The Arizona Corporations Commission authorized an 11.5 % rate increase at Tucson Electric Power Co. , substantially lower than recommended last month by a commission hearing officer and barely half the rise sought by the utility . The ruling follows a host of problems at Tucson Electric , including major write-downs , a 60 % slash in the common stock dividend and the departure of former Chairman Einar Greve during a company investigation of his stock sales . The Arizona regulatory ruling calls for $ 42 million in added revenue yearly , compared with a $ 57 million boost proposed by the commission hearing officer . The company had sought increases totaling $ 80.3 million , or 22 % . The decision was announced after trading ended . Tucson Electric closed at $ 20.875 a share , down 25 cents , in New York Stock Exchange composite trading . A Tucson Electric spokesman said the utility was disappointed by the commission 's decision and `` concerned about the financial integrity of the company . South Korean President Roh Tae Woo , brushing aside suggestions that the won be revalued again , said the currency 's current level against the dollar is `` appropriate . '' His comments , made in response to reporters ' questions at the National Press Club here , signaled that Seoul is resisting U.S. pressure for a further rise in the currency 's value . The U.S. wants a higher won to make South Korea 's exports more expensive and help trim Seoul 's trade surplus . Many South Korean business people want a devaluation instead , arguing that the won 's recent gains already have weakened the country 's export performance . Mr. Roh also said South Korea is taking steps that would free the won to respond to market forces . Seoul has pointed to its lack of a foreign exchange market as one reason the won 's value remains heavily controlled . Mr. Roh said a U.S. demand for the removal of South Korean import quotas on beef will be resolved `` satisfactorily '' but gave no hint when that will happen . Speaking to a joint meeting of Congress earlier , he said South Korea ca n't move quickly on such agricultural trade issues `` without causing political and social trauma . Great American Bank said its board approved the formation of a holding company enabling the savings bank to pursue nontraditional banking activities under a new federal law . The proposed holding company 's primary purpose would be to allow Great American to continue engaging in real estate development activities , it said . Those activities generated $ 26.1 million in operating profit last year . But according to Great American , such profits do n't count toward meeting the San Diego savings bank 's new capitalization requirements under 1989 federal law . The new real estate unit would have a separate capital structure to comply with the law . The proposed holding company would also consolidate Great American Bank in San Diego and its Tucson , Ariz. , savings bank into a single , federally chartered institution in San Diego . The consolidation is expected to save $ 1 million a year in administrative costs , a Great American spokesman said . Dale Lang , who this week completed the acquisition of the publisher of Ms. and Sassy , is candid about the challenge he is taking on . Mr. Lang admits that Ms. is `` in dire straits '' and that Sassy needs big promotional dollars to keep it alive . But the 57-year-old publisher has moved quickly and boldly to deal with the magazines ' problems . Last Friday , he told the staff of Ms. that the magazine in January would begin publishing without advertising . Mr. Lang will do away with expensive circulation drives , not to mention sales staff , and attempt to publish the 17-year-old magazine supported by circulation revenue alone . `` Any fool can publish a money-losing magazine . I want to publish one that succeeds , '' said Mr. Lang . `` For Ms. , it 's time to publish for the reader , not the advertiser . '' As for Sassy , which competes directly with News Corp. 's Seventeen magazine , Mr. Lang says that in the next two years he will spend $ 6 million promoting and improving the magazine . Though Sassy has grown quickly since its debut in March 1988 , it has been the target of conservative lobbyists and skittish advertisers who bristled at its frank editorial matter on teen-age problems . Mr. Lang said the former Australian owners of Sassy were `` blind-sided by the Moral Majority . . . . Their reaction was to do nothing and ride it out . '' He said Sassy will keep its irreverent tone , but added , `` We will keep a close watch on the editorial content of the magazine . '' Sassy already has recovered ; circulation has quickly passed the 500,000 mark and advertising pages have stabilized this year at more than 300 . What 's more , Mr. Lang says he has what all publishers wish for : a bona fide niche . `` Seventeen is written more for mothers , not their daughters , '' said Mr. Lang . `` But Sassy has a different spirit . It gets more mail in a month than McCall 's got in a year , and it 's not from mothers . I feel about Sassy like I did about Working Woman 10 years ago . '' Mr. Lang took on Ms. and Sassy with the acquisition of Matilda Publications Inc. by his newly formed Lang Communications . Lang owns 70 % of Matilda , while Citicorp owns the rest through its Citicorp Venture Capital Partners . Two weeks ago , Citicorp and Mr. Lang pumped $ 800,000 into Matilda just to keep the doors open . Industry observers have congratulated Mr. Lang on what some call his `` courageous '' handling of Ms. , but his track record in magazine publishing in general has gotten mixed reviews . Besides Ms. and Sassy , closely held Lang Communications includes Success , a magazine for entrepreneurs and small businesses , and Working Woman and Working Mother , two monthly magazines . Working Woman , with circulation near one million , and Working Mother , with 625,000 circulation , are legitimate magazine success stories . The magazine Success , however , was for years lackluster and unfocused . Only recently has it been attractively redesigned and its editorial product improved . Success is expected to gain at least because of the recent folding of rival Venture , another magazine for growing companies . Working Woman and Working Mother have operated as part of Working Woman/McCall 's Group , a less-than-successful joint venture between Mr. Lang and Time Warner Inc . The joint venture is being undone , with McCall 's magazine being sold last summer to the New York Times Co. 's Magazine Group for about $ 80 million , and Time Warner agreeing to sell back its 50 % interest in Working Woman and Working Mother to Mr. Lang . Executives at Time Inc . Magazine Co. , a subsidiary of Time Warner , have said the joint venture with Mr. Lang was n't a good one . The venture , formed in 1986 , was supposed to be Time 's low-cost , safe entry into women 's magazines . Mr. Lang surprised Time soon after joining forces when he said he would negotiate rates individually with advertisers , a practice common in broadcasting but considered taboo by magazine publishers . In addition , McCall 's put in a less than stellar performance . Until a recent comeback , it saw steep losses in ad pages and circulation . Time executives complained about the shoddy editorial quality , and in the end , one Time executive who asked not to be identified said , `` Frankly , McCall 's and the joint venture were an embarrassment . '' Mr. Lang feels that Time 's priorities changed . `` Their management changed right after { the venture was formed } , and I do n't think they were comfortable getting into the competitive wars of women 's service magazines . '' Today , Mr. Lang believes his magazines will offer what many women 's magazines do n't . `` We write straight for women on their level , '' he said . `` We do n't have passive readers . '' Mr. Lang points out that even Success , in part , fits the company 's image , since about 30 % of its readership is female . Mr. Lang has named Carol Taber , 43 , as group publisher of New York-based Lang Communications . She will oversee Working Woman , Working Mother and Success magazines , and retain her post as publisher of Working Woman . The sale price of McCall 's -- twice what Mr. Lang originally paid for it -- will finance Lang Communications ' buy-back of Time Warner 's 50 % interest in Working Woman and Working Mother . Mr. Lang says he is n't scouting new acquisitions , at least for now . `` We would have to go outside to banks to get the money and I am not ready to do that , '' he said . `` Besides , we have enough on our plate . There is plenty of work to be done on what we have . Britain 's Monopolies and Mergers Commission Wednesday cleared Rhone-Poulenc S.A. 's purchase of a specialty bulk-chemical unit from Monsanto Co. , saying the purchase was unlikely to have any lasting impact on U.K. industrial consumers . The commission , which was asked to study the deal by the Department of Trade and Industry after its announcement in February , said the diversity of global supply of chemicals used in making analgesic drugs was great enough to offset the dominant U.K. market share Rhone-Poulenc would gain through the acquisition . The French chemical giant would hold an 80 % share of the U.K. market for salicylic acid , methyl salicylate and bulk aspirin . The commission found that if the British government attempted to block the merger , Rhone-Poulenc would likely respond by closing the salicylates plant Monsanto operates in Wales , removing the matter from U.K. jurisdiction . Morrison Knudsen Corp. posted third-quarter net income of $ 7.9 million , or 69 cents a share , continuing a rebound from steep year-ago losses . In the third quarter a year-earlier , the construction and engineering concern posted a loss of $ 51.2 million , or $ 4.68 a share . Revenue in the latest quarter rose 14 % to $ 589 million from $ 515.1 million . In composite trading on the New York Stock Exchange , Morrison gained $ 2.25 to $ 44.125 . Morrison said the engineering and construction segment performed well , with the mining and MK-Ferguson operations making important contributions . Boise , Idaho-based Morrison had losses totaling $ 186 million over the two years ended in December , but it has surged back to profitability as a result of cost-cutting and shedding of unprofitable operations . In the nine months , the company 's net income was $ 21.5 million , or $ 1.88 a share , compared with a year-earlier loss of $ 97.8 million , or $ 8.96 a share . Revenue rose 17 % to $ 1.62 billion from $ 1.39 billion . The House Ethics Committee officially cited Rep. Jim Bates ( D. , Calif . ) for sexually harassing two female employees , but did n't recommend formal disciplinary action . Rep. Bates said he accepted the finding , but one of the victims , Dorena Bertussi , denounced the ethics panel 's action as `` absurd . '' Acting more than a year after Ms. Bertussi filed a complaint , the panel issued a `` letter of reproval '' saying Rep. Bates had admitted conduct that violated a House rule forbidding discrimination against employees on account of their sex . It ordered Rep. Bates to write letters of apology to Ms. Bertussi and to a second complainant , Karen Dryden . Rep. Bates said he would write the letters as ordered . `` I accept the resolution of the matter by the Ethics Committee , '' he said . The panel also warned Rep. Bates that any further violations `` may result in a recommendation that disciplinary action be considered . '' But Ms. Bertussi asked , `` Who in their right mind is going to file another complaint with the Ethics Committee ? '' Rep. Bates has publicly begged for forgiveness from voters and was re-elected with 60 % of the vote last November . Mesa Airlines said the takeover offer it received earlier this week from StatesWest Airlines is for a combination of cash and securities valued by StatesWest at $ 10 a Mesa share . Both companies are regional carriers in the Southwest . When it made the offer , StatesWest declined to disclose details and asked Mesa to do the same . But Farmington , N.M.-based Mesa said the offer was for $ 7 in cash and unspecified StatesWest securities valued at $ 3 a share . Based on the number of Mesa shares outstanding not already owned by StatesWest , the proposed takeover would have a value of about $ 15.3 million . StatesWest owns 7.25 % of Mesa . Last week , Mesa rejected a general proposal from StatesWest that the two carriers combine . In response to the specific offer , Gary Risley , Mesa vice president , said management will ask directors to employ a financial consultant to advise them . Hawker Siddeley Group PLC , a U.K. engineering company , reported a 16 % jump in pretax profit for the six-month period ending June 30 . Pretax profit rose to # 93.2 million ( $ 146.8 million ) from # 80.6 million ( $ 127 million ) , matching analysts ' expectations , which ranged from # 90 million to # 95 million . Profit after taxes and minority interests increased 16 % to # 55.2 million from # 47.6 million in the year-earlier period , while earnings per share rose 16 % to 27.9 pence ( 44 cents ) from 24.1 pence ( 38 cents ) . Hawker Siddeley said its core electrical products division enjoyed strong growth , with a 20 % rise in operating profit during the period . Fleet/Norstar Financial Group reported a 12 % increase in net income in the third quarter , led by a 43 % gain in its financial services group . Fleet 's net was $ 96.4 million , or 86 cents a primary share , compared with $ 85.8 million , or 79 cents a share , a year earlier . The Providence , R.I. , financial services group , which includes commercial-credit , leasing and mortgage-banking operations , contributed $ 30.6 million to net , up from last year 's $ 21.3 million . Fleet also noted that , unlike other banking companies in the Northeast , it has been only marginally hurt by nonperforming loans that have resulted from the slumping regional real estate market . Fleet reported nine-month net of $ 279.0 million , or $ 2.51 a primary share , up from $ 248.2 million , or $ 2.28 a share , a year earlier . Benj . Franklin Federal Savings & Loan Association said it expects to post a third-quarter net loss of about $ 8 million , or $ 1.04 a share , as a result of adding $ 11 million in loan-loss reserves . The Portland , Ore. , thrift , which has $ 5.2 billion of assets , had net income in last year 's third quarter of $ 1.8 million , or 23 cents a share . Franklin said it expects to report earnings for the latest quarter next week . The additional reserves relate to possible write-downs of certain assets held by Franklin and its subsidiaries and the default of a bond in its investment portfolio , the thrift said . According to a spokeswoman , they also relate to changes Franklin will have to make in its accounting procedures to comply with new federal capitalization requirements for thrifts . The company 's shares closed yesterday at $ 4.25 , off 25 cents , in national over-the-counter trading . Arkla Inc. said that as part of a program to improve profitability it will take a total of $ 189 million in after-tax charges by year end . It also announced an initial public offering of 18 % of its gas exploration and production subsidiary . The Shreveport , La. , natural gas company said the charges , though partially offset by a one-time gain from the offering , will result in a full-year after-tax loss . Last year , the company had net income of $ 117.3 million , or $ 1.30 a share . Arkla said it will report $ 179 milllion in one-time charges against continuing operations for the third quarter , reflecting settlement of certain natural gas contracts . It said it will take a $ 10 million fourth-quarter charge against discontinued operations , reflecting certain write-downs and the planned sale of a unit . Arkla said its initial offering of 18 % of Arkla Exploration Co. is expected to result in a net gain of about $ 90 million , which will be used to pay down Arkla debt . Arkla Exploration owns sizable gas and crude-oil reserves in the South and Southwest . South Africa negotiated a new debt agreement with its major foreign creditors for about $ 8 billion of its foreign debt outstanding , said Chris Stals , governor of the Reserve Bank and the country 's chief debt negotiator . The new agreement will last for 3 1/2 years starting July 1 , 1990 , when the current agreement expires . The announcement coincides with the start of the Commonwealth Ministers Conference in Kuala Lumpur , where proposals for renewed sanctions against South Africa , including moves to block settling of a new debt agreement , were scheduled to be discussed . As with the previous pact , the new agreement covers the country 's debt `` inside the net , '' which applies mainly to repayments due to overseas creditor banks by the private sector . The agreement calls for South African debtors to make repayments in eight installments , starting in December of next year . The redemption then would be at 1.5 % of the total debt , increasing to 2.5 % in February 1991 , and to 3 % at six-month intervals thereafter . A revised provision would be included for the conversion of short-term claims inside the net to long-term loans outside the net . These claims would be repayable over a 10-year period . Foreign debt falling outside the net of affected indebtedness -- which Mr. Stahl estimated at $ 12 billion -- would remain not subject to the debt arrangements . New York Times Co. said net income rose in the third quarter because of a one-time gain on the sale of the company 's cable-TV system . Net surged to $ 210.8 million , or $ 2.68 a share , from $ 26.7 million , or 33 cents a share , a year earlier . The latest quarter included a gain of $ 193.3 million , or $ 2.46 a share , from the sale of New York Times Cable , completed in August . Exclusive of the gain , operating profit declined 35 % to $ 16.4 million , or 21 cents a share , from $ 25.2 million , or 31 cents a share . The decline primarily reflected the dilution from acquiring McCall 's , Golf World ( U.S . ) and Sailing World magazines ; lower equity earnings from the forest-products group because of price discounting and an unfavorable exchange rate , and an 8.7 % decline in advertising linage at the New York Times , the company 's flagship newspaper . Advertising volume at the company 's 35 regional newspapers decreased 1.1 % . The company said the negative factors are expected