,000 times shy.

[22387001] |The crowded field for notebook-sized computers is about to become a lot more crowded.

[22387002] |Compaq Computer Corp.'s long-awaited entry today into the notebook field is expected to put immediate heat on others in the market, especially Zenith Electronics Corp., the current market leader, and on a swarm of promising start-ups.

[22387003] |Compaq's series of notebooks extends a trend toward downsizing in the personal computer market.
[22387004] |One manufacturer already has produced a clipboard-sized computer called a notepad, and two others have introduced even smaller "palmtops."

[22387005] |But those machines are still considered novelties, with keyboards only a munchkin could love and screens to match.
[22387006] |Compaq's notebooks, by contrast, may be the first in their weight class not to skimp on features found in much bigger machines.
[22387007] |Analysts say they're faster and carry more memory than anything else of their size on the market -- and they're priced aggressively at $2,400 to $5,000.
[22387008] |All of this comes in a machine that weighs only six pounds and fits comfortably into most briefcases.

[22387009] |In recent months, Compaq's competition, including Zenith, Toshiba Corp., Tandy Corp. and NEC Corp. all have introduced portables that weigh approximately the same and that are called notebooks -- perhaps misleadingly.
[22387010] |One analyst, noting that most such machines are about two inches thick, takes exception to the name.
[22387011] |"This isn't quite a notebook -- I call it a phonebook," he says.

[22387012] |That can't be said of the $2,400 notepad computer introduced a few weeks ago by GRiD Systems Corp., a unit of Tandy.
[22387013] |Instead of a keyboard, it features a writing surface, an electronic pen and the ability to "read" block printing.
[22387014] |At 4 1/2 pounds, it may be too ambitiously named, but it nevertheless opens up the kind of marketing possibilities that make analysts froth.

[22387015] |Palmtops aren't far behind.
[22387016] |Atari Corp.'s Portfolio, introduced in Europe two months ago and in the U.S. in early September, weighs less than a pound, costs a mere $400 and runs on three AA batteries, yet has the power to run some spreadsheets and word processing programs.
[22387017] |Some critics, however, say its ability to run commonplace programs is restricted by a limited memory.

[22387018] |Poquet Computer Corp., meanwhile, has introduced a much more sophisticated palmtop that can run Lotus 1-2-3 and other sophisticated software programs, but costs five times as much.

[22387019] |At stake is what Mike Swavely, Compaq's president of North America operations, calls "the Holy Grail of the computer industry" -- the search for "a real computer in a package so small you can take it everywhere."
[22387020] |The market is so new, nobody knows yet how big it can be.
[22387021] |"I've had a lot of people trying to sell me services to find out how big it is," says Tom Humphries, director of marketing for GRiD.
[22387022] |"Whether it's $5 billion or $3.5 billion, it doesn't matter.
[22387023] |It's huge."

[22387024] |Consider the growth of portables, which now comprise 12% of all personal computer sales.
[22387025] |Laptops -- generally anything under 15 pounds -- have become the fastest-growing personal computer segment, with sales doubling this year.

[22387026] |Responding to that demand, however, has led to a variety of compromises.
[22387027] |Making computers smaller often means sacrificing memory.
[22387028] |It also has precluded use of the faster, more powerful microprocessors found in increasing numbers of desktop machines.
[22387029] |Size and weight considerations also have limited screen displays.

[22387030] |The competitive sniping can get pretty petty at times.
[22387031] |A Poquet spokesman, for example, criticizes the Atari Portfolio because it requires three batteries while the Poquet needs only two.
[22387032] |Both palmtops are dismissed by notebook makers, who argue that they're too small -- a problem Poquet also encountered in focus groups, admits Gerry Purdy, director of marketing.
[22387033] |Poquet, trying to avoid the "gadget" label, responded with the tag line, "The Poquet PC -- a Very Big Computer."

[22387034] |Despite the sniping, few question the inevitability of the move to small machines that don't make compromises.
[22387035] |Toward that end, experts say the real battle will take place between center-stage players like Toshiba, Zenith and now Compaq.

