[22400001] |The economy's temperature will be taken from several vantage points this week, with readings on trade, output, housing and inflation.

[22400002] |The most troublesome report may be the August merchandise trade deficit due out tomorrow.
[22400003] |The trade gap is expected to widen to about $9 billion from July's $7.6 billion, according to a survey by MMS International, a unit of McGraw-Hill Inc., New York.

[22400004] |Thursday's report on the September consumer price index is expected to rise, although not as sharply as the 0.9% gain reported Friday in the producer price index.
[22400005] |That gain was being cited as a reason the stock market was down early in Friday's session, before it got started on its reckless 190-point plunge.

[22400006] |Economists are divided as to how much manufacturing strength they expect to see in September reports on industrial production and capacity utilization, also due tomorrow.
[22400007] |Meanwhile, September housing starts, due Wednesday, are thought to have inched upward.

[22400008] |"There's a possibility of a surprise" in the trade report, said Michael Englund, director of research at MMS.
[22400009] |A widening of the deficit, if it were combined with a stubbornly strong dollar, would exacerbate trade problems -- but the dollar weakened Friday as stocks plummeted.

[22400010] |In any event, Mr. Englund and many others say that the easy gains in narrowing the trade gap have already been made.
[22400011] |"Trade is definitely going to be more politically sensitive over the next six or seven months as improvement begins to slow," he said.

[22400012] |Exports are thought to have risen strongly in August, but probably not enough to offset the jump in imports, economists said.

[22400013] |Views on manufacturing strength are split between economists who read September's low level of factory job growth as a sign of a slowdown and those who use the somewhat more comforting total employment figures in their calculations.
[22400014] |The wide range of estimates for the industrial output number underscores the differences: The forecasts run from a drop of 0.5% to an increase of 0.4%, according to MMS.

[22400015] |A rebound in energy prices, which helped push up the producer price index, is expected to do the same in the consumer price report.
[22400016] |The consensus view expects a 0.4% increase in the September CPI after a flat reading in August.

[22400017] |Robert H. Chandross, an economist for Lloyd's Bank in New York, is among those expecting a more moderate gain in the CPI than in prices at the producer level.
[22400018] |"Auto prices had a big effect in the PPI, and at the CPI level they won't," he said.

[22400019] |Food prices are expected to be unchanged, but energy costs jumped as much as 4%, said Gary Ciminero, economist at Fleet/Norstar Financial Group.
[22400020] |He also says he thinks "core inflation," which excludes the volatile food and energy prices, was strong last month.
[22400021] |He expects a gain of as much as 0.5% in core inflation after a summer of far smaller increases.

[22400022] |Housing starts are expected to quicken a bit from August's annual pace of 1,350,000 units.
[22400023] |Economists say an August rebound in permits for multifamily units signaled an increase in September starts, though activity remains fairly modest by historical standards.

[22401001] |Two-Way Street

[22401002] |If the sixty-day plant-closing law's fair, Why should we not then amend the writ To require that all employees give Similar notice before they quit?

[22401003] |-- Rollin S. Trexler.

[22401004] |Candid Comment

[22401005] |When research projects are curtailed due to government funding cuts, are we "caught with our grants down"?

[22401006] |-- C.E. Friedman.

[22402001] |Assuming the stock market doesn't crash again and completely discredit yuppies and trading rooms, American television audiences in a few months may be seeing Britain's concept of both.
[22402002] |"Capital City" is a weekly series that premiered here three weeks ago amid unprecedented hype by its producer, Thames Television.

[22402003] |The early episodes make you long for a rerun of the crash of 1987.
[22402004] |Let's make that 1929, just to be sure.

[22402005] |According to the program's publicity prospectus, "Capital City," set at Shane Longman, a fictional mid-sized securities firm with #500 million capital, "follows the fortunes of a close-knit team of young, high-flying dealers, hired for their particular blend of style, genius and energy.
[22402006] |But with all the money and glamour of high finance come the relentless pressures to do well; pressure to pull off another million before lunch; pressure to anticipate the market by a fraction of a second . . ."

[22402007] |You needn't be a high-powered securities lawyer to realize the prospectus is guilty of less than full disclosure.
[22402008] |The slickly produced series has been criticized by London's financial cognoscenti as inaccurate in detail, but its major weakness is its unrealistic depiction of the characters' professional and private lives.

[22402009] |Turned loose in Shane Longman's trading room, the yuppie dealers do little right.
[22402010] |Judging by the money lost and mistakes made in the early episodes, Shane Longman's capital should be just about exhausted by the final 13th week.

[22402011] |In the opening episode we learn that Michelle, a junior bond trader, has indeed pulled off another million before lunch.
[22402012] |Trouble is, she has lost it just as quickly.
[22402013] |Rather than keep the loss a secret from the outside world, Michelle blabs about it to a sandwich man while ordering lunch over the phone.

[22402014] |Little chance that Shane Longman is going to recoup today.
[22402015] |Traders spend the morning frantically selling bonds, in the belief that the U.S. monthly trade figures will look lousy.
[22402016] |Ah, perfidious Columbia!
[22402017] |The trade figures turn out well, and all those recently unloaded bonds spurt in price.
[22402018] |So much for anticipating the market by a fraction of a second.
[22402019] |And a large slice of the first episode is devoted to efforts to get rid of some nearly worthless Japanese bonds (since when is anything Japanese nearly worthless nowadays?).
[22402020] |Surprisingly, Shane Longman survives the week, only to have a senior executive innocently bumble his way into becoming the target of a criminal insider trading investigation.
[22402021] |Instead of closing ranks to protect the firm's reputation, the executive's internal rivals, led by a loutish American, demand his resignation.
[22402022] |The plot is thwarted when the firm's major stockholder, kelp farming on the other side of the globe, hurries home to support the executive.
[22402023] |But the investigation continues.

[22402024] |If you can swallow the premise that the rewards for such ineptitude are six-figure salaries, you still are left puzzled, because few of the yuppies consume very conspicuously.
[22402025] |In fact, few consume much of anything.
[22402026] |Two share a house almost devoid of furniture.
[22402027] |Michelle lives in a hotel room, and although she drives a canary-colored Porsche, she hasn't time to clean or repair it; the beat-up vehicle can be started only with a huge pair of pliers because the ignition key has broken off in the lock.
[22402028] |And it takes Declan, the obligatory ladies' man of the cast, until the third episode to get past first base with any of his prey.

[22402029] |Perhaps the explanation for these anomalies is that class-conscious Britain isn't ready to come to terms with the wealth created by the Thatcherian free-enterprise regime.
[22402030] |After all, this isn't old money, but new money, and in many cases, young money.

[22402031] |This attitude is clearly illustrated in the treatment of Max, the trading room's most flamboyant character.
[22402032] |Yuppily enough, he lives in a lavishly furnished converted church, wears designer clothes and drives an antique car.
[22402033] |But apparently to make him palatable, even lovable, to the masses, the script inflates pony-tailed Max into an eccentric genius, master of 11 Chinese dialects.
[22402034] |He takes his wash to the laundromat, where he meets a punky French girl who dupes him into providing a home for her pet piranha and then promptly steals his car and dumps it in Dieppe.

[22402035] |In producing and promoting "Capital City," Thames has spent about as much as Shane Longman loses on a good day.
[22402036] |The production costs are a not inconsiderable #8 million ($12.4 million), and would have been much higher had not the cost of the trading floor set been absorbed in the budget of "Dealers," an earlier made-for-TV movie.
[22402037] |Another half million quid went for a volley of full-page advertisements in six major British newspapers and for huge posters in the London subway.

[22402038] |These expenses create a special incentive for "Capital City's" producers to flog it, or a Yank-oriented version of it, in America.
[22402039] |Thames's U.S. marketing agent, Donald Taffner, is preparing to do just that.
[22402040] |He is discreetly hopeful, citing three U.S. comedy series -- "Three's Company," "Too Close for Comfort" and "Check It Out" -- that had British antecedents.

[22402041] |Perhaps without realizing it, Mr. Taffner simultaneously has put his finger on the problem and an ideal solution: "Capital City" should have been a comedy, a worthy sequel to the screwball British "Carry On" movies of the 1960s.

[22402042] |The seeds already are in the script.
[22402043] |The first episode concluded with a marvelously cute scene in which the trading-room crew minded a baby, the casualty of a broken marriage at the firm.
[22402044] |And many in the young cast bear striking resemblances to American TV and movie personalities known for light roles.
[22402045] |Joanna Kanska looks like a young Zsa Zsa Gabor; William Armstrong, who plays Max, could pass for Hans Conreid, and Douglas Hodge (Declan) for James Farentino; Rolf Saxon is a passable Tommy Noonan and Dorian Healy could easily double for Huntz Hall, the blank-faced foil of the Bowery Boys comedies.

[22402046] |So, OK kids, everybody on stage for "Carry On Trading": The cast is frantically searching the office for misplaced Japanese bonds that suddenly have soared in value because Dai-Ichi Kangyo Bank has just bought the White House.
[22402047] |The pressure is too much for Zsa Zsa, who slaps a security guard.
[22402048] |He backflips into a desktop computer terminal, which explodes, covering Huntz Hall's face with microchips.
[22402049] |And all the while, the bonds are in the baby's diaper.

[22402050] |It should run forever.

[22402051] |Mr. Rustin is senior correspondent in the Journal's London bureau.

[22403001] |Axa-Midi Assurances of France gave details of its financing plans for its proposed $4.5 billion acquisition of Farmers Group Inc., in amended filings with insurance regulators in the nine U.S. states where Farmers operates.

[22403002] |The proposed acquisition is part of Sir James Goldsmith's unfriendly takeover attempt for B.A.T Industries PLC, the British tobacco, retailing, paper and financial services concern that is parent of Los Angeles-based Farmers.
[22403003] |In an attempt to appease U.S. regulators' concern over a Goldsmith acquisition of Farmers, Sir James in August agreed to sell Farmers to Axa if he is successful in acquiring B.A.T.

[22403004] |As part of the agreement, Axa agreed to invest $1 billion in Hoylake Investments Ltd., Sir James's acquisition vehicle.

[22403005] |Of the total $5.5 billion to be paid to Hoylake by Axa, about $1 billion will come from available resources of Axa's parent, Axa-Midi Group, $2.25 billion will be in the form of notes issued by Axa, and the remaining $2.25 billion will be in long-term bank loans.

[22403006] |In an interview Thursday, Claude Bebear, chairman and chief executive officer of Axa, said his group has already obtained assurances from a group of banks led by Cie. Financiere de Paribas that they can provide the loan portion of the financing.
[22403007] |The other banking companies in the group are Credit Lyonnais, Societe Generale, BankAmerica Corp. and Citicorp, he said.

[22403008] |Mr. Bebear said Axa-Midi Group has "more than $2.5 billion of non-strategic assets that we can and will sell" to help pay off debt from the acquisition.
[22403009] |He said the assets to be sold would be "non-insurance" assets, including a beer company and a real estate firm, and wouldn't include any pieces of Farmers.
[22403010] |"We won't put any burden on Farmers," he said.

[22403011] |The amended filings also point out that under a new agreement, Hoylake has an absolute obligation to sell Farmers to Axa upon an acquisition of B.A.T.
[22403012] |"We hope that with what we did, the regulators will not need to evaluate Hoylake, and they can directly look at the agreement with us, because Hoylake won't be an owner of Farmers at anytime," Mr. Bebear said.

[22403013] |Any change of control in Farmers needs approval of the insurance commissioners in the nine states where Farmers and its related companies are incorporated.

[22403014] |The amended filings were required because of the new agreement between Axa and Hoylake, and to reflect the extension that Sir James received last month under British takeover rules to complete his proposed acquisition.
[22403015] |Hoylake dropped its initial #13.35 billion ($20.71 billion) takeover bid after it received the extension, but said it would launch a new bid if and when the propsed sale of Farmers to Axa receives regulatory approval.

[22403016] |A spokesman for B.A.T said of the amended filings that, "It would appear that nothing substantive has changed.
[22403017] |The new financing structure is still a very-highly leveraged one, and Axa still plans to take out 75% of Farmers' earnings as dividends to service their debt."
[22403018] |That dividend is almost double the 35% currently taken out of Farmers by B.A.T, the spokesman added.
[22403019] |"It would have severe implications for Farmers' policy holders."

[22403020] |To fend off Sir James's advances, B.A.T has proposed a sweeping restructuring that would pare it to a tobacco and financial services concern.

[22404001] |Dismal sales at General Motors Corp. dragged the U.S. car and truck market down below year-ago levels in early October, the first sales period of the 1990 model year.

[22404002] |The eight major domestic auto makers sold 160,510 North American-made cars in the first 10 days of October, a 12.6% drop from a year earlier.
[22404003] |Domestically built truck sales were down 10.4% to 86,555 pickups, vans and sport utility vehicles.

[22404004] |The heavy use of incentives to clear out 1989 models appears to have taken the steam, at least initially, out of 1990 model sales, which began officially Oct. 1.
[22404005] |This appears particularly true at GM, which had strong sales in August and September but saw its early October car and truck results fall 26.3% from last year's unusually high level.

[22404006] |Overall, sales of all domestic-made vehicles fell 11.9% from a year ago.
[22404007] |Without GM, overall sales for the other U.S. automakers were roughly flat with 1989 results.

[22404008] |Some of the U.S. auto makers have already adopted incentives on many 1990 models, but they may have to broaden their programs to keep sales up.
[22404009] |"We've created a condition where, without incentives, it's a tough market," said Tom Kelly, sales manager for Bill Wink Chevrolet in Dearborn, Mich.

[22404010] |Car sales fell to a seasonally adjusted annual selling rate of 5.8 million vehicles, the lowest since October 1987.
[22404011] |The poor performance contrasts with a robust selling rate of almost eight million last month.
[22404012] |Furthermore, dealers contacted late last week said they couldn't see any immediate impact on sales of Friday's steep market decline.

[22404013] |GM's domestic car sales dropped 24.3% and its domestic trucks were down an even steeper 28.7% from the same period a year ago.
[22404014] |All of the GM divisions except Cadillac showed big declines.
[22404015] |Cadillac posted a 3.2% increase despite new competition from Lexus, the fledging luxury-car division of Toyota Motor Corp.
[22404016] |Lexus sales weren't available; the cars are imported and Toyota reports their sales only at month-end.

[22404017] |The sales drop for the No. 1 car maker may have been caused in part by the end in September of dealer incentives that GM offered in addition to consumer rebates and low-interest financing, a company spokesman said.
[22404018] |Last year, GM had a different program in place that continued rewarding dealers until all the 1989 models had been sold.

[22404019] |Aside from GM, other car makers posted generally mixed results.
[22404020] |Ford Motor Co. had a 1.8% drop in domestic car sales but a 2.4% increase in domestic truck sales.

[22404021] |Chrysler Corp. had a 7.5% drop in car sales, echoing its generally slow performance all year.
[22404022] |However, sales of trucks, including the company's popular minivans, rose 4.3%.

[22404023] |Honda Motor Co.'s sales of domestically built vehicles plunged 21.7% from a year earlier.
[22404024] |Honda's plant in Marysville, Ohio, was gearing up to build 1990 model Accords, a Honda spokesman said.
[22404025] |"We're really confident everything will bounce back to normal," he added.

[22404026] |Separately, Chrysler said firm prices on its 1990-model domestic cars and minivans will rise an average of 5% over comparably equipped 1989 models.
[22404027] |Firm prices were generally in line with the tentative prices announced earlier this fall.
[22404028] |At that time, Chrysler said base prices, which aren't adjusted for equipment changes, would rise between 4% and 9% on most vehicle.

[22404029] |a-Totals include only vehicle sales reported in period.

[22404030] |c-Domestic car

[22404031] |d-Percentage change is greater than 999%.

[22404032] |x-There were 8 selling days in the most recent period and 8 a year earlier.
[22404033] |Percentage differences based on daily sales rate rather than sales volume.

[22405001] |Antonio L. Savoca, 66 years old, was named president and chief executive officer of the Atlantic Research Corp. subsidiary.
[22405002] |Mr. Savoca had been a consultant to the subsidiary's rocket-propulsion operations.
[22405003] |Mr. Savoca succeeds William H. Borten, who resigned to pursue personal interests.
[22405004] |Sequa makes and repairs jet engines.
[22405005] |It also has interests in military electronics and electro-optics, marine transportation and machinery used to make food and beverage cans.

[22406001] |It wasn't so long ago that a radio network funded by the U.S. Congress -- and originally by the Central Intelligence Agency -- was accused by officials here of employing propagandists, imperialists and spies.
[22406002] |Now, the network has opened a news bureau in the Hungarian capital.

[22406003] |Employees held an open house to celebrate and even hung out a sign: "Szabad Europa Radio" -- Radio Free Europe.

[22406004] |"I think this is a victory for the radio," says Barnabas de Bueky, a 55-year-old former Hungarian refugee who works in the Munich, West Germany, headquarters as deputy director of the Hungarian service.
[22406005] |In fact, the network hopes to set up offices in Warsaw and anywhere else in the East Bloc that will have it.

[22406006] |But the rapid changes brought on by glasnost and open borders are altering the network's life in more ways than one.
[22406007] |In fact, Radio Free Europe is in danger of suffering from its success.

[22406008] |While the network currently can operate freely in Budapest, so can others.
[22406009] |In addition, competition for listeners is getting tougher in many ways than when broadcasting here was strictly controlled.
[22406010] |Instead of being denounced as an evil agent of imperialism, Radio Free Europe is more likely to draw the criticism that its programs are too tame, even boring.

[22406011] |"They have a lot to do these days to compete with Hungarian radio," says Andrew Deak, a computer-science student at the Technical University in Budapest.
[22406012] |"The Hungarian {radio} reporters seem better informed and more critical about about what's going on here."

[22406013] |Indeed, Hungary is in the midst of a media explosion.
[22406014] |Boys on busy street corners peddle newspapers of every political stripe.
[22406015] |Newsstands are packed with a colorful array of magazines.
[22406016] |Radio and television are getting livelier and bolder.

[22406017] |The British Broadcasting Corp. and the U.S. State Department's Voice of America broadcast over Hungarian airwaves, though only a few hours a day each in Hungarian.
[22406018] |Australian press magnate Rupert Murdoch has bought 50% stakes in two popular and gossipy Hungarian newspapers, while Britain's Robert Maxwell has let it be known here that he is thinking about similar moves.

[22406019] |But Radio Free Europe doesn't plan to fade away.
[22406020] |With its mission for free speech and the capitalist way, the network's staff says it still has plenty to do -- in Hungary and in the "Great Eastern Beyond."
[22406021] |Radio Free Europe and its sister station for the Soviet Union, Radio Liberty, say they won't cut back their more than 19 hours of daily broadcasts.
[22406022] |They are still an important source of news for 60 million listeners in 23 exotic tongues: from Bulgarian and Belorussian to Kazakh and Kirghiz.

[22406023] |The establishment of its first bureau in Warsaw Pact territory shows the depth of some of the changes in Eastern Europe.
[22406024] |Months before the decision by the Hungarian Communist Party to rename itself Socialist and try to look more appealing to voters, the country's rulers were trying to look more hospitable.
[22406025] |It proved a perfect time for Radio Free Europe to ask for permission to set up office.

[22406026] |Not only did the Hungarian Ministry of Foreign Affairs approve Radio Free Europe's new location, but the Ministry of Telecommunications did something even more amazing: "They found us four phone lines in central Budapest," says Geza Szocs, a Radio Free Europe correspondent who helped organize the Budapest location.
[22406027] |"That is a miracle."

[22406028] |It's a far cry from the previous treatment of the network, which had to overcome jamming of its frequencies and intimidation of local correspondents (who filed reports to the network by phone, secret messengers or letters).
[22406029] |In fact, some of the network's Hungarian listeners say they owe Radio Free Europe loyalty because it was responsible in many ways for keeping hope alive through what one writer here calls the "Dark Ages of the 20th Century."

[22406030] |"During the past four years, many of us have sat up until late at night listening to our radios," says the writer.
[22406031] |"There were some very brave broadcasts."

[22406032] |The listeners, too, had to be brave.
[22406033] |Through much of the post-World War II period, listening to Western broadcasts was a crime in Hungary.
[22406034] |"When we listen to the Europe station, my mother still gets nervous," says a Budapest translator.
[22406035] |"She wants to turn down the volume and close the curtains."