to continue into next year . Revenue rose 6.4 % to $ 415.3 million from $ 390.5 million . Democrat Gene Taylor won a special election to fill the congressional seat vacated by the death of Republican Larkin Smith , taking back the GOP 's lone redoubt in Mississippi 's House delegation . Mr. Taylor 's overwhelming victory against Republican Tom Anderson reclaims a seat the Republicans had held for 17 years and gives the Democrats their fifth victory in the seven special House elections held this year . Mr. Taylor , a 36-year-old state senator from Bay St. Louis , won 65 % of the vote in a district that has voted Republican in the past five presidential elections and that was once represented by Republican U.S. Sen. Trent Lott . Mr. Taylor 's victory was an embarrassment for both state and national Republicans . Mr. Anderson , a former Lott aide , received campaign assistance from the senator and from President Bush , who visited the district last week . Even so , Mr. Taylor carried all but one of the district 's dozen counties . Rep. Smith died in a plane crash on Aug. 13 . Wall Street Journal reporters called companies with headquarters or facilities in the Bay area in a bid to assess the damage to their operations caused by Tuesday 's earthquake . The calls reached many , but certainly not all , of the publicly held companies with operations in the area . In most cases damage to company facilities and operations was minimal . ADIA SERVICES INC. , Menlo Park , temporary personnel agency , annual sales of $ 504 million , OTC , said all 30 offices in Bay area were working , but in various states of disarray . Business was slow because many companies were closed yesterday . ADVANCED MICRO DEVICES INC. , Sunnyvale , integrated circuit maker , annual sales of $ 1.12 billion , NYSE , had only minor structural damage . Most of its 4,500 workers were at work yesterday , and no production slowdown was anticipated as long as electricity remains available . AMDAHL CORP. , Sunnyvale , computer maker , annual sales of $ 1.8 billion , Amex , was closed yesterday and no damage estimates were available . AMERICAN BUILDING MAINTENANCE INDUSTRIES Inc. , San Francisco , provider of maintenance services , annual revenue of $ 582 million , NYSE , had some damage to headquarters and lost phone service , but operations were moved to a branch office and are running smoothly thanks to a decentralized computer system the company had developed before the quake . AMERICAN PRESIDENT COS. , Oakland , shipping concern , annual sales of $ 2.2 billion , NYSE , had little damage to the cranes , dock or rail track at its container-ship facility near the collapsed Route 880 overpass . The company expects to work a ship due in today with minimal delays , despite sporadic power . ANACOMP INC. , Indianapolis , NYSE , said its Xidex Corp. unit , a Sunnyvale maker of computer disks and microfilm with annual sales of $ 637 million , had only minor damage and is fully operational . ANTHEM ELECTRONICS INC. , San Jose , distributor of electronic parts , annual sales of about $ 300 million , NYSE , sustained very little damage , anticipated being `` in 100 % operating condition '' by midday . APPLE COMPUTER CO. , Cupertino , computer maker , annual sales of $ 4.07 billion , OTC , sustained some structural damage . Offices were closed yesterday . APPLIED MATERIALS INC. , Santa Clara , maker of computer-chip machine systems , annual sales of $ 490 million , OTC , had slight damage to headquarters , no damage to manufacturing plants . Company , with 1,750 workers in area , is fully functional . ATARI CORP. , Sunnyvale , maker of personal computers and software , annual sales of $ 700 million , Amex , had minor damage and expects to be fully operational by tomorrow . BANKAMERICA Corp. , San Francisco , bank holding company , annual revenue of $ 10.2 billion , NYSE , yesterday had no power at its headquarters , 80 of its 433 Northern California branches were closed and 250 of 750 automatic teller machines were closed in the area . Securities trading was conducted in a backup facility in Concord . BECHTEL CORP. , San Francisco , engineering and construction concern , annual sales of $ 4 billion , had only minor structural damage at its three buildings in the city , but its computers were knocked out . Backup computer tapes were hand-carried to an IBM office in Philadelphia , and the company expects its mainframe to be up in a few days . Workers , except for senior management , were asked not to report for work yesterday . BIO-RAD LABORATORIES INC. , Hercules , biological research and clinical-products leader , $ 200 million in annual sales , Amex , said its Richmond warehouse north of San Francisco was closed because of debris and fallen shelves . It expects to be fully operational by next week . BORLAND INTERNATIONAL , Scotts Valley , personal computer and software designer , annual sales of $ 72 million , had heavy damage to its headquarters and was conducting business from its parking lot . The company does n't expect any shipping delays . BUSINESSLAND INC. , San Jose , computer retail company , annual sales of $ 1.1 billion , NYSE , said all 16 corporate office and stores in the area were open with the exception of a retail center in San Francisco 's business district . That facility should reopen today . CARTER HAWLEY HALE STORES Inc. , Los Angeles , retailer , annual sales of $ 2.79 billion , NYSE , said nine of its 22 Emporium stores in the area were closed because of water damage , broken windows and fallen displays . A spokesman said sales are expected to be hurt , but the losses are covered by insurance . CHEVRON CORP. , San Francisco , oil company , annual sales of $ 25.2 billion , NYSE , had minor damage to downtown headquarters , but structural damage closed two of its seven buildings in San Ramone industrial park . Company expects to be fully operational by next week . CLOROX Co. , Oakland , consumer products , annual sales of $ 1.36 billion , NYSE , was closed yesterday but plans to reopen today or tomorrow . Meanwhile , orders are being routed through Kingsford Products unit in Louisville , Ky. , but computer problems mean they must be processed manually . Expects to be fully operational early next week . COHERENT INC. , Palo Alto , laser maker , annual sales of $ 159 million , was closed yesterday but expects to reopen today . CONSOLIDATED FREIGHTWAYS INC. , Menlo Park , trucking company , $ 2.69 billion in annual sales , NYSE , had structural damage to CF Motor Freight subsidiary 's office in Palo Alto , no damage in Menlo Park . COOPER COMPANIES INC. , Palo Alto , medical products maker , annual sales of $ 628 million , NYSE , had little damage and was in full operation yesterday . DAYTON HUDSON CORP. , Minneapolis , retailer , annual sales of $ 12.2 billion , NYSE , closed seven of its 13 Bay-area Target discount stores and nine of its 20 Mervyn 's department stores because of pending reviews by structural engineers or requests from authorities , who were trying to keep shoppers off the freeways . The company expects to reopen three Target stores and all but two Mervyn 's today or tomorrow . DIASONICS INC. , South San Francisco , maker of magnetic resonance imaging equipment , annual sales of $ 281 million , Amex , had minor damage , mostly in a stockroom . The company plans to be fully operational today . DIGITAL EQUIPMENT CORP. , Maynard , Mass. , computer maker , annual sales of $ 12.7 billion , NYSE , had structural damage at its San Francisco sales office but no appreciable damage elsewhere in the area , including its Cupertino plant . DREYER'S GRAND ICE CREAM INC. , Oakland , ice cream maker , annual sales of $ 225 million , OTC , said it is delivering ice cream wherever roads are passable . EVEREX SYSTEMS INC. , Fremont , maker of personal computers and peripherals , annual sales of $ 377 million , OTC , had minor damage and was almost fully operational yesterday . EXXON Corp. , New York , oil company , NYSE , said its refinery northeast of San Francisco was operating at a slightly reduced rate as a precaution in case of aftershocks . FORD MOTOR CO. , Dearborn , Mich. , auto maker , annual sales of $ 92.4 billion , NYSE , said its three Ford Aerospace unit facilities in the Bay area , including a satellite-assembly operation in Palo Alto , had no major damage . GAP Inc. , San Bruno , clothing retailer , annual sales of $ 1.25 billion , NYSE , expects most of its stores to return to full operation and all 2,500 of its Bay-area workers to be back at work by today . GENENTECH INC. , South San Francisco , biotechnology company , annual sales of $ 334.8 million , NYSE , sustained no major damage and expects to be fully operational today . GENERAL ELECTRIC CO. , Fairfield , Conn. , consumer , industrial products and broadcasting concern , annual sales of $ 50 billion , NYSE , said its GE Nuclear Energy unit , with 1,600 Bay-area employees , had only minor damage at its San Jose headquarters . Business was n't disrupted . GENERAL MOTORS CORP. , Detroit , auto maker , annual sales of $ 123.6 billion , NYSE , sustained about 10 injuries to workers and some ruptured water mains at its New United Motor Manufacturing Inc. facility in Fremont , a joint venture with Toyota Motor Corp . There was limited production of some models yesterday , but it was n't clear when the normal 750-car-a-day pace will resume . Plant officials are still assessing damage to parts suppliers and Port of Oakland facilities that handle shipments to the plant . GOLDEN WEST FINANCIAL CORP. , Oakland , savings and loan , annual revenue of $ 1.4 billion , NYSE , had only minor damage to a few branches and no injured employees . HEWLETT-PACKARD Co. , Palo Alto , personal computer and electronic equipment maker , annual sales of $ 9.8 billion , NYSE , said there will be a `` minimal suspension '' of manufacturing for an undefined period . The computer system was operating , so orders could be taken . The company has 18,000 employees and more than 70 buildings in the Bay area . One building in Palo Alto may be damaged beyond repair . Others had lesser damage and there were no injuries among workers . Damage will be `` easily in the millions , '' the company said . HEXCEL Corp. , Dublin , manufacturer of engineered parts , annual sales of $ 399 million , NYSE , had little damage beyond some phone trouble . HOMESTAKE MINING CO. , San Francisco , gold and general miner , annual sales of $ 432.6 million , NYSE , said its headquarters was closed yesterday because of power failures and lack of water , but that it may reopen today . It expects any impact on its business to be slight . HOMESTEAD FINANCIAL CORP. , Millbrae , financial services concern , annual revenue of $ 562 million , OTC , said three of its 17 Bay-area branches were closed yesterday . The company expects all branches to reopen today . INMAC CORP. , Santa Clara , maker of computer accessories , annual sales of $ 250 million , OTC , said telephones were out at its headquarters but service should be restored by today . The company said it was doing a brisk business in computer power-surge protectors , cables and uninterruptable power sources . INTEL Corp. , Santa Clara , semiconductor maker , annual sales of $ 2.87 billion , OTC , had some damage and few people were at work yesterday . INTERNATIONAL BUSINESS MACHINES Corp , Armonk , N.Y. , maker of business machines , NYSE , said flooding caused by broken water pipes closed its San Jose plant , which makes high-end data-storage devices . The plant and its 8,500 employees gradually will resume operations over the next several days , the company said . Also closed yesterday were the company 's Santa Teresa software-development lab and the Almaden research center . The concern 's National Service Division opened a center for emergency service in Walnut Creek as part of its disaster-recovery plan . KAISER ALUMINUM & CHEMICAL , Oakland , metal and chemical maker , annual sales of $ 2.22 billion , had slight structural damage to its 28-story headquarters building and employees stayed home yesterday to allow crews to clean up . LOCKHEED CORP. , Calabasas , aerospace and defense concern , annual sales of $ 10.59 billion , NYSE , said its Lockheed Missiles & Space division closed its Santa Cruz test facility because of power outages and landslides . The closing , affecting 266 employees , will continue at least until roads are cleared . It was n't known to what extent , if any , the facility was damaged . It also was n't known what the impact will be on the division 's work , which includes the Navy 's Trident submarine-based missile program and the Air Force 's Strategic Defense Initiative . The division had only minor damage at its Sunnyvale headquarters and plant in Palo Altos , and no delays in deliveries are expected . LONGS DRUG STORES INC. , Walnut Creek , drugstore chain , annual sales of $ 1.9 billion , NYSE , had only minor damage and only four of its 75 Bay-area stores , all in the Santa Cruz area , were closed . All are expected to reopen soon . LSI LOGIC CORP. , Milpitas , maker of customized integrated circuits , annual sales of $ 550 million , NYSE , has halted manufacturing at its three plants in the area while they are inspected for structural damage . The company expects to resume full operations by today . R.H. MACY & Co. , New York , retailer , annual sales of $ 7 billion , said there was minor damage to its 24 Macy stores and nine I. Magnin stores in the Bay area . MEASUREX CORP. , Cupertino , maker of computer integrated manufacturing processes , annual sales of $ 265 million , NYSE , had only minor damage but workers spent most of yesterday cleaning up . NATIONAL SEMICONDUCTOR CORP. , Santa Clara , semiconductor maker , annual sales of $ 1.65 billion , NYSE , said it had no major structural damage at its 30 Bay-area buildings , but two workers were injured . Production resumed yesterday . Piping in a waste-treatment plant needed immediate repairs . NORDSTROM INC. , Seattle , retailer , annual sales $ 2.33 billion , OTC , five of this 59-store chain 's nine stores in the Bay Area were closed yesterday , damage appears primarily cosmetic , hopes to reopen four of the stores by today and the fifth by Saturday . ORACLE SYSTEMS CORP. , Belmont , provider of computer programming and software services , annual sales $ 584 million , four of 12 offices and buildings in the Belmont and San Mateo areas were closed , 95 % of computer and telephone systems are operating , expects to be back to full operation by the end of the week . PACIFIC GAS & ELECTRIC CO. , San Francisco , electric , gas and water supplier , annual sales $ 7.6 billion , some minor damage to headquarters , undetermined damage to four nearby substations , severe structural damage to a major power plant at Moss Landing , extensive damage to gas lines and electric lines , 400,000 residences without electricity and 69,000 without gas , can not reconnect electricity until it is certain there are no gas leaks , no predictions on when this will happen . PACIFIC TELESIS GROUP , San Francisco , telecommunications holding company , annual sales of $ 9.5 billion , no damage to headquarters , but no power , the power failure has caused a delay in the release of the company 's earnings report , major concern is subsidiaries , Pacific Bell and Pacific Telesis Cellular , both of which sustained damage to buildings , structural damage to several cellular sites in Santa Cruz , volume of calls on cellular phones 10 times the usual , causing a big slowdown . PROCTER & GAMBLE CO. , Cincinnati-based company 's Folgers Coffee plant in South San Francisco was closed following the earthquake , no injuries or major damage , other plants around country can make up for any lost production . QUANTUM CORP. , Milpitas , manufactures rigid disc drives for small business computers , word processors , annual sales $ 120.8 million , OTC , open for business , minor structural damage . RAYCHEM CORP. , Menlo Park , plastics manufacturer , annual sales $ 1 billion , no major damage and no production slowdown is anticipated . ROSS STORES INC. , Newark , discount apparel chain , annual sales $ 576 million , two of 28 stores in Bay Area closed , both could open as early as today . SAFEWAY STORES INC. , Oakland , retail food chain , annual sales of $ 13.6 billion , some structural damage to headquarters and no power ; major problems transporting products to those stores that remained open ; no numbers on how many stores closed . CHARLES SCHWAB & CO. , San Francisco , discount brokerage firm , annual sales of $ 392 million , had only minor damage to headquarters building and was up and running for yesterday 's market open . Firm will not , however , resume 24-hour service until power in city is restored . Office closed yesterday at 4:30 p.m. EDT . SEAGATE TECHNOLOGY , Scotts Valley , maker of hard disk drives for computers , annual sales of $ 1.37 billion , OTC , closed to assess what appeared to be minor damage to some of its 20 buildings . SOUTHERN PACIFIC TRANSPORTATION CO. , San Francisco , railroad , annual sales of $ 2.41 billion , had only minor damage to headquarters and tracks , and expects to be fully operational tomorrow . St. Louis Southwestern Railway Co. unit halted all service Tuesday night but has since restored some freight lines and limited commuter service between San Francisco and San Jose . SUN MICROSYSTEMS INC. , Mountain View , maker of desktop computers , annual sales $ 1.77 billion , OTC , no injured employees and very little damage to buildings . Closed yesterday due to power difficulties . TANDEM COMPUTERS INC. , Cupertino , computer maker , annual sales of $ 1.6 billion , NYSE , said it had no significant damage and should be fully operational within a week . Many employees stayed home yesterday , but customer service was being maintained . TRANSAMERICA CORP. , San Francisco , financial services and insurance company , annual sales of $ 7.9 billion , NYSE , said its headquarters , the well-known downtown pyramid-shaped building , was intact but closed yesterday . VARIAN ASSOCIATES INC. , Palo Alto , instrumentation and semiconductor equipment company , annual sales of $ 1.3 billion , had only minor damage and no slowdowns were anticipated . VLSI TECHNOLOGY INC. , San Jose , maker of semiconductor products , annual sales $ 171.9 million , OTC , minimal damage to facilities , no injuries , expected operations to return to normal late yesterday . WATKINS-JOHNSON CO. , defense-oriented electronics manufacturer , annual sales $ 292 million , NYSE , minor damage to headquarters and plant in Palo Alto , no damage to San Jose plant , `` still assessing '' damage at Scotts Valley plant , where main product is furnaces for semiconductor production . WELLS FARGO & CO. , San Francisco , bank holding company , annual revenue $ 4.9 billion , NYSE , minor damage at headquarters , 12 branches out of 170 in Northern California sustained structural damage that will preclude them from opening in the near future , 45 locations with at least one automatic teller machine inoperable , central computer systems are operating , no injuries . WYSE TECHNOLOGY INC. , San Jose , maker of video display terminals and workstations and IBM compatible computers , annual sales of $ 452 million , slight structural damage at headquarters , no injuries , expects to be back to full operation today . 