[22387036] |Compaq's new machines are considered a direct threat to start-up firms like Dynabook Inc., which introduced in June a computer that, like Compaq's, uses an Intel 286 microprocessor and has a hard disk drive.
[22387037] |But the Dynabook product is twice as heavy and costs more than Compaq's.

[22387038] |Compaq's announcement also spells trouble for Zenith, which last year had 28% of the U.S. laptop market but recently agreed to sell its computer business to Cie. des Machines Bull, the French government-owned computer maker.
[22387039] |Zenith holders will vote in December on the proposed $635 million sale, a price that could slip because it is pegged to Zenith's share and sales.

[22387040] |Compaq is already taking aim at Zenith's market share.
[22387041] |Rod Canion, Compaq's president and chief executive officer, notes pointedly that Zenith's $2,000 MinisPort uses an "unconventional" two-inch floppy disk, whereas Compaq's new machines use the more common 3 1/2-inch disk.
[22387042] |John P. Frank, president of Zenith Data Systems, simply shrugs off such criticism, noting that 3 1/2-inch floppies were also "unconventional" when they first replaced five-inch disks.
[22387043] |"We don't look at it as not being a standard, we look at it as a new standard," he argues.

[22387044] |Analysts don't see it that way.
[22387045] |"I can't imagine that you'll talk to anyone who won't tell you this is dynamite for Compaq and a stopper for everyone else," says Gene Talsky, president of Professional Marketing Management Inc.
[22387046] |Adds Bill Lempesis, senior industry analyst for DataQuest, a high-technology market research firm: "We basically think that these are very hot products.
[22387047] |The problem Compaq is going to have is that they won't be able to make enough of them."

[22387048] |Compaq's machines include the 3 1/2-inch floppy disk drive, a backlit screen that is only 1/4-inch thick and an internal expansion slot for a modem -- in other words, almost all the capabilities of a typical office machine.

[22387049] |Others undoubtedly will follow, but most analysts believe Compaq has at least a six-month lead on the competition.
[22387050] |Toshiba's line of portables, for example, features the T-1000, which is in the same weight class but is much slower and has less memory, and the T-1600, which also uses a 286 microprocessor, but which weighs almost twice as much and is three times the size.
[22387051] |A third model, marketed in Japan, may hit the U.S. by the end of the first quarter of 1990, but by then, analysts say, Compaq will have established itself as one of three major players.

[22387052] |What about Big Blue?
[22387053] |International Business Machines Corp., analysts say, has been burned twice in trying to enter the laptop market and shows no signs of trying to get into notebooks anytime soon.

[22388001] |Honeywell Inc. and International Business Machines Corp. received Air Force contracts to develop integrated circuits for use in space.

[22388002] |Honeywell's contract totaled $69.7 million, and IBM's $68.8 million.

[22388003] |Boeing Co. received a $46.7 million Air Force contract for developing cable systems for the Minuteman Missile.

[22388004] |General Dynamics Corp. received a $29 million Air Force contract for electronic-warfare training sets.

[22388005] |Grumman Corp. received an $18.1 million Navy contract to upgrade aircraft electronics.

[22388006] |Avco Corp. received an $11.8 million Army contract for helicopter engines.

[22389001] |Sharp increases in the price of fresh produce caused Spain's September consumer price index to shoot up 1.1% from the previous month, pushing the annual rate of inflation to 6.8%, the National Institute of Statistics said Friday.

[22389002] |The monthly increase is the highest recorded in the past four years.

[22389003] |The index, which registered 156.8 at the end of September, has a base of 100 set in 1983 and isn't seasonally adjusted.

[22389004] |Prices have risen 5.9% in the first nine months of the year, outstripping both the initial 3% inflation goal set by the government of Socialist Prime Minister Felipe Gonzalez and the second, revised goal of 5.8%.

[22390001] |Japan's wholesale prices in September rose 3.3% from a year earlier and were up 0.4% from the previous month, the Bank of Japan announced Friday.

[22390002] |The wholesale price index stood at 90.1, compared with a 1985 base of 100.