[22406036] |Now, the toughest competition for Radio Free Europe comes during the late-night slot.
[22406037] |Hungarian radio often saves its most politically outspoken broadcasts for around midnight.
[22406038] |Television, which most of the time is considered rather tame, has entered the running with a new program, "The End of the Day," which comes on after 11 p.m.
[22406039] |It is a talk show with opposition leaders and political experts who discuss Hungary's domestic problems as well as foreign affairs.
[22406040] |Those who want to hear even more radical views have to get up at five on Sunday morning for "Sunday Journal," on Hungarian Radio.

[22406041] |The competitive spirit is clearly influencing Radio Free Europe, which is trying to beef up programs.
[22406042] |The Budapest office plans to hire free-lance reporters to cover the latest happenings in Hungarian country towns from Nagykanizsa in the west to Nyiregyhaza in the east.
[22406043] |The Hungarian service has a daily 40-minute news show called Newsreel, with international and domestic news, plus a daily news review of opinions from around the world.

[22406044] |There's also a host of new programs, trying to lighten up on the traditional diet of politics.
[22406045] |A daily 35-minute program called "The March of Time" tries to find interesting tidbits of lighthearted news and gossip from around the world.
[22406046] |There's a program for women and a science show.
[22406047] |And to attract younger listeners, Radio Free Europe intersperses the latest in Western rock groups.
[22406048] |The Pet Shop Boys are big this year in Budapest.

[22406049] |"We are starving for all the news," says Mr. Deak, the student.
[22406050] |"Every moment we want to know everything about the world.

[22407001] |Proposals for government-operated "national service," like influenza, flare up from time to time, depress the resistance of the body politic, run their course, and seem to disappear, only to mutate and afflict public life anew.

[22407002] |The disease metaphor comes to mind, of course, not as an aspersion on the advocates of national service.
[22407003] |Rather, it is born of frustration with having to combat constantly changing strains of a statist idea that one thought had been eliminated in the early 1970s, along with smallpox.

[22407004] |It is back with us again, in the form of legislation to pay volunteers under a "National and Community Service Act," a proposal with a serious shot at congressional passage this fall.

[22407005] |Why does the national-service virus keep coming back?
[22407006] |Perhaps it is because utopian nostalgia evokes both military experience and the social gospel.
[22407007] |If only we could get America's wastrel youth into at least a psychic uniform we might be able to teach self-discipline again and revive the spirit of giving.

[22407008] |A quarter of a century ago national service was promoted as a way of curing the manifest inequities of the draft -- by, of all things, expanding the draft.
[22407009] |Those of us who resisted the idea then suspect today that an obligation of government service for all young people is still the true long-term aim of many national-service backers, despite their protests that present plans contain no coercion.

[22407010] |Choice of the volunteer military in the 1970s seemed to doom national service as much as the draft.
[22407011] |But the virus was kept alive in sociology departments until a couple of years ago, when it again was let loose.
[22407012] |This time it attempted to invade two connected problems, the rising cost of higher education and the rising expense to the federal government of educational grants and loans.
[22407013] |Why not keep and even expand the loans and grants, the advocates reasoned, but require some form of service from each recipient?
[22407014] |Military service, moreover, could be a national-service option.

[22407015] |Thus, undoubtedly it was hoped that the new strain of national service would prove contagious, infecting patriotic conservatives, pay-as-you-go moderates, and idealistic liberals.
[22407016] |The Democratic Leadership Council, a centrist group sponsoring the plan, surely thought it might help the party to attract support, especially among college students and their parents.
[22407017] |A provision allowing grants to be applied to first-home purchases was added to appeal to those who had had enough of schooling.

[22407018] |The DLC plan envisaged "volunteers" planting trees, emptying bedpans, tutoring children, and assisting librarians for $100 a week, tax free, plus medical care.
[22407019] |With a tax-free $10,000 voucher payment at the end of each year, the volunteers would be making a wage comparable to $17,500 a year.
[22407020] |Mind you, most of "the volunteers" would be unskilled 17- to 18-year-olds, some not even high school graduates, and many saving money by living at home.
[22407021] |They would be doing better financially under national service than many taxpayers working at the same kinds of jobs and perhaps supporting families.

[22407022] |As it happened, political resistance developed among educational and minority interests that count on the present education grant system, so the national-service devotees decided to abandon the supposedly crucial principle of "give in order to get."
[22407023] |Opposition to national service from the Pentagon, which wants to protect its own recruitment process, also led to the military-service option being dropped.

[22407024] |Clearly, a new rationale for national service had to be cooked up.
[22407025] |What better place to turn than Sen. Edward Kennedy's Labor Committee, that great stove of government expansionism, where many a stagnant pot of porridge is kept on the back burner until it can be brought forward and presented as nouvelle cuisine?

[22407026] |In this case, the new recipe for national service called for throwing many assorted legislative leftovers into one kettle: a demonstration project for educational aid (particularly satisfying to the DLC and Sen. Sam Nunn), a similar demonstration program for youth conservation (a la Sen. Chris Dodd), a competitive grants program to states to spark youth and senior citizen volunteer projects (a Kennedy specialty), a community service work-study program for students (pleasing to the palate of Sen. Dale Bumpers, among others), plus engorgement of the VISTA volunteer program and the Retired Senior Volunteer, Foster Grandparent, and Senior Companion programs.
[22407027] |Before the menu is printed, the House may add more ingredients, also changing the initial price, now posted at some $330 million.

[22407028] |It is widely known that "too many cooks spoil the broth," but that wisdom does not necessarily reflect the view of the cooks, especially if they are senators.
[22407029] |The "omnibus" bill coming out of Congress may be unwholesome glop, but the assorted chefs are happy and the restaurant is pushing the dish very hard.
[22407030] |The aroma of patronage is in the air.

[22407031] |Is the voluntary sector so weak that it needs such unsolicited assistance?
[22407032] |On the contrary, it is as robust as ever.
[22407033] |According to the Gallup Poll, American adults contribute an average of two hours a week of service, while financial contributions to charity in the 1980s have risen 30% (adjusted for inflation).

[22407034] |Even if government does see various "unmet needs," national service is not the way to meet them.
[22407035] |If we want to support students, we might adopt the idea used in other countries of offering more scholarships based on something called "scholarship," rather than on the government's idea of "service."
[22407036] |Or we might provide a tax credit for working students.
[22407037] |What we do not need to do is start a war, and then try to justify it by creating a GI Bill.

[22407038] |To the extent we lack manpower to staff menial jobs in hospitals, for example, we should raise pay, pursue labor-saving technology, or allow more legal immigration, rather than overpay high school graduates as short-term workers and cause resentment among permanent workers paid lesser amounts to do the same jobs.

[22407039] |Will national service, in the current highly politicized and opportunistic form exert enough appeal to get adopted?
[22407040] |Not necessarily.
[22407041] |Polls show wide, generalized support for some vague concept of service, but the bill now under discussion lacks any passionate public backing.
[22407042] |Nonetheless, Senate Democrats are organizing a roll of supporting "associations," "societies" and "councils," some of which may hope to receive the paid "volunteers."

[22407043] |So far, the president seems ill-disposed to substitute any of the omnibus for his own free-standing proposal to endow a "Points of Light" foundation with $25 million to inform citizens of all ages and exhort them to genuine volunteerism.

[22407044] |However, even this admirable plan could become objectionable if the White House gives in to congressional Democratic pressure to add to the scope of the president's initiative or to involve the independent foundation in "brokering" federal funds for volunteer projects.

[22407045] |There's no need for such concessions.
[22407046] |The omnibus can be defeated, the virus controlled, and real service protected.
[22407047] |National service, the utopian idea, still won't go away then, of course, but the millions of knee-socked youth performing works of "civic content" will be mobilized only in the imagination of their progenitors.

[22407048] |Mr. Chapman is a fellow at the Indianapolis-based Hudson Institute.
[22407049] |This article is adapted from remarks at a Hoover Institution conference on national service, in which Mr. Szanton also participated.

[22408001] |Drug Emporium Inc. said Gary Wilber, 39 years old, who had been president and chief operating officer for the past year, was named chief executive officer of this drugstore chain.

[22408002] |He succeeds his father, Philip T. Wilber, who founded the company and remains chairman.

[22408003] |Robert E. Lyons III, 39, who headed the company's Philadelphia region, was appointed president and chief operating officer, succeeding Gary Wilber.

[22409001] |American Physicians Service Group Inc. said it purchased about 42% of Prime Medical Services Inc. for about $5 million from Texas American Energy Corp.

[22409002] |American Physicians said it also replaced four Texas American representatives on Prime's five-member board.

[22409003] |American provides a variety of financial services to doctors and hospitals.
[22409004] |Prime, based in Bedminster, N.J., provides management services to cardiac rehabilitation clinics and diagnostic imaging centers.
[22409005] |For the year ended June 30, Prime had a net loss of $3 million on sales of $13.8 million.

[22410001] |The inflation-adjusted growth rate for France's gross domestic product for the second quarter was revised upward to 0.8% from the previous three months from the initial estimate of 0.7%, the National Statistics Institute said.

[22410002] |The state agency said the latest revision left the growth rate for the first-quarter compared with the previous three months unchanged at 1.3%.

[22410003] |If the economy continues to expand by 0.8% a quarter for the rest of the year, it would leave GDP growth for all of 1989 at 3%, the institute said.
[22410004] |That would be down from the 3.8% rise posted in 1988.

[22411001] |The Canadian government announced a new, 12-year Canada Savings Bond issue that will yield investors 10.5% in the first year.

[22411002] |The annual interest rate for each of the next 11 years will be set each fall, when details of a new series are released.

[22411003] |Canada Savings Bonds are major government instruments for meeting its financial requirements.
[22411004] |The government has about 41.4 billion Canadian dollars (US$35.2 billion) of such bonds currently outstanding.

[22411005] |Only Canadian residents are permitted to buy Canada Savings Bonds, which may be redeemed any time at face value.
[22411006] |The bonds go on sale Oct. 19.

[22412001] |The debate over National Service has begun again.
[22412002] |After a decade in which more than 50 localities established their own service or conservation corps and dozens of school systems made community service a prerequisite to high-school graduation, the focus has shifted to Washington.

[22412003] |At least 10 bills proposing one or another national program were introduced in Congress this spring.
[22412004] |One, co-sponsored by Sen. Sam Nunn (D., Ga.) and Rep. Dave McCurdy (D., Okla.), would have restricted federal college subsidies to students who had served.
[22412005] |An omnibus bill assembled by Sen. Edward Kennedy (D., Mass.), and including some diluted Nunn-McCurdy provisions along with proposals by fellow Democratic Sens. Claiborne Pell, Barbara Mikulski and Christopher Dodd, has been reported out of the Senate Labor Committee.
[22412006] |It might well win Senate passage.
[22412007] |President Bush has outlined his own Youth Entering Service (YES) plan, though its details remain to be specified.

[22412008] |What is one to think of all this?
[22412009] |Doctrine and special interests govern some responses.
[22412010] |People eager to have youth "pay their dues to society" favor service proposals -- preferably mandatory ones.
[22412011] |So do those who seek a "re-energized concept of citizenship," a concept imposing stern obligations as well as conferring rights.
[22412012] |Then there are instinctive opponents.
[22412013] |To libertarians, mandatory service is an abomination and voluntary systems are illegitimate uses of tax money.
[22412014] |Devotees of the market question the value of the work national service would perform:
[22412015] |If the market won't pay for it, they argue, it can't be worth its cost.
[22412016] |Elements of the left are also reflexively opposed; they see service as a cover for the draft, or fear the regimentation of youth, or want to see rights enlarged, not obligations.

[22412017] |But what about those of us whose views are not predetermined by formula or ideology?
[22412018] |How should we think about national service?
[22412019] |Let's begin by recognizing a main source of confusion -- "national service" has no agreed meaning.
[22412020] |Would service be voluntary or compulsory?
[22412021] |Short or long?
[22412022] |Part-time or full-time?
[22412023] |Paid or unpaid?
[22412024] |Would participants live at home and work nearby or live in barracks and work on public lands?
[22412025] |What kinds of work would they do?

[22412026] |What does "national" mean?
[22412027] |Would the program be run by the federal government, by local governments, or by private voluntary organizations?
[22412028] |And who would serve?
[22412029] |Only males, as with the draft, or both sexes?
[22412030] |Youth only or all ages?
[22412031] |Middle-class people, or poor people, or a genuine cross-section?
[22412032] |Many or few?

[22412033] |Those are not trivial questions, and the label "national service" answers none of them.
[22412034] |Then how should we think about national service?
[22412035] |As a starting point, here are five propositions: 1. Consider the ingredients, not the name.
[22412036] |Ignore "national service" in the abstract; consider specific proposals.
[22412037] |They will differ in crucial ways.

[22412038] |2. "Service" should be service.
[22412039] |As commonly understood, service implies sacrifice.
[22412040] |It involves accepting risk, or giving up income, or deferring a career.
[22412041] |It follows that proposals like Nunn-McCurdy, whose benefits to enrollees are worth some $17,500 a year, do not qualify.
[22412042] |There is a rationale for such bills: Federal subsidies to college students amount to "a GI Bill without the GI"; arguably those benefits should be earned, not given.
[22412043] |But the earnings exceed by 20% the average income of young high-school graduates with full-time jobs.
[22412044] |Why call that service?

[22412045] |3. Encouragement is fine; compulsion is not.
[22412046] |Compelled service is unconstitutional.
[22412047] |It is also unwise and unenforceable.
[22412048] |(Who will throw several hundred thousand refusers in jail each year?)
[22412049] |But through tax policy and in other ways the federal government encourages many kinds of behavior.
[22412050] |It should also encourage service -- preferably by all classes and all ages.
[22412051] |Its encouragement should strengthen and not undercut the strong tradition of volunteering in the U.S., should build on the service programs already in existence, and should honor local convictions about which tasks most need doing.

[22412052] |4. Good programs are not cheap.
[22412053] |Enthusiasts assume that national service would get important work done cheaply: forest fires fought, housing rehabilitated, students tutored, day-care centers staffed.
[22412054] |There is important work to be done, and existing service and conservation corps have shown that even youths who start with few skills can do much of it well -- but not cheaply.

[22412055] |Good service programs require recruitment, screening, training and supervision -- all of high quality.
[22412056] |They involve stipends to participants.
[22412057] |Full-time residential programs also require housing and full-time supervision; they are particularly expensive -- more per participant than a year at Stanford or Yale.
[22412058] |Non-residential programs are cheaper, but good ones still come to some $10,000 a year.
[22412059] |Are they worth that?
[22412060] |Evaluations suggest that good ones are -- especially so if the effects on participants are counted.
[22412061] |But the calculations are challengeable.

[22412062] |5. Underclass youth are a special concern.
[22412063] |Are such expenditures worthwhile, then?
[22412064] |Yes, if targeted.
[22412065] |People of all ages and all classes should be encouraged to serve, but there are many ways for middle-class kids, and their elders, to serve at little public cost.
[22412066] |They can volunteer at any of thousands of non-profit institutions, or participate in service programs required by high schools or encouraged by colleges or employers.

[22412067] |Underclass youth don't have those opportunities.
[22412068] |They are not enrolled in high school or college.
[22412069] |They are unlikely to be employed.
[22412070] |And they have grown up in unprecedentedly grim circumstances, among family structures breaking down, surrounded by self-destructive behaviors and bleak prospects.
[22412071] |But many of them can be quite profoundly reoriented by productive and disciplined service.

[22412072] |Some won't accept the discipline; others drop out for other reasons.
[22412073] |But some whom nothing else is reaching are transformed.
[22412074] |Learning skills, producing something cooperatively, feeling useful, they are no longer dependent -- others now depend on them.
[22412075] |Even if it is cheaper to build playgrounds or paint apartments or plant dune-grass with paid professionals, the effects on the young people providing those services alter the calculation.

[22412076] |Strictly speaking, these youth are not performing service.
[22412077] |They are giving up no income, deferring no careers, incurring no risk.
[22412078] |But they believe themselves to be serving, and they begin to respect themselves (and others), to take control of their lives, to think of the future.
[22412079] |That is a service to the nation.
[22412080] |It is what federal support should try hardest to achieve.

[22412081] |Mr. Szanton, a Carter administration budget official, heads his own Washington-based strategic planning firm.
[22412082] |He is a co-author of "National Service: What Would It Mean?"
[22412083] |(Lexington Books, 1986).

[22413001] |Government officials here and in other countries laid plans through the weekend to head off a Monday market meltdown -- but went out of their way to keep their moves quiet.

[22413002] |Federal Reserve Chairman Alan Greenspan was on the telephones, making it clear to officials in the U.S. and abroad that the Fed was prepared to inject massive amounts of money into the banking system, as it did in October 1987, if the action were needed to prevent a financial crisis.

[22413003] |And at the Treasury, Secretary Nicholas Brady talked with friends and associates on Wall Street while Assistant Secretary David Mullins carefully analyzed data on the Friday market plunge.

[22413004] |But the officials feared that any public announcements would only increase market jitters.
[22413005] |In addition, officials at the Fed and in the Bush administration decided that avoiding overt actions and statements over the weekend would give them more strength and flexibility should Friday's market drop turn into this morning's rout.

[22413006] |"The disadvantage at this point is that anything you do that looks like you are doing too much tends to reinforce a sense of crisis," said one government official, insisting on anonymity.

[22413007] |The Fed's efforts at secrecy were partly foiled Sunday morning, when both the New York Times and the Washington Post carried stories quoting a senior Fed official saying the central bank was prepared to pour cash into the banking system Monday morning.
[22413008] |Fed Chairman Greenspan was surprised by both stories, according to knowledgeable sources, and insisted he hadn't authorized any public comment.
[22413009] |Nevertheless, Fed officials acknowledged the stories were reasonably accurate portrayals of the central bank's game plan.
[22413010] |It is prepared to assume the same role it played in October 1987, providing money to the markets if necessary to keep the financial system afloat.
[22413011] |The Fed provides money to the banking system by buying government securities from financial institutions.

[22413012] |The reticence of federal officials was evident in the appearance Sunday of Budget Director Richard Darman on ABC's "This Week."
[22413013] |"Secretary of the Treasury Brady and Chairman Greenspan and the chairman of the SEC and others have been in close contact.
[22413014] |I'm sure they'll do what's right, what's prudent, what's sensible," he said.

[22413015] |When it was suggested his comment was a "non-answer," Mr. Darman replied: "It is a non-answer.
[22413016] |But, in this context, that's the smart thing to do."

[22413017] |At the Treasury, Secretary Brady issued a statement minimizing the stock market's drop.
[22413018] |"Today's stock market decline doesn't signal any fundamental change in the condition of the economy," he said.
[22413019] |"The economy remains well-balanced, and the outlook is for continued moderate growth."

[22413020] |But administration officials conceded that Friday's drop carried the chance of further declines this week.
[22413021] |"One possibility is that this is a surgical setback, reasonably limited in its breadth, and not a major problem," said one senior administration official, who also asked that he not be named.
[22413022] |"The other is that we see another major disaster, like two years ago.
[22413023] |I think that's less likely."

[22413024] |Nevertheless, Fed Chairman Greenspan and Vice Chairman Manuel Johnson were in their offices Sunday evening, monitoring events as they unfolded in markets around the world.
[22413025] |The action was expected to begin with the opening of the New Zealand foreign exchange markets at 5 p.m. EST -- when stocks there plunged -- and to continue as the trading day began later in the evening in Tokyo and through early this morning in Europe.
[22413026] |Both the Treasury and the Fed planned to keep market rooms operating throughout the night to monitor the developments.
[22413027] |In Tokyo, share prices dropped sharply by 1.7% in early Monday morning trading.
[22413028] |After the initial slide, the market appeared to be turning around but by early afternoon was headed lower.

[22413029] |In the Bush administration, the lead is being taken by Treasury Secretary Brady, Undersecretary Robert Glauber and Assistant Secretary Mullins.
[22413030] |The three men worked together on the so-called Brady Commission, headed by Mr. Brady, which was established after the 1987 crash to examine the market's collapse.
[22413031] |As a result they have extensive knowledge in financial markets, and financial market crises.

[22413032] |Mr. Brady was at the White House Friday afternoon when the stock market's decline began.
[22413033] |He was quickly on the phone with Mr. Mullins, who in turn was talking with the chairmen of the New York and Chicago exchanges.
[22413034] |Later, Mr. Brady phoned Mr. Greenspan, SEC Chairman Richard Breeden and numerous contacts in New York and overseas.
[22413035] |Aides say he continued to work the phones through the weekend.