3COM CORP. , Santa Clara , maker of computer communications systems , annual sales of $ 386 million , OTC , slight structural damage to headquarters , communications systems already fully operational . Could the collapse of I-880 have been prevented ? That was the question structural engineers and California transportation officials were asking themselves yesterday as rescue workers began the gruesome task of trying to extract as many as 250 victims from beneath the concrete slabs of the double-deck Nimitz Freeway in Oakland that caved in during Tuesday 's temblor . After touring the area , California Gov. George Deukmejian late yesterday called for an inquiry into the freeway 's collapse , blaming the disaster on substandard construction , the Associated Press reported . The impact of the destruction of this 2.5-mile stretch of highway was tragically measured in lost lives . But there are other long-term effects that raise serious questions about the ability of California 's infrastructure to withstand a major temblor . It could easily be two years before the well-traveled artery that helps connect Oakland with San Francisco is reopened , and the cost to build a new stretch of highway could soar to more than $ 250 million , said Charles J. O'Connell , deputy district director in Los Angeles of the California Department of Transportation , nicknamed Caltrans . Caltrans in Sacramento said total damage from the collapsed highway is estimated at around $ 500 million . The aftershocks of the highway tragedy are reverberating in Los Angeles as well , as local politicians spoke yesterday against plans to bring double-decking to Los Angeles freeways by 1994 . Caltrans plans to add a second deck for buses and car pools above the median of a 2.5-mile stretch of the Harbor Freeway just south of Los Angeles , near the Memorial Coliseum . Los Angeles County Supervisor Kenneth Hahn yesterday vowed to fight the introduction of double-decking in the area . Caltrans abandoned double-decking in the early 1970s , following the 1971 Sylmar earthquake that destroyed freeway sections just north of Los Angeles , Mr. O'Connell explained . That temblor measured 6.1 on the Richter scale ; Tuesday 's was So why even consider stacking freeways now ? `` We 've run out of places to build freeways in L.A. , and the only place to go is up , '' Mr. O'Connell said , although he acknowledges there are many obstacles , including cost . But as for safety , he says double-deck freeways built today with the heavily reinforced concrete and thicker columns required after the Sylmar quake should withstand a calamitous temblor of 7.5 to 8 on the Richter scale . Reasons for the collapse of the Nimitz Freeway were sketchy yesterday . But most structural engineers attributed the destruction to improper reinforcement of the columns that supported the decks , and the fact that the ground beneath the highway is largely landfill and can become unstable , or `` liquefy , '' in a major quake . The two-story roadway , designed in the mid-1940s and completed in 1957 , was supported by columns that apparently lacked the kind of steel reinforcement used in highways today . While the pillars did have long metal bars running vertically through them for reinforcement , they apparently lacked an adequate number of metal `` ties '' that run horizontally through the column , said Leo Parker , a structural engineer in Los Angeles . Caltrans today uses a variation of the design Mr. Parker describes , with spiraling steel rods inside . But in the case of the Nimitz Freeway , the lack of such support caused the core of the columns to crumble and buckle under the weight of the second deck , crushing motorists who were lined up in bumper-to-bumper rush-hour traffic on the lower deck nearly 15 feet below . Officials of the state agency did n't have any immediate explanation why the reinforcement did n't hold up . Caltrans reinforced the highway in 1977 as part of a $ 55 million statewide project , using steel cables to tie the decks of the freeway to the columns and prevent the structure from swaying in a quake . Caltrans spokesman Jim Drago in Sacramento declined to identify the engineering firm that did the reinforcement work . Liability in the bridge and road collapses will revolve around whether government took `` reasonable care '' to build and maintain the structures , says John Messina , a Tacoma , Wash. , personal-injury attorney who specializes in highway design and maintenance cases . The firm brought in to strengthen the structure could be liable as well . The results of the quake certainly raise questions about whether reasonable care was taken , Mr. Messina says . Given the seismic history of the Bay Area , `` it seems to me that a 6.9 earthquake is a foreseeable event . '' Caltrans ' Mr. Drago defended the agency 's work on the Nimitz Freeway . `` The work was done properly , '' he said . `` Basically , we had a severe earthquake of significant duration and it was just something the structure could n't withstand . '' Ironically , Caltrans this year began working on a second round of seismic reinforcements of freeways around the state , this time wrapping freeway columns in `` steel blankets '' to reinforce them . But only bridges supported with single rows of columns were top priority , and the Nimitz Freeway , supported by double rows , was left out , Mr. Drago explained . `` The reason is that the technology is such that we 're not able to retrofit multi-column structures , '' he said . Charles McCoy in San Francisco and John R. Emshwiller in Los Angeles contributed to this article . Lionel Corp. 's board unanimously rejected a tender offer of $ 8 a share , or $ 95.4 million , for as much as 90 % of Lionel by a group with a 9.9 % stake in the toy retailer . Lionel also urged holders of its stock and debt not to tender their securities , saying it wants to remain independent to pursue its business strategy . Lionel also said the offer by Robert I. Toussie Limited Partnership is inadequate , and full of conditions that leave it `` subject to substantial uncertainty . '' In addition , Lionel began a lawsuit in federal District Court in New York seeking to enjoin the offer , alleging , among other things , violations of federal securities law and fraudulent manipulation of the market for Lionel 's securities . Robert I. Toussie , general partner of the investment group , said the Lionel response reflected management 's entrenched position , saying officials had failed to come up with a better alternative to his group 's offer . Mr. Toussie said he would respond to Lionel 's suit after his lawyers review it . Efforts by a federal mediator to reignite talks between Boeing Co. and the Machinists union apparently failed , and no further meetings are scheduled . Company officials and union representatives did n't meet face to face , but the mediator shuttled between the two groups . In a statement issued after the meeting , the aerospace giant said it wo n't increase its offer although adjustments within the proposed pay-and-benefit mix are possible . Machinists already have rejected a proposal that called for a 4 % pay increase and 8 % bonus in the first year . In the second year , workers would receive a 3 % wage boost and a 3 % bonus , followed by a 3 % increase without a bonus in the third year . `` The company will not budge on anything , '' said a spokesman for the union . As the strike enters its 15th day today , some members are getting nervous , the spokesman conceded , but the majority of the 55,000 Machinists are prepared to `` wait it out as long as it takes . United Merchants & Manufacturers Inc. said its president , Uzi Ruskin , withdrew his proposal to acquire control of the New York textile and clothing company . Last month , Mr. Ruskin proposed , among other things , to buy 3.5 million shares , or 38 % , for $ 4 apiece . Coupled with his current 1.2 million shares and 4 % held by an associate , the stake would have given him control of 55 % of the concern . In a Securities and Exchange Commission filing , Mr. Ruskin had said that holders of the other 45 % of United Merchants would receive one-half share of a new preferred stock for each of their shares . A special committee of United Merchants directors said that in view of uncertainties regarding various legal and financial considerations , it could n't recommend the plan to the full board . The company is exploring , with a major financial institution , the development of a plan to boost the value of the company for its holders , Mr. Ruskin said . In a separate SEC filing , Albert Safer , who holds 6.46 % of United Merchants , said he retained investment bank Lazard Freres & Co. for advice as he evaluates the possibility of making a bid for the textile maker . On Friday , Mr. Safer , a Newark , N.J. , textile businessman , signed a confidentiality agreement under which United Merchants would provide him with nonpublic information . The White House is making sure nobody will accuse it of taking this crisis lightly . In the aftermath of the California earthquake , President Bush and his aides flew into a whirlwind of earthquake-related activity yesterday morning . Some of it was necessary to get federal help flowing to victims , but some seemed designed mostly to project an image of a White House in action . Mr. Bush and his aides were accused of responding too slowly after the Exxon Valdez oil tanker split open in Alaskan waters and Hurricane Hugo struck the Carolina coast , and they clearly do n't want a repeat of those charges now . So the White House announced that Mr. Bush got his first earthquake briefing of the day at 6:30 a.m. from chief of staff John Sununu . By noon , Mr. Bush had taken two phone calls from Vice President Dan Quayle , who was in California ; made a televised statement of concern ; signed a disaster proclamation ; received a written report from the Federal Emergency Management Agency ; and visited FEMA headquarters . Mr. Bush himself essentially acknowledged that he and his aides were trying to head off criticism . On his FEMA visit , Mr. Bush said that he hoped there would be `` less carping '' about the emergency office 's performance this time , adding that the agency `` took a hit '' for its reaction to Hurricane Hugo . The White House already is talking of Mr. Bush visiting the California earthquake site this weekend . He visited the Hugo devastation but not until after local leaders urged him to do so . Beazer PLC , a major British building materials and construction concern , reported a 24 % jump in pretax profit for its latest financial year , helped largely by contributions from its U.S. unit , Koppers Co . Pretax profit for the year to June 30 rose to # 142.5 million ( $ 224.5 million ) from # 114.7 million ( $ 180.7 million ) , broadly matching analysts ' expectations . Profit after taxes and minority interests but before extraordinary items increased 22 % to # 92.6 million from # 75.6 million a year earlier , while fully diluted earnings per share rose to 29.90 pence ( 47 cents ) from 24.68 pence ( 39 cents ) . The lethal shudders that wracked the San Francisco Bay Area -- rated a 6.9 on the Richter scale -- did n't match the great earthquake of 1906 , rated at 8.25 . The difference of just 1.35 points on the scale , designed by Charles Richter of CalTech in the 1930s , means the older quake was `` 10 to 20 times stronger , '' says Lane Johnson , director of the University of California Berkeley Seismographic Station . The ground ruptured along a 20-to-30-mile stretch of the San Andreas Fault on Tuesday , Mr. Johnson added . In 1906 , the rupture was 300 miles long and a couple feet wide . Though the epicenter of Tuesday 's temblor was located 10 miles north of the town of Santa Cruz , and 50 miles south of San Francisco , its havoc hopscotched up the coast in seemingly random fashion . But the greatest damage was visited on buildings and roadways perched upon landfill , as were the Marina District of San Francisco and the Bay Bridge -- two areas of maximum devastation . `` Landfill -- loose and unconsolidated earth -- may feel like rock but it behaves like liquid when you shake it , '' said Douglas Segar , professor of geosciences at San Francisco State University in a televised interview . `` It liquefies in a patchwork quilt pattern . Our quake behaved much like the Mexico City earthquake , where great damage was miles from the epicenter . '' Mr. Johnson , of the Berkeley seismographic station , said : `` Landfill can be done if it 's properly compacted . You can drive piles on it and build on it . '' He cited the example of San Francisco 's financial district , where many new glass towers survived almost unscathed . But the public policy issues raised by earthquake damage will be difficult to address , Mr. Johnson predicted . `` The attention span of the public is short , '' he said . `` We 've known for years and years we 've got lots of old { pre-1950s } unreinforced brick and masonry buildings . '' One old building , the Golden State Bank Building on Front Street , had its yellow brick facade sheared off by the shock of the quake , leaving a wedge of its third floor open to the air , while piles of dusty bricks tumbled to the street below narrowly missing rush-hour pedestrians and cars . Reinforcing such old building stock , Mr. Johnson said , `` comes down to money . It 's a danger . We know it 's there . And sooner or later , we have to do something about it . '' The urgency is heightened because this week 's earthquake -- while major and followed by hundreds of aftershocks -- did n't release enough pent-up energy tension along the faultlines to preclude more and bigger quakes soon . `` The big one is still due , '' Mr. Johnson predicted in an interview . `` The Bay Area has three very dangerous faults , the San Andreas , the Hayward fault and the Calaveras fault . It { Tuesday 's quake } has n't solved our problem . In California , this is the reality . Coca-Cola Co. may be about to intensify the cola wars . Coke said it will test market a caffeine-free version of its flagship brand , Coca-Cola Classic , beginning next week in Charlotte , N.C . Other , as yet unnamed , cities will follow . If all goes well , the product will be rolled out for national sales sometime next year , a Coke spokesman said . After the confusion surrounding the change of the Coke formula in 1985 , Coca-Cola was reluctant to clutter the Classic name with a brand extension . But now , the soft-drink giant appears willing to take the risk . `` The name Classic Coke has tremendous value , and they have n't merchandised that name before , '' says Jesse Meyers , publisher of the trade journal Beverage Digest . The Coke spokesman said a caffeine-free Classic should help increase volume of the original brand . Indeed , analysts have said that the absence of new products , among other factors , has limited sales growth throughout the industry . Coke now leads Pepsi in market share in caffeine-free diet colas but trails Pepsi in sales of caffeine-free sugared colas , according to Beverage Digest . Coke introduced a caffeine-free sugared cola based on its original formula in 1983 . It switched to a caffeine-free formula using its new Coke in 1985 . Coke has been studying the possibility of introducing a caffeine-free Classic for a year , a company spokesman said . He said large increases in sales of other non-caffeine soft drinks make the timing right now . CALIFORNIA STRUGGLED with the aftermath of a Bay area earthquake . As aftershocks shook the San Francisco Bay area , rescuers searched through rubble for survivors of Tuesday 's temblor , and residents picked their way through glass-strewn streets . In Oakland , hopes faded for finding any more survivors within the concrete and steel from the collapse of an interstate highway . At least 270 people were reported killed and 1,400 injured in the rush-hour tremor that caused billions of dollars of damage along 100 miles of the San Andreas fault . Bush declared the region a major disaster area and the military was mobilized to prevent looting . The baseball commissioner said the third game of the World Series between the Giants and the Athletics would be played Tuesday in Candlestick Park . HONECKER WAS OUSTED as leader of East Germany amid growing unrest . The 77-year-old official , who oversaw the building of the Berlin Wall , was removed during a meeting of the 163-member Communist Party Central Committee in East Berlin . Honecker , who was reported ill following gall-bladder surgery in August , said he was resigning for health reasons . He was succeeded by internal-security chief Egon Krenz , 52 , a hard-liner who quickly ruled out any sharing of power with pro-democracy groups . Honecker 's departure came after weeks of street protests and an exodus to the West of East Germans who had become disenchanted with his rule . HUNGARY ADOPTED constitutional changes to form a democratic system . At a nationally televised legislative session in Budapest , the Parliament overwhelmingly approved changes formally ending one-party domination in the country , regulating free elections by next summer and establishing the office of state president to replace a 21-member council . The country was renamed the Republic of Hungary . Like other Soviet bloc nations , it had been known as a `` people 's republic '' since The voting for new laws followed dissolution of Hungary 's Communist Party this month and its replacement by a Western-style Socialist Party . The space