[22391001] |Plunge?
[22391002] |What plunge?

[22391003] |Twenty-four New York Stock Exchange issues hit 52-week highs during Friday's trading, despite the Dow Jones Industrial Average's 190.58-point plunge.

[22391004] |Stocks of utilities held up relatively better than other market sectors during the sell-off.
[22391005] |And among the issues hitting new highs were Detroit Edison Co. and Niagara Mohawk Power Corp.
[22391006] |Other major issues hitting highs included American Telephone & Telegraph Co., Westinghouse Electric Corp., Exxon Corp. and Cigna Corp., the big insurer.

[22391007] |Of course, many more issues -- 93 -- hit new lows.
[22391008] |These included International Business Machines Corp., which during Friday's session traded below $100 a share for the first time since June 1984.
[22391009] |IBM closed at $102, down $5.625.
[22391010] |Other new lows included Navistar International Corp., Union Carbide Corp. and Bethlehem Steel Corp., all of which are included in the industrial average.

[22391011] |Meanwhile, two initial public offerings braved the cascading market in their maiden day of national over-the-counter trading Friday.
[22391012] |Shares of Rally's Inc., an operator of fast-food restaurants, closed at $17 each, up from its $15 offering price and shares of Employee Benefit Plans Inc., a health-care consultant, closed at $14.125, up from its $12 offering price.

[22392001] |Ford Motor Co. said it acquired 5% of the shares in Jaguar PLC.
[22392002] |Jaguar, the London Stock Exchange and the U.S. Securities and Exchange Commission are being notified of the transactions, the company said.

[22392003] |The U.S. Federal Trade Commission advised Ford last week that it wouldn't raise any objection to the acquisition of as much as 15% of Jaguar shares.

[22392004] |The No. 2 auto maker disclosed last month that it wants to buy as much as 15% of the British luxury-car maker, the maximum allowed under current United Kingdom government restrictions.
[22392005] |General Motors Corp. said it had discussed the possibility of a joint venture with Jaguar before Ford began buying shares.
[22392006] |GM said it still is talking with Jaguar about acquiring a minority interest.

[22393001] |Investors who bought stock with borrowed money -- that is, "on margin" -- may be more worried than most following Friday's market drop.

[22393002] |That's because their brokers can require them to sell some shares or put up more cash to enhance the collateral backing their loans.
[22393003] |In October 1987, these margin calls were thought to have contributed to the downward spiral of the stock market.

[22393004] |Typically, a margin call occurs when the price of a stock falls below 75% of its original value.
[22393005] |If the investor doesn't put up the extra cash to satisfy the call, the brokerage firm may begin liquidating the securities.

[22393006] |But some big brokerage firms said they don't expect major problems as a result of margin calls.
[22393007] |Margin calls since Friday "have been higher than usual, but reasonable," a spokesman for Shearson Lehman Hutton Inc. said.

[22393008] |Merrill Lynch & Co. officials "don't expect {margin calls} to be as big a factor as in 1987" because fewer individual investors are buying stock on margin, a spokesman said.

[22393009] |Hugo Quackenbush, senior vice president at Charles Schwab Corp., the San Francisco-based discount brokerage firm, said he didn't expect any immediate problems with margin calls for Schwab customers.
[22393010] |He said Schwab had increased margin requirements "so customers have more of a cushion."
[22393011] |He added: "We learned a lesson in 1987 about volatility.

[22394001] |Avis Inc., following rival Hertz Corp.'s lead, said it is backing out of frequent-flier programs with three airlines.

[22394002] |The Garden City, N.Y., car-rental company said it won't renew contracts with NWA Inc.'s Northwest Airlines unit, Pan Am Corp.'s Pan American World Airways unit and Midway Airlines at the end of this year.
[22394003] |But it remains involved in programs with AMR Corp.'s American Airlines unit and Delta Air Lines.

[22394004] |Industry estimates put Avis's annual cost of all five programs at between $8 million and $14 million.
[22394005] |A spokesman for Avis wouldn't specify the costs but said the three airlines being dropped account for "far less than half" of the total.