[22413036] |Administration officials say President Bush was briefed throughout Friday afternoon and evening, even after leaving for Camp David.
[22413037] |He had frequent telephone consultations with Mr. Brady and Michael Boskin, chairman of the counsel of economic advisers.

[22413038] |Government officials tried throughout the weekend to render a business-as-usual appearance in order to avoid any sense of panic.
[22413039] |Treasury Undersecretary David Mulford, for instance, was at a meeting of the Business Council in Hot Springs, Va., when the stock market fell, and remained there through the following day.
[22413040] |And as of last night, Fed Chairman Greenspan hadn't canceled his plans to address the American Bankers Association convention in Washington at 10 a.m. this morning.

[22413041] |Ironically, Mr. Greenspan was scheduled to address the same convention in Dallas on Oct. 20, 1987.
[22413042] |He flew to Dallas on Oct. 19, when the market plummeted 508 points, but then turned around the next morning and returned to Washington without delivering his speech.

[22414001] |Following is a weekly listing of unadited net asset values of publicly traded investment fund shares, reported by the companies as of Friday's close.
[22414002] |Also shown is the closing listed market price or a dealer-to-dealer asked price of each fund's shares, with the percentage of difference.

[22414003] |b-As of Thursday's close.
[22414004] |c-Translated at Commercial Rand exchange rate.
[22414005] |e-In Canadian dollars.
[22414006] |f-As of Wednesday's close.
[22414007] |g-10.06.89 NAV:22.15.
[22414008] |z-Not available.

[22415001] |Put down that phone.

[22415002] |Walk around the room; take two deep breaths.
[22415003] |Resist the urge to call your broker and sell all your stocks.

[22415004] |That's the advice of most investment professionals after Friday's 190-point drop in the Dow Jones Industrial Average.

[22415005] |No one can say for sure what will happen today.
[22415006] |And investment pros are divided on whether stocks will perform well or badly in the next six months.
[22415007] |But they're nearly unanimous on one point: Don't sell into a panic.

[22415008] |Investors who sold everything after the crash of 1987 lived to regret it.
[22415009] |Even after Friday's plunge, the Dow Jones Industrial Average was 48% above where it landed on Oct. 19 two years ago.

[22415010] |Panic selling also was unwise during other big declines in the past.
[22415011] |The crash of 1929 was followed by a substantial recovery before the great Depression and awful bear market of the 1930s began.
[22415012] |The "October massacres" of 1978 and 1979 were scary, but didn't lead to severe or sustained downturns.

[22415013] |Indeed, some pros see Friday's plunge, plus any further damage that might occur early this week, as a chance for bargain hunting.
[22415014] |"There has been a lot of emotional selling that presents a nice buying opportunity if you've got the cash," says Stephen B. Timbers, chief investment officer of Chicago-based Kemper Financial Services Inc.

[22415015] |But most advisers think the immediate course for individual investors should be to stand pat.
[22415016] |"When you see a runaway train," says Steve Janachowski, partner in the San Francisco investment advisory firm Brouwer & Janachowski, "you wait for the train to stop."

[22415017] |Even for people who expect a bear market in coming months -- and a sizable number of money managers and market pundits do -- the advice is: Wait for the market to bounce back, and sell shares gradually during rallies.
[22415018] |The best thing individual investors can do is "just sit tight," says Marshall B. Front, executive vice president and head of investment counseling at Stein Roe & Farnham Inc., a Chicago-based investment counseling firm that manages about $18 billion.

[22415019] |On the one hand, Mr. Front says, it would be misguided to sell into "a classic panic."
[22415020] |On the other hand, it's not necessarily a good time to jump in and buy.
[22415021] |"This is all emotion right now, and when emotion starts to run, it can run further than anyone anticipates," he said.
[22415022] |"So it's more prudent to wait and see how things stabilize."

[22415023] |Roger Ibbotson, professor of finance at Yale University and head of the market information firm Ibbotson Associates Inc., says, "My real advice would be to just ride through it.
[22415024] |Generally, it isn't wise to be in and out" of the stock market.

[22415025] |Mr. Ibbotson thinks that this week is "going to be a roller-coaster week."
[22415026] |But he also thinks it is "a good week to consider buying."

[22415027] |John Snyder, former president of the Los Angeles chapter of the National Association of Investors Corp., an organization of investment clubs and individual investors, says his fellow club members didn't sell in the crash of 1987, and see no reason to sell now.
[22415028] |"We're dedicated long-term investors, not traders," he says.
[22415029] |"We understand panics and euphoria.
[22415030] |And we hope to take advantage of panics and buy stocks when they plunge."

[22415031] |One camp of investment pros sees what happened Friday as an opportunity.
[22415032] |Over the next days and weeks, they say, investors should look for stocks to buy.

[22415033] |Friday's action "was an old-fashioned panic," says Alfred Goldman, director of technical market analysis for A.G. Edwards & Sons in St. Louis.
[22415034] |"Stocks were being thrown out of windows at any price."
[22415035] |His advice: "You ought to be there with a basket catching them."

[22415036] |James Craig, portfolio manager for the Denver-based Janus Fund, which has one of the industry's better track records, started his buying during Friday's plunge.
[22415037] |Stocks such as Hershey Foods Corp., Wal-Mart Stores Inc., American International Group Inc. and Federal National Mortgage Association became such bargains that he couldn't resist them, he says.

[22415038] |And Mr. Craig expects to pick up more shares today.
[22415039] |"It will be chaotic at first, but I would not be buying if I thought we were headed for real trouble," he says.
[22415040] |He argues that stocks are reasonably valued now, and that interest rates are lower now than in the fall of 1987.

[22415041] |Mr. Front of Stein Roe suggests that any buying should "concentrate in stocks that have lagged the market on the up side, or stocks that have been beaten down a lot more than the market in this correction."
[22415042] |His firm favors selected computer, drug and pollution-control stocks.

[22415043] |Other investment pros are more pessimistic.
[22415044] |They say investors should sell stocks -- but not necessarily right away.
[22415045] |Many of them stress that the selling can be orderly, gradual, and done when stock prices are rallying.

[22415046] |On Thursday, William Fleckenstein, a Seattle money manager, used futures contracts in his personal account to place a bet that the broad market averages would decline.
[22415047] |He thinks the underlying inflation rate is around 5% to 6%, far higher than most people suppose.

[22415048] |In the pension accounts he manages, Mr. Fleckenstein has raised cash positions and invested in gold and natural gas stocks, partly as an inflation hedge.
[22415049] |He thinks government officials are terrified to let a recession start when government, corporate and personal debt levels are so high.
[22415050] |So he thinks the government will err on the side of rekindled inflation.

[22415051] |As a result, Mr. Fleckenstein says, "I think the ball game's over," and investors are about to face a bear market.

[22415052] |David M. Jones, vice president at Aubrey G. Lanston & Co., recommends Treasury securities (of up to five years' maturity).
[22415053] |He says the Oct. 6 employment report, showing slower economic growth and a severe weakening in the manufacturing sector, is a warning sign to investors.

[22415054] |One strategy for investors who want to stay in but hedge their bets is to buy "put" options, either on the individual stocks they own or on a broad market index.
[22415055] |A put option gives its holder the right (but not the obligation) to sell a stock (or stock index) for a specified price (the strike price) until the option expires.

[22415056] |Whether this insurance is worthwhile depends on the cost of an option.
[22415057] |The cost, or premium, tends to get fat in times of crisis.
[22415058] |Thus, buying puts after a big market slide can be an expensive way to hedge against risk.

[22415059] |The prices of puts generally didn't soar Friday.
[22415060] |For example, the premium as a percentage of the stock price for certain puts on Eli Lilly & Co. moved up from 3% at Thursday's close to only 3.3% at Friday's close, even though the shares dropped more than $5.50.
[22415061] |But put-option prices may zoom when trading resumes today.

[22415062] |It's hard to generalize about a reasonable price for puts.
[22415063] |But investors should keep in mind, before paying too much, that the average annual return for stock holdings, long-term, is 9% to 10% a year; a return of 15% is considered praiseworthy.
[22415064] |Paying, say, 10% for insurance against losses takes a deep bite out of the return.

[22415065] |James A. White and Tom Herman contributed to this article.

[22416001] |Coldwell Banker Commercial Group said it sold $47 million of common stock to its employees at $10 a share, giving them a total stake of more than 40% in the commercial real estate brokerage firm.

[22416002] |The firm, which was acquired in April from Sears, Roebuck & Co. in a management-led buy-out, had planned to sell up to $56.4 million of stock, or a 50% stake in the company, to its 5,000 employees.

[22416003] |Though the offering didn't sell out, James J. Didion, chairman and chief executive officer, said, "We're pretty proud of the employees' response."
[22416004] |He noted that unlike an employee stock ownership plan, where a company usually borrows money from third party lenders to buy stock that it sets aside to award employees over time, here employees had to fork out their own cash for the stock.
[22416005] |"They came up with their own money instead of borrowed money," Mr. Didion said.
[22416006] |"It's totally different."

[22416007] |He said the offering was designed to create long-term incentives for employees.
[22416008] |"We're in a service business, and in that context, it's vital to have your employees involved in the ownership so they have a stake in the success."
[22416009] |The brokerage firm won't pay a dividend on the stock.

[22416010] |Employees have the right to trade stock among themselves, and the company will establish an internal clearing house for these transactions.
[22416011] |They may also eventually sell the shares to third parties, but the outside investors who own the remaining 60% of Coldwell Banker have the right to first refusal.

[22416012] |Those outside investors in Coldwell Banker include Carlyle Group, a closely held Washington, D.C., merchant banking firm whose co-chairman is Frank Carlucci, former secretary of defense; Frederic V. Malek, senior adviser to Carlyle Group; Mellon Family Trust of Pittsburgh; Westinghouse Credit Corp., the financial services unit of Westinghouse Electric Corp.; Bankers Trust Co., a unit of Bankers Trust New York Corp.; and a group of Japanese investors represented by the investment banking unit of Tokyo-based Sumitomo Bank.
[22416013] |Bankers Trust and Sumitomo financed the $300 million acquisition from Sears Roebuck.
[22416014] |Coldwell Banker also named three outside director nominees for its 17 member board.
[22416015] |The nominees are Gary Wilson, chief financial officer of Walt Disney Co.; James Montgomery, chief executive officer of Great Western Financial Corp.; and Peter Ubberroth, former commissioner of baseball and now a private investor.

[22417001] |The first major event this morning in U.S. stock and futures trading may be a pause at the Chicago Mercantile Exchange.

[22417002] |Under a reform arising from the 1987 crash, trading in the Merc's stock-index futures will break for 10 minutes if the contract opens and stays five points from Friday's close, a move equal to 40 points on the Dow Jones Industrial Average.
[22417003] |The aim of the interruption would be to ease the opening of the New York Stock Exchange, which would be hammered by such a volatile move on the Merc.

[22417004] |That early-morning breather is just one of a number of safeguards adopted after the 1987 crash.
[22417005] |The Big Board also added computer capacity to handle huge surges in trading volume.
[22417006] |Several of those post-crash changes kicked in during Friday's one-hour collapse and worked as expected, even though they didn't prevent a stunning plunge.
[22417007] |But the major "circuit breakers" have yet to be evaluated.
[22417008] |A deeper market plunge today could give them their first test.

[22417009] |A further slide also would resurrect debate over a host of other, more sweeping changes proposed -- but not implemented -- after the last crash.
[22417010] |Most notably, several of the regulatory steps recommended by the Brady Task Force, which analyzed the 1987 crash, would be revived -- especially because that group's chairman is now the Treasury secretary.
[22417011] |The most controversial of the Brady recommendations involved establishing a single overarching regulator to handle crucial cross-market questions, such as setting consistent margin requirements for the stock and futures markets.

[22417012] |But for the moment, attention focuses on the reforms that were put into place, and market regulators and participants said the circuit breakers worked as intended.
[22417013] |Big Board and Merc officials expressed satisfaction with the results of two limits imposed on of the Merc's Standard & Poor's 500 contract, as well as "hot-line" communications among exchanges.
[22417014] |Those pauses -- from 2:07 p.m. to 2:30 p.m. CDT and from 2:45 p.m. until the close of trading a half-hour later -- forced traders to buy and sell contracts at prices at or higher than their frozen levels.

[22417015] |During the first halt, after the S&P index had fallen 12 points, the Big Board's "Sidecar" computer program automatically was triggered.
[22417016] |That system is designed to separate computer-generated program trades from all other trades to help exchange officials resolve order imbalances in individual stocks.

[22417017] |One Merc broker compared the action in the S&P pit during the two freezes to a fire at a well-drilled school.
[22417018] |"You don't want the fire but you know what to do," said Howard Dubnow, an independent floor broker and a Merc governor.
[22417019] |"There was no panic.
[22417020] |The system worked the way we devised it to work."

[22417021] |After reopening for about 15 minutes, the S&P index tumbled to its 30-point limit and the second freeze went into effect.
[22417022] |Traders then spent the last half-hour "watching to see if the Dow would drop 250 points," Mr. Dubnow added, referring to the level at which the stock market itself would have closed for an hour.
[22417023] |One observer estimated that 80% to 90% of the S&P traders "were just standing around watching."

[22417024] |But the 250-point circuit breaker never had to kick in, and freezes on the Chicago Board of Trade's Major Market Index also weren't triggered.
[22417025] |The MMI and the S&P 500 are the two major indexes used by program traders to run their computerized trading strategies.
[22417026] |The programs are considered by many to be a major cause of the 1987 crash.

[22417027] |The process of post-crash reforms began with calls to remake the markets and wound up a year later with a series of rather technical adjustments.

[22417028] |In October 1987, just after the market drop, Washington was awash in talk of sweeping changes in the way the financial markets are structured and regulated.
[22417029] |Over the next year that grand agenda was whittled down to a series of steps to soften big stock drops by interrupting trading to give market players time to pause and reconsider positions.
[22417030] |In addition, limits were placed on computer-driven trading, and steps were taken to better link the stock and futures markets.
[22417031] |Few changes were made in the way the markets are regulated.

[22417032] |At the outset the prime target was program trading, which was much discussed but little understood on Capitol Hill.
[22417033] |There were also calls to strip the stock markets of "derivative" products, such as stock-index futures and options, which Federal Judge Stanley Sporkin, for example, likened to "barnacles attached to the basic market."
[22417034] |And there was much criticism of the New York Stock Exchange's system of having stock trades flow through specialists, or market makers.

[22417035] |When the Brady Task Force's powerful analysis of the crash was released in January 1988, it immediately reshaped the reformers' agenda.
[22417036] |Arguing that the separate financial marketplaces acted as one, and concluding that the crash had "raised the possibility of a full-scale financial system breakdown," the presidential task force called for establishing a super-regulator to oversee the markets, to make margins consistent across markets, to unify clearing systems and to install circuit breakers.

[22417037] |Only the last of those recommendations ever was implemented.
[22417038] |The Reagan White House held the Brady recommendations at arm's length and named a second panel -- the Working Group on the Financial Markets -- to review its analysis and those of other crash studies.
[22417039] |In May 1988, the Working Group, made up of representatives from the Federal Reserve, the Treasury, the Securities and Exchange Commission, and the Commodity Futures Trading Commission, finally endorsed only circuit breakers.

[22417040] |After several more months of arguments among various stock exchanges and futures markets, circuit breakers were set in place, with the most notable suspending trading after 250 and 400 point drops in the Dow Jones Industrial Average.
[22417041] |Privately, some free marketeers dismissed such mechanisms as sops to interventionists.
[22417042] |After all, this free-market argument went, the Dow only dropped more than 250 points once this century.

[22417043] |"Circuit breakers" set to soften big drops:

[22417044] |-- If S&P futures fall 5 points at opening, contract trading pauses for 10 minutes.

[22417045] |-- If Dow Industrials fall 25 points at opening, contract trading pauses for 10 minutes.

[22417046] |-- If S&P futures fall 12 points (equivalent to about 100 points on DJIA), trading is frozen for half hour to that price or higher.
[22417047] |On NYSE program trades are diverted into a separate computer file to determine buy and sell orders.

[22417048] |-- If S&P futures fall 30 points, trading is restricted for an hour to that price or higher.

[22417049] |-- If Dow Industrials fall 250 points, trading on the Big Board halts for an hour.
[22417050] |S&P and MMI contracts also halt.

[22417051] |-- If DJIA drops 400 points, Big Board halts trading for two hours.
[22417052] |Trading in MMI and S&P futures also halted.

[22417053] |Brady Task Force recommendations (Jan. 1988):

[22417054] |-- Establish an overarching regulator for financial markets

[22417055] |-- Unify trade-clearing systems

[22417056] |-- Make margins consistent across stock and futures markets

[22417057] |SEC proposals (May 1988):

[22417058] |-- Require prompt reports of large securities trades.

[22417059] |-- Give SEC authority to monitor risk-taking by affiliates of brokerage firms.

[22417060] |-- Transfer jurisdiction over stock-related futures to SEC from CFTC.
[22417061] |(Opposed by new SEC chairman)
[22417062] |-- Give SEC authority to halt securities trading, (also opposed by new SEC chairman).

[22417063] |Congressional proposal:

[22417064] |-- Create a task force to review current state of the securities markets and securities laws.

[22417065] |Breaking the Soviet government's television monopoly, an independent company has gained rights to show world programming, including American films.

[22417066] |"There must not be a monopoly, there must be freedom of choice for both journalists and viewers," Nikolai I. Lutsenko, the president of the Nika TV company, told the weekly newspaper Nedelya.
[22417067] |The company is already working on its own programming in several provincial cities and hopes to be on the air regularly in about a year, the newspaper said.

[22417068] |Mr. Lutsenko told Nedelya that he recently had been to the U.S. to pick up the rights to show 5,000 U.S. films in the Soviet Union.
[22417069] |Nedelya's article was accompanied by a picture of Mr. Lutsenko interviewing singer John Denver in Colorado.

[22417070] |Even though it will be independent of official television, Nika will have an oversight board that will include members of the Communist youth league.

[22417071] |South Africa's National Union of Mineworkers said that about 10,000 diamond miners struck for higher wages at De Beers Consolidated Mines Ltd.
[22417072] |De Beers said that workers at five of the group's mines were on strike, which it said was peaceful, with orderly picketing occurring at one of the mines.
[22417073] |The deadlock in negotiations occurred with De Beers offering a 17% increase in the minimum-wage category while the union demanded a 37.6% increase in the minimum wage.

[22417074] |Japan's opposition Socialist Party denied that its legislators had been bribed by pinball-parlor owners.
[22417075] |The allegation had been raised in Parliament by the governing Liberal Democratic Party following magazine reports suggesting that money from Japanese-style pinball, called pachinko, had infiltrated politics.
[22417076] |Tsuruo Yamaguchi, secretary general of the Socialist Party, acknowledged that nine party lawmakers had received donations from the pachinko association totaling 8 million yen (about $55,000) but said the donations were legal and none of its members acted to favor the industry.

[22417077] |The World Wide Fund for Nature said that Spain, Argentina, Thailand and Indonesia were doing too little to prevent illegal trade in endangered wildlife across their borders.
[22417078] |A report by the conservation group presented at the U.N.-sponsored Convention on International Trade in Endangered Species in Lausanne accused the four of trading protected species ranging from parakeets to orchids.
[22417079] |Fund official Simon Lyster said world trade in wildlife was estimated to total $5 billion of business annually.

[22417080] |A NATO project to build a frigate for the 1990s was torpedoed by the pull-out of three of its eight participating nations.
[22417081] |Britain, France and Italy announced technical reasons for withdrawing, but some officials pointed to growing reluctance among the allies to commit themselves to big defense spending while East-West disarmament talks show signs of success.

[22417082] |Small wonder that Britain's Labor Party wants credit controls.
[22417083] |A few hours after the party launched its own affinity credit card earlier this month, the Tories raised the nation's base interest rate.
[22417084] |Labor's Visa card is believed to be the first linked to a British political party.
[22417085] |Labor gets 25 pence (39 cents) for every 100 (about $155) that a user charges to the card.
[22417086] |As with other plastic in Britain's high-interest-rate environment, the Labor card, administered by Co-operative Bank, carries a stiff (in this case, 29.8%) annual rate on the unpaid balance.

[22417087] |China's year-long austerity program has achieved some successes in harnessing runaway economic growth and stabilizing prices but has failed to eliminate serious defects in state planning and an alarming drain on state budgets.