shuttle Atlantis blasted into orbit from Cape Canaveral , Fla. , and its crew of five astronauts launched the nuclear-powered Galileo space probe on a flight to the planet Jupiter . The $ 1.4 billion robot spacecraft 's exploratory mission is to take six years . The shuttle is slated to return Monday to California . South Korea 's President Roh addressed a joint House-Senate meeting and urged patience over U.S. demands for the opening of Seoul 's markets to more American goods , saying trade issues would be `` resolved to mutual satisfaction . '' He also said tragic results could follow any `` hint of weakening '' of the U.S. defense commitment to Seoul . The Census Bureau reported that 13.1 % of the U.S. population , or 31.9 million people , were living in poverty in 1988 . Last year 's figure was down from 13.4 % in 1987 and marked the fifth consecutive annual decline in the poverty rate . Per capita income rose 1.7 % to $ 13,120 , but median family income fell 0.2 % . The Bush administration accused Israeli Prime Minister Shamir of hindering peace efforts in the Mideast with `` unhelpful '' and disappointing statements . Shamir said Tuesday that he was prepared to risk a policy conflict with the U.S. over an Egyptian plan to hold direct Israeli-Palestinian talks , which the premier 's Likud bloc opposes . Cuba was elected to the U.N. Security Council for the first time since its Castro-led revolution 30 years ago . The election was by secret ballot in the General Assembly . The U.S. did n't openly oppose Cuba 's seating as the Latin American council delegate . Britain 's Prime Minister Thatcher told a Commonwealth summit in Kuala Lumpur , Malaysia , that sanctions against South Africa were `` utterly irresponsible , '' officials said . But other nations at the opening of the 49-nation meeting of Britain and its former colonies pressed for continued or stronger embargoes in an effort to end apartheid . Arab officials in Saudi Arabia said three-week-old talks by Lebanese lawmakers aimed at ending Lebanon 's civil war appeared about to collapse . Christian legislators are insisting on a Syrian troop pullout from Lebanon before agreeing to political changes giving the nation 's Moslems a greater role in Beirut 's government . Colombia 's judges launched a 72-hour strike to press security demands following Tuesday 's murder of a High Court justice in Medellin . The country 's narcotics traffickers claimed responsibility for the slaying . Most of the country 's 20,000 judges and judicial employees joined the work stoppage . Charles S. Mitchell , a vice president with Homart Development Co. , the real estate development subsidiary of Sears , Roebuck & Co. , was named president of Figgie Properties , a real estate development unit . He succeeds William Kohut , who resigned earlier this year . Also , Richard A. Barkley , a former marketing executive with FMC Corp. , was appointed president of Continental Container Systems , a producer of can closing machinery that Figgie acquired late last year . Figgie is a fire protection , electronics and industrial products concern . Dow Chemical Co. said third-quarter net income slipped 6.8 % from a record year-ago quarter . The decline broke a streak of 10 quarters in which Dow posted earnings increases . Dow 's third-quarter net fell to $ 589 million , or $ 3.29 a share , from $ 632 million , or $ 3.36 a share , a year ago . Sales in the latest quarter rose 2 % to $ 4.25 billion from $ 4.15 billion a year earlier . Dow closed at $ 94.625 a share , up 75 cents , in New York Stock Exchange composite trading . A spokeswoman said Dow is comfortable with Wall Street expectations that full-year earnings will total about $ 14.60 a share , compared with last year 's record net of $ 2.4 billion , or $ 12.76 a share . But that signal on full-year profit casts doubt on whether Dow will improve on its year-ago fourth-quarter net of $ 3.44 a share , or $ 635 million . Dow would earn $ 14.85 a share for the year if it equaled that year-ago fourth-quarter performance . Dow officials were signaling that the company would earn less than $ 15 a share this year even before they announced in July a plan to acquire 67 % of Marion Laboratories Inc . That acquisition could further dilute earnings per share this year , the company spokeswoman said . Dow has n't said exactly what impact the Marion acquisition will have on 1989 earnings . Dow blamed the third-quarter earnings drop on several factors , including softer prices for polyethylene and other basic chemicals , a slower U.S. economy and a stronger dollar , which made Dow 's exports from the U.S. more expensive to overseas customers . Another problem was a 7 % increase in operating costs at a time when revenue was rising by only 2 % . For the first nine months of the year , Dow earned $ 2.06 billion , or $ 11.41 a share , up 17 % from $ 1.76 billion , or $ 9.32 a share , a year ago . Sales for the latest nine months rose 7.7 % to $ 13.34 billion from $ 12.38 billion in the year-ago period . Whether or not `` great cases make bad-law '' -- as Justice Holmes asserted -- who can doubt that when great confirmation hearings turn on the nominee 's response to these great cases they make bad judicial history ? Ethan Bronner 's `` Battle for Justice : How the Bork Nomination Shook America '' ( Norton , 399 pages , $ 22.50 ) is a spirited narrative of the nastiest of these hearings , done with journalistic verve , but with a flawed legal philosophy . While the book amply justifies its subtitle , the title itself is dubious . What shook America was not a battle for justice but for naked power , in which an army of judicial activists rolled over a judge they had demonized . In its basic structure and style the book is novelistic , with piquant character portrayal , hard-wire action and devious intrigue of the sort more likely to be encountered in a Washington docudrama than in a constitutional history . Mr. Bronner seems to believe that the hearings could have gone either way . I doubt that . Given Democratic frustration with the Reagan victories and Court appointments , the contingency plans in place , and Mr. Bork 's paper trail of vulnerable writings , it was pretty clear that Judge Bork never stood much chance of being confirmed . As Mr. Bronner himself says , the smell of `` raw meat '' was in the air . Perhaps because they won , Mr. Bork 's attackers come through more vividly than his defenders . Ralph Neas was the organizing genius , whipping a conglomerate of pressure groups into an irresistible attacking force . Harvard 's Laurence Tribe was the constitutional heavy , laying out legal strategies for the senators and witnesses to follow . But it was Ted Kennedy who scored most effectively with his searing portrayal of `` Robert Bork 's America '' -- the parade of imaginary horribles that would follow logically , he claimed , from the positions Mr. Bork had taken over the space of two decades . Sen. Kennedy , never mind his dubious credentials for the moral high ground , emoted brilliantly . I add two others . Republican Sen. Arlen Specter of Pennsylvania engaged the nominee in a verbal contest aimed at showing that Mr. Bork was willing to stretch the Constitution in one area ( free speech ) while remaining rigid in all the others . It achieved a good media play , and enabled Sen. Specter and others to vote against Mr. Bork out of `` conscience . '' Further ammunition came from left legal theorist Ronald Dworkin , who in the New York Review of Books painted a picture of a constitutional zombie willfully reading his personal prejudices into the Constitution , particularly in the area of `` original intent . '' The charge of being `` outside the mainstream '' of legal thought gravely undercut Mr. Bork 's scholarly standing , leaving him bleeding on the platform . The nomination still might have been salvaged if a number of Democratic moderates in the South and Southwest had broken party lines . But Democratic Sen. Bennett Johnson of Louisiana reminded the little band that anti-Bork blacks and women could furnish the margin to punish them in their next Senate elections . Demographics converged with `` mainstream '' and demonizing to seal Robert Bork 's fate . The upshot ? Mr. Bork 's opponents chose the battlefield , held it and kept it . Yet with the smooth confirmation of Anthony Kennedy , an `` 80 percenter '' only slightly less supportive of judicial restraint than Mr. Bork , the Democrats may have won the battle but lost the war . Another upshot , however , was the chilling message the Bork hearings sent into the judicial culture from which the Supreme Court draws its talent . The word went forth to every law school that those with federal court ambitions must travel a safe constitutional journey , with no paper trail and no bite to their tongue or pen . Unfortunately , the author simply does n't supply the philosophical frame to sustain his reportorial talents . He has too readily swallowed the case for the activist law school culture . Probing more deeply into the doctrine of `` judicial restraint , '' he would have found a long history going back to the great decisions of Justice Holmes . He would discover it also in Alexander Bickel , a subtle constitutional scholar , Mr. Bork 's closest friend at Yale , whose influence on the judge goes well beyond Mr. Bronner 's reporting . Still , the long view of Robert Bork as constitutional thinker must be a spotty one . His strength lies in his majoritarian doctrine , which keeps the Court clear of transient group pressures and leaves most decisions in a democracy to elected legislatures and executives . Unfortunately , Mr. Bork failed to distinguish between such pressures and the emergence of great issues critical to a society that must be settled judicially if it is to cohere . The question of segregated schools , in Brown vs. Board of Education , was such an issue . In our time abortion has become another , best left to a line of Supreme Court decisions rather than to the chaos of 50 state legislatures . A reflective and growing consensus of Americans clearly wishes to apply the right to privacy in contraceptive matters ( decided in the Griswold case ) to abortion as well . One can understand Mr. Bork 's fear that the new right to privacy will become intolerably stretched , though a Supreme Court composed of men and women with realism , guts and a sense of limits should be able to manage it . What is certain is that if Americans allow another happening like the degrading Bork confirmation circus , it will be at their peril . Mr. Lerner is a writer and historian living in New York . Sotheby 's Inc. , the world 's biggest auction house , is taking a huge Wall Street-style risk on the outcome of the sale of art from the estate of John T. Dorrance Jr. , the Campbell Soup Co. heir . The Financial Services division has guaranteed the Dorrance family that it will receive a minimum of $ 100 million for the collection , regardless of what the bids for the art works total , people close to the transaction say . The collection , which includes two early Picassos , a van Gogh , a Monet , other paintings , furniture and porcelains , went on sale last night in the first of six auctions . What Sotheby 's is doing closely resembles an underwriting by an investment bank . A corporation that wants to sell stock or bonds goes to a Wall Street firm , which purchases the securities outright , accepting the financial risk of finding buyers . If the investment bank can sell the securities at a higher price than it paid the issuer , it makes a profit . At the initial sale last night , for example -- the sale featuring the Impressionists masters -- bids totaled $ 116 million . That was slightly above Sotheby 's presale estimate of $ 111 million . Normally , Sotheby 's would have earned 20 % of the total in commissions . Instead , people familiar with the transaction said , the auction house opted to forgo that percentage in order to obtain the collection and in exchange for taking a bigger chunk of proceeds exceeding $ 100 million . Art dealers say that while auction houses occasionally guarantee the seller of a highly desirable work of art a minimum price , a financial commitment of this size is unprecedented . Diana D. Brooks , president of Sotheby 's North America division , vehemently denies it offered the Dorrance heirs a money-back guarantee , calling such reports `` inaccurate . '' Buried in the glossy hardbound catalog for the sale , however , appears the statement , `` Sotheby 's has an interest in the property in this catalog . '' Explains a Sotheby 's spokeswoman , the statement `` means exactly what it says . We have some level of financial interest '' in the collection . `` We do n't disclose specifics . '' Frank Mirabello , a lawyer for the Dorrance estate with the Philadelphia law firm of Morgan , Lewis & Bockius , declines to comment on the financial arrangements . Sotheby 's made the $ 100 million guarantee to keep the Dorrance collection away from its archrival , auction house Christie 's International PLC ; Christie 's has handled smaller sales for the Dorrance family over the years . When Christie 's officials asked why the firm was n't picked to sell the Dorrance collection , representatives of the Dorrance family `` told us it was a question of financial considerations , '' said Michael Findlay , Christie 's head of impressionist and modern paintings . Collectors who have made their money on Wall Street have become an increasingly important part of the art business and their money has helped fuel the art boom , but recently it appears Sotheby 's has been returning the compliment . In November 1987 , Sotheby 's essentially offered a Wall Street-style `` bridge loan '' of about $ 27 million to Australian businessman Alan Bond to enable him to purchase Vincent van Gogh 's `` Irises '' for $ 53.9 million . It was the highest bid in history for a work of art . But two weeks ago , Sotheby 's said that it has the painting under lock and key because the loan had not been fully repaid . Sotheby 's is offering such deals because it 's an art sellers ' market , at least where the best works are concerned , says Ralph Lerner , an attorney and author of the book `` Art Law . '' `` There seems to be a lot of art for sale , but there 's more competition . The competition gives the seller the ability to cut a better deal , '' he says . The Dorrance family will still receive a substantial portion of the auction proceeds above $ 100 million , people familiar with the transaction said . But it 's likely that Sotheby 's will take a higher than usual commission , called an override , on the amount exceeding the guarantee . Sotheby 's has been aggressively promoting the Dorrance sale . At a news conference last May announcing plans for the auction , Sotheby 's estimated its value in excess of $ 100 million . More recently , Sotheby 's has predicted the collection will fetch $ 140 million . That 's the highest estimate for a single collection in auction history . The decision to put the entire collection on the block stunned many , since Mr. Dorrance had served as chairman of the Philadelphia Museum of Art , and it had been assumed many of the works would be donated to the institution . At last night 's sale , 13 of 44 works that sold were purchased by Aska International Gallery , the art-acquisition unit of Aichi Financial , a Japanese conglomerate that owns 7.5 % of Christie 's . Meanwhile , Sotheby 's guarantee is raising eyebrows in the art world . `` The consumer has to throw out the idea that the auction house is a disinterested middleman , '' says New York art dealer David Tunick . While he adds that he has no problem with auction houses who sell works in which they have a financial interest , `` It ought not to be hidden in some small print . '' In such situations , he says , the house `` is going to put the best light on things . '' For example , an auction house 's comments on the condition of a work of art that is up for sale should be looked at with `` very open eyes , '' he says . `` There 's more and more of this cash-up-front going on at every level , '' says Bruce Miller , president of Art Funding Corp. , an art lender . Dealers and auction houses `` know if they do n't lay out a half a million for this , another one will ; it 's that competitive . '' In January , two small New York galleries , the Coe Kerr Gallery and Beadleston Fine Arts , snatched a major art collection owned by the Askin family away from rival auction-house bidders with an up-front payment of about $ 25 million . A Christie 's spokeswoman said that while the auction house sometimes waives its seller 's commission to attract art works -- it still gets a commission from the buyer -- Christie 's wo n't offer financial guarantees because `` Christie 's believes its primary role is as an auction house , and therefore as an agent { for buyer and seller } , not as a bank . Egon Krenz , the man tapped yesterday to become East Germany 's new leader , faces the same task that has fallen to neighboring socialist colleagues : reforming a country in crisis . But unlike the other new leaders in the East Bloc , Mr. Krenz will face an immediate threat to his nation 's very existence : German reunification . Mr. Krenz , age 52 , is known as an old-guard ironfist , one likely to continue the method of running a country that the Berlin Wall made famous . Even if he were to change his stripes and become another Milton Friedman , however , he would still stand a good chance of losing a country . Mr. Krenz almost certainly will be a younger version of Erich Honecker , his rigid predecessor as dictator . Mr. Krenz has followed much the same career path as Mr. Honecker : Both spent years overseeing the Freie Deutsche Jugend , the youth group that is the communist regime 's principal tool for stamping young Germans into socialist citizens . More recently , Mr. Krenz has been in charge of East German security , and is the youngest member of the ruling Politburo . Faced with another Mr. Honecker , so many despairing East Germans are likely to flee that the two German peoples will get their reunification , de facto , on West German ground . But if East Germany 's arthritic Politburo does loosen up enough to permit Mr. Krenz to make serious efforts at reform , he will face a challenge just as fundamental . Abandoning socialism means abandoning the East German state 's reason for existence , and