[22394006] |Budget Rent a Car Corp., of Chicago, and National Car Rental Systems Inc., of Minneapolis, both said they had no plans to follow suit.
[22394007] |In fact, Budget indicated it saw some benefit to staying involved in these programs, in which renters earn frequent-flier miles and fliers can get car-rental discounts.

[22394008] |"I cannot see how this news by Hertz and Avis cannot benefit Budget's programs," said Bob Wilson, Budget's vice president, marketing planning.
[22394009] |Northwest and Midway are two of the five airlines with which Budget has agreements.

[22394010] |National also participates in the Northwest frequent-flier program along with four other airlines, including Delta and USAir Group Inc.'s USAir unit.

[22394011] |A month ago, Hertz, of Park Ridge, N.J., said that it would drop its marketing agreements at year end with Delta, America West and Texas Air Corp.'s Continental Airlines and Eastern Airlines, and that pacts with American Airlines, UAL Inc's United Airlines and USAir also would be ended. . . sometime after Dec. 31.
[22394012] |At the time, Hertz said its annual fees to those airlines amounted to $20 million and that the value of redeemed awards topped $15 million.
[22394013] |Analysts and competitors, however, doubt the numbers were that high.
[22394014] |Budget said its frequent-flier costs are "substantially below" Avis's level.

[22394015] |Robert D. Cardillo, Avis vice president of marketing, said, "The proliferation and costs attached to {frequent-flier programs} have significantly diminished their value."

[22394016] |This year has been difficult for both Hertz and Avis, said Charles Finnie, car-rental industry analyst at Alex. Brown & Sons.
[22394017] |"They've been looking to get their costs down, and this is a fairly sensible way to do it," he said.

[22395001] |CBS Inc. is cutting "The Pat Sajak Show" down to one hour from its current 90 minutes.

[22395002] |CBS insisted the move wasn't a setback for the program, which is the network's first entry into the late-night talk show format since 1972.

[22395003] |"I have every intention of making this the best possible show and having it run one hour is the best way to it," said Rod Perth, who was named vice president of late night entertainment in August.
[22395004] |"This will raise the energy level of the show."

[22395005] |CBS will continue to program action-adventure shows to follow the Sajak hour.
[22395006] |But CBS News will extend its four-hour "Nightwatch" by 30 minutes and begin at 1:30 a.m.

[22395007] |The show, despite a promising start, has slipped badly in the weekly ratings as compiled by A.C. Nielsen Co., finishing far below "Tonight" on NBC, a unit of General Electric Co., and "Nightline" on ABC-TV, a unit of Capital Cities/ABC Inc.
[22395008] |Further fractioning the late-night audience is the addition of the "Arsenio Hall Show," syndicated by Paramount Communications Inc.

[22396001] |Tandem Computers Inc., preparing to fight with International Business Machines Corp. for a piece of the mainframe business, said it expects to post higher revenue and earnings for its fiscal fourth quarter ended Sept. 30.

[22396002] |Tandem said it expects to report revenue of about $450 million and earnings of 35 cents to 40 cents a share.
[22396003] |The results, which are in line with analysts' estimates, reflect "a continued improvement in our U.S. business," said James Treybig, Tandem's chief executive officer.

[22396004] |In the year-earlier period, Tandem reported net income of $30.1 million, or 31 cents a share, on revenue of $383.9 million.

[22396005] |Tandem expects to report the full results for the quarter next week.
[22396006] |Analysts have predicted that the Cupertino, Calif., company will report revenue of $430 million to $460 million and earnings of 35 cents to 40 cents a share.

[22396007] |Commenting on the results for the quarter, Mr. Treybig said the strength of the company's domestic business came as "a surprise" to him, noting that sales "in every region of the U.S. exceeded our plan."

[22396008] |The company's U.S. performance was helped by "a record quarter for new customers," he said.

[22396009] |Tandem makes "fault-tolerant" computers -- machines with built-in backup systems -- that run stock exchanges, networks of automatic tellers and other complex computer systems.
[22396010] |Tomorrow the company is scheduled to announce its most powerful computer ever, which for the first time will bring it into direct competition with makers of mainframe computers.