[22417088] |The official China Daily said retail prices of non-staple foods haven't risen since last December but acknowledged that huge government subsidies were a main factor in keeping prices down.
[22417089] |The State Statistical Bureau found that more than 1 billion yuan ($270 million) was spent in the first half of the year for pork subsidies.

[22417090] |The newspaper quoted experts as saying the subsidies would cause the difference between prices and real values of commodities to "become very unreasonable" and reduce needed funds for investment in the "already difficult state budget."

[22417091] |The aim of the austerity measures was to slice economic growth, which soared to 20.7% last year, to 8% in 1990.
[22417092] |Economists now predict the growth rate will be about 11.5% for the year.

[22417093] |In a sign of growing official tolerance for religion, Russian Orthodox priests were allowed to celebrate the 400th anniversary of the Moscow patriarchate in the Kremlin's 15th-century Uspensky Cathedral, where czars were crowned. . . .
[22417094] |A 34-foot-tall, $7.7 million statue of Buddha was completed on a hill outside Hong Kong, facing China.
[22417095] |The statue is the brainchild of Sik Chi Wan, director of the Po Lin Monastery, who said: "Hong Kong is such a prosperous place, we also need some kind of religious symbol.

[22418001] |It all seemed innocent enough: Last April, one Steven B. Iken visited Justin Products Inc. here, identified himself as a potential customer and got the word on the little company's new cassette players for children.

[22418002] |"It is almost identical to the Sony product," Mr. Iken remarked, after seeing prototypes and pictures.
[22418003] |Replied a Justin salesman: "Exactly."
[22418004] |The Justin merchandise carried wholesale prices some 40% below those of Sony Corp. of Japan's "My First Sony" line.
[22418005] |The visitor waxed enthusiastic and promised to return.

[22418006] |But instead of a new customer -- part of a hoped-for bonanza from underselling Sony -- Justin got a costly legal morass.
[22418007] |Mr. Iken, it turned out, was a private detective using a hidden tape recorder to gather information for Sony.
[22418008] |His recording later turned up as a court exhibit.
[22418009] |Seeking to keep Justin's "My Own" product line off the U.S. market, Sony last May filed a suit in Manhattan federal court accusing the upstart of trademark infringement, unfair competition and other violations of business law.

[22418010] |Since then, life has changed a lot for 61-year-old Leonard Kaye, Justin's owner.
[22418011] |"I haven't been able to get a decent night's sleep since this has been going on," he says.
[22418012] |"It's the most distracting thing in my life -- I can't even attend to my business."
[22418013] |His company (annual sales: about $25 million) may suffer a costly blow -- losing an estimated 10% of total sales -- if Sony (annual sales: about $16 billion) prevails.
[22418014] |Justin's plight shows what can happen when a tiny company suddenly faces the full legal might of a wrathful multinational.

[22418015] |With considerable irony, the case also shows how completely Japan has turned the tables on U.S. business.
[22418016] |Americans used to complain bitterly about being undersold by look-alike products from Japan.
[22418017] |Now Sony, whose innovative, premium-priced products are among the most admired in consumer electronics, is bitterly complaining about a little U.S. firm with a cheap look-alike produced in China.

[22418018] |"The gist of this is that Justin knocked off the Sony line and Sony wants to stop it," says Lewis H. Eslinger, Sony's attorney, who previously guarded Rubik's Cube.
[22418019] |(Sony itself declines to comment.)
[22418020] |If Sony wins, Mr. Eslinger says, its little rival will have to try to sell the products overseas.
[22418021] |At worst, he adds, "They'd have to grind them all up and throw them away."

[22418022] |Mr. Kaye denies the suit's charges and says his only mistake was taking on Sony in the marketplace.
[22418023] |"I made a similar line and I produced it cheaper," he says.

[22418024] |Today, U.S. Judge John E. Sprizzo is expected to rule on Sony's renewed request for a pre-trial order blocking sale of the disputed products, on which deliveries began in July.
[22418025] |The judge turned down an earlier Sony request for such an order -- a decision upheld on appeal -- but Sony returned with additional evidence and arguments.

[22418026] |Though hoping to settle the case, Justin vows to fight on, if necessary.
[22418027] |But the battle is more than Justin bargained for.
[22418028] |"I had no idea I was getting in so deep," says Mr. Kaye, who founded Justin in 1982.
[22418029] |Mr. Kaye had sold Capetronic Inc., a Taiwan electronics maker, and retired, only to find he was bored.
[22418030] |With Justin, he began selling toys and electronics made mostly in Hong Kong, beginning with Mickey Mouse radios.
[22418031] |The company has grown -- to about 40 employees, from four initially, Mr. Kaye says.
[22418032] |Justin has been profitable since 1986, adds the official, who shares his office with numerous teddy bears, all samples from his line of plush toys.

[22418033] |Like many others, Mr. Kaye took notice in 1987 when Sony, in a classic example of market segmentation, changed the plastic skin and buttons on the famous Walkman line of portable audio equipment and created the My First Sony line for children.
[22418034] |The brightly colored new products looked more like toys than the adult models.
[22418035] |(In court papers, Sony says it has spent more than $3 million to promote the line, with resulting sales of over a million units.)

[22418036] |Sony found a new market niche, but Mr. Kaye figured that its prices left plenty of room for a lower-priced competitor.
[22418037] |His products aren't exact copies of Sony's but strongly resemble them in size, shape and, especially, color.
[22418038] |Sony uses mostly red and blue, with traces of yellow -- and so does Justin, on the theory that kids prefer these colors.
[22418039] |("To be successful, a product can be any color whatsoever, as long as it is fire-engine red," says Charles E. Baxley, Justin's attorney.)

[22418040] |By last winter, Justin was showing prototypes at toy fairs in Hong Kong and New York -- and Sony noticed.
[22418041] |Indeed, concerned that Sony sales personnel were threatening legal action or other retaliation -- such as withholding desirable Sony products -- against Justin's customers, Mr. Baxley fired off a letter to Sony in April.
[22418042] |He himself threatened to take the matter to the Federal Trade Commission or U.S. Justice Department.
[22418043] |But Justin hasn't pursued those charges (which were without merit, according to Mr. Eslinger, the Sony attorney).
[22418044] |Recalls Mr. Baxley: "Our purpose was to influence them to leave us alone.
[22418045] |We never intended taking on Sony -- we don't have the resources."

[22418046] |Sony answered the empty threat with its real suit.
[22418047] |Off and on since then, the companies have skirmished in court.
[22418048] |And Justin, in a news release, says, "Once competitive, Sony now resorts to strong-arm tactics in American courtrooms to carve out and protect niche markets."

[22418049] |Sony's lawyer insists that the company's tactics -- including the use of a private detective posing as a buyer -- are routine in such matters.
[22418050] |He also insists that Sony, no less than others, has a legal right to protect its "trade dress," in this case, mostly the colors that it claims make My First Sony products distinctive.
[22418051] |(Justin claims it began using the same colors on electronic goods for children long before Sony entered the children's market.)

[22418052] |Whatever its merits, Sony's aggressive defense is debilitating for Justin.
[22418053] |It's also costly.
[22418054] |Mr. Kaye says he has paid more than $70,000 in legal fees so far.

[22418055] |Of Sony, Mr. Kaye says: "They know there's no way for them to lose.
[22418056] |They just keep digging me in deeper until I reach the point where I give up and go away."
[22418057] |For now, though, he vows to hang in.

[22419001] |@ Charles H. Tenney II, chairman of Unitil Corp., purchased 34,602 shares, or 4.9%, of Unitil's common, according to a filing with the Securities and Exchange Commission.

[22419002] |The stock was bought on Thursday in a privately negotiated transaction, the filing said.

[22419003] |As previously reported, Unitil, Exeter, N.H., and Fitchburg Gas & Electric Co., Fitchburg, Mass., are targets of unsolicited tender offers from Boston-based Eastern Utilities Associates.
[22419004] |Eastern Utilities has offered $40 a share for Unitil and $36 a share for Fitchburg Gas and has extended both offers to Dec. 4.
[22419005] |Both companies rejected the offers.

[22420001] |Dresdner Bank AG of West Germany has announced a friendly tender offer for control of Banque Internationale de Placements, a French bank whose main shareholder is France's Societe Generale, the Societe de Bourses Francaises said.

[22420002] |The tender offer by West Germany's second-biggest commercial bank is in two stages.
[22420003] |Dresdner is offering to acquire 32.99% of BIP's capital for 1,015 francs ($156.82) a share.
[22420004] |The terms of the offer put a value of 528 million francs ($81.6 million) on the 32.99% shareholding.

[22420005] |The Societe Generale banking group controls 18.2% of the shareholding, while Societe Generale de Belgique S.A. owns 9.69% and Financiere Tradition, a holding company, owns 5.1%.

[22421001] |Mexican investor Joel Rocha Garza said he sold a block of 600,000 shares of Smith Laboratories Inc. common stock to companies affiliated with him.

[22421002] |In a filing with the Securities and Exchange Commission, Mr. Rocha Garza said Biscayne Syndicate Inc., Lahus II Inc., and Lahus III Inc. bought the 600,000 shares on Oct. 11 for $1.4 million, or $2.375 a share.

[22421003] |Mr. Rocha Garza said that he, Clarendon Group Ltd., Biscayne, Lahus II, and Lahus III are all affiliated and hold a combined stake of 1,234,100 shares, or 9.33%.
[22421004] |Mr. Rocha Garza has said he wants to purchase more shares.

[22421005] |In San Diego, Smith Laboratories President Timothy Wollaeger said the transfer of the shares isn't significant.

[22422001] |Investcorp, New York, said it and the management of Sports & Recreation Inc. bought the operator of the 10-store Sports Unlimited chain for some $40 million.

[22422002] |The investment bank becomes majority shareholder in Sports & Recreation, a 10-year-old sporting goods retailer, said Oliver E. Richardson, a member of Investcorp's management committee and a director of the chain.

[22422003] |Sports Unlimited, Tampa, Fla., posted revenue of $59 million for the year ended July 31.
[22422004] |The company is "very profitable" on an operating basis, Mr. Richardson said, but he declined to specify numbers.

[22422005] |In 1982, Sports & Recreation's managers and certain passive investors purchased the company from Brunswick Corp. of Skokie, Ill.
[22422006] |In the latest transaction, management bought out the passive investors' holding, Mr. Richardson said.

[22423001] |Hammond Co., Newport Beach, Calif., said Fidelity National Financial Inc. extended its previous agreement, under which it won't purchase any more of the mortgage banker's common stock, through Oct. 31.

[22423002] |The previous agreement expired Thursday.

[22423003] |Hammond said that its discussions with Fidelity, an Irvine, Calif., title-insurance underwriter, are continuing, but that prospects for a longer-term standstill agreement are uncertain.

[22423004] |Fidelity has increased its stake in Hammond to 23.57% in recent months.
[22423005] |Statements made in Securities and Exchange Commission filings led Hammond to request a standstill agreement.

[22424001] |Giant Group Ltd. said it terminated negotiations for the purchase of Aspen Airways, a Denver-based regional carrier that operates the United Express connector service under contract to UAL Corp.'s United Airlines.

[22424002] |Giant, a Beverly Hills, Calif., collection of companies that is controlled by Hollywood producer Burt Sugarman, didn't give a reason for halting its plan to acquire the airline, and Aspen officials couldn't be reached for comment.

[22424003] |Giant agreed last month to purchase the carrier.
[22424004] |Giant hasn't ever disclosed the proposed price, although Avmark Inc., an Arlington, Va.-based aircraft consulting concern, has valued Aspen's fleet at about $46 million.

[22424005] |The airline would have become the latest in a peculiar blend of Giant companies, which are involved in making cement, recycling newsprint and operating fast-food restaurants.

[22425001] |The state-controlled insurer Assurances Generales de France said it has obtained regulatory approval to increase its stake in the financial holding company Cie. de Navigation Mixte above 10% from the current level of about 8%.

[22425002] |Friday's approval was needed to conform with Bourse rules regarding companies with bank interests and follows a similar approval given Wednesday to Cie. Financiere de Paribas.
[22425003] |Both Paribas and AGF have been increasing their stakes in Navigation Mixte recently for what they have termed "investment purposes," although the issue has been surrounded by takeover speculation in recent weeks.

[22425004] |AGF didn't comment officially on its reasons for seeking the approval, but people close to the group said it was done to make sure the group would have the flexibility to increase its stake in the future, should interesting price opportunities arise.

[22425005] |An AGF official did specify, however, that there was no foundation to recent rumors the group might be acting in concert with Paribas.

[22426001] |Lockheed Aeronautical Systems Co., a unit of Lockheed Corp., said it agreed to join with Aermacchi S.p.A. of Varese, Italy, to propose a new generation of jet trainers for the U.S. Air Force.

[22426002] |The Air Force is looking to buy 540 new primary jet trainers, with a total value of $1.5 billion to $2 billion, between 1994 and 2004.
[22426003] |The aircraft would replace the T-37, made by the Cessna Aircraft Co. unit of General Dynamics Corp., which the Air Force uses to train jet pilots.
[22426004] |Lockheed said the U.S. Navy may also buy an additional 340 trainer aircraft to replace its T34C trainers made by the Beech Aircraft Corp. unit of Raytheon Corp.

[22426005] |Under the agreement with Lockheed, Aermacchi will license Lockheed to build the Aermacchi MB-339 jet tandem-trainer and will supply certain structures.
[22426006] |Lockheed will build additional structures and perform final assembly of the tandem-seat trainer at its Marietta, Ga., plant should the Air Force order the craft.

[22426007] |A Lockheed spokesman in Burbank, Calif., said he wasn't aware of which other companies would be competing for the Air Force contract.

[22427001] |Striking auto workers ended their 19-day occupation of a metal shop at a Peugeot S.A. factory in eastern France Friday as pay talks got under way in the capital.

[22427002] |But the Peugeot breakthrough came as a nationwide dispute by Finance Ministry employees disrupted border checkpoints and threatened the government's ability to pay its bills.

[22427003] |The Peugeot metalworkers began filing out of the shop, which makes auto parts, at the plant in Mulhouse after voting 589 to 193 to abandon the occupation.

[22427004] |Their withdrawal was based on promises by Peugeot to open negotiations in Paris at the same time the last man left the premises.

[22427005] |The strike by customs officers, tax collectors, treasury workers and other civil servants attached to the Ministry of Finance may pose a more serious challenge to the government and the average Frenchman.
[22427006] |Ministry employees complain that they are poorly paid because of a complex job-rating system they say fails to take into account their education and level of technical expertise.

[22428001] |The market for $200 billion of high-risk junk bonds, battered by a succession of defaults and huge price declines this year, practically vanished Friday.

[22428002] |Trading ground to a halt as investors rushed to sell bonds, only to find themselves deserted by potential buyers.
[22428003] |Stunned, they watched brokerage houses mark down price quotations on their junk holdings while being able to execute very few actual trades.

[22428004] |"The junk bond market is in a state of gridlock now -- there are no bids, only offers," says independent investor Martin D. Sass, who manages nearly $4 billion and who recently decided to buy distressed securities for a new fund.
[22428005] |This calamity is "far from over," he says.

[22428006] |Junk's collapse helped stoke the panicky selling of stocks that produced the deepest one-day dive in the Dow Jones Industrial Average since the Oct. 19, 1987, crash.
[22428007] |Simultaneously, it also helped trigger this year's biggest rally in the U.S. government bond market as investors rushed to move capital into the highest-quality securities they could find.

[22428008] |But "an eerie silence pervaded" the junk market Friday as prices tumbled on hundreds of high-yield bonds despite "no active trading," says John Lonski, an economist at Moody's Investors Service Inc.
[22428009] |For example, the price of Southland Corp.'s $500 million of 16 3/4% bonds due 2002 -- sold less than two years ago by Goldman, Sachs & Co. -- plummeted 25% to just 30 cents on the dollar.
[22428010] |But not even Goldman would make a market in the securities of Southland, the owner of the nationwide chain of 7-11 convenience stores that is strapped for cash.
[22428011] |Goldman officials declined to comment.

[22428012] |Junk bonds, which mushroomed from less than $2 billion at the start of this decade, have been declining for months as issuer after issuer sank beneath the weight of hefty interest payments.
[22428013] |The shaky market received its biggest jolt last month from Campeau Corp., which created its U.S. retailing empire with junk financing.
[22428014] |Campeau developed a cash squeeze that caused it to be tardy on some interest payments and to put its prestigious Bloomingdales department-store chain up for sale.

[22428015] |Now, dozens of corporations, including Ethan Allen, TW Services and York International, that are counting on at least $7 billion of scheduled new junk financings to keep their highly leveraged takeovers and buy-outs afloat, may never get the money.
[22428016] |"The music has stopped playing," says Michael Harkins, a principal in the investment firm of Levy Harkins.
[22428017] |"You've either got a chair or you don't."

[22428018] |In Friday's aftermath, says R. Douglas Carleton, a director of high-yield finance at First Boston Corp., "much of the $7 billion forward calendar could be deferred, depending on the hysteria."
[22428019] |In August, First Boston withdrew a $475 million junk offering of Ohio Mattress bonds because potential buyers were "very skittish."

[22428020] |The outlook "looks shaky because we're still waiting" for mutual funds, in particular, to dump some of their junk bond holdings to pay off redemptions by individual investors, says King Penniman, senior vice president at McCarthy, Crisanti & Maffei, an investment arm of Xerox Financial Services.
[22428021] |Indeed, a Moody's index that tracks the net asset values of 24 high-yield mutual funds declined for the 17th consecutive day Friday.

[22428022] |In a stark contrast, the benchmark 30-year Treasury bond climbed more than 2 1/2 points, or about $25 for each $1,000 face amount, to 103 12/32, its biggest gain of the year.
[22428023] |The bond's yield dropped to 7.82%, the lowest since March 31, 1987, according to Technical Data Global Markets Group.
[22428024] |The yield on three-month Treasury bills, considered the safest of all investments, plummeted about 0.7 percentage point to 7.16%, the largest one-day decline since 1982.

[22428025] |The main catalyst for government bond market rally was the 190.58-point drop in the Dow Jones Industrial Average.
[22428026] |"When you get panic in one market, you get flight to quality in the other," said Maria Ramirez, money market economist at Drexel Burnham Lambert Inc.

[22428027] |Nevertheless, the problems of the junk market could prompt the Federal Reserve to ease credit in the months ahead.
[22428028] |"This marks a significant shift in the interest rate outlook," says William Sullivan, director of money market research at Dean Witter Reynolds Inc., New York.

[22428029] |Any sustained credit-easing could be a lift for junk bonds as well as other securities.
[22428030] |Robert Dow, a partner and portfolio manager at Lord, Abbett & Co., which manages $4 billion of high-yield bonds, says he doesn't "think there is any fundamental economic rationale {for the junk bond rout}.
[22428031] |It was herd instinct."

[22428032] |He adds: "The junk market has witnessed some trouble and now some people think that if the equity market gets creamed that means the economy will be terrible and that's bad for junk.
[22428033] |I don't believe that's the case, but I believe that people are running scared.
[22428034] |There is a flight to quality, and the quality is not in equities and not in junk -- it's in Treasurys."

[22428035] |Even as trading in high-yield issues dried up over the past month, corporations sold more than $2 billion of new junk bonds.
[22428036] |For example, a recent $375 million offering of Petrolane Gas Services L.P. bonds sold by First Boston was three times oversubscribed.
[22428037] |A $550 million offering of Turner Broadcasting System Inc. high-yield securities sold last week by Drexel was increased $50 million because of strong demand.

[22428038] |First Boston estimates that in November and December alone, junk bond investors will receive $4.8 billion of coupon interest payments.
[22428039] |"That's a clear indication that there is and will be an undercurrent of basic business going on," says Mr. Carleton of First Boston.

[22428040] |"I don't know how people can say the junk bond market disappeared when there were $1.5 billion of orders for $550 million of junk bonds sold last week by Turner," says Raymond Minella, co-head of merchant banking at Merrill Lynch & Co.
[22428041] |"When the rally comes, insurance companies will be leading it because they have billions to invest and invest they will.
[22428042] |There is plenty of money available from people who want to buy well-structured deals; it's the stuff that's financed on a shoestring that people are wary of."

[22428043] |But such highly leveraged transactions seemed to have multiplied this year, casting a pall over much of the junk market.
[22428044] |Michael McNamara, director of fixed-income research at Kemper Financial Services, says the quality of junk issues has been getting poorer, contributing to the slide in prices.