with it the justification for its watchdogs and its Wall . In this scenario it 's hard to imagine that a pale imitation of the Federal Republic could avoid being pulled into some kind of tie -- economic , federal or stronger -- with West Germany . Mr. Krenz may need a bit of time to consolidate his empire , which would do a lot to promote Reunification Scenario One . Cartoonists in West Germany have already mocked the exodus by imagining an advertisement placed by Mr. Honecker : `` Wanted : one people . '' The West German embassies in Prague , Budapest and Warsaw are continuing to find refugees at their gates . Of course East Germany , true to its tradition , could tighten its borders yet further . Two of the last gestures of the Honecker regime were to close the border to Czechoslovakia and install halogen lights in some spots along the frontier . But with world-wide opinion -- even , apparently in Moscow -- against East Germany , the country would have to turn itself into an Albania to clamp down further on refugees . There have been some reports that Mr. Krenz is moving to `` soften '' his reputation , notably rumors that it was he who kept East Germany 's state police off protesters ' backs at the country 's dismal 40th anniversary celebrations earlier this month . But even if he effects a Hyde-to-Jekyll transformation , he will face a serious ideological crisis and Reunification Scenario Two . The problem is one that East Germany shares with other half-states , such as North Korea , but one it must shoulder alone in the East Bloc . When Poland moves to reform , it can at least lean on its past : However flawed and short-lived Joseph Pilsudski 's interwar republic , it was a nonsocialist democracy . Czech reformers can recall the Wilsonian ideals of the same period in their country . Even the Soviet Union has Peter the Great to rediscover , should it choose to . But East Germany is merely `` the land of truly existing socialism . '' Beyond that , it has to compete with West Germany for a claim to the German identity . Up to now , the main weapon of the `` worker and peasant state '' has been the ideology of socialism . With talk today of a second economic miracle in West Germany , East Germany no longer can content itself with being the economic star in a loser league . Without Moscow 's military and party behind it , East Germany runs the risk of disintegrating . If it goes capitalist , and increases trade with West Germany , it will convert itself , willy-nilly , into an economic annex of the Federal Republic . There 's a certain cruel logic at work here : It 's particularly appropriate -- and tragic -- that the land that produced Karl Marx should prove socialism 's failure in an experiment that uses its own people as controls . There may be forces that would delay this scenario . Ideologues are the last to surrender , and Germans are an ideological people . The protesters who greeted Mikhail Gorbachev at East Berlin 's airport earlier this month were n't shouting `` Go U.S.A '' -- they were chanting `` Gorby , Help Us . '' Ideologues on the other side of the border can also slow the process . Helmut Kohl 's governing conservative coalition is proving admirably true to the West German constitution by making more than 500,000 people of German descent automatic citizens this year alone . But within the government and in the think tanks outside it , many West Germans maintain that they do n't want immediate reunification . Politically , this currently is wisdom -- particularly given a nervous neighboring France . But it would be ironic if Germany 's reunification , just like its division , eventually were the result of actions in centers of power other than Bonn and Berlin . In a statement that was as close as East Germany gets to practicing `` glasnost '' , Otto Reinhold , an East German party theorist , actually acknowledged the reunification dilemma . `` The main problem , '' Mr. Reinhold said in an East German radio interview monitored by Radio Free Europe in Munich , stems from the fact that `` the GDR is different '' from other East European states . `` What kind of right to exist , '' he asked , `` would a capitalist German Democratic Republic have alongside a capitalist Federal Republic ? '' That 's a question East Germany ca n't answer easily , no matter what its new leader does . Miss Shlaes is editorial features editor of The Wall Street Journal/Europe . INSURERS ARE FACING billions of dollars in damage claims from the California quake . But most businesses in the Bay area , including Silicon Valley , were n't greatly affected . Computer and software companies in the region are expecting virtually no long-term disruption in shipments . Also , investors quickly singled out stocks of companies expected to profit or suffer from the disaster . Leveraged buy-outs may be curbed by two rules in pending congressional legislation . The provisions , in deficit-reduction bills recently passed by the House and Senate , could raise the price tags of such deals by up to 10 % and cool the takeover boom . A bill giving the Transportation Department the power to block airline leveraged buy-outs cleared a House panel . But Secretary Skinner said he would urge Bush to veto the bill . Housing starts sank 5.2 % in September to a seven-year low . The drop , following a 6.2 % decline in August , indicates the industry is still being hurt by the Fed 's anti-inflation battle . IBM plans to buy back $ 1 billion of its common shares , a move likely to help the computer giant 's battered stock . The buy-back , which was n't a complete surprise , was announced after the stock market had closed . A capital-gains tax cut plan has been worked out by Senate Republicans . A similar proposal may be introduced soon by Senate Democrats . British Airways said it is seeking improved terms and a sharply lower price in any revised bid for United Air 's parent . The British carrier also confirmed it is n't committed to going forward with any new bid . UAL 's stock fell $ 6.25 , to $ 191.75 . Stock prices rose slightly as trading slowed , while bonds ended little changed despite a slumping dollar . The Dow Jones industrials gained 4.92 , to 2643.65 . But investors remain wary about stocks , partly because of turmoil in the junk-bond market . B.A.T Industries may delay part of its defensive restructuring plan , including the sale of its Saks Fifth Avenue and Marshall Field units . The British conglomerate cited the recent turmoil in financial markets . WCRS Group announced a major restructuring that largely removes it from the advertising business . The London-based concern will sell most of its ad unit to France 's Eurocom . Commodore International expects to post its second consecutive quarterly loss because of weak personal computer sales in some markets . Jaguar hopes to reach a friendly accord with General Motors within a month that may involve producing a cheaper executive model . Sears is negotiating to refinance its Sears Tower for close to $ 850 million , sources said . The retailer was unable to find a buyer for the building . Whitbread of Britain put its spirits division up for sale , setting off a scramble among distillers . The business includes Beefeater gin . Markets -- Stocks : Volume 166,900,000 shares . Dow Jones industrials 2643.65 , up 4.92 ; transportation 1247.87 , off 6.40 ; utilities 213.97 , off 0.57 . Bonds : Shearson Lehman Hutton Treasury index 3371.36 , off Commodities : Dow Jones futures index 129.90 , up 0.18 ; spot index 130.36 , up 0.39 . Dollar : 141.45 yen , off 1.30 ; 1.8485 marks , off 0.0182 . The dollar finished softer yesterday , tilted lower by continued concern about the stock market . `` We 're trading with a very wary eye on Wall Street , '' said Trevor Woodland , chief corporate trader at Harris Trust & Savings Bank in New York . `` No one is willing to place a firm bet that the stock market wo n't take another tumultuous ride . '' News of the major earthquake in California Tuesday triggered a round of dollar sales in early Asian trade , but most foreign-exchange dealers said they expect the impact of the quake on financial markets to be short-lived . Despite the dollar 's lackluster performance , some foreign-exchange traders maintain that the U.S. unit remains relatively well bid . Harris Trust 's Mr. Woodland noted that the unit continues to show resilience in the face of a barrage of `` headline negatives '' in recent weeks , including rate increases in Europe and Japan , aggressive central bank intervention , a 190-point plunge in New York stock prices , an unexpectedly poor U.S. trade report and action by the Federal Reserve to nudge U.S. rates lower . While Mr. Woodland does n't predict a significant climb for the U.S. unit in light of recent moves in interest rates around the world , he noted that `` its downside potential is surprisingly and -- for dollar bulls -- `` impressively '' limited . In late New York trading yesterday , the dollar was quoted at 1.8485 marks , down from 1.8667 marks late Tuesday , and at 141.45 yen , down from 142.75 yen late Tuesday . Sterling was quoted at $ 1.5920 , up from $ 1.5753 late Tuesday . In Tokyo Thursday , the U.S. currency opened for trading at 140.97 yen , down from Wednesday 's Tokyo close of 142.10 yen . Since Friday 's dive in stock market prices , the Fed has injected reserves into the banking system in an effort to calm the markets and avert a repeat of 1987 's stock market debacle . Some analysts note that after last week 's stock market tailspin and Tuesday 's California earthquake , it 's hard to gauge where the central bank wants the key federal funds rate . They say that the earthquake , by preventing many banks from operating at full capacity , has given the Fed an additional reason to keep liquidity at a high level . The Fed did , in fact , execute $ 1.5 billion of liquidity-enhancing customer repurchase agreements , the third set of repurchase orders in three days . Analysts said the additional liquidity should tend to reduce the federal funds rate . For now , traders say the foreign exchange market is scrutinizing both federal funds and events on Wall Street . They note that the dollar remains extremely vulnerable to the slightest bad news from the stock exchange . Indeed , the U.S. unit edged lower as the Dow Jones Industrial Average dropped about 13 points in early trading . A slight recovery in the stock market gave currency traders confidence to push the dollar higher before the unit dropped back by day 's end . Some dealers noted that nervousness over the recent sharp dive in stock prices could intensify following suggestions by Bank of Japan Governor Satoshi Sumita that appeared to advise Japanese investors to be very careful in investing in U.S. leveraged buy-outs . Dealers suggest that the only positive news on the horizon that could detract attention from equities transactions is September 's U.S. consumer price data . The figures , due for release Friday , are expected to show an uptick in inflation to 4.8 % from 4.7 % in August . If the figures show a hefty rise in inflation , they could militate against easing by the Fed . On the Commodity Exchange in New York , gold for current delivery rose $ 1.30 to $ 368.70 an ounce in moderate trading . Estimated volume was three million ounces . In early trading in Hong Kong Thursday , gold was at $ 368.15 an ounce . Crude prices spurted upward in brisk trading on the assumption that heavy earthquake damage occurred to San Francisco area refinery complexes , but the rise quickly fizzled when it became apparent that oil operations were n't severely curtailed . Trading on little specific information , market players overnight in Tokyo began bidding up oil prices . The rally spread into European markets , where traders were still betting that the earthquake disrupted the San Francisco area 's large oil refining plants . By yesterday morning , much of the world was still unable to reach San Francisco by telephone . West Texas Intermediate was bid up more than 20 cents a barrel in many overseas markets . At the opening of the New York Mercantile Exchange , West Texas Intermediate for November delivery shot up 10 cents a barrel , to $ 20.85 , still on the belief that the refineries were damaged . In the San Francisco area , roughly 800,000 barrels a day of crude , about a third of all the refining capacity in California , is processed daily , according to industry data . For more than the past year , even the rumor of a major West Coast refinery shutdown has been enough to spark a futures rally because the gasoline market is so tight . But yesterday , as the morning wore on , some major West Coast refinery operators -- including Chevron Corp. , Exxon Corp. and the Shell Oil Co. unit of Royal Dutch/Shell Group -- said their refineries were n't damaged and were continuing to operate normally . Most said they shut down their petroleum pipeline operations as a precaution but did n't see any immediate damage . Gasoline terminals were also largely unhurt , they said . `` It 's hard to imagine how the markets were speculating , given that nobody could get through to San Francisco , '' said one amazed oil company executive . As the news spread that the refineries were intact , crude prices plunged , ending the day at $ 20.56 a barrel , down 19 cents . Gasoline for November delivery was off 1.26 cents a gallon to 54.58 cents . Heating oil finished at 60.6 cents , down 0.45 cent . `` The market was basically acting on two contradictory forces , '' said Nauman Barakat of Shearson Lehman Hutton Inc . `` One is the panic , the earthquake in San Francisco , which is positive . '' But once that factor was eliminated , traders took profits and focused on crude oil inventories , Mr. Barakat said . After the market closed Tuesday , the American Petroleum Institute had reported that crude stocks increased by 5.7 million barrels in the week ended Friday , which traders viewed as bearish . But some market players still think earthquake speculation could have more impact on the oil markets . `` The problem is that while on the surface everything is all right , the question is , '' said Mr. Barakat , `` was there any structural damage to the pipelines or anything else . '' In other commodity markets yesterday : COPPER : Futures prices eased on indications of improvement in the industry 's labor situation . The December contract declined 1.85 cents a pound to $ 1.2645 . According to one analyst , workers at the Cananea copper mine in Mexico , which has n't been operating since it was declared bankrupt by the Mexican government in late August , are set to return to work . The analyst said it will take about two to three months before the mine begins to produce copper in significant quantities . He added that , while there has n't been any official announcement as yet , the Highland Valley mine strike in British Columbia , which has lasted more than three months , is regarded as settled . Another analyst said the Cananea return to operation may not be as near as some expect . `` There are still negotiations taking place on whether there will be a loss of jobs , which has been a critical issue all along , '' he said . Nevertheless , the increasing likelihood that these two major supply disruptions will be resolved weighed on the market , the analysts agreed . Both of these mines are normally major suppliers of copper to Japan , which has been buying copper on the world market . The first analyst said that the Japanese , as well as the Chinese , bought copper earlier in the week in London , but that this purchasing has since slackened as the supply situation , at least over the long term , appears to have improved . `` The focus for some time has been on the copper supply , and good demand has been taken for granted , '' he said . `` Now that the supply situation seems to be improving , it would be best for traders to switch their concentration to the demand side . '' He noted the Commerce Department report yesterday that housing starts in September dropped 5.2 % from August to 1.26 million units on an annualized basis , the lowest level in seven years . `` Along with these factors , other economic reports suggest a slowing of the economy , which could mean reduced copper usage , '' he said . SUGAR : Futures prices extended Tuesday 's gains . The March delivery ended with an advance of 0.16 cent a pound to 14.27 cents , for a two-day gain of 0.3 cent . According to one dealer , Japan said it has only 40,000 tons of sugar remaining to be shipped to it this year by Cuba under current commitments . The announcement was made because of reports Tuesday that Cuba would delay shipments to Japan scheduled for later this year , into early next year . The dealer said the quantity mentioned in the Japanese announcement is so small that it 's meaningless . One analyst said he thought the market continued to be supported to some degree by a delay in the Cuban sugar harvest caused by adverse weather . The dealer said India might be the real factor that is keeping futures prices firm . That country recently bought 200,000 tons of sugar and had been expected to seek a like quantity last week but did n't . `` It 's known they need the sugar , and the expectation that they will come in is apparently giving the market its principal support , '' the dealer said . LIVESTOCK AND MEATS : The Agriculture Department is expected to announce tomorrow that the number of cattle in the 13 major ranch states slipped 4 % to 8.21 million on Oct. 1 compared with the level a year earlier , said Tom Morgan , president of Sterling Research Corp. , Arlington Heights , Ill . Cattle prices have risen in recent weeks on speculation that the government 's quarterly report will signal tighter supplies of beef . Among other things , the government is expected to report that the number of young cattle placed on feedlots during the quarter slipped 3 % . Feedlots fatten cattle for slaughter , so a drop indicates that the production of beef will dip this winter . Indeed , some analysts expect the government to report that the movement of young cattle onto feedlots in the month of September in seven big ranch states dropped 8 % compared with the level for September 1988 . The following issues were recently filed with the Securities and Exchange Commission : Health Care Property Investors Inc. , offering of 2,250,000 shares of common stock , via Merrill Lynch Capital Markets , Alex . Brown & Sons Inc. and Dean Witter Reynolds Inc . Union Pacific Corp. , shelf offering of up to $ 500 million debt securities and warrants . United Technologies Corp. , shelf offering of up to $ 500 million unsubordinated non-convertible unsecured debt securities . A new drug to prevent the rejection of transplanted organs has been successfully used on more than 100 patients at the University of Pittsburgh , according to researchers . The drug , which is still in the experimental phase , has n't been approved yet by the Food and Drug Admistration , and its long-term effects are unknown . But researchers say the drug , called FK-506 , could revolutionize the transplantation field by reducing harmful side effects and by lowering rejection rates . Rejection has been the major obstacle in the approximately 30,000 organ transplants performed world-wide each year . Researchers began using the drug in February on patients who had received kidney , liver , heart and pancreas transplants . Only two of 111 transplants have been rejected . The drug , discovered in 1984 , is metabolized from soil fungus found in Japan . The Pittsburgh patients are the first humans to be given the drug , which is made by Fujisawa Pharmaceutical Co . `` We 're shocked by it , because it 's worked so fast , '' said Dr. Thomas E. Starzl , director of the University of Pittsburgh Transplantation Program , at a news conference here yesterday . `` We consider it a life-saving drug , like one for AIDS , '' said Dr. John Fung , an immunologist at the University of Pittsburgh . Researchers say they believe FK-506 is 100 times more effective than the traditional anti-rejection drug , cyclosporine , made by Swiss pharmaceutical giant Sandoz Ltd . They are also encouraged by the relatively mild side effects of FK-506 , compared with cyclosporine , which can cause renal failure , morbidity , nausea and other problems . `` The side effects { of cyclosporine } have made the penalty for its success rather high , '' Dr. Starzl said . Dr. Fung said that FK-506 would not be available in the market for at least a year , and that the FDA approval process usually takes three years to five years . There are no firm plans to expand the experimental program beyond the University of Pittsburgh , whose hospital performs the most transplants in the world . Researchers could n't estimate the cost of the drug when it reaches the market , but they said FK-506 will enable patients to cut hospital stays by 50 % and reduce the number of blood tests used to monitor the dosage of cyclosporine and other drugs among transplant recipients . Dr. Starzl said the research has been largely financed by the National Institute of Health and by university funds , and that Fujisawa did n't give the hospital any grants . He said that the research team had no financial stake in the drug . `` We 've known for six months the effect of this drug , and our advice to our people has been not to buy the company 's stock , '' Dr. Starzl said , adding that profiting from FK-506 would n't be ethical . Economist David N. Laband 's Sept. 27 editorial-page article , `` In Hugo 's Path , a Man-Made Disaster , '' decries the control of price gouging , swiftly ordered by South Carolina 's governor after Hurricane Hugo . According to Mr. Laband , `` screaming '' for price controls occurs when income redistribution `` threatens to hit home . '' To be sure , the threat has hit home down here . Yet in Mr. Laband 's rehash of free-market logic , human greed and self-interest are the only permissible psychological reactions . Allowing uncontrolled prices for necessities would indeed shorten the lines at stores , as he contends . But not because resources are going to their most efficient use , leaving scarce goods `` allocated to those buyers who place the highest value on them . '' Rather , lines would diminish because at higher prices many victims could not afford necessities such as food and medical supplies . It is inhumane to imply that a poor , unemployed woman can not receive immediate relief for her family at fair prices because she does not have as much to protect as a rich family . Moreover , essential relief supplies such as ice must be distributed throughout the population because of potential health problems from spoiled food and possible outbreak of disease . Such spillover effects give the state a right to intervene in the marketplace and temporarily coordinate allocation of resources . Fortunately , volunteers and charities are not motivated by self-interest , but by altruism . Why should they have to co-exist with opportunists rushing in to turn a quick profit ? These latter-day scalawags would be ill-advised to take advantage of the situation , if they ever expect to face the people of South Carolina again . The government is actually protecting avaricious ice-baggers and other profiteers who can not see beyond their own short-term gain . South Carolina deserves an A for its quick and timely relief efforts . Mr. Laband , meanwhile , gets an A for his rote recital of economic-efficiency arguments . Give him an F for his failure to understand the ethics of economic equity . Signed by 25 students Of Douglas Woodward 's Honors Economics Class , University of South Carolina Columbia , S.C . Mr. Laband gives us an idea why economists ' predictions are usually wrong . They set up absurd situations , detached from reality , and then try to reason from them . I 'm surprised he did n't advocate letting people loot , since that behavior can also be foreseen in a disaster and `` every individual has an incentive to alter the distribution of income in his favor . '' Price controls were `` so fervently embraced by Charleston '' because price gouging in this situation is equivalent to looting . Suzanne Foster Galax , Va . Mr. Laband described one of the more insidious threats we face when dealing with disasters such as Hugo -- anti-profiteering ordinances such as that by the Charleston City Council as it thrashed about trying to Do Something . Since he concentrated on the economic folly of such ordinances , he did n't mention certain other of their effects . They divert law-enforcement resources at a time they are most needed for protecting lives and property . Also , rather than increase supplies , they reduce them and encourage hoarding . And they , or even the prospect of them , discourage disaster preparedness in the form of speculative advance stocking of supplies by merchants . N. Joseph Potts Miami Lakes , Fla . Would Mr. Laband also suggest that the Red Cross , Salvation Army , military units , police , fire departments , rescue units and individual citizens cease their efforts to assist Hugo 's victims because they interfere with his concept of the `` free market '' ? What about those caring people all over the country who are donating food , water and other necessities of life to these people who could be any of us ? Should they , too , stop `` messing with '' his free market ? Maybe he thinks they should also sell to the highest bidder . And what about insurance firms ? Should they be required to pay claims based on exorbitant costs for labor and materials ? Mr. Laband should beware , since he lives in South Carolina . In a free market , his insurance rates can be raised to recover insurance-company losses . John W. Rush Marietta , Ga . Having been through several tornadoes and hurricanes , I have a different perspective . Mine comes from seeing thriving communities devastated -- but only temporarily . Their recovery came surprisingly fast , and always with the help of neighbors . The shock of seeing homes destroyed and city services disrupted may cause some to confuse priorities such as the true economic value of a freezer full of meat . In Texas after Hurricane Alicia , major grocery chains used their truck fleets to ship essential goods to Houston , no gouging , just good will . Tom Mongan Victoria , Texas We here in the affected areas were dazzled by Mr. Laband 's analysis of time values and his comparisons of effectiveness concerning research and development . His theoretical approach and its publication in this venerable paper are no doubt a noteworthy accomplishment for him . Too bad theory fails in practice . We consumers tend to have long memories . The businesses subscribing to Mr. Laband 's effective price system will be remembered when normalcy returns . Perhaps , considering the value of our time , we will be unable to patronize their establishments in the post-Hugo era . I have a question for Mr. Laband : How do I explain to the single mother of three standing in line next to me for the past three hours that the two bags of ice she needs to keep her children 's food edible will take her last $ 20 ? I 'm sure she 'll appreciate what an efficient reaction to her problems the price system has created . Chris Edgar Myrtle Beach , S.C . This seems to be the season for revivals in Chicago . Though the Cubs ' championship season ended with the National League playoffs , a revival of the Organic Theater 's production of `` Bleacher Bums , '' a play in nine innings set in the Wrigley Field bleachers , continues within spitting distance of the ballpark . Revivals of a different sort also are being offered by our two major theater troupes , the Goodman and Steppenwolf . Each is more problematic than an unexpected divisional baseball championship , but both help explain why Chicago remains a vital center of this country 's regional theater movement . The Goodman is offering a modernized version of Moliere 's `` The Misanthrope '' through Nov. 4 . The original is a comedy about Alceste , a man who sees falseness and vanity in everyone except himself . He is the jealous friend of Philinte , and the jealous lover of Celimene . The play is filled with intrigue , dishonesty and injustice . Twenty-five years ago the poet Richard Wilbur modernized this 17th-century comedy merely by avoiding `` the zounds sort of thing , '' as he wrote in his introduction . Otherwise , the scene remained Celimene 's house in 1666 . Assuming modern audiences readily understand that Moliere 's social indictment covers their world as well as 17th-century Paris , Mr. Wilbur concentrated his formidable artistry on rendering the Alexandrine French verse into sprightly and theatrical English iambic pentameter . The Wilbur translation is remarkable -- well worth a read and even better seen in the theater if you ever have the opportunity . But if you happen to be coming to Chicago in the next few weeks , do n't fail to have a look at Robert Falls 's `` The Misanthrope '' at the Goodman . If Mr. Wilbur 's translation is a finely ground lens through which we see the pettiness and corruption of 17th-century Paris , Mr. Falls 's production is a mirror in which we see ourselves . Mr. Falls , the Goodman 's artistic director , took a recent adaptation by Neil Bartlett and significantly adapted it . Mr. Bartlett had slimmed Moliere 's cast of characters to six and set them in the London media world of Thatcherite Britain . Mr. Falls transfers the setting to Hollywood , and transforms the characters into what passes for aristocracy there -- agents , producers , actors , writers and sycophants . It works . Mr. Bartlett managed to more or less maintain Moliere 's Alexandrine verse form , 12 syllable lines in rhyming couplets . Mr. Falls kept the form , but Americanized it with Mr. Bartlett 's further help . With a splendid cast led by David Darlow as Alceste , Christina Haag as Celimene and , especially , William Brown as a Philinte who plays the Hollywood game but harbors authentic values and feelings , the Goodman production barrels through an all-night Hollywood party with exuberance and wit . If this version , with its references to Steven Spielberg , Spago and `` thirtysomething '' attracts younger audiences who might stay away from the classical version , then Messrs. Bartlett and Falls are justified in abandoning Mr. Wilbur . A 300-year-old play may be easier to revive than one merely 25 . The Steppenwolf Theatre Company , back from a critical and box office success in London with its adaptation of Steinbeck 's `` The Grapes of Wrath , '' opened the new season with Harold Pinter 's `` The Homecoming , '' first produced by the Royal Shakespeare Company in 1965 . Back then , Mr. Pinter was not only the angry young British playwright , but also the first to use silences and sentence fragments and menacing stares , almost to the exclusion of what we previously understood to be theatrical dialogue . When `` The Homecoming '' was first produced on this side of the Atlantic , actors and directors were reverential . Silences were lengthy -- nobody moved or gestured . Nobody smiled onstage , and nobody in the audience was encouraged to laugh . This kind of theater was new to us . Also , it was not a funny time over here , what with the Vietnam War , the '68 '68 Democratic convention , assassinations and riots . But under Jerry Perry 's direction the current Steppenwolf production , scheduled to play through Nov. 19 , breaks through the flat and boring ritual that `` The Homecoming '' had become . Led by a near-perfect performance by Alan Wilder as Max , the father , the play is at once an appalling and hilarious dissection of a family 's rage , bitterness , fear and isolation . Encouraged by Mr. Wilder 's sly grins , embarrassed grimaces and sputtering rages , the audience gets the joke and begins to laugh before the end of the first act . Three of the family members , Max and his two sons , Lenny and Joey , live off the flesh : Max is a retired butcher , Lenny a pimp and Joey an aspiring boxer . Sam , Max 's brother , has escaped the flesh by working as a liveried chauffeur and never seeking a wife . Teddy , the eldest of Max 's sons , has made the most dramatic escape by becoming a professor of philosophy at an American university . Though it 's clearly Max 's wife who held sway here until her death , now none of the other male residents of this misbegotten household can challenge Max . The play concerns Teddy 's homecoming with his wife of six years , Ruth . Curiously , Randall Arney as Teddy seems the only cast member unable to get beyond the zombie approach to a Pinter character . As Ruth , Moira Harris , a large and beautiful woman who may be our next Colleen Dewhurst , begins almost immediately to overpower each of the men . In the end , Teddy returns alone to America , leaving Ruth in Max 's chair . We have seen her develop within a few hours from a shy and unknown in-law to a goddess of the flesh who will replace the dead mother , and then some . While Steppenwolf was in London with `` The Grapes of Wrath , '' Bruce Sagan , the president of its board of directors , quietly returned to Chicago to buy a piece of real estate in the city 's rapidly reviving North Halsted Street restaurant and theater district . Within a year he hopes Steppenwolf will move into a new 500-seat theater on that site . The troupe currently performs in a converted dairy that seats 211 and provides little capacity for staging anything beyond a simple one-set production . `` If we wanted to stage ` Death of a Salesman , ' `` Mr. Sagan says , `` Willie Loman would have to live in a ranch house because of the low ceiling . '' Steppenwolf needs the extra seats even more than the fly space . It 's currently forced to turn away many potential subscribers beyond the 13,000 who can be accommodated in its present digs . For all the attention that Chicago theater has received during the past decade , not one new building has been devoted to it . Mr. Sagan , a former publisher and real estate developer , has put together an $ 8 million financial package that includes approximately $ 4 million of tax exempt bonds issued by the State of Illinois ( the first time that a state has used its educational facilities authority to support construction of a theater ) , and approximately $ 1 million in grants from the National Endowment for the Arts , the MacArthur Foundation , and a few other deep pockets . The rest , he is confident , can be raised . His board members alone have pledged $ 800,000 and he is just beginning to massage local foundations and corporations . Mr. Sagan compares the importance of Steppenwolf with Orson Welles 's Mercury Theater in the '30s . But Welles 's theater company turned out to have a brief -- one might say a mercurial -- existence . What will Mr. Sagan do with his new theater building if the allure of Hollywood and Broadway proves too much for such Steppenwolf stalwarts as John Malkovich ( `` Dangerous Liaisons '' ) , Joan Allen ( `` The Heidi Chronicles '' ) , and Glenne Headly ( `` Lonesome Dove '' ) , and the company crumbles ? `` That 's OK , '' Mr. Sagan replies . `` Let this building be Steppenwolf 's legacy to Chicago theater . '' Mr. Henning is a Chicago-based law firm management consultant and a writer . After enduring three days of heavy selling , the beleaguered Nasdaq over-the-counter market finally rebounded , rising sharply in hearty trading . The Nasdaq Composite Index jumped 0.7 % , or 3.35 , to 463.28 . It rose more than the New York Stock Exchange Composite , which improved 0.2 % . Among bigger stocks , the Nasdaq 100 Index rose 1 % , or 4.56 , to 453.05 , while the Dow Jones Industrial Average was up 0.2 % . Richard Bruno , head of OTC trading at PaineWebber , said the OTC market has a habit of lagging big moves on the New York Stock Exchange . While the industrial average rallied on Monday following last Friday 's collapse , the OTC market , which did n't suffer too badly during the correction , tumbled . `` Our market got hit a lot harder on Monday than the listed market , '' Mr. Bruno said . `` We 're just recovering and getting back to business as usual . I 'm encouraged by the action . '' The trading pace was busy , with 4,343 issues and 147.6 million shares changing hands . Advancing issues beat declining ones , 1,271 to 811 . Much of the jockeying by OTC traders and investors centered on shares of companies that might be financially affected by damage from the devastating earthquake in northern California . As investors speculated about the long - and short-term implications , shares of a number of companies that might either profit or face problems because of the disaster were actively traded . Heading the list : insurance , construction and technology companies located in the San Francisco Bay Area . Insurance-related stocks were mixed as investors tried