[22396011] |Tandem's new high-end computer is called Cyclone.
[22396012] |Prices for the machine, which can come in various configurations, are $2 million to $10 million.

[22396013] |Analysts expect the new computer to wrest a hefty slice of business away from IBM, the longtime leader in mainframes.

[22396014] |"We believe they could siphon perhaps two to three billion dollars from IBM" over the next few years, said George Weiss, an analyst at the Gartner group.
[22396015] |That will spur Tandem's growth.
[22396016] |"I'd be disappointed if the company grew by less than 20% next year," said John Levinson, an analyst at Goldman, Sachs & Co.

[22396017] |IBM is expected to respond to Tandem's Cyclone by discounting its own mainframes, which analysts say are roughly three times the price of a comparable system from Tandem.
[22396018] |"Obviously IBM can give bigger discounts to users immediately," said Mr. Weiss.

[22396019] |But Mr. Treybig questions whether that will be enough to stop Tandem's first mainframe from taking on some of the functions that large organizations previously sought from Big Blue's machines.
[22396020] |"The answer isn't price reductions, but new systems," he said.

[22396021] |Nevertheless, Tandem faces a variety of challenges, the biggest being that customers generally view the company's computers as complementary to IBM's mainframes.
[22396022] |Even Mr. Treybig is reluctant to abandon this notion, insisting that Tandem's new machines aren't replacements for IBM's mainframes.

[22396023] |"We're after a little bigger niche," he said.

[22397001] |Don't jump yet.
[22397002] |The stock market's swoon may turn out to be good news for the economy.

[22397003] |In one wild hour of trading, the market managed to accomplish what the Bush administration has been trying to do, unsuccessfully, for weeks.
[22397004] |It is forcing the Federal Reserve to ease its grip on credit and it took the wind out of a previously irrepressible dollar.
[22397005] |The resulting decline in interest rates and the value of the dollar could reinvigorate American business -- indeed, the entire economy.

[22397006] |This may sound strangely optimistic.
[22397007] |After all, until a few years ago, the stock market was viewed as a barometer of the national economy.
[22397008] |When it went down, by all tradition, the economy followed.

[22397009] |That has changed, partly because the two years following the worst stock-market plunge in history have been reasonably comfortable.
[22397010] |The 1987 crash was "a false alarm however you view it," says University of Chicago economist Victor Zarnowitz.

[22397011] |The market seems increasingly disconnected from the rest of the nation.
[22397012] |Its spasms can't be traced to fundamental business conditions, nor do they appear to presage major shifts in the economy.
[22397013] |"The market today has a life of its own," John Akers, chairman of International Business Machines Corp., said Saturday.
[22397014] |"There's nothing rational about this kind of action."

[22397015] |Of course, the health of the economy will be threatened if the market continues to dive this week.
[22397016] |Sharply falling stock prices do reduce consumer wealth, damage business confidence and discourage the foreign investors upon whom the U.S. now relies for financial sustenance.
[22397017] |The financial-services industry was battered by the 1987 crash.
[22397018] |What's more, although the stock market is far less overvalued today than two years ago, the U.S. economy is weaker.
[22397019] |Growth is slower.
[22397020] |Profits are softer.
[22397021] |Debt burdens are heavier.

[22397022] |But if the stock market doesn't continue to plummet, the beneficial effects of lower interest rates and a lower dollar may well dominate.
[22397023] |The Fed, which until Friday had been resisting moves to ease credit, is now poised to pour money into the economy if needed to soothe the markets.
[22397024] |Fed officials may protest that this doesn't necessarily mean a fundamental change in their interest-rate policies.
[22397025] |But the experience of the 1987 crash suggests the Fed is likely to bring down short-term interest rates in its effort to calm markets.

[22397026] |Anticipating the Fed's move, money traders lowered a key interest rate known as the Federal Funds rate to 8.625% late Friday, down from 8.820% the day before.
[22397027] |Tiny movements in the rate, which is what banks charge each other for overnight loans, are usually among the few visible tracks that the Fed leaves on the monetary markets.