[22428045] |"Last year we probably bought one out of every three new deals," he says.
[22428046] |"This year, at best, it's in one in every five or six.
[22428047] |And our credit standards haven't changed one iota."
[22428048] |However, Mr. McNamara said the slide in junk is creating "one hell of a buying opportunity" for selective buyers.

[22428049] |For the moment, investors seem more preoccupied with the "bad" junk than the "good" junk.
[22428050] |"The market has been weak since" the announcement of the Campeau cash squeeze and the company's subsequent bailout by Olympia & York, says Mr. Minella of Merrill Lynch.
[22428051] |"That really affected the market in that people started to ask 'What else is in trouble?'"

[22428052] |Well before Campeau, though, there were signs that the junk market was stumbling through one of its worst years ever.
[22428053] |Despite the relatively strong economy, junk bond prices did nothing except go down, hammered by a seemingly endless trail of bad news:

[22428054] |-- In June, two months before it would default on interest payments covering some of its $1.2 billion of speculative debt securities, New York-based Integrated Resources Inc. said it ran out of borrowed money.

[22428055] |-- In July, Southmark Corp., the Dallas-based real estate and financial services company with about $1.3 billion of junk bonds, voluntarily filed for protection under U.S. bankruptcy law.
[22428056] |-- By the end of July, the difference in yield between an index of junk bonds and seven-year Treasury notes widened to more than 5.5 percentage points.

[22428057] |-- In August, Resorts International Inc., which sold more than $500 million of junk bonds, suspended interest payments.

[22428058] |-- In September, just as the cash squeeze hit Campeau, Lomas Financial Corp. defaulted on $145 million of notes and appeared unlikely to pay interest on a total of $1.2 billion of debt securities.

[22428059] |Meantime, regulators are becoming increasingly worried as the rush to leverage shows no signs of abating.
[22428060] |Moody's says the frequency of corporate credit downgrades is the highest this year since 1982.
[22428061] |In addition, there are six times as many troubled banks as there were in the recession of 1981, according to the Federal Deposit Insurance Corp.

[22428062] |"The era of the 1980s is about compound interest and the reaching for it," says James Grant, editor of Grant's Interest Rate Observer, an early critic of the junk bond market.
[22428063] |"What we've begun to see is the damage to businesses of paying exorbitant compound interest.
[22428064] |Businesses were borrowing at interest rates higher than their own earnings.
[22428065] |What we're seeing now is the wrenching readjustment of asset values to a future when speculative-grade debt will be hard to obtain rather than easy."

[22428066] |Friday's Market Activity

[22428067] |Prices of Treasury bonds surged in the biggest rally of the year as investors fled a plummeting stock market.

[22428068] |The benchmark 30-year Treasury bond was quoted 6 p.m. EDT at 103 12/32, compared with 100 27/32 Thursday, up 2 1/2 points.
[22428069] |The yield on the benchmark fell to 7.82%, the lowest since March 31, 1987, according to Technical Data Global Markets Group.

[22428070] |The "flight to quality" began late in the day and followed a precipitous fall in the stock market.
[22428071] |Treasurys opened lower, reacting negatively to news that the producer price index -- a measure of inflation on the wholesale level -- accelerated in September.
[22428072] |Bond prices barely budged until midday.

[22428073] |Many bond market participants will be closely eying the action of the Federal Reserve, which might repeat its October 1987 injection of huge amounts of liquidity to buoy the financial markets and keep the economy from slowing into a recession.

[22428074] |Prices of municipals, investment-grade corporates and mortgage-backed bonds also rose, but lagged behind their Treasury counterparts.

[22428075] |Mortgage securities rose in hectic trading, with most of the activity concentrated in Government National Mortgage Association 9% coupon securities, the most liquid mortgage issue.

[22428076] |The Ginnie Mae November 9% issue ended at 98 25/32, up 7/8 point on the day, to yield about 9.28% to a 12-year average life assumption.

[22428077] |Investment-grade corporate bonds were up about 1/2 to 3/4 point.
[22428078] |But the yield spread between lower-quality, investment-grade issues and higher-quality bonds widened.

[22428079] |And the yields on telephone and utility issues rose relative to other investment-grade bonds in anticipation of this week's $3 billion bond offering by the Tennessee Valley Authority.

[22428080] |Despite rumors that the TVA's long-awaited offering would be postponed because of the debacle in the equity markets, sources in the underwriting syndicate said they expect the issue will be priced as scheduled.

[22428081] |One of the sources said the smaller portions of $750 million each of five-year and 10-year bonds have already been "substantially oversubscribed."

[22428082] |Municipal bonds rose as much as 3/4 point.

[22428083] |Roger Lowenstein contributed to this article.

[22429001] |Friday's 190-point plunge in stocks does not come atop the climate of anxiety that dominated financial markets just prior to their 1987 October crash, and mechanisms have been put in place to keep markets more orderly.
[22429002] |Still, the lesson is about the same: On Friday the 13th, the market was spooked by Washington.

[22429003] |The consensus along the street seems to be that the plunge was triggered by the financing problems of the UAL takeover, and it's certainly true the rout began immediately after the UAL trading halt.
[22429004] |Still, the consensus seems almost as wide that one faltering bid is no reason to write down the value of all U.S. business.
[22429005] |This observation leads us to another piece of news moving on the Dow Jones ticker shortly before the downturn: the success of Senate Democrats in stalling the capital gains tax cut.

[22429006] |The real value of all shares, after all, is directly impacted by the tax on any profits (all the more so given the limits on deductions for losses that show gains are not "ordinary income").
[22429007] |And market expectations clearly have been raised by the capital gains victory in the House last month.
[22429008] |An hour before Friday's plunge, that provision was stripped from the tax bill, leaving it with $5.4 billion in tax increases without a capital gains cut.

[22429009] |There is a great deal to be said, to be sure, for stripping the garbage out of the reconciliation bill.
[22429010] |It would be a good thing if Congress started to decide issues one-by-one on their individual merits without trickery.
[22429011] |For one thing, no one doubts that the capital gains cut would pass on an up-or-down vote.
[22429012] |Since Senate leaders have so far fogged it up with procedural smokescreens, promises of a cleaner bill are suspect.
[22429013] |Especially so since President Bush has been weakened by the Panama fiasco.

[22429014] |To the extent that the UAL troubles contributed to the plunge, they are another instance of Washington's sticky fingers.
[22429015] |As the best opportunities for corporate restructurings are exhausted of course, at some point the market will start to reject them.
[22429016] |But the airlines are scarcely a clear case, given anti-takeover mischief by Secretary of Transportation Skinner, who professes to believe safety will be compromised if KLM and British Airways own interests in companies that fly airplanes.

[22429017] |Worse, Congress has started to jump on the Skinner bandwagon.
[22429018] |James Oberstar, the Minnesota Democrat who chairs the Public Works and Transportation Committee's aviation subcommittee, has put an anti-airline takeover bill on supersonic speed so that it would be passed in time to affect the American and United Air Lines bids.
[22429019] |It would give Mr. Skinner up to 50 days to "review" any bid for 15% or more of the voting stock of any U.S. carrier with revenues of $1 billion or more.
[22429020] |So the UAL deal has problems, and the market loses 190 points.
[22429021] |Congratulations, Mr. Secretary and Mr. Congressman.

[22429022] |In the 1987 crash, remember, the market was shaken by a Danny Rostenkowski proposal to tax takeovers out of existance.
[22429023] |Even more important, in our view, was the Treasury's threat to thrash the dollar.
[22429024] |The Treasury is doing the same thing today; thankfully, the dollar is not under 1987-style pressure.

[22429025] |Also, traders are in better shape today than in 1987 to survive selling binges.
[22429026] |They are better capitalized.
[22429027] |They are in less danger of losing liquidity simply because of tape lags and clearing and settlement delays.
[22429028] |The Fed promises any needed liquidity.
[22429029] |The Big Board's liaison with the Chicago Board of Trade has improved; it will be interesting to learn if "circuit breakers" prove to be a good idea.
[22429030] |In any event, some traders see stocks as underpriced today, unlike 1987.

[22429031] |There is nothing wrong with the market that can't be cured by a little coherence and common sense in Washington.
[22429032] |But on the bearish side, that may be too much to expect.

[22430001] |First Chicago Corp. posted a third-quarter loss of $23.3 million after joining other big banks in further adding to its reserves for losses on foreign loans.

[22430002] |The parent company of First National Bank of Chicago, with $48 billion in assets, said it set aside $200 million to absorb losses on loans and investments in financially troubled countries.
[22430003] |The addition, on top of two big 1987 additions to foreign-loan reserves, brings the reserve to a level equaling 79% of medium-term and long-term loans outstanding to troubled nations.

[22430004] |First Chicago since 1987 has reduced its loans to such nations to $1.7 billion from $3 billion.

[22430005] |Despite this loss, First Chicago said it doesn't need to sell stock to raise capital.
[22430006] |During the quarter, the company realized a pretax gain of $60.4 million from the sale of its First Chicago Investment Advisors unit.

[22430007] |Combined foreign exchange and bond trading profits dipped 24% against last year's third quarter, to $38.2 million from $50.5 million.
[22430008] |Gains from First Chicago's venture capital unit, a big leveraged buy-out investor, rose 32% to $34 million from $25.7 million a year ago.

[22430009] |Interest income and most fee income was strong.

[22431001] |Greece's second bout of general elections this year is slated for Nov. 5.
[22431002] |For those hoping to see a modicum of political normalcy restored -- in view of Greece's eight-year misadventure under autocratic pseudosocialism and subsequent three-month hitch with a conservative-communist coalition government -- there is but one bright sign: The scandals still encircling former Prime Minister Andreas Papandreou and his fallen socialist government are like flies buzzing around a rotting carcass.

[22431003] |In the mid-June round of voting, Greeks gave no clear mandate to any single political party.
[22431004] |The ad interim coalition government that emerged from post-electoral hagglings was, in essence, little more than the ill-conceived offspring of ideological miscegenation: On one side, the center-right New Democracy Party, headed by Constantine Mitsotakis.
[22431005] |On the other, the so-called Coalition of the Left and Progress -- a quaint and rather deceptive title for a merger of the pro-Soviet Communist Party of Greece and its Euro-Communist cousin, the Hellenic Left.

[22431006] |The unifying bond for this left-right mismatch was plain: PASOK (Mr. Papandreou's party) as common political enemy.
[22431007] |The ostensible goal was a mop-up of government corruption, purportedly at all levels, but the main marks were Mr. Papandreou and his closest associates.
[22431008] |In point of fact, this catharsis was overdue by decades.
[22431009] |When reduced to buzzword status in ex parte pledges, however, the notion transmogrified into a promised assault, with targets primarily for political gains, not justice.

[22431010] |With regard to Greece's long-bubbling bank-looting scandal, Mr. Papandreou's principal accuser remains George Koskotas, former owner of the Bank of Crete and self-confessed embezzler, now residing in a jail cell in Salem, Mass., from where he is fighting extradition proceedings that would return him to Greece.
[22431011] |Mr. Koskotas's credibility is, at best, problematic.
[22431012] |He has ample motive to shift the blame, and his testimony has also been found less than forthright on numerous points.
[22431013] |Nevertheless, the New Democracy and Communist parties herald his assertions as proof of PASOK complicity.

[22431014] |Among unanswered questions are whether Mr. Papandreou received $23 million of stolen Bank of Crete funds and an additional $734,000 in bribes, as contended; whether the prime minister ordered state agencies to deposit some $57 million in Mr. Koskotas's bank and then skim off the interest; and, what PASOK's cut was from the $210 million Mr. Koskotas pinched.

[22431015] |Two former ministers were so heavily implicated in the Koskotas affair that PASOK members of Parliament voted to refer them to the special court.
[22431016] |But eluding parliamentary probe was the case of millions of drachmas Mr. Koskotas funneled into New Democracy coffers.
[22431017] |In the end, the investigation produced only circumstantial evidence and "indications" that point to PASOK, not clinching proof.

[22431018] |On another issue, Greeks were told how their national intelligence agency, the EYP, regularly monitored the telephone conversations of prominent figures, including key opposition politicians, journalists and PASOK cabinet members.
[22431019] |Despite convincing arguments, it was never established that Mr. Papandreou personally ordered or directed the wiretaps.

[22431020] |The central weakness of the "scandals" debates was pointed up especially well when discussions focused on arms deals and kickbacks.
[22431021] |The coalition government tried to show that PASOK ministers had received hefty sums for OKing the purchase of F-16 Fighting Falcon and Mirage 2000 combat aircraft, produced by the U.S.based General Dynamics Corp. and France's Avions Marcel Dassault, respectively.
[22431022] |Naturally, neither General Dynamics nor Dassault could be expected to hamper its prospective future dealings by making disclosures of sums paid (or not) to various Greek officials for services rendered.

[22431023] |So it seems that Mr. Mitsotakis and his communist chums may have unwittingly served Mr. Papandreou a moral victory on a platter: PASOK, whether guilty or not, can now traipse the countryside condemning the whole affair as a witch hunt at Mr. Papandreou's expense.
[22431024] |But while verbal high jinks alone won't help PASOK regain power, Mr. Papandreou should never be underestimated.
[22431025] |First came his predictable fusillade: He charged the Coalition of the Left and Progress had sold out its leftist tenets by collaborating in a right-wing plot aimed at ousting PASOK and thwarting the course of socialism in Greece.

[22431026] |Then, to buttress his credibility with the left, he enticed some smaller leftist parties to stand for election under the PASOK banner.
[22431027] |Next, he continued to court the communists -- many of whom feel betrayed by the left-right coalition's birth -- by bringing into PASOK a well-respected Communist Party candidate.
[22431028] |For balance, and in hopes of gaining some disaffected centrist votes, he managed to attract a former New Democracy Party representative and known political enemy of Mr. Mitsotakis.
[22431029] |Thus PASOK heads for the polls not only with diminished scandal-stench, but also with "seals of approval" from representatives of its harshest accusers.

[22431030] |Crucial as these elections are for Greece, pressing issues of state are getting lost in the shuffle.
[22431031] |The country's future NATO participation remains unsure, for instance.
[22431032] |Greece also must revamp major pieces of legislation in preparation for the 1992 targets of heightened Common Market cooperation.
[22431033] |Greece's bilateral relations with the U.S. need attention soon as well.
[22431034] |For one, the current accord concerning U.S. military bases in Greece lapses in May 1990.
[22431035] |Negotiations for a new agreement were frozen before the June elections, but the clock is running.

[22431036] |Another matter of concern is the extradition of Mohammed Rashid, a Palestinian terrorist who is wanted in the U.S. for the 1982 bombing of a Pan American Airways flight.
[22431037] |The Greek courts have decided in favor of extradition in the Rashid case, but the matter awaits final approval from Greece's next justice minister.
[22431038] |The Greeks seem barely aware of the importance of the case as a litmus test of whether Greece will be counted in or out for international efforts to combat terrorism.

[22431039] |That PASOK could win the elections outright is improbable; the Greek press, previously eager to palm off PASOK's line, has turned on Mr. Papandreou with a wild-eyed vengeance.
[22431040] |Yet the possibility of another lash-up government is all too real.
[22431041] |If Mr. Papandreou becomes the major opposition leader, he could hamstring a conservative-led coalition.
[22431042] |Also, he could force new elections early next year by frustrating the procedures for the election of the president of the republic in March.

[22431043] |New Democracy has once again glaringly underestimated the opponent and linked its own prospects to negative reaction against PASOK, forgetting to tend to either program clarity or the rectification of internal squabbles.

[22431044] |As for Mr. Papandreou?
[22431045] |He's not exactly sitting pretty at this stage.
[22431046] |But since he is undoubtedly one of the most proficient bull slingers who ever raked muck, it seems far wiser to view him as sidelined, but certainly not yet eliminated.

[22431047] |Mr. Carpenter, a regional correspondent for National Review, has lived in Athens since 1981.

[22432001] |U.S. OFFICIALS MOVED to head off any repeat of Black Monday today following Friday's plunge in stock prices.
[22432002] |Fed Chairman Greenspan signaled that the central bank was prepared to inject massive amounts of money into the banking system to prevent a financial crisis.
[22432003] |Other U.S. and foreign officials also mapped out plans, though they kept their moves quiet to avoid making the financial markets more jittery.

[22432004] |Friday's sell-off was triggered by the collapse of UAL's buy-out plan and a big rise in producer prices.
[22432005] |The Dow Jones industrials skidded 190.58, to 2569.26.
[22432006] |The junk bond market came to a standstill, while Treasury bonds soared and the dollar fell.

[22432007] |Japanese stocks dropped early Monday, but by late morning were turning around.
[22432008] |The dollar was trading sharply lower in Tokyo.

[22432009] |Prospects for a new UAL buy-out proposal appear bleak.
[22432010] |Many banks refused to back the $6.79 billion transaction, but bankers said it was not from any unwillingness to finance takeovers.
[22432011] |The decision was based solely on problems with the UAL management-pilot plan, they said.

[22432012] |The surge in producer prices in September followed three months of declines, but analysts were divided on whether the 0.9% jump signaled a severe worsening of inflation.
[22432013] |Also, retail sales grew 0.5% last month.

[22432014] |A capital-gains tax cut was removed from the Senate's deficit reduction bill, but proponents still hope to enact the cut this year.
[22432015] |Bush won't press for a capital-gains provision in the final deficit bill when House-Senate conferees meet later this week.

[22432016] |General Motors signaled that up to five North American assembly plants may close by the mid-1990s as it tries to cut excess capacity.

[22432017] |U.S. car and truck sales fell 12.6% in early October, the first sales period of the 1990-model year, dragged down by a sharp decline in GM sales.

[22432018] |Warner and Sony are entangled in a legal battle over movie producers Peter Gruber and Jon Peters.
[22432019] |The fight could set back Sony's plans to enter the U.S. movie business.

[22432020] |Hooker's U.S. unit received a $409 million bid for most of its real-estate and shopping-center assets from an investor group.
[22432021] |The offer doesn't include Bonwit Teller or B. Altman.

[22432022] |The Boeing strike is starting to affect airlines.
[22432023] |America West said Friday it will postpone its new service out of Houston because of delays in receiving aircraft from Boeing.

[22432024] |Saatchi & Saatchi would launch a management buy-out if a hostile suitor emerged, an official said.

[22432025] |British Aerospace and France's Thomson-CSF are nearing a pact to merge guided-missile divisions.

[22432026] |New U.S. steel-import quotas will give a bigger share to developing nations that have relatively unsubsidized steel industries.
[22432027] |Japan's steel quota will be cut significantly.

[22432028] |Four ailing S&Ls were sold off by government regulators, but low bids prevented the sale of a fifth.

[22432029] |Markets --

[22432030] |Stocks: Volume 251,170,000 shares.
[22432031] |Dow Jones industrials 2569.26, off 190.58; transportation 1406.29, off 78.06; utilities 211.96, off 7.29.

[22432032] |Bonds: Shearson Lehman Hutton Treasury index 3421.29, up

[22432033] |Commodities: Dow Jones futures index 129.87, up 0.01; spot index 129.25, up 0.28.

[22432034] |Dollar: 142.10 yen, off 2.07; 1.8740 marks, off 0.0343.

[22433001] |A federal appeals court in San Francisco ruled that shareholders can't hold corporate officials liable for false sales projections on new products if the news media concurrently revealed substantial information about the product's flaws.

[22433002] |The ruling stems from a 1984 suit filed by shareholders of Apple Computer Inc., claiming that company officials misled investors about the expected success of the Lisa computer, introduced in 1983.

[22433003] |Lawyers specializing in shareholder suits said they are concerned that use of the "press defense" by corporations may become popular as a result of the ruling.

[22433004] |According to the suit, Apple officials created public excitement by touting Lisa as an office computer that would revolutionize the workplace and be extremely successful in its first year.
[22433005] |The plaintiffs also alleged that prior to the fanfare, the company circulated internal memos indicating problems with Lisa.

[22433006] |The suit claimed Apple's stock climbed to a high of $63.50 a share on the basis of the company's optimistic forecasts.
[22433007] |But when the company revealed Lisa's poor sales late in 1983, the stock plummeted to a low of $17.37 a share, according to the suit.
[22433008] |The shareholders claimed more than $150 million in losses.

[22433009] |In 1987, the San Francisco district court dismissed the case largely because newspaper reports had sufficiently counterbalanced the company's statements by alerting consumers to Lisa's problems.