to figure out how to assess the impact of the property damage and deaths on those concerns . Traders said property-casualty companies with the heaviest exposure in the San Francisco area include the OTC 's Safeco and Ohio Casualty . Frank Gilmartin , a trader who follows insurance stocks for Fox-Pitt Kelton , said his strategy was to sell early . Then , if the stocks fell sharply , he planned to begin buying them aggressively , on the theory that the companies that insure against property damage and accidents will have to raise rates eventually to compensate for the claims they will pay to earthquake victims and victims of last month 's Hurricane Hugo . As well , reinsurers and insurance brokerage companies will have improved profits . Many investors expected damage from the hurricane to be the catalyst for higher rates in the industry , which has been depressed because of low rates arising from intense competition . But Mr. Gilmartin said the hurricane damage was n't extensive enough to prompt premium boosts . `` The companies just gave back what they had reserved for , '' he said . `` Now , they 'll have to increase their coffers to protect for the future and that means rate increases . '' Overall OTC insurance issues were mixed . Safeco fell 1/8 to 32 5/8 on 462,900 shares . Ohio Casualty rose 1/4 to 51 3/4 on 137,200 shares . St. Paul Cos. jumped 2 to 59 3/4 on 517,500 shares . Academy Insurance fell 1/32 to 1 3/16 ; but volume totaled 1.2 million shares . The Nasdaq Insurance Index jumped 4.15 to 529.32 on the day , while the barometer of big insurance and banking issues climbed 1.72 to 455.29 . Investors expect SunGard Data Systems , a company that provides disaster recovery services for computer-dependent businesses , to profit from the earthquake . SunGard 's stock rose 1 3/4 to 21 1/4 on 194,000 shares . Shares of Kasler , a California road and bridge builder , were heavily traded , jumping 2 1/8 to 9 7/8 on 1.3 million shares . Guy F. Atkinson added 7/8 to 16 7/8 , on 335,700 shares . The company , based in San Francisco , provides industrial infrastructure engineering and construction services . Traders were initially nervous about shares of companies , including many leading OTC computer companies , such as Apple Computer with offices in the vicinity of the area damaged by the quake . But most of those stocks fared well . Apple Computer gained 1 to 48 1/4 ; Ashton-Tate rose 3/8 to 10 3/8 . Intel also added 3/8 to 33 7/8 . But Sun Microsystems slipped 1/4 to 17 1/4 . Shares of biotechnology companies in the area were also higher . Chiron was up 1/2 to 27 and Cetus gained 1/2 to 16 3/8 . The stocks of computer-related companies located outside California improved , too . Microsoft advanced 1 7/8 to 80 1/2 and Lotus Development added 1 1/4 to 32 1/2 . In other earthquake-related news , Hambrecht & Quist 's OTC market makers were excused from trading yesterday and its positions were frozen for the day by the National Association of Securities Dealers . Power could n't be restored at the company 's San Francisco headquarters to allow trading yesterday morning . In New York , Roger Killion , a Hambrecht executive vice president , said he expects OTC trading at the company to resume this morning , either in New York or in San Francisco . In other trading , Medco Containment Services gained 7/8 to 15 on 1.9 million shares after reporting a loss for the first quarter , which ended Sept. 30 . The company earned $ 6.6 million in the year-earlier quarter . Jaguar 's American depositary receipts added 3/8 to 10 3/4 on volume of 1.1 million . Analysts in London believe investors , despite their stampede to dump takeover stocks , should hold on tight to their Jaguar shares , this newspaper 's Heard on the Street column said yesterday . Amgen rose 1 1/2 to 50 3/4 in heavy trading . Analysts figure Amgen could benefit as a result of troubles facing its competitor , Genetics Institute , over the anti-anemia drug EPO . Genetics Institute disclosed recently that it is embroiled in a dispute with Boehringer Mannheim , which distributes the drug , regarding the usability of some batches . Ciba-Geigy Ltd. and Chiron Corp. said they extended their offer for Connaught BioSciences Inc. , valued at 866 million Canadian dollars ( US$ 736 million ) to Oct. 27 . The companies earlier said they did n't want to raise their offer to match a rival bid by Institut Merieux S.A. of C$ 37 a share , or C$ 942 million . But they said the C$ 30-a-share bid , which was due to expire Monday , may still be extended or varied . Merieux , a vaccine manufacturer based in Lyon , France , is 51%-held by French state-owned Rhone-Poulenc S.A. Ciba-Geigy is a major pharmaceutical concern based in Basel , Switzerland . Chiron , another pharmaceutical concern , is based in Emeryville , Calif . Connaught is a biotechnology research and vaccine manufacturing concern . Institut Merieux 's bid for Toronto-based Connaught has run into problems with the Canadian government , which told Merieux last week that it was n't convinced that the proposed acquisition would be of `` net benefit '' to Canada . Merieux officials are expected to meet with federal officials in Ottawa today to discuss the decision . Within minutes after the stock market closed Friday , I called Sen. Bill Bradley of New Jersey , advised him that the Dow Jones Industrial Average had declined by 190 points late that afternoon , and cheerfully informed him that he and his fellow Democrats were to blame . They had dealt a major setback that afternoon to President Bush 's capital-gains tax cut proposal , which had seemed in the bag after it passed the House overwhelmingly earlier in the month . Sen. Bradley has it in his mind that such a tax cut would unravel the tax reform he helped engineer in 1986 . But he knows that as many as 20 of his fellow Democrats are disposed to vote for the cut , popular among their constituents . As a result , he took the lead in arguing that the cut should be blocked on procedural grounds . He helped persuade 10 of these senators to support him and Majority Leader George Mitchell on these grounds . The budget reconciliation had to be dealt with by the Oct. 15 deadline , and these Senate Democrats refused to agree to allow a vote to append capital gains to the budget bill , knowing it would pass . Denied a vote on substance , the GOP leadership in the Senate on Friday morning was confronted with a hard choice . It could throw in the towel and hope to win on capital gains late this month , or it could follow the White House strategy , to veto reconciliation unless capital gains was appended . The U.S. Chamber of Commerce has been in the forefront in supporting the Bush proposal . It endorsed the White House strategy , believing it to be the surest way to victory . At noon Friday , a senior White House official advised Richard Rahn , the Chamber 's chief economist , that the White House would not agree to a budget reconciliation bill unless it had firm assurances that a vote on substance would be permitted in the Senate . Two hours later , the first word emerged on Capitol Hill that the administration had agreed to reconciliation with no such assurances from Senate Democrats . Mr. Rahn was shocked , telephoning the office of Richard Darman , director of the Office of Management and Budget , and the administration 's chief strategist on this issue . He left a message accusing Mr. Darman of selling out . It was the Senate Republicans , though , who had edged away from the veto strategy . The stock market reacted as Mr. Rahn did , crumbling as it absorbed the news that Mr. Darman 's strategy had been abandoned . The stock market , after all , represents the collective expectations about the value of the future income stream of the nation 's capital stock , discounted to present value . Why should it be so surprising that a 30 % cut in the capital-gains tax would have such an enormous impact on the value of the nation 's capital stock ? The total value of privately held assets is easily more than $ 15 trillion . The value traded on the exchanges is close to $ 3 trillion . If the tax on any gain to those assets was doubled , would n't the value fall to the owners of the assets ? Is n't it reasonable to assume that the asset you own would be worth more if the government suddenly announced that if you sold it , you would be able to keep 30 % more of its gain than you previously believed ? Indeed , the stock market 's steady advance this year tracked with President Bush 's success in advancing his capital-gains proposal . A 30 % cut in this year 's capital gains alone amounts to roughly $ 50 billion . We 're talking real money . When Richard Rahn advised the financial press that the market crash was caused by the setback to capital gains , he was generally ignored and mildly ridiculed . Instead , the press corps readily accepted the notion that a snag in the takeover financing of United Airlines instantly knocked 7 % off the value of the nation 's capital stock and caused convulsions around the world . Mr. Rahn was pointing out an elephant rumbling through Wall Street while conventional wisdom had fastened on the UAL flea . Why is this happening ? For one thing , quite a number of the leading spokesmen on Wall Street are not portfolio managers , who understand that the value of assets is greatly affected by how government taxes those assets . They are economists and financial reporters who sympathize with the view that a capital-gains tax cut benefits the rich . Yet they somehow think that Wall Street is indifferent to losing the tax cut that seemed so close Friday morning and is now problematic . The market rebound Monday followed weekend assurances from Mr. Darman that the administration has other plans to win the cut , which is alive and well . Sen. Bradley 's argument is that a capital-gains tax cut would be bad for the economy in the longer run . It would inevitably lead to an increase in marginal income-tax rates in 1990 , he thinks , when the White House is forced to ask for higher taxes to meet budget targets . That is , with capital gains cut , the glue of the 1986 accord will be gone , and political realities will push up income-tax rates . The counter-argument , which he has heard , is that if he and his fellow Democrats are successful in killing the president 's proposal , the revenue gap will open up tremendously in 1990 because of the weakened economy . In this atmosphere , there would be no serious consideration of tax increases . If Sen. Bradley would permit a vote on capital gains , though , it would pass , Christmas retail sales would be strong instead of burdened by a falling stock market , the 1990 economy would be robust , and the revenue gains at every level of government , including New Jersey 's , would be surprisingly high . No tax increases would be necessary . The struggle over capital gains is the most important game in town . In Washington and on Wall Street . Mr. Wanniski is president of Polyconomics Inc. , of Morristown , N.J . Federal prosecutors said they have obtained a guilty plea from another person in the government 's ongoing probe of illegal payments in the record industry . William Craig , an independent record promoter , pleaded guilty to payola and criminal tax charges , according to a statement issued by Gary Feess , the U.S. attorney here . Payola is the practice of making illegal , undisclosed payments to radio station personnel in return for getting the stations to play certain songs over the air . As part of his plea agreement with the government , the 44-year-old Mr. Craig faces a maximum of three years in prison . In return , Mr. Craig agreed to cooperate in the government 's continuing payola probe , says a spokeswoman for the U.S. attorney 's office . Mr. Craig and three others were indicted last year as part of that payola probe . Two other defendants previously pleaded guilty , and charges against the third were dropped . Companies listed below reported quarterly profit substantially different from the average of analysts ' estimates . The companies are followed by at least three analysts , and had a minimum five-cent change in actual earnings per share . Estimated and actual results involving losses are omitted . The percent difference compares actual profit with the 30-day estimate where at least three analysts have issues forecasts in the past 30 days . Otherwise , actual profit is compared with the 300-day estimate . Source : Zacks Investment Grumman Corp. was awarded a $ 53.1 million Navy contract for advanced acquisition of six E-2C tactical control aircraft . LTV Corp. won a $ 25 million Army contract for missile test equipment . Unisys Corp. received a $ 24.4 million Air Force contract for computer programming . Ford Aerospace & Communications Corp. , a unit of Ford Motor Co. , was awarded a $ 15.9 million Air Force contract for computer improvements . Rockwell International Corp. was issued a $ 12.5 million Air Force contract for changes in the National Aerospace Plane . The Tennessee Valley Authority issued $ 4 billion in bonds in the federal utility 's first public debt offering in 15 years . Proceeds from the bonds , with coupon rates in the 8 % range , will be used to replace bonds with an average interest rate of 13.1 % . The TVA said the refinancing should save $ 75 million a year in interest payments . The refinancing is part of the TVA 's strategy of dealing with what has been an intractable problem : its staggering $ 18.5 billion debt , most of which is owed to the Treasury Department 's Federal Financing Bank . The TVA currently plans to issue a total of $ 6.7 billion in bonds to refinance its high-interest debt . The $ 4 billion bond issue also will help the TVA meet its goal of not raising rates for another year , said William F. Malec , the agency 's chief financial officer . The bond issue is TVA 's first public offering since the Financing Bank was created in 1974 , primarily to finance the TVA . But the offering almost did n't happen . The TVA , in fact , decided to proceed with the bond offering following an agreement last week with the Financing Bank , which allows TVA to keep borrowing short term from the bank for two years after it goes to the public market . The Treasury contended that TVA could n't borrow from both it and the public debt market . The $ 4 billion in bonds break down as follows : $ 1 billion in five-year bonds with a coupon rate of 8.25 % and a yield to maturity of 8.33 % ; $ 1 billion in 10-year bonds with a coupon rate of 8.375 % and a yield to maturity of 8.42 % ; $ 2 billion in 30-year bonds with five-year call protection , a coupon rate of 8.75 % and a yield to maturity of 9.06 % . Managing the bond issue is a group of investment banks headed by First Boston Corp. and co-managed by Goldman , Sachs & Co. , Merrill Lynch Capital Markets , Morgan Stanley & Co. , and Salomon Brothers Inc . Mutual-fund czar John M. Templeton has put his money where his moniker is , pouring $ 1.4 million into one of his own funds , the Templeton Value Fund . Mr. Templeton owns shares in several of the 33 funds that his firm manages , but only in three of the 10 available to U.S. investors , according to filings with the Securities and Exchange Commission . Those are Templeton Global Income , Templeton Emerging Markets and now the Value Fund . Why did he add the Value Fund to the list ? Because he 's very bullish on the emerging growth stocks that make up the fund 's portfolio , Mr. Templeton said from his Bahamas hideaway . `` Emerging growth stocks have n't been popular in America for years , they 've been neglected , '' he said , and their prices often trail the market as a whole . Mr. Templeton 's 147,300-share purchase in the closed-end fund came before the U.S. stock market 's plunge last Friday , but still proved slightly profitable . Mr. Templeton bought his shares in several separate purchases between Aug. 30 and Sept. 28 , according to reports with the SEC . He bought at share prices ranging from $ 9.375 to $ 9.625 . The fund closed yesterday in New York Stock Exchange composite trading at $ 9.625 , up 12.5 cents . In addition , Mr. Templeton received a dividend of 22 cents a share Oct. 5 . RIVER RUN : A senior vice president and a vice president at James River Corp. sold the majority of their shares in the Richmond , Va. , paper-products concern in late August and early September , reports filed with the SEC show . The executives , who got $ 30.88 a share for the stock , showed good timing . In Big Board trading yesterday , James River shares closed at $ 28.375 , down 12.5 cents . On Sept. 6 , Robert Joseph Sherry , the firm 's senior vice president of employee and public relations , sold 4,000 shares , leaving himself with 1,062 shares of James River . Including a sale of stock last February , Mr. Sherry has sold 88 % of his stake in the company this year , according to SEC filings . Mr. Sherry declined to comment when asked about the sales . James A. Toney , a vice president , sold 1,500 shares Aug. 28 . He still has 1,143 shares , according to SEC files . Mr. Toney also declined to comment . INTEREST-RATE PLAYER : Cincinnati Gas & Electric Co. tops the companies portion of the accompanying Insider Trading table this week . Three of the utility 's directors have at least doubled their holdings in the company since July . The largest purchase was by Dudley Taft , who bought 4,400 shares for $ 125,075 . Mr. Taft , who is also president of Taft Broadcasting Co. , said he bought the shares because he keeps a utility account at the brokerage firm of Salomon Brothers Inc. , which had recommended the stock as a good buy . Salomon Brothers confirmed that it has had a buy recommendation on the stock for about two years . `` Cincinnati Gas & Electric is in good shape , '' Mr. Taft said , and utilities are `` a good investment because interest rates are going down . '' Mr. Taft paid an average of $ 28.43 for each share . The stock closed yesterday on the Big Board at $ 28.75 , down 12.5 cents . The two other directors bought 1,000 and 1,900 shares , respectively , at prices between $ 28.15 a share and $ 28.75 a share , filings with the SEC show . The two could n't be reached for comment . A company spokesman said he could n't explain their sudden bullishness . `` I do n't know of any news or anything unusual happening here , '' said Bruce Stoecklin , director of media services . Peter Pae in Pittsburgh contributed to this