[22397028] |The dollar also began to decline Friday as the stock market's plunge caused some investors to reassess their desire to invest in the U.S.
[22397029] |Treasury officials have been arguing for months that the dollar's strength was out of whack with economic fundamentals, threatening to extinguish the export boom that has sustained manufacturers for several years.
[22397030] |The market drop has now apparently convinced foreign investors that the Treasury was right about the overpriced dollar.

[22397031] |A modest drop in the dollar -- only a modest one, mind you -- would be welcomed by the U.S.
[22397032] |That wasn't the case in 1987, when the dollar was so weak that some economists and government officials seriously worried that it might collapse, producing panic among foreign investors and diminishing the flow of foreign capital to the U.S.

[22397033] |Another big difference between 1987 and 1989 isn't so comforting.
[22397034] |In the third quarter of 1987, the economy spurted at an inflation-adjusted annual rate of 5.3%.
[22397035] |The consensus among economists is that it grew a much more sluggish 2.3% in the third quarter of 1989, which ended two weeks ago.

[22397036] |The plunge in stock prices "is happening at a time when the economy has already slowed down," says economist Lawrence Chimerine of WEFA Group, a Bala Cynwyd, Pa., forecasting company.
[22397037] |"A lot of pent-up demand is gone."

[22397038] |Consumer spending did drop in the months following Black Monday 1987 -- "but only slightly and for a short period of time," recalls Mr. Zarnowitz, a longtime student of business cycles.
[22397039] |"That was offset by strength elsewhere.
[22397040] |{The effects} were much less severe and less prolonged than some had feared or expected.
[22397041] |" Today, he frets, exports and business investment spending may be insufficient to pick up the slack if stock prices sink this week and if consumers retrench in reaction.

[22397042] |What's more, the corporate borrowing binge hasn't abated in the past two years.
[22397043] |"We've had two more years of significant accumulation of debt . . . just at the time when earnings are being squeezed," Mr. Chimerine notes.
[22397044] |The more a company relies on borrowed money, the greater its sensitivity to an economic slowdown.
[22397045] |A company with a strong balance sheet can withstand an unanticipated storm; a highly leveraged company may end up in bankruptcy court.

[22397046] |The Fed, of course, knows that very well -- hence its readiness to pump credit into the economy this morning.
[22397047] |But, in the process, the Fed risks reigniting inflation.
[22397048] |Even before Friday's events, Harvard University economist Benjamin Friedman was arguing that the Fed won't be able to live up to its tough words on eliminating inflation because of its responsibility to protect fragile financial markets, banks and highly leveraged corporations.
[22397049] |The biggest threat on the economic horizon right now isn't recession, he reasons; it's an outbreak of uncontrolled inflation.

[22397050] |In the end, the 1987 collapse suggested, the economy doesn't move in lockstep with stock prices.
[22397051] |The economy does, however, depend on the confidence of businesses, consumers and foreign investors.
[22397052] |A panic on Wall Street doesn't exactly inspire confidence.

[22397053] |Surveys suggested that consumer confidence was high before Friday.
[22397054] |A 190-point drop isn't likely to make much of a dent; multiply that a few times over, though, and it will.
[22397055] |If the reactions of executives gathered Saturday at Hot Springs, Va., for the Business Council meetings are typical, business leaders weren't overly rattled by Friday's decline.
[22397056] |And if foreign investors become a tad more cautious -- well, the dollar's recent strength suggests that the U.S. can stand it.

[22397057] |On the bottom line, the most comforting fact for the economic outlook is that we've been through this before.
[22397058] |Two years ago, about the only point of comparison was the 1929 crash and the subsequent Depression.
[22397059] |The doomsayers had a receptive audience.
[22397060] |The prosperity that followed Black Monday permits a more optimistic view today.

[22397061] |At the very least, the establishment here is taking comfort from the nation's success in handling the last go-around.
[22397062] |As Sen. Lloyd Bentsen (D., Texas) observed yesterday, "The Fed avoided a meltdown last time.
[22397063] |They are more sophisticated this time.