[22433010] |Late last month, the appeals court agreed that most of the case should be dismissed.
[22433011] |However, it gave the shareholders the right to pursue a small portion of their claim that pertains to Lisa's disk drive, known as Twiggy.
[22433012] |The court ruled that the news media didn't reveal Twiggy's problems at the time.

[22433013] |Lawyers are worried about the ruling's implication in other shareholder suits but pointed out that the court stressed that the ruling should be regarded as very specific to the Apple case.

[22433014] |"The court was careful to say that the adverse information appeared in the very same articles and received the same attention as the company's statements," said Patrick Grannon, a Los Angeles lawyer at the firm of Greenfield & Chimicles, which wasn't involved in the case.
[22433015] |"The court is saying that the adverse facts have to be transferred to the market with equal intensity and credibility as the statements of corporate insiders."

[22433016] |Shareholders' attorneys at the New York firm of Milberg, Weiss, Bershad, Specthrie & Lerach last week petitioned for a rehearing of the case.
[22433017] |They wrote: "The opinion establishes a new rule of immunity -- that if a wide variety of opinions on a company's business are publicly reported, the company can say anything without fear of securities liability."

[22433018] |NFL ORDERED to pay $5.5 million in legal fees to defunct

[22433019] |The National Football League is considering appealing the ruling stemming from the U.S. Football League's largely unsuccessful antitrust suit against the NFL.

[22433020] |A jury in 1986 agreed with the USFL's claims that the NFL monopolized major league football.
[22433021] |But the jury awarded the USFL only $1 in damages, trebled because of the antitrust claims.

[22433022] |Last week, the U.S. Court of Appeals in New York upheld a $5.5 million award of attorneys fees to the defunct league.
[22433023] |Harvey D. Myerson, of Myerson & Kuhn, then of Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey, was the lead trial lawyer, and his new firm pursued the application appeal.
[22433024] |Douglas R. Pappas of Myerson & Kuhn says about $5.3 million of the award goes directly to the USFL to reimburse it for fees already paid.
[22433025] |Myerson & Kuhn will get about $260,000 for the costs of pressing the application.

[22433026] |The federal appeals court held that the nominal damages and the failure to prove all claims didn't exclude the USFL from being reimbursed.
[22433027] |Antitrust laws provide that injured parties may be reimbursed for lawyers' fees.

[22433028] |But Shepard Goldfein, an attorney for the NFL, says his client will consider asking for another hearing or appealing to the U.S. Supreme Court.
[22433029] |Mr. Goldfein, of Skadden, Arps, Slate, Meagher & Flom in New York, says the ruling is wrong and the fee award is excessive because the USFL lost its major claims, including its contention that the NFL restrained trade through television contracts.

[22433030] |"The USFL was not the prevailing party," Mr. Goldfein insists.

[22433031] |HOUSTON-CALGARY ALLIANCE:
[22433032] |Fulbright & Jaworski of Houston and Fenerty, Robertson, Fraser & Hatch of Calgary, Alberta, are affiliating to help serve their energy-industry clients.
[22433033] |The affiliation is believed to be the first such cross-border arrangement among major law firms.
[22433034] |The firms aren't required to refer work exclusively to each other and remain separate organizations.
[22433035] |But they will work together on energy-, environmental- and fair-trade-related issues and conduct seminars on topics of mutual interest, said Gibson Gayle Jr. of 585-lawyer Fulbright & Jaworski.
[22433036] |In addition, Fulbright & Jaworski's Washington, D.C., office will play a key role as the firms work together on regulatory issues, particularly natural-gas exports, for their clients.
[22433037] |The arrangement, reached after about eight months of negotiations, grew out of 80-lawyer Fenerty Robertson's desire to develop ties with a U.S. firm in light of relaxed trade barriers between the U.S. and Canada, said Francis M. Saville of Fenerty Robertson.

[22433038] |IN WHAT MAY SIGNAL a turnaround for asbestos manufacturers, W.R. Grace & Co. won a 3 1/2-week trial in Pittsburgh over whether it should be required to remove asbestos fireproofing from a local high school.
[22433039] |Mount Lebanon High School, near Pittsburgh, sought $21 million in compensatory damages from Grace, arguing that the asbestos, which can cause respiratory diseases and lung cancer, posed a risk to students.
[22433040] |Grace successfully contended that removing the fire retardant would pose a greater health risk than leaving it alone.
[22433041] |A spokesman for the company said the verdict is thought to be the first in favor of an asbestos manufacturer where the plaintiff was a school and the asbestos in question was used for fireproofing.

[22433042] |FCC COUNSEL JOINS FIRM:
[22433043] |Diane S. Killory will join 500-lawyer Morrison & Foerster as a partner in its Washington, D.C., office in mid-November.
[22433044] |She will help develop the mass-media practice of the San Francisco-based firm's communications group.
[22433045] |Ms. Killory, 35 years old, resigned as Federal Communications Commission general counsel early this month after nearly three years in that post.
[22433046] |She was the first woman to be appointed FCC general counsel.

[22433047] |RICHARD P. MAGURNO, formerly Eastern Airlines' top lawyer, joined the New York law firm of Lord Day & Lord, Barrett Smith as a partner.
[22433048] |Mr. Magurno, 45, spent 17 years at the Miami airline unit of Houston-based Texas Air Corp. and was named general counsel in 1984.
[22433049] |He left the company in 1987.
[22433050] |Mr. Magurno said he will split his time between the 200-lawyer firm's offices in Washington, D.C., and New York, with specialties in aviation and labor law.

[22434001] |Apple Computer Inc. said it will offer cash rebates on several of its machines from Oct. 14 to Dec. 31., as part of a holiday-season sales promotion.

[22434002] |Apple will offer a $150 rebate on its Apple IIGS with any Apple Monitor and disk drive; $200 on the basic Macintosh Plus central processing unit; $250 on the Macintosh SE central processing unit; $250 on the Macintosh SE/30 cpu, and $300 on a Macintosh IIcx with any Apple video card and Apple monitor.
[22434003] |The rebates, as a percentage of the retail cost of the cpu of each system, amount to 6% to 13%.

[22434004] |The company is also offering a free trial of its computers to consumers who qualify for its credit cards or leases.

[22435001] |Matsushita Electric Industrial Co. of Japan and Siemens AG of West Germany announced they have completed a 100 million-mark ($52.2 million) joint venture to produce electronics parts.

[22435002] |In the venture's first fiscal year, Siemens will hold 74.9% of the venture and a Matsushita subsidiary, Matsushita Electronic Components Co., 25.1%.

[22435003] |A basic agreement between the two companies was announced in June.

[22435004] |The new company is to be called Siemens Matsushita Components G.m.b.H.
[22435005] |It will have its headquarters in Munich.

[22435006] |Matsushita's share in the venture will rise to 35% Oct. 1, 1990, and to 50% the following Oct. 1.
[22435007] |Siemens will retain majority voting rights.

[22435008] |The parent companies forecast sales for the venture of around 750 million marks for its first fiscal year, Matsushita said.
[22435009] |Sales are expected to rise to one billion marks after four years.
[22435010] |The company will have production facilities in West Germany, Austria, France and Spain.

[22436001] |Roger Rosenblatt, editor of U.S. News & World Report, resigned Friday from the weekly news magazine.

[22436002] |Mr. Rosenblatt said he resigned because of difficulties with commuting between his home in New York and the magazine's editorial offices in Washington.
[22436003] |"Frankly, I missed my family," said Mr. Rosenblatt.

[22436004] |In Mr. Rosenblatt's tenure, the magazine's advertising pages and circulation have grown significantly.
[22436005] |But at 2.3 million weekly paid circulation, U.S. News still ranks third behind Time Warner Inc.'s Time magazine, with 4.4 million circulation, and Washington Post Co.'s Newsweek, with 3.3 million circulation.

[22436006] |Mortimer B. Zuckerman, chairman and editor in chief, said Mr. Rosenblatt would be succeeded starting today by Michael Ruby, the magazine's executive editor, and Merrill McLoughlin, a senior writer.
[22436007] |Mr. Ruby and Ms. McLoughlin are married to each other.
[22436008] |Mr. Zuckerman said his magazine would maintain its editorial format, which is a mix of analysis and trend stories with service-oriented, how-to articles.

[22436009] |Mr. Rosenblatt, a senior writer at Time magazine before joining U.S. News & World Report, said he had numerous job offers from other magazines while he was editor.
[22436010] |The offers were to work as a writer, not an editor.
[22436011] |He said he will now consider those offers.

[22437001] |Avions Marcel Dassault-Breguet Aviation S.A. said group profit before taxes and contributions to employee profit-sharing soared 97% to 839 million francs ($129.6 million) in the first half of 1989 from 425 million francs a year earlier.

[22437002] |The French aircraft group pointed out, however, that financial results from its sector of industry are frequently erratic because of irregular cash flow from large contracts.

[22437003] |It noted, for example, that group revenue for the first half was 8.734 billion francs, down about 12% from 9.934 billion francs a year earlier.
[22437004] |Still, it said it expects sales for all of 1989 to be on the order of 20 billion francs, reflecting anticipated billings for two large contracts in the second half of the year.

[22437005] |For all of 1988, Dassault had group profit of 428 million francs on revenue of 18.819 billion francs.
[22437006] |The group hasn't yet released earnings figures for the first half of 1989, nor has it made a detailed forecast of its full-year earnings.

[22438001] |Keystone Consolidated Industries Inc. expects to report earnings before extraordinary tax benefits of about $1.5 million, or about 41 cents a share, for the third quarter, compared with a loss last year, said Glenn R. Simmons, chairman and chief executive officer.

[22438002] |After a tax benefit of about $780,000, Keystone expects to report net income of $2.3 million, or about 62 cents a share, Mr. Simmons said.
[22438003] |For third quarter last year, Keystone reported a $1 million loss from continuing operations and a $200,000 loss from discontinued operations, for a net loss of $1.2 million.

[22438004] |Revenue for the latest third quarter was about $70.5 million, up 10% from $63.6 million last year, he said.

[22438005] |Mr. Simmons said the results signal a turnaround for the maker of wire and wire products, which has struggled to remain competitive in the face of lower-priced, imported steel.
[22438006] |A new $46 million steel rod minimill, which got off to a rocky start in early 1988, now is running efficiently and a new management team is more heavily marketing Keystone's products, Mr. Simmons said.

[22438007] |As a result, the company hopes to report net income for the year of about $11.6 million, or about $3.10 to $3.15 a share, compared with a net loss of $24.4 million last year, after a loss from discontinued operations of $18.4 million.
[22438008] |Revenue for 1989 is expected to be about $300 million, up about 21% from $247.3 million in 1988.

[22438009] |For the nine months ended Sept. 30, Keystone expects to report net income of $9.3 milion, or about $2.53 a share, after an extraordinary gain from $3.2 million in tax benefits.
[22438010] |Last year, the company had a net loss of $6.5 million, including a $6.1 million loss from continuing operations and a $400,000 loss from discontinued operations.
[22438011] |Revenue for the nine months is expected to be about $230.5 million, up about 21% from $190.4 million last year.

[22438012] |Mr. Simmons said Keystone's new mill is expected to produce about 585,000 tons of steel rods this year, up from 413,000 tons in 1988.
[22438013] |Production at the mill has exceeded the ability of Keystone's casting operation to supply it, he said, which will force Keystone to purchase billet, or unfinished steel bars, from outside the company during the fourth quarter and next year.

[22438014] |Keystone will have to consider expanding its casting operation, at an estimated cost of $8 million to $10 million, within the next 18 to 24 months, Mr. Simmons said.

[22438015] |Under Robert W. Singer, who was named president and chief operating officer last year, Keystone has expanded its sales force to about 20 people from about 15 and hopes to expand its sales from the middle portion of the country toward the East and West coasts.

[22438016] |"Prior to a year ago, Keystone was an order-taker.
[22438017] |Now I think we have a group of marketing people who are out selling to retailers and wholesalers," Mr. Simmons said.

[22438018] |Still, he said, the 100-year-old company plans to continue its premium-priced strategy for its distinctive brand of red-tipped wire fencing and other products.
[22438019] |The company claims a 40% share of the U.S. field fence business, a 35% share of poultry netting sales and a 30% share of barbed wire sales.

[22439001] |Freeport-McMoRan Inc. said a temporary cessation of operations at its Sunshine Bridge uranium-recovery facility in Donaldsonville, La., will result in slight earnings improvement to both the company and its Freeport-McMoRan Resource Partners Limited Partnership unit.
[22439002] |The company didn't elaborate.

[22439003] |The diversified energy and minerals concern said that a depressed uranium market is responsible for the temporary mothballing of the plant, but that the plant can be reactivated quickly when the market improves.
[22439004] |More than 400,000 pounds of uranium a year have been produced at the facility during the past seven years.
[22439005] |A second uranium-recovery plant at Uncle Sam, La., that produces more than 700,000 pounds of uranium annually, will continue to operate.

[22439006] |Freeport-McMoRan said the shutdown won't affect sales volumes under long-term sales contracts of its Freeport Uranium Recovery Co. unit, but will reduce the amount of product sold on the spot market.
[22439007] |Freeport-McMoRan Resource Partners, as owner of the uranium-recovery technology, receives royalty payments.

[22440001] |Business Week subscribers may hear this week's issue talking back to them.

[22440002] |A four-page ad from Texas Instruments Inc., running in approximately 140,000 issues of the Oct. 20 "Corporate Elite" issue of the McGraw-Hill Inc. publication, contains a speech synthesizer laminated between two of the pages.
[22440003] |Readers who pull off a piece of tape and press a switch will hear a tiny -- but distinctly human-sounding -- voice announce, "I am the talking chip," as it launches into a 15-second discourse on its own attributes.

[22440004] |The talking chip isn't cheap -- the per-ad cost to Texas Instruments is about $4, and that's without adding in Business Week's charge -- but Texas Instruments believes it is a first.
[22440005] |Previous efforts have included musical ads, featuring simple tone-generating chips that play a tune, but the voice synthesizer in this effort is much more sophisticated, with none of the robotic flatness that one hears, for example, when calling telephone directory services.

[22440006] |And for those who miss the message the first time around, not to worry: Three tiny batteries provide enough juice for as many as 650 replays.

[22441001] |Lomas Financial Corp., Dallas, said it will ask a U.S. bankruptcy court to allow it to hire Lazard Freres & Co. to help it sell its leasing unit.

[22441002] |Lomas, assisted by Merrill Lynch Capital Markets, has been trying to sell its Equitable Lomas Leasing Co. for several months, apparently without success.

[22441003] |The real estate and mortgage banking concern had hoped to use proceeds from the sale to reduce its debt.
[22441004] |Without cash from asset sales and unable to reach a new bank-credit agreement, Lomas defaulted on $145 million in notes that became due Sept. 1.
[22441005] |It filed for protection from creditors under Chapter 11 of the federal Bankruptcy Code Sept. 24 to give it additional time to work on a plan to restructure its $1.45 billion in senior debt.

[22441006] |Lomas said Merrill Lynch, which owns bonds and equity in Lomas, couldn't continue as Lomas's investment banker because it is also a creditor.
[22441007] |It said it chose Lazard in part because of Lazard's offices in Europe and Japan, where investors might be interested in a U.S. leasing company.

[22442001] |Canadian Imperial Bank of Commerce said it will increase its loan-loss provisions to cover all its loans to lesser developed countries, except Mexico, resulting in an after-tax charge to 1989 earnings of 300 million Canadian dollars (US$255 million).

[22442002] |Don Bowder, senior vice president and chief accountant, said the bank's strong earnings enable it to be the first major Canadian bank to set aside provisions covering all its C$1.17 billion in non-Mexican LDC debt.

[22442003] |"It eliminates the continuing uncertainty with respect to the ultimate value of the loans," he said.

[22442004] |The bank said about C$525 million will be added to its existing LDC and general loss provisions in its fourth quarter, ending Oct. 31.
[22442005] |Mr. Bowder said the C$300 million charge to earnings would amount to about C$1.34 a share.
[22442006] |The bank's net income for the nine months ended July 31 was C$577 million, or C$3.10 a share.

[22442007] |Mr. Bowder said the bank will restructure its C$604 million of Mexican debt, of which C$255 million is in Mexican notes secured by U.S. government bonds.
[22442008] |The bank has a 45% reserve against the remaining C$349 million of Mexican debt and expects to swap that for other Mexican notes supported by U.S. Treasury zero-coupon bonds.

[22442009] |Mr. Bowder said the bank's experience with LDC debt has been "painful" and this latest move represents the final phase of a program begun seven years ago to reduce its exposure through provisioning, debt sales and debt swaps.
[22442010] |He said the bank will no longer participate in LDC sovereign lending, but will support trade financing and other transactions that meet the bank's standards.

[22443001] |The carnage among takeover stocks Friday doesn't mean the end of mega-mergers but simply marks the start of a less ambitious game, Wall Street's big-time deal makers say.

[22443002] |Suitors from now on are more likely to be expansion-minded companies, rather than raiders or debt-happy financiers.
[22443003] |And they will be launching lower-priced and perhaps fewer deals, now that it's tougher to finance them.

[22443004] |This is an ominous sign for a stock market that lately has been fueled by takeover speculation and bidding wars for companies that put themselves up for sale.
[22443005] |Whenever the 1980s merger boom seems to be stalling, shock waves ripple through the stock market.

[22443006] |"The market is overvalued, not cheap," says Alan Gaines of the New York money-management firm Gaines Berland.
[22443007] |He recently began increasing his cash position to 45% of his portfolio.
[22443008] |"I look at where deals can get done," he says, "and they're not getting done" at current prices.

[22443009] |Lenders are growing increasingly nervous about debt-financed takeovers, investment bankers say.
[22443010] |"You had a week of a deteriorating junk-bond market that ran smack into the news on Friday about what appeared to be happening to the bank debt market," says Steven Rattner, a partner and merger specialist with Lazard Freres & Co.

[22443011] |Trading dried up Friday in the market for high-yield junk bonds, often used to finance takeovers.
[22443012] |It was the latest in a series of setbacks for the junk bond market, where prices began weakening last month after Campeau hit a cash crunch.

[22443013] |And banks appear to be taking an increasingly skeptical view of requests for high-risk takeover loans.
[22443014] |The group trying to buy UAL announced Friday that it couldn't arrange the $7.2 billion in bank loans it needs to buy the parent of United Airlines for $300 a share.

[22443015] |Takeover-stock traders today will be scrambling to learn of any UAL developments, and other takeover stocks are likely to trade in sympathy.
[22443016] |Investment bankers representing the buy-out group and UAL's board spent a frantic weekend trying to hammer out new terms that would be more acceptable to the banks.

[22443017] |After UAL, the stock viewed as most vulnerable is American Airlines' parent AMR, the target of a $120-a-share takeover proposal from New York real estate developer Donald Trump.
[22443018] |Trading in AMR shares was suspended shortly after 3 p.m. EDT Friday and didn't resume.
[22443019] |Before the halt, AMR last traded at 98 5/8.
[22443020] |Late Friday night, the London office of Jefferies & Co., a Los Angeles securities firm, traded AMR shares at prices as low as 80.
[22443021] |Similarly, Delta Air Lines and USAir Group dropped 10.1% and 8.5%, respectively, on Friday and could weaken further.

[22443022] |Over the weeked, however, two developments in other deals indicated that commerical banks and Wall Street firms still are willing to commit billions of dollars to finance takeover bids launched by major companies.

[22443023] |Vitro S.A., a major Mexican glass maker, said yesterday that it agreed to buy Anchor Glass Container in a tender offer for $21.25 a share, sweetened from the original $20-a-share offer Vitro launched two months ago.
[22443024] |On Friday, Anchor shares fell 1 1/4 to close at 18 1/2.

[22443025] |For the broader market, the greatest significance of the Vitro-Anchor deal may be that it was put together late Friday night -- after the market rout -- and involves a $155 million temporary "bridge" loan from Donaldson, Lufkin & Jenrette Securities and a $139 million loan from Security Pacific National Bank.

[22443026] |Moreover, to complete the entire Anchor Glass purchase and refinance existing debt, Donaldson said it is "highly confident" that it will be able to sell $400 million of junk bonds for Vitro, despite the current disarray in the junk bond market.
[22443027] |Donaldson's statement isn't merely an idle boast, because those bonds will have to be sold before Donaldson's bridge loan can be paid back.
[22443028] |Security Pacific, meanwhile, said it expects to arrange $430 million in bank loans for Vitro.