article . T. Rowe Price Associates Inc. said directors recommended stockholders approve a 2-for-1 stock split and an increase in authorized shares to 25 million from 10 million . Stockholders will vote on the proposal at a meeting Dec. 13 . T. Rowe Price is an investment adviser to mutual funds , institutions and individuals . In one of the first indoor air-pollution cases to go to trial , a state-court jury decided in favor of the defendant , Burlington Industries Inc . The verdict , reached late last week in Cincinnati , may end an eight-year legal battle for the Greensboro , N.C. , carpet maker . Glenn and Sharon Beebe of Cincinnati had sued the com - pany in 1981 after installing Burlington carpets in their office . The Beebes alleged that toxic fumes from the carpets made them sick . As a result of their illness , the Beebes said , they lost $ 1.8 million in wages and earnings . In addition , they said that months of exposure to the chemicals has left them sensitive to a wide range of commonly used substances . The case had been closely watched because attorneys anticipate increasing litigation nationally over the so-called sick-building syndrome . Plaintiffs ' lawyers say that buildings become `` sick '' when inadequate fresh air and poor ventilation systems lead pollutants to build up inside . Anthony J. Iaciofano , a lawyer for Burlington , said the company believes the Beebes ' symptoms were not related to the carpeting . He said that ill effects from new carpets manifest themselves immediately but that the Beebes ' symptoms appeared months later . Catherine Adams , the Beebes ' lawyer , said the verdict would not discourage other plaintiffs from filing such suits . Scientists are only beginning to understand what causes sick-building syndrome and much of that research was unavailable when the Beebes filed the case , she said . The Beebes now believe that a prime culprit for their injuries was fumes from an adhesive used in the carpeting . But the Beebes did n't come to that conclusion until time limits had elapsed for adding the adhesives maker as a defendant in the case , Ms. Adams said . The Beebes have not yet decided whether to appeal . TIMES SQUARE development opponents are dealt setback . The Appellate Division of New York State Supreme Court dismissed six lawsuits attempting to block a $ 2.5 billion project planned for 42nd Street in Manhattan . Opponents of the project had claimed that the city and the state of New York , which are co-sponsoring the project , had failed to adhere to environmental guidelines . All but two of the 40 or so lawsuits that have been filed since the project 's 1984 approval have been dismissed before the trial stage . The two that remain have n't yet reached the pre-trial fact-finding stage . State officials said the court 's ruling clears the way for proceedings to condemn buildings in the area . `` This project is ready to move , '' said State Urban Development Corp. Chairman Vincent Tese . But developers of four planned office towers cautioned that obstacles still remain . As part of the agreement with the state , the developers -- a partnership of Park Tower Realty and Prudential Insurance Co. of America -- said they would not proceed with condemnation proceedings while there was `` significant litigation '' pending . Park Tower General Counsel Matthew Mayer said the development team will have to review two additional lawsuits before putting up a $ 155 million letter of credit to cover condemnation costs . Also , he said , the partnership is waiting to see whether the appellate division 's ruling will be appealed . The plan , which has been plagued with delays and business-related setbacks , seeks to transform the area from a seedy thoroughfare to a more wholesome office and theater district . State and city officials are still negotiating with developers to renovate historic theaters and build and operate a merchandise mart and hotel . FEDERAL JUDGE EXPANDS role of U.S. courts in extradition decisions . U.S. District Judge Jack B. Weinstein of Brooklyn , N.Y. , ruled that a man implicated in an attack on an Israeli passenger bus in 1986 can be extradited to Israel for trial . A magistrate had initially refused the request , ruling that the attack had been a political act for which the man , Mahmoud El-Abed Ahmad , would be exempt from extradition . However , Judge Weinstein wrote in his opinion late last month that terrorism and acts of war against civilians can not be defined as political acts . Judge Weinstein also ruled that judges must consider prior to extradition whether the defendant will be treated fairly in a foreign court . To do so , the judge said , the U.S. courts must review the judicial process in the foreign country independently of the State Department 's assessment . He said that in this case he concurred with the State Department 's decision that Mr. Ahmad should be extradited . Mr. Ahmad 's lawyer said he would appeal . Lawyers close to the case said they believed the ruling was unprecedented . `` Up until now the courts have said it is not their role to supervise the foreign country 's courts , '' said Jacques Semmelman , the assistant U.S. attorney on the case . FORMER CANADIAN AMBASSADOR to the U.S. Allan E. Gotlieb has joined the Philadelphia law firm of Pepper , Hamilton & Scheetz as a consultant . Mr. Gotlieb , who serves as a consultant to Stikeman , Elliott , one of Canada 's biggest law firms , is advising Pepper Hamilton 's Washington office on legal matters related to Canadian-U.S. investment , corporate finance and international transactions . QUOTABLE : In a speech prepared for delivery in New York yesterday , retired Justice Lewis Powell contested the notion that the last Supreme Court term marked a turn toward conservatism : `` Commentators who agreed on little else unanimously proclaimed a ` shift in direction ' on the court . . . . I take these pronouncements , like many that have preceded them in past years , with a grain of salt . In an era of ` sound bites ' and instant opinion polls it is dangerous to apply broad labels to a single term . ( During its centennial year , The Wall Street Journal will report events of the past century that stand as milestones of American business history . ) THE YOM KIPPUR WAR , WHEN EGYPT CRASHED into Israel on Oct. 6 , 1973 , the holiest day in the Jewish calendar , lasted barely a month . But one far-afield effect is still with us . The Arab states , always bitterly resentful of U.S. support toward Israel , realized they held an irresistable weapon -- oil . Early in October , six Arab nations in the Persian Gulf jacked up prices sharply . On Oct. 22 , led by Saudi Arabia , the world 's largest exporter , they embargoed oil shipments to the U.S. and to the Netherlands , Israel 's staunchest European ally . The timing was perfect . The Arabs had tried embargos before . In 1956 , when Britain , France and Israel invaded Egypt to seize the Suez Canal , Arab producers cut off supplies to Europe . Texas simply pumped harder . U.S. oil supplies , however , had peaked in 1970 and 1971 and by 1973 were declining . Imports , then six million barrels a day , came primarily from Venezuela and Canada . But Middle East supplies were growing in importance . By 1973 , the U.S. was bringing in two million barrels of Arab oil a day , more than 10 % of the 17.3 million barrels consumed daily . Politics and economics conspired . Japan and Europe , far more dependent on Mideast oil than the U.S. , would n't offend the Arabs or trade off their precious supplies . The U.S. did manage to supply the Dutch with oil by relabeling supplies ; once oil is shipped , no one can tell its source . But car-happy Americans panicked , and so did the U.S. and other oil-consuming governments . `` Shortage '' and `` crisis '' became buzz words , although neither really applied . The spot dislocations that showed up were largely the result of confusion ( much of it in Washington ) , though that was cold comfort for drivers waiting in mile-long lines at the gas pumps . The embargo lasted only six months , but the price hikes became a fact of life . What the Arabs started , inflation finished . Once and for all , $ 5-a-barrel crude oil and 35-cents-a-gallon gasoline were history . Times may be tough on Wall Street for some , but a few bosses are making as much as ever -- or more . At Bear Stearns Cos. , for example , the 15 executive officers led by Chairman Alan `` Ace '' Greenberg got a pay increase to $ 35.9 million for the 14-month period ended June 30 from $ 22.9 million for the 12 months ended April 30 , 1988 . The figures do n't include substantial dividends on holdings of Bear Stearns stock . Mr. Greenberg himself was paid $ 4.5 million , before an estimated $ 1.5 million in dividends , up from $ 2.4 million the year before . The increase is noted in the brokerage firm 's latest proxy statement filed with the Securities and Exchange Commission . Because it operates on a fiscal year , Bear Stearns 's yearly filings are available much earlier than those of other firms . The latest period includes 14 months instead of 12 because Bear Stearns changed to a fiscal year ending in June instead of April . Meanwhile , Bear Stearns 's 650 stock and bond salesmen saw thinner paychecks over the past year , which the company says reflected lower commission revenue caused by a decline in investor activity in the markets . However , Bear Stearns on Monday reported improved earnings for its first quarter , ended Sept. 29 , partly because of a 31 % increase in commissions during the quarter . William J. Montgoris , chief financial officer , defended the lofty salaries at Bear Stearns . `` All of us are on a base salary of $ 200,000 if the firm makes nothing -- and that 's pretty low as far as Wall Street goes , '' Mr. Montgoris said . However , Bear Stearns has never had an unprofitable year since its founding 65 years ago . Four Bear Stearns executives besides the 62-year-old Mr. Greenberg were paid $ 3 million or more before dividends for the 14 months ended in June . According to the proxy statement , James E. Cayne , 55 , Bear Stearns 's president , made $ 3.9 million ; an executive vice president , Michael L. Tarnopol , 53 , made nearly $ 3.4 million ; and two executive vice presidents , Vincent J. Mattone , 44 , and William J. Michaelcheck , 42 , made about $ 3.3 million each . Mr. Montgoris said the firm has a `` straight mathematical formula '' for determining compensation , based on the firm 's earnings . `` Just because a particular element of the firm is down , '' such as stockbrokerage , `` does n't mean the executive committee should be paid less , '' he said . Morgan Grenfell Group PLC said John Craven , group chief executive officer , is taking over the chairmanship of the merchant banking group from Sir Peter Carey , who is retiring . Mr. Carey will remain a member of the merchant bank 's board . Mr. Craven is widely credited with refocusing Morgan Grenfell 's energies on its core corporate finance , fund management and banking activities over the past year . Last year , Morgan Grenfell shut down its ailing U.K. securities operations . Mr. Craven said his move to the chairmanship means he will take a less active role in the day-to-day management of the group , but he added that the merchant bank 's strategic focus remains unchanged . Mr. Craven joined Morgan Grenfell as group chief executive in May 1987 , a few months after the resignations of former Chief Executive Christopher Reeves and other top officials because of the merchant bank 's role in Guinness PLC 's controversial takeover of Distiller 's Co. in 1986 . Morgan Grenfell had advised Guinness on the bid , which was surrounded by allegations that Guinness used artificial means to support the bid 's value . Morgan Grenfell said Michael Dobson , currently group deputy chief executive , will assume the chief executive position . The merchant bank also announced that finance director David Eward is taking early retirement for personal reasons . His duties will be taken over by Anthony Richmond-Watson , who has been elected deputy chairman . News of Mr. Eward 's retirement comes one day after Morgan said that Christopher Whittington resigned as chairman of Morgan 's banking subsidiary to join a financial services firm . Mr. Craven said both Messrs. Eward and Whittington had planned to leave the bank earlier , but Mr. Craven had persuaded them to remain until the bank was in a healthy position . `` If there 's any coincidence about the departures it 's that they are leaving at a time when the business is in reasonably good shape and going forward very well . '' Last month , Morgan Grenfell announced its pretax profit rose 49.6 % to # 32.8 million in the first half , boosted by a healthy growth in its domestic and international corporate finance business . The following were among yesterday 's offerings and pricings in the U.S. and non-U.S. capital markets , with terms and syndicate manager , as compiled by Dow Jones Capital Markets Report : Lockheed Corp. -- $ 300 million of 9 3/8 % notes due Oct. 15 , 1999 , priced at 99.90 to yield 9.39 % . The issue was priced at a spread of 137.5 basis points above the Treasury 's 10-year note . Rated single-A-3 by Moody 's Investors Service Inc. and single-A by Standard & Poor 's Corp. , the issue will be sold through underwriters led by Goldman , Sachs & Co . California Health Facilities Financing Authority -- $ 144.35 million of revenue bonds for Kaiser Permanente , due 19931999 , 2004 , 2008 , 2018 and 2019 , tentatively priced by a PaineWebber Inc. group to yield from 6.25 % in 1993 to 7.227 % in 2018 . Serial bonds were priced to yield to 6.80 % in 1999 . There are about $ 10 million of 7 % bonds priced at 99 1/4 to yield 7.081 % in 2004 ; about $ 15 million of 7 % bonds priced at 98 1/2 to yield 7.145 % in 2008 ; about $ 88.35 million of 7 % bonds priced at 97 1/4 to yield 7.227 % in 2018 ; and about $ 15 million of 6 3/4 % bonds priced to yield 7.15 % in 2019 . The bonds are rated double-A-2 by Moody 's and double-A by S&P , according to the lead underwriter . Pennsylvania Higher Education Facilities Authority -- approximately $ 117 million of revenue bonds for Hahnemann University , Series 1989 , due 1990-2002 , 2009 and 2019 , priced late Monday by a Merrill Lynch Capital Markets group to yield from 6 % in 1990 to 7.282 % in 2019 . Serial bonds were priced to yield from 6 % in 1990 to 7.10 % in 2002 . There are about $ 25.6 million of 7.2 % term bonds due 2009 , priced to yield 7.25 % , and about $ 66.8 million of 7.2 % term bonds due 2019 , priced at 99 to yield 7.282 % . The bonds are insured and rated triple-A by Moody 's and S&P . Connecticut -- $ 100.4 million of general obligation capital appreciation bonds , College Savings Plan , 1989 Series B , priced by a Prudential-Bache Capital Funding group . The zero-coupon bonds were priced to yield to maturity from 6.25 % in 1994 to 6.90 % in 2006 , 2007 and 2009 . The bonds have received a rating of double-A-1 from Moody 's , and a double-A-plus rating is expected from S&P , the underwriter said . Oregon -- $ 100 million of general obligation veterans ' tax notes , Series 1989 , dated Nov. 1 , 1989 , and due Nov. 1 , 1990 , through a Chemical Securities Inc. group . The group is offering the notes priced as 6 3/4 % securities to yield 6.25 % . The notes are rated MIG-1 by Moody 's and SP1-plus by S&P . University of Medicine and Dentistry of New Jersey -- $ 55.8 million of Series C bonds priced by a Prudential-Bache Capital Funding group . The bonds , rated single-A by Moody 's and double-A by S&P , were priced to yield from 6.20 % in 1992 to 7.26 % in 2019 . All serial bonds are being offered at par except those due 2002 . Federal Home Loan Mortgage Corp. -- $ 500 million of Remic mortgage securities being offered in eight classes by Salomon Brothers Inc . The offering , Series 104 , is backed by Freddie Mac 9 % securities . The issue used at-market pricing . Federal National Mortgage Association -- $ 350 million of Remic mortgage securities being offered in 11 classes by Greenwich Capital Markets . The offering , Series 1989-82 , is backed by Fannie Mae 9 1/2 % securities and used at-market pricing . The issue brings Fannie Mae 's 1989 Remic issuance to $ 30.2 billion and its total volume to $ 42.3 billion since the program began in April 1987 . Hanshin Electric Railway Co . ( Japan ) -- $ 150 million of bonds due Nov. 2 , 1993 , with equity-purchase warrants , indicating a 4 % coupon at par , via Nomura International Ltd . Each $ 5,000 bond carries one warrant , exercisable from Nov. 16 , 1989 , through Oct. 19 , 1993 , to buy company shares at an expected premium of 2 1/2 % to the closing share price when terms are fixed Oct. 24 . Toyobo Co . ( Japan ) -- $ 150 million of bonds due Nov. 1 , 1993 , with equity-purchase warrants , indicating a 4 % coupon at par , via Daiwa Europe Ltd . Each $ 5000 bond carries one warrant , exercisable from Nov. 15 , 1989 , to Oct. 18 , 1993 , to buy company shares at an expected premium of 2 1/2 % to the closing share price when terms are fixed Oct. 23 . Sammi Steel Co . ( Korea ) -- $ 50 million of bonds due Nov. 8 , 1994 , with equity-purchase warrants , indicating a 1 1/4 % to 1 3/4 % coupon at par , via Merrill Lynch International Ltd. and Dong Suh Securities Co . Each $ 5,000 bond carries one warrant , exercisable from May 8 , 1991 , through Oct. 8 , 1994 , to buy company shares at an expected premium of 75 % to 85 % to the closing share price when terms are fixed Oct. 18 . Redland International Funding PLC ( U.K. parent ) -- 150 million Australian dollars of 15 3/8 % bonds due Nov. 8 , 1996 , priced at 101 3/4 to yield 15.44 % less full fees , via JP Morgan Securities Ltd . Guaranteed by Redland PLC . Fees 2 . Tennessee Valley Authority -- A $ 4 billion , three-part offering of power bonds priced through an underwriting group led by First Boston Corp . The size of the issue was increased from an originally planned $ 3 billion . The first part , consisting of $ 2 billion of bonds due Oct. 1 , 2019 , with a five-year non-call provision , was priced as 8 3/4 % securities at 96.808 to yield 9.06 % . The 30-year issue was priced at a spread of 105 basis points above the Treasury 's 30-year bellwether bond . The second part , consisting of $ 1 billion of noncallable bonds due Oct. 1 , 1999 , was priced as 8 3/8 % securities at 99.691 to yield 8.42 % . The 10-year issue