[22398001] |The chemical industry is expected to report that profits eroded in the third quarter because of skidding prices in the commodity end of the business.

[22398002] |Producers of commodity chemicals, the basic chemicals produced in huge volumes for other manufacturers, have seen sharp inventory cutting by buyers.
[22398003] |Once the chief beneficiaries of the industry's now fading boom, these producers also will be reporting against exceptionally strong performances in the 1988 third quarter.

[22398004] |"For some of these companies, this will be the first quarter with year-to-year negative comparisons," says Leonard Bogner, a chemical industry analyst at Prudential Bache Research.
[22398005] |"This could be the first of five or six down quarters."

[22398006] |Perhaps most prominent, Dow Chemical Co., which as of midyear had racked up eight consecutive record quarters, is expected to report that profit decreased in the latest quarter from a year earlier, if only by a shade.
[22398007] |Though Dow has aggressively diversified into specialty chemicals and pharmaceuticals, the company still has a big stake in polyethylene, which is used in packaging and housewares.

[22398008] |Analysts' third-quarter estimates for the Midland, Mich., company are between $3.20 a share and $3.30 a share, compared with $3.36 a year ago, when profit was $632 million on sales of $4.15 billion.
[22398009] |A Dow spokeswoman declined to comment on the estimates.

[22398010] |At the investment firm of Smith Barney, Harris Upham & Co., the commodity-chemical segment is seen pulling down overall profit for 20 companies representative of the whole industry by 8% to 10%.
[22398011] |"You will find the commodities off more than the others and the diversified companies about even or slightly better," says James Wilbur, a Smith Barney analyst.

[22398012] |First Boston Corp. projects that 10 of the 15 companies it follows will report lower profit.
[22398013] |Most of the 10 have big commodity-chemical operations.

[22398014] |Still, some industry giants are expected to report continuing gains, largely because so much of their business is outside commodity chemicals.
[22398015] |Du Pont Co. is thought to have had steady profit growth in white pigments, fibers and polymers.
[22398016] |Moreover, the Wilmington, Del., company is helped when prices weaken on the commodity chemicals it buys for its own production needs, such as ethylene.

[22398017] |Analysts are divided over whether Du Pont will report much of a gain in the latest quarter from its Conoco Inc. oil company.
[22398018] |The estimates for Du Pont range from $2.25 to $2.45 a share.
[22398019] |In the 1988 third quarter, the company earned $461 million, or $1.91 a share, on sales of $7.99 billion.
[22398020] |Du Pont declined to comment.

[22398021] |Monsanto Co., too, is expected to continue reporting higher profit, even though its sales of crop chemicals were hurt in the latest quarter by drought in northern Europe and the western U.S.
[22398022] |The St. Louis-based company is expected to report again that losses in its G.D. Searle & Co. pharmaceutical business are narrowing.
[22398023] |Searle continued to operate in the red through the first half of the year, but Monsanto has said it expects Searle to post a profit for all of 1989.

[22398024] |Most estimates for Monsanto run between $1.70 and $2 a share.
[22398025] |A year ago, the company posted third-quarter profit of $116 million, or $1.67 a share, on sales of $2.02 billion.
[22398026] |Monsanto declined to comment.

[22398027] |But the commodity-chemical producers are caught on the downside of a pricing cycle.
[22398028] |By some accounts on Wall Street and in the industry, the inventory reductions are near an end, which may presage firmer demand.
[22398029] |But doubters say growing production capacity could keep pressure on prices into the early 1990s.

[22398030] |In the latest quarter, at least, profit is expected to fall sharply.
[22398031] |For Himont Inc., "how far down it is, we don't know," says Leslie Ravitz at Salomon Brothers.
[22398032] |The projections are in the neighborhood of 50 cents a share to 75 cents, compared with a restated $1.65 a share a year earlier, when profit was $107.8 million on sales of $435.5 million.