[22443029] |In another takeover battle, a spokesman for McCaw Cellular Communications said yesterday that McCaw has been advised by three commercial banks that they remain "highly confident" they can arrange $4.5 billion of bank loans for McCaw's tender offer for about 45% of LIN Broadcasting, "notwithstanding recent events."

[22443030] |McCaw is offering $125 a share for 22 million LIN shares, thereby challenging LIN's proposal to spin off its television properties, pay shareholders a $20-a-share special dividend and combine its cellular-telephone operations with BellSouth's cellular business.

[22443031] |On Friday, LIN shares were among the few takeover issues that didn't fall much, dropping 5 1/2, or 4.9%, to close at 107 1/2.
[22443032] |Traders and investment bankers said LIN shares weren't hurt much because BellSouth is viewed as a well-financed corporate buyer unlikely to be affected by skittishness among bankers or bond buyers.

[22443033] |Investment bankers interviewed over the weekend see a silver lining for the merger business in the stock-market drop.
[22443034] |Potential bidders for companies "were saying that things were beginning to look expensive," says Mr. Rattner of Lazard.

[22443035] |"Nothing makes things look cheaper than a 200-point drop in the Dow," Mr. Rattner says.
[22443036] |"Just as there are people waiting to become bargain hunters in the stock market, there are people waiting to become bargain hunters in the deal market."

[22443037] |Investment bankers expect most of those bargain hunters to be well-heeled corporations.

[22443038] |"In the past, corporate buyers were often discouraged from making bids because of competition from LBO firms, which were often prepared to outbid" the corporations, says J. Tomilson Hill, head of mergers and acquisitions at Shearson Lehman Hutton.
[22443039] |Now, "corporate buyers should be willing to re-enter the acquisition market because the competition from junkbond-financed buyers has been reduced."

[22443040] |Many takeover stocks plunged Friday, as speculators retained their confidence in corporate buyers but fled from the socalled whisper stocks, the targets of rumored deals.

[22443041] |Columbia Pictures Entertainment, which has agreed to a friendly $27-a-share bid from Sony of Japan, fell only 1/8 to close at 26 5/8.

[22443042] |But several stocks long rumored to be ripe for a takeover or restructuring fell 10% or more.
[22443043] |They include USX, down 11.7%; Upjohn, down 11.1%; Campbell Soup, down 11%; Paramount Communications, off 10.3%; Woolworth, down 10.2%; Delta Air Lines, down 10.1%, and MCA, down 9.7%.

[22443044] |The market -- and investment bankers -- are even less sanguine about companies that have had at least one bid, merger agreement or restructuring plan fall through already.
[22443045] |Given the weakness in both the junk bond market and the stock market, traders fear that these transactions may be revised yet again.

[22443046] |Examples include Kollmorgen, whose agreement to be acquired for $25 a share by Vernitron collapsed last month.
[22443047] |Kollmorgen shares fell nearly 20% on Friday to close at 12 7/8.

[22443048] |Ramada, which first delayed and then shelved a $400 million junk bond sale that was designed to help finance a restructuring, fell 15.6% to close at 9 1/2.
[22443049] |Ramada has said it hopes to propose a new restructuring plan but hasn't indicated when it will do so.

[22443050] |Shares of American Medical International, which agreed last week to accept a lower price from a buy-out group that includes First Boston Corp. and the Pritzker family of Chicago, fell 15.8% on Friday to close at 20.
[22443051] |The buy-out group is offering $26.50 a share for 63 million American Medical shares, down from its offer in July of $28 a share for 68.8 million shares.

[22443052] |But investment bankers say the market may have oversold some takeover-related stocks.
[22443053] |Hilton Hotels, for example, was among the worst-hit issues, falling 20.2% to close at 85, down 21 1/2 on Friday.

[22443054] |Hilton currently is soliciting bids for a sale of part or all of its hotel and casino businesses.
[22443055] |People familiar with Hilton said over the weekend that the depth of the sell-off in Hilton shares was unwarranted because none of the likely buyers would be dependent on junk-bond financing.
[22443056] |However, they conceded that some potential bidders would rely on bank loans and would be hurt if the troubles of the UAL buy-out group signified a general unwillingness among banks to provide credit for debt-financed takeovers.

[22443057] |Hilton officials said they weren't worried about the drop in the company's stock.
[22443058] |William Lebo, Hilton's general counsel, said plans to consider a sale of the company or some of its assets are "on track" for what has been described previously as "a slow and deliberate process."

[22443059] |"I can't believe that any potential buyer for Hilton would be affected by one day's trading," Mr. Lebo said.

[22443060] |But the stock market as a whole, bolstered as it is by takeover speculation, remains vulnerable to any further pullback by takeover financiers, both in the junkbond market and among commercial banks.
[22443061] |For debt-ridden suitors, "the takeover game has been over for some time," says New York money manager Neil Weisman of Chilmark Capital, who has been keeping 85% of his portfolio in cash.
[22443062] |"The market is just waking up to that point."

[22443063] |Pauline Yoshihashi in Los Angeles contributed to this column.

[22444001] |Of all the one-time expenses incurred by a corporation or professional firm, few are larger or longer term than the purchase of real estate or the signing of a commercial lease.

[22444002] |To take full advantage of the financial opportunities in this commitment, however, the corporation or professional firm must do more than negotiate the best purchase price or lease terms.
[22444003] |It must also evaluate the real-estate market in the chosen location from a new perspective.
[22444004] |Specifically, it must understand how real-estate markets overreact to shifts in regional economies and then take advantage of these opportunities.

[22444005] |When a regional economy catches cold, the local real-estate market gets pneumonia.
[22444006] |In other words, real-estate market indicators, such as building permits and leasing activity, plummet much further than a local economy in recession.
[22444007] |This was seen in the late 1960s in Los Angeles and the mid-1970s in New York.
[22444008] |But the reverse is also true: When a region's economy rebounds from a slowdown, these real-estate indicators will rebound far faster than the improving economy.

[22444009] |Why do local real-estate markets overreact to regional economic cycles?
[22444010] |Because real-estate purchases and leases are such major long-term commitments that most companies and individuals make these decisions only when confident of future economic stability and growth.

[22444011] |Metropolitan Detroit was written off economically during the early 1980s, as the domestic auto industry suffered a serious sales depression and adjustment.
[22444012] |Area employment dropped by 13% from its 1979 peak and retail sales were down 14%.
[22444013] |However, the real-estate market was hurt even more.
[22444014] |For example, residential building permits in the trough year of 1982 were off 76% from the 1979 peak level.

[22444015] |Once metropolitan Detroit's economy rallied in the mid-1980s, real estate rebounded.
[22444016] |Building permits, for example, soared a staggering 400% between 1982 and the peak year of 1986.

[22444017] |Where, savvy corporations and professional firms are now asking, are today's opportunities?

[22444018] |Look no further than metropolitan Houston and Denver, two of the most depressed, overbuilt and potentially undervalued real-estate markets in the nation.
[22444019] |Of course, some observers have touted Houston and Denver for the past five years as a counter-cyclical play.
[22444020] |But now appears to be the time to act.

[22444021] |Metropolitan Houston's economy did drop and then flatten in the years after its 1982 peak.
[22444022] |In the mid-1980s, employment was down as much as 5% from the 1982 peak and retail sales were off 13%.

[22444023] |The real-estate market suffered even more severe setbacks.
[22444024] |Office construction dropped 97%.
[22444025] |The vacancy rate soared more than 20% in nearly every product category, and more than 30% of office space was vacant.
[22444026] |To some observers, the empty office buildings of Houston's "see-through skyline" were indicative of a very troubled economy.

[22444027] |As usual, the real-estate market had overreacted.
[22444028] |Actually, the region's economy retained a firm foundation.
[22444029] |Metropolitan Houston's population has held steady over the past six years.
[22444030] |And personal income, after slumping in the mid-1980s, has returned to its 1982 level in real dollar terms.

[22444031] |Today, metropolitan Houston's real-estate market is poised for a significant turnaround.
[22444032] |More than 42,000 jobs were added in metro Houston last year, primarily in biotechnology, petrochemical processing, and the computer industry.
[22444033] |This growth puts Houston in the top five metro areas in the nation last year.
[22444034] |And forecasts project a 2.5% to 3% growth rate in jobs over the next few years -- nearly twice the national average.

[22444035] |Denver is another metropolitan area where the commercial real-estate market has overreacted to the region's economic trends, although Denver has not experienced as severe an economic downturn as Houston.
[22444036] |By some measures, metropolitan Denver's economy has actually improved in the past four years.
[22444037] |Its population has continued to increase since 1983, the peak year of the economic cycle.
[22444038] |Employment is now 4% higher than in 1983.
[22444039] |Buying income in real dollars actually increased 15% between 1983 and 1987 (the most recent year available).

[22444040] |The rates of increase, however, are less than the rapid growth of the boom years, and this has resulted in a loss of confidence in the economy.
[22444041] |In a self-fulfilling prophecy, therefore, the region's real-estate market all but collapsed in recent years.
[22444042] |Housing building permits are down more than 75% from their 1983 peaks.

[22444043] |Although no one can predict when metropolitan Denver's real-estate market will rebound, major public works projects costing several billion dollars are under way or planned -- such as a new convention center, a major beltway encircling the metropolitan area, and a new regional airport.
[22444044] |When Denver's regional economy begins to grow faster -- such a recovery could occur as early as next year -- business and consumer confidence will return, and the resulting explosion of real-estate activity will dwarf the general economic rebound.

[22444045] |What real-estate strategy should one follow in a metropolitan area whose economic health is not as easy to determine as Houston's or Denver's?
[22444046] |Generally, overcapacity in commercial real estate is dropping from its mid-1980s peak, even in such economically healthy metropolitan areas as Washington, New York and Los Angeles.
[22444047] |Vacancy rates in the 15% to 19% range today may easily rise to the low to mid-20% range in a couple of years.
[22444048] |Under these conditions, even a flattening out of economic growth -- "catching cold" -- in the healthy metropolitan areas will create significant opportunities for corporations and professional service firms looking for bargains as the realestate industry catches pneumonia.

[22444049] |Those looking for real-estate bargains in distressed metropolitan areas should lock in leases or buy now; those looking in healthy metropolitan areas should take a short-term (three-year) lease and wait for the bargains ahead.

[22444050] |Mr. Leinberger is managing partner of a real-estate advisory firm based in Beverly Hills, Calif.

[22445001] |Kysor Industrial Corp. said it expects its third-quarter net earnings to be between two cents and four cents a share, compared with 61 cents a share a year ago.
[22445002] |Analysts had been projecting that the company's earnings would be between 25 cents and 30 cents a share.
[22445003] |The year-earlier third-quarter earnings amounted to $4.1 million.

[22445004] |The company said a drop in activity in the powerboat industry reduced sales volume at its two marine-related operations.
[22445005] |Also, the company said its commercial products operation failed to meet forecasts.

[22445006] |Kysor, a maker of heavy-duty truck and commercial refrigeration equipment, said it expects its fourth-quarter earnings to be more closely in line with usual levels, which are between 30 cents and 50 cents a share.

[22446001] |Common Cause asked both the Senate Ethics Committee and the Justice Department to investigate $1 million in political gifts by Arizona businessman Charles Keating to five U.S. senators who interceded with thrift-industry regulators for him.

[22446002] |Mr. Keating is currently the subject of a $1.1 billion federal anti-racketeering lawsuit accusing him of bleeding off assets of a California thrift he controlled, Lincoln Savings & Loan Association, and driving it into insolvency.

[22446003] |Fred Wertheimer -- president of Common Cause, the self-styled citizens lobby -- said Mr. Keating already has conceded attempting to buy influence with the lawmakers -- Democratic Sens. Dennis DeConcini of Arizona, Alan Cranston of California, John Glenn of Ohio and Donald Riegle of Michigan; and GOP Sen. John McCain of Arizona.

[22446004] |Mr. Wertheimer based this on a statement by Mr. Keating that was quoted in a Wall Street Journal story in April: "One question . . . had to do with whether my financial support in any way influenced several political figures to take up my cause.
[22446005] |I want to say in the most forceful way I can: I certainly hope so."

[22446006] |In a highly unusual meeting in Sen. DeConcini's office in April 1987, the five senators asked federal regulators to ease up on Lincoln.
[22446007] |According to notes taken by one of the participants at the meeting, the regulators said Lincoln was gambling dangerously with depositors' federally insured money and was "a ticking time bomb."
[22446008] |Mr. Keating had complained that the regulators were being too zealous.

[22446009] |The notes show that Sen. DeConcini called the Federal Home Loan Bank Board's regulations "grossly unfair," and that Sen. Glenn insisted that Mr. Keating's thrift was "viable and profitable."

[22446010] |For the next two years, the Bank Board, which at the time was the agency responsible for regulating thrifts, failed to act -- even after federal auditors warned in May 1987 that Mr. Keating had caused Lincoln to become insolvent.
[22446011] |Lincoln's parent company, American Continental Corp., entered bankruptcy-law proceedings this April 13, and regulators seized the thrift the next day.
[22446012] |The newly formed Resolution Trust Corp., successor to the Bank Board, filed suit against Mr. Keating and several others on Sept. 15.

[22446013] |Mr. Keating has filed his own suit, alleging that his property was taken illegally.

[22446014] |The cost to taxpayers of Lincoln's collapse has been estimated at as much as $2.5 billion.

[22446015] |Details of the affair have become public gradually over the past two years, mostly as a result of reporting by several newspapers.
[22446016] |In the midst of his 1988 re-election campaign, Sen. Riegle, chairman of the Senate Banking Committee, returned $76,000 in contributions after a Detroit newspaper said that Mr. Keating had gathered the money for him about two weeks before the meeting with regulators.

[22446017] |Sen. DeConcini, after months of fending off intense press criticism, returned $48,000 only last month, shortly after the government formally accused Mr. Keating of defrauding Lincoln.

[22446018] |In addition, Sen. McCain last week disclosed that he belatedly had paid $13,433 to American Continental as reimbursement for trips he and his family took aboard the corporate jet to Mr. Keating's vacation home at Cat Cay, the Bahamas, from 1984 through 1986.
[22446019] |Sen. McCain said he had meant to pay for the trips at the time but that the matter "fell between the cracks."

[22446020] |Mr. Keating, his family members and associates also donated $112,000 to Sen. McCain's congressional campaigns over the years, according to press accounts.
[22446021] |But Sen. McCain says Mr. Keating broke off their friendship abruptly in 1987, because the senator refused to press the thrift executive's case as vigorously as Mr. Keating wanted.
[22446022] |"He became very angry at that, left my office and told a number of people that I was a wimp," Sen. McCain recalls.

[22446023] |In July, California newspapers disclosed that Mr. Keating gave $850,000 in corporate funds to three tax-exempt voter registration organizations in 1987 and 1988 at the behest of Sen. Cranston, who conceded that soliciting the money was "a pretty stupid thing to do politically."
[22446024] |In addition, Sen. Cranston received $47,000 in campaign donations through Mr. Keating, and the California Democratic party received $85,000 in corporate donations for a 1986 get-out-the-vote drive that benefited the senator's re-election campaign that year.

[22446025] |Also in July, Ohio newspapers disclosed $200,000 in corporate donations by Mr. Keating to the National Council on Public Policy, a political committee controlled by Sen. Glenn.
[22446026] |That was in addition to $34,000 in direct campaign donations arranged by Mr. Keating to the Ohio senator.

[22446027] |Mr. Wertheimer said the Senate Ethics Committee should hire a special outside counsel to conduct an investigation, as was done in the case of former House Speaker James Wright.
[22446028] |Wilson Abney, staff director of the ethics panel, wouldn't comment.

[22446029] |Sen. Riegle said he would cooperate with any inquiry, but that his conduct had been "entirely proper."
[22446030] |Sen. McCain said he had been "deeply concerned" at the time of the meeting that it might seem to be improper, but decided it was "entirely appropriate" for him to seek fair treatment for a constituent.

[22446031] |Sen. Glenn said he had already made a complete disclosure of his role in the affair and "I am completely satisfied to let this matter rest in the hands of the Senate Ethics Committee."
[22446032] |Sen. DeConcini said, "When all is said and done, I expect to be fully exonerated."

[22446033] |Sen. Cranston, who had already volunteered his help to the Federal Bureau of Investigation in any investigation of Mr. Keating, portrayed his role in 1987 as prodding regulators to act.
[22446034] |"Why didn't the Bank Board act sooner?" he said.
[22446035] |"That is what Common Cause should ask be investigated.

[22447001] |Trinity Industries Inc. said it reached a preliminary agreement to manufacture 1,000 coal rail cars for Norfolk Southern Corp.
[22447002] |Trinity estimated the value of the pact at more than $40 million.

[22447003] |Trinity said it plans to begin delivery of the rail cars in the first quarter of 1990.
[22447004] |It said the 1,000 rail cars are in addition to the 1,450 coal rail cars presently being produced for Norfolk Southern, a Norfolk, Va.-based railroad concern.

[22448001] |When China opened its doors to foreign investors in 1979, toy makers from Hong Kong were among the first to march in.

[22448002] |Today, with about 75% of the companies' products being made in China, the chairman of the Hong Kong Toys Council, Dennis Ting, has suggested a new sourcing label: "Made in China by Hong Kong Companies."

[22448003] |The toy makers were pushed across the border by rising labor and land costs in the British colony.
[22448004] |But in the wake of the shootings in Beijing on June 4, the Hong Kong toy industry is worrying about its strong dependence on China.
[22448005] |Although the manufacturers stress that production hasn't been affected by China's political turmoil, they are looking for additional sites.
[22448006] |The toy makers, and their foreign buyers, cite uncertainty about China's economic and political policies.

[22448007] |"Nobody wants to have all his eggs in one basket," says David Yeh, chairman and chief executive officer of International Matchbox Group Ltd.

[22448008] |Indeed, Matchbox and other leading Hong Kong toy makers were setting up factories in Southeast Asia, especially in Thailand, long before the massacre.
[22448009] |Their steps were partly prompted by concern over a deterioration of business conditions in southern China.

[22448010] |By diversifying supply sources, the toy makers don't intend to withdraw from China, manufacturers and foreign buyers say.
[22448011] |It wouldn't be easy to duplicate quickly the manufacturing capacity built up in southern China during the past decade.
[22448012] |A supply of cheap labor and the access to Hong Kong's port, airport, banks and support industries, such as printing companies, have made China's Guangdong province a premier manufacturing site.

[22448013] |"South China is the most competitive source of toys in the world," says Henry Hu, executive director of Wah Shing Toys Consolidated Ltd.

[22448014] |Hong Kong trade figures illustrate the toy makers' reliance on factories across the border.
[22448015] |In 1988, exports of domestically produced toys and games fell 19% from 1987, to HK$10.05 billion (US$1.29 billion).
[22448016] |But re-exports, mainly from China, jumped 75%, to HK$15.92 billion.
[22448017] |In 1989's first seven months, domestic exports fell 29%, to HK$3.87 billion, while re-exports rose 56%, to HK$11.28 billion.

[22448018] |Manufacturers say there is no immediate substitute for southern China, where an estimated 120,000 people are employed by the toy industry.
[22448019] |"For the next few years, like it or not, China is going to be the main supplier," says Edmund Young, vice president of Perfecta Enterprises Ltd., one of the first big Hong Kong toy makers to move across the border.

[22448020] |In the meantime, as manufacturers and buyers seek new sites, they are focusing mainly on Southeast Asia.
[22448021] |Several big companies have established manufacturing joint ventures in Thailand, including Matchbox, Wah Shing and Kader Industrial Co., the toy manufacturer headed by Mr. Ting.
[22448022] |Malaysia, the Philippines and Indonesia also are being studied.

[22448023] |With the European Community set to remove its internal trade barriers in 1992, several Hong Kong companies are beginning to consider Spain, Portugal and Greece as possible manufacturing sites.

[22448024] |Worries about China came just as Hong Kong's toy industry was recovering from a 1987 sales slump and bankruptcy filings by two major U.S. companies, Worlds of Wonder Inc. and Coleco Industries Inc.
[22448025] |Hong Kong manufacturers say large debt writeoffs and other financial problems resulting from the 1987 difficulties chastened the local industry, causing it to tighten credit policies and financial management.
[22448026] |The industry regards last year and this year as a period of recovery that will lead to improved results.
[22448027] |Still, they long for a "mega-hit" toy to excite retail sales in the U.S., Hong Kong's biggest market for toys and games.

[22448028] |The closest thing the colony's companies have to a U.S. mega-hit this year is the Teenage Mutant Ninja Turtles series of action figures manufactured by Playmates Holdings Ltd.
[22448029] |Introduced in mid-1988, the 15-centimeter-tall plastic turtles are based on an American comic book and television series.

[22448030] |Paul Kwan, managing director of Playmates, says 10 million Ninja Turtles have been sold, placing the reptilian warriors among the 10 biggest-selling toys in the U.S.
[22448031] |Should sales continue to be strong through the Christmas season, which accounts for about 60% of U.S. retail toy sales, Mr. Kwan said the Ninja Turtles could make 1989 a record sales year for Playmates.

[22448032] |Other Hong Kong manufacturers expect their results to improve only slightly this year from 1988.
[22448033] |Besides the lack of a fast-selling product, they cite the continued dominance of the U.S. market by Nintendo Entertainment System, an expensive video game made by Nintendo Co. of Japan.
[22448034] |Nintendo buyers have little money left to spend on other products.

[22448035] |Many of the toy makers' problems started well before June 4 as a result of overstrained infrastructure and Beijing's austerity programs launched late last year.
[22448036] |Toy makers complain that electricity in Guangdong has been provided only three days a week in recent months, down from five days a week, as the province's rapid industrialization has outstripped its generating capacity.
[22448037] |Manufacturers are upgrading standby power plants.

[22448038] |Bank credit for China investments all but dried up following June 4.
[22448039] |Also, concern exists that the harder-line Beijing leadership will tighten its control of Guangdong, which has been the main laboratory for the open-door policy and economic reforms.

[22448040] |But, toy manufacturers and other industrialists say Beijing will be restrained from tightening controls on export-oriented southern China.
[22448041] |They say China's trade deficit is widening and the country is too short of foreign exchange for it to hamper production in Guangdong.
[22448042] |"The Chinese leaders have to decide whether they want control or whether the want exports," says Mr. Kwan of Playmates.

[22449001] |The Bush administration, urging the Supreme Court to give states more leeway to restrict abortions, said minors haven't any right to abortion without the consent of their parents.

[22449002] |Solicitor General Kenneth Starr argued that the 1973 Supreme Court decision, Roe vs. Wade, recognizing a constitutional right to abortion, was incorrect.
[22449003] |He also argued that the high court was wrong in 1976 to rule that minors have a right to abortion that can't be absolutely vetoed by their parents.

[22449004] |The administration's position was outlined in a friend-of-the-court brief filed in one of three abortion cases the Supreme Court will hear argued and will decide this term.
[22449005] |The administration filed the brief in an appeal involving a Minnesota law that requires that both parents of a minor be notified before she may have an abortion.

[22449006] |The administration urged the justices to adopt a legal standard suggested by Chief Justice William Rehnquist last July when the high court upheld Missouri's abortion restrictions.
[22449007] |Under that standard, which garnered the votes of only three of the nine justices, a state restriction of abortion is constitutional if the state has a "reasonable" justification for adopting it.
[22449008] |That is a much easier standard for a state to satisfy than the Supreme Court's test since 1973, which requires a state to have a "compelling" reason for restricting abortion.

[22449009] |On the provisions of the Minnesota law, the Bush administration said that requiring that both parents be notified is a reasonable regulation, and that there is no need to have an alternative that allows minors to go to court for a judge's permission instead.

[22449010] |The case, Hodgson vs. Minnesota, will be argued Nov. 29.

[22450001] |Aluminum Co. of America, hit hard by the strength of the dollar overseas, said net income for the third quarter dropped 3.2% to $219 million, or $2.46 a share.

[22450002] |The nation's No. 1 aluminum maker earned $226.3 million, or $2.56 a share, a year earlier.

[22450003] |Revenue rose 11% to $2.83 billion from $2.56 billion.

[22450004] |Analysts, who were expecting Alcoa to post around $2.70 to $3 a share, were surprised at the lackluster third-quarter results.
[22450005] |"It's disappointing," said William Siedenburg, an analyst with Smith Barney, Harris Upham & Co.

[22450006] |Much of the earnings decline was led by currency-exchange rate adjustments, which affected the bottom line by $15.3 million, or 17 cents a share, compared with $3.6 million, or four cents a share, the previous year.

[22450007] |Lower prices for aluminum ingots and certain alloy products and a shift in the product mix also contributed to lower earnings, the company said.
[22450008] |"In addition, costs were higher partly due to scheduled plant outages for modernization work," the company said.

[22450009] |Excluding the higher tax rate, which rose two percentage points to 38%, and the negative exchange rate adjustment, the company would have met analysts' expectations, said R. Wayne Atwell, an analyst with Goldman, Sachs & Co.

[22450010] |Noting that the third quarter is usually the aluminum industry's slowest, Mr. Atwell added, "the third quarter is never a bang up period for them anyway."

[22450011] |Nevertheless, the company said shipments were up slightly to 679,000 metric tons from 671,000, buffing the impact of the unexpected earning decline.

[22450012] |The results were announced after the stock market closed.
[22450013] |In New York Stock Exchange composite trading Friday, Alcoa closed at $72 a share, down $4.75, in a sharply lower market.

[22451001] |For 20 years, federal rules have barred the three major television networks from sharing in one of the most lucrative and fastest-growing parts of the television business.
[22451002] |And for six years, NBC, ABC and CBS have negotiated with Hollywood studios in a futile attempt to change that.

[22451003] |But with foreign companies snapping up U.S. movie studios, the networks are pressing their fight harder than ever.
[22451004] |They hope the foreign deals will divide the Hollywood opposition and prod Congress to push for ending federal rules that prohibit the networks from grabbing a piece of rerun sales and owning part of the shows they put on the air.

[22451005] |Even network executives, however, admit privately that victory -- either in Congress or in talks with the studios -- is highly doubtful any time soon.
[22451006] |And so the networks also are pushing for new ways to sidestep the "fin-syn" provisions, known formally as the Financial Interest and Syndication Rules.

[22451007] |That became clear last week with the disclosure that National Broadcasting Co., backed by the deep pockets of parent General Electric Co., had tried to help fund Qintex Australia Ltd.'s now-scuttled $1.5 billion bid for MGM/UA Communications Co.
[22451008] |NBC's interest may revive the deal, which MGM/UA killed last week when the Australian concern had trouble raising cash.

[22451009] |Even if that deal isn't revived, NBC hopes to find another.
[22451010] |"Our doors are open," an NBC spokesman says.
[22451011] |NBC may yet find a way to take a passive, minority interest in a program-maker without violating the rules.
[22451012] |And any NBC effort could prompt CBS Inc. and ABC's parent, Capital Cities/ABC Inc., to look for ways of skirting the fin-syn regulations.

[22451013] |But the networks' push may only aggravate an increasingly bitter rift between them and Hollywood studios.
[22451014] |Both sides are to sit down next month for yet another meeting on how they might agree on reducing fin-syn restraints.
[22451015] |Few people privy to the talks expect the studios to budge.

[22451016] |The networks still are "uninhibited in their authority" over what shows get on the air, charges Motion Picture Association President Jack Valenti, the most vociferous opponent of rescinding the rules.
[22451017] |Studios are "powerless" to get shows in prime-time lineups and keep them there long enough to go into lucrative rerun sales, he contends.
[22451018] |And that's why the rules, for the most part, must stay in place, he says.

[22451019] |Studio executives in on the talks-including officials at Paramount Communications Inc., Fries Entertainment Inc., Warner Communications Inc. and MCA Inc. -- declined to be interviewed.
[22451020] |But Mr. Valenti, who represents the studios, asserts: "The whole production industry, to a man, is on the side of preserving" the rules.

[22451021] |Such proclamations leave network officials all the more doubtful that the studios will bend.
[22451022] |"They don't seem to have an incentive to negotiate," says one network executive.
[22451023] |"And there's no indication that Washington is prepared to address the rules.
[22451024] |That's the problem, isn't it?"

[22451025] |Indeed it is.
[22451026] |Congress has said repeatedly it wants no part of the mess, urging the studios and the networks, which license rights to air shows made by the studios, to work out their own compromise.

[22451027] |But recent developments have made the networks -- and NBC President Robert Wright, in particular -- ever more adamant that the networks must be unshackled to survive.
[22451028] |The latest provocation: Sony Corp.'s plan to acquire Columbia Pictures Entertainment Inc. for $3.4 billion, and to buy independent producer Guber Peters Entertainment Co. for $200 million.

[22451029] |"I wonder what Walter Cronkite will think of the Sony/Columbia Broadcast System Trinitron Evening News with Dan Rather broadcast exclusively from Tokyo," wrote J.B. Holston, an NBC vice president, in a commentary in last week's issue of Broadcasting magazine.
[22451030] |In his article, Mr. Holston, who was in Europe last week and unavailable, complained that the "archaic restraints" in fin-syn rules have "contributed directly to the acquisition of the studios by non-U.S. enterprises.
[22451031] |" (He didn't mention that NBC, in the meantime, was hoping to assist Australia's Qintex in buying

[22451032] |An NBC spokesman counters that Mr. Holston's lament was "entirely consistent" with NBC plans because the U.S. rules would limit NBC's involvement in the Qintex deal so severely as to be "light years away from the type of unrestrained deals available to Sony -- and everyone else except the three networks."

[22451033] |The Big Three's drumbeat for deregulation began intensifying in the summer when the former Time Inc. went ahead with plans to acquire Warner.
[22451034] |Although Time already had a long-term contract to buy movies from Warner, the merger will let Time's largely unregulated pay-cable channel, Home Box Office, own the Warner movies aired on HBO -- a vertical integration that is effectively blocked by fin-syn regulations.

[22451035] |NBC's Mr. Wright led the way in decrying the networks' inability to match a Time-Warner combination.
[22451036] |He spoke up again when the Sony bid for Columbia was announced.
[22451037] |Since NBC's interest in the Qintex bid for MGM/UA was disclosed, Mr. Wright hasn't been available for comment.
[22451038] |With a Qintex deal, NBC would move into uncharted territory -- possibly raising hackles at the studios and in Washington.

[22451039] |"It's never really been tested," says William Lilley III, who as a top CBS executive spent years lobbying to have the rules lifted.
[22451040] |He now runs Policy Communications in Washington, consulting to media companies.
[22451041] |Fin-syn rules don't explicitly block a network from buying a passive, small stake in a company that profits from the rerun syndication networks can't enjoy.

[22451042] |Hence, NBC might be able to take, say, a 5% stake in a company such as MGM/UA.
[22451043] |If the transaction raised objections, the studio's syndication operations could be spun off into a separate firm in which the network doesn't have a direct stake.

[22451044] |But such convolutions would still block the networks from grabbing a big chunk of the riches of syndication.
[22451045] |Under current rules, even when a network fares well with a 100%-owned series -- ABC, for example, made a killing in broadcasting its popular crime/comedy "Moonlighting" -- it isn't allowed to share in the continuing proceeds when the reruns are sold to local stations.
[22451046] |Instead, ABC will have to sell off the rights for a one-time fee.

[22451047] |The networks admit that the chances of getting the relief they want are slim -- for several years at the least.

[22451048] |Six years ago they were tantalizingly close.
[22451049] |The Reagan-era Federal Communications Commission had ruled in favor of killing most of the rules.
[22451050] |Various evidence, including a Brookings Institution study of some 800 series that the networks had aired and had partly owned in the 1960s, showed the networks didn't wield undue control over the studios as had been alleged.

[22451051] |But just eight days before the rules were to die, former President Ronald Reagan, a one-time actor, intervened on behalf of Hollywood.
[22451052] |The FCC effort collapsed.

[22451053] |The networks and studios have bickered ever since.
[22451054] |Network officials involved in the studio talks may hope the foreign influx builds more support in Washington, but that seems unlikely.
[22451055] |In Congress, the issue falters: It's about money, not program quality, and Hollywood has lots of clout given its fund raising for senators and representatives overseeing the issue.

[22451056] |A spokesman for Rep. Edward J. Markey (D-Mass.), who heads a subcommittee that oversees the FCC, says Mr. Markey feels "the world has been forever changed by the Sony-Columbia deal."
[22451057] |But he said Mr. Markey hopes this pushes the networks and studios to work it out on their own.
[22451058] |And at the FCC, meanwhile, new Chairman Alfred C. Sikes has said he wants the two sides to hammer out their own plan.

[22452001] |Recognition Equipment Inc. said it settled a civil action filed against it by the federal government on behalf of the U.S. Postal Service.

[22452002] |The government sued the company in April, seeking $23,000 and other unspecified damages related to an alleged contract-steering scheme.
[22452003] |The suit named the company, former chief executive officer William G. Moore Jr., former vice president Robert W. Reedy and five defendants who weren't part of the company.
[22452004] |The suit charged the defendants with causing Peter E. Voss, an ex-member of the Postal Service board of governors, to accept $23,000 in bribes, kickbacks and gratuities.
[22452005] |Mr. Voss was previously sentenced to four years in prison and fined $11,000 for his role in the scheme.

[22452006] |In the agreement, Recognition agreed to pay the government $20,000 in return for the release of all claims against the company, Mr. Moore and Mr. Reedy.
[22452007] |The five additional defendants weren't parties to the settlement.

[22452008] |A trial on criminal allegations against the company and the same two former executives began Sept. 27 in federal court for the District of Columbia.
[22452009] |They were indicted last October on charges of fraud, theft and conspiracy related to an effort to win $400 million in Postal Service equipment contracts by the maker of data management equipment.
[22452010] |The company and its executives deny the charges.

[22452011] |In a related development, Recognition Equipment said the Postal Service has barred the company from bidding on postal contracts for an additional 120 days.
[22452012] |The Postal Service originally suspended the company Oct. 7, 1988, and has been renewing the ban ever since.
[22452013] |The company said it will continue to pursue a lifting of the suspension.

[22453001] |Intel Corp. reported a 50% drop in third-quarter net income, partly because of a one-time charge for discontinued operations.

[22453002] |The big semiconductor and computer maker, said it had net of $72 million, or 38 cents, down 50% from $142.7 million, or 78 cents a share.
[22453003] |The lower net included a charge of $35 million, equal to 12 cents a share on an after-tax basis, for the cost of abandoning a computer-systems joint venture with Siemens AG of West Germany.
[22453004] |Earning also fell from the year-ago period because of slowing microchip demand.
[22453005] |Sales amounted to $771.4 million, down 1.7% from $784.9 million.

[22453006] |Intel's stock rose in early over-the-counter trading Friday, as investors appeared relieved that the company's income from continuing operations was only slightly below the second quarter's earnings of $99.3 million, or 53 cents a share, and that sales actually exceeded the $747.3 million for the second period.
[22453007] |But Intel later succumbed to the stock market's plunge, closing at $31.75, down $2.125.

[22453008] |In August, Intel warned that third-quarter earnings might be "flat to down" from the previous period's because of slowing sales growth of its 80386 microprocessor, start-up costs associated with a line of computers and costs of preparing for mass shipments of the company's new 80486 chip in the current quarter.

[22453009] |On Friday, Andrew S.Grove, Intel president and chief executive officer, said "Intel's business is strong.
[22453010] |Our bookings improved as the quarter progressed and September was especially good.
[22453011] |For the full quarter, our bookings were higher than the previous quarter, and our book-to-bill ratio exceeded 1.0."

[22453012] |For the nine-month period, Intel reported net of $268.3 million, or $1.43 a share, down 27% from $367.1 million, or $2.05 a share.
[22453013] |Revenue amounted to $2.23 billion, up slightly from $2.15 billion.

[22454001] |Walter Sisulu and the African National Congress came home yesterday.

[22454002] |After 26 years in prison, Mr. Sisulu, the 77-year-old former secretary-general of the liberation movement, was dropped off at his house by a prison services' van just as the sun was coming up.
[22454003] |At the same time, six ANC colleagues, five of whom were arrested with him in 1963 and sentenced to life imprisonment, were reunited with their families at various places around the country.

[22454004] |And as the graying men returned to their homes, the ANC, outlawed in South Africa since 1960 and still considered to be the chief public enemy by the white government, defiantly returned to the streets of the country's black townships.
[22454005] |A huge ANC flag, with black, green and gold stripes, was hoisted over the rickety gate at Mr. Sisulu's modest house, while on the street out front, boys displayed the ANC colors on their shirts, caps and scarves.
[22454006] |At the small four-room home of Elias Motsoaledi, a leading ANC unionist and a former commander in the group's armed wing, Umkhonto we Sizwe, well-wishers stuck little ANC flags in their hair and a man tooted on an antelope horn wrapped in ANC ribbons.

[22454007] |"I am happy to see the spirit of the people," said Mr. Sisulu, looking dapper in a new gray suit.
[22454008] |As the crowd outside his home shouted "ANC, ANC," the old man shot his fists into the air.
[22454009] |"I'm inspired by the mood of the people."

[22454010] |Under the laws of the land, the ANC remains an illegal organization, and its headquarters are still in Lusaka, Zambia.
[22454011] |But the unconditional release of the seven leaders, who once formed the intellectual and organizational core of the ANC, is a de facto unbanning of the movement and the rebirth of its internal wing.

[22454012] |"The government can never put the ANC back into the bottle again," said Cassim Saloojee, a veteran anti-apartheid activist on hand to welcome Mr. Sisulu.
[22454013] |"Things have gone too far for the government to stop them now.
[22454014] |There's no turning back."

[22454015] |There was certainly no stopping the tide of ANC emotion last night, when hundreds of people jammed into the Holy Cross Anglican Church in Soweto for what became the first ANC rally in the country in 30 years.
[22454016] |Deafening chants of "ANC" and "Umkhonto we Sizwe" shook the church as the seven aging men vowed that the ANC would continue its fight against the government and the policies of racial segregation on all fronts, including the armed struggle.
[22454017] |And they called on the government to release Nelson Mandela, the ANC's leading figure, who was jailed with them and remains in prison.
[22454018] |Without him, said Mr. Sisulu, the freeing of the others "is only a half-measure."

[22454019] |President F.W. de Klerk released the ANC men -- along with one of the founding members of the Pan Africanist Congress, a rival liberation group -- as part of his efforts to create a climate of trust and peace in which his government can begin negotiations with black leaders over a new constitution aimed at giving blacks a voice in national government.

[22454020] |But Pretoria may instead be creating a climate for more turmoil and uncertainty in this racially divided country.
[22454021] |As other repressive governments, particularly Poland and the Soviet Union, have recently discovered, initial steps to open up society can create a momentum for radical change that becomes difficult, if not impossible, to control.

[22454022] |As the days go by, the South African government will be ever more hard pressed to justify the continued imprisonment of Mr. Mandela as well as the continued banning of the ANC and enforcement of the state of emergency.
[22454023] |If it doesn't yield on these matters, and eventually begin talking directly to the ANC, the expectations and promise raised by yesterday's releases will turn to disillusionment and unrest.
[22454024] |If it does, the large number of right-wing whites, who oppose any concessions to the black majority, will step up their agitation and threats to take matters into their own hands.

[22454025] |The newly released ANC leaders also will be under enormous pressure.
[22454026] |The government is watching closely to see if their presence in the townships leads to increased anti-government protests and violence; if it does, Pretoria will use this as a reason to keep Mr. Mandela behind bars.
[22454027] |Pretoria hasn't forgotten why they were all sentenced to life imprisonment in the first place: for sabotage and conspiracy to overthrow the government.

[22454028] |In addition, the government is figuring that the releases could create a split between the internal and external wings of the ANC and between the newly freed leaders and those activists who have emerged as leaders inside the country during their imprisonment.
[22454029] |In order to head off any divisions, Mr. Mandela, in a meeting with his colleagues before they were released, instructed them to report to the ANC headquarters in Lusaka as soon as possible.

[22454030] |The men also will be faced with bridging the generation gap between themselves and the country's many militant black youths, the so-called young lions who are anxious to see the old lions in action.
[22454031] |Says Peter Mokaba, president of the South African Youth Congress: "We will be expecting them to act like leaders of the ANC."

[22454032] |They never considered themselves to be anything else.
[22454033] |At last night's rally, they called on their followers to be firm, yet disciplined, in their opposition to apartheid.
[22454034] |"We emphasize discipline because we know that the government is very, very sensitive," said Andrew Mlangeni, another early Umkhonto leader who is now 63.
[22454035] |"We want to see Nelson Mandela and all our comrades out of prison, and if we aren't disciplined we may not see them here with us.