[22398033] |Himont faces lower prices for its mainstay product, polypropylene, while it goes forward with a heavy capital investment program to bolster its raw material supply and develop new uses for polypropylene, whose markets include the packaging and automobile industries.
[22398034] |The company, based in Wilmington, Del., is 81%-owned by Montedison S.p.A., Milan, which has an offer outstanding for the Himont shares it doesn't already own.

[22398035] |At Quantum Chemical Corp., New York, the trouble is lower prices for polyethylene, higher debt costs and the idling of an important plant due to an explosion.
[22398036] |Some analysts hedge their estimates for Quantum, because it isn't known when the company will book certain one-time charges.
[22398037] |But the estimates range from break-even to 35 cents a share.
[22398038] |In the 1988 third quarter, Quantum earned $99.8 million, or $3.92 a share, on sales of $724.4 million.

[22398039] |Another big polyethylene producer, Union Carbide Corp., is expected to post profit of between $1 a share and $1.25, compared with $1.56 a share a year earlier, when the company earned $213 million on sales of $2.11 billion.

[22398040] |Himont, Quantum and Union Carbide all declined to comment.

[22399001] |The following were among Friday's offerings and pricings in the U.S. and non-U.S. capital markets, with terms and syndicate manager, as compiled by Dow Jones Capital Markets Report:

[22399002] |Dow Chemical Co. --
[22399003] |$150 million of 8.55% senior notes due Oct. 15, 2009, priced at par.
[22399004] |The issue, which is puttable back to the company at par on Oct. 15, 1999, was priced at a spread of 50 basis points above the Treasury's 10-year note.
[22399005] |Rated single-A-1 by Moody's Investors Service Inc. and single-A by Standard & Poor's Corp., the non-callable issue will be sold through underwriters led by Merrill Lynch Capital Markets.

[22399006] |Centel Capital Corp. --
[22399007] |$150 million of 9% debentures due Oct. 15, 2019, priced at 99.943 to yield 9.008%.
[22399008] |The non-callable issue, which can be put back to the company in 1999, was priced at 99 basis points above the Treasury's 10-year note.
[22399009] |Rated Baa-1 by Moody's and triple-B-plus by S&P, the issue will be sold through underwriters led by Morgan Stanley & Co.

[22399010] |Federal Home Loan Mortgage Corp. --
[22399011] |$500 million of Remic mortgage securities offered in 13 classes by Prudential-Bache Securities Inc.
[22399012] |The offering, Series 102, backed by Freddie Mac 8 1/2% securities with a weighted average remaining term to maturity of 28.4 years, was priced before the market's afternoon surge.
[22399013] |Among classes for which details were available, yields ranged from 8.78%, or 75 basis points over two-year Treasury securities, to 10.05%, or 200 basis points over 10-year Treasurys.

[22399014] |Federal Home Loan Mortgage Corp. --
[22399015] |$300 million of Remic mortgage securities offered by Citicorp Securities Markets Inc.
[22399016] |The offering, Series 101, is backed by Freddie Mac 9 1/2% securities.
[22399017] |Pricing details weren't immediately available.

[22399018] |Federal Home Loan Mortgage Corp. --
[22399019] |$200 million of stripped mortgage securities underwritten by BT Securities Corp.
[22399020] |The agency's first strips issue, collateralized by Freddie Mac 8% securities pooled into a single security called a Giant, will be divided into interest-only and principal-only securities.
[22399021] |The collateral is being sold by a thrift institution.
[22399022] |The principal-only securities will be repackaged by BT Securities into a Freddie Mac Remic, Series 103, that will have six classes.
[22399023] |The interest-only securities will be sold separately by BT Securities.
[22399024] |The principal-only securities pay the principal from the underlying Freddie Mac 8% securities, while the interest-only securities pay only interest.
[22399025] |Freddie Mac said the principal-only securities were priced at 58 1/4 to yield 8.45%, assuming an average life of eight years and a prepayment of 160% of the PSA model.
[22399026] |The interest-only securities were priced at 35 1/2 to yield 10.72%.

[22399027] |There were no major Eurobond or foreign bond offerings in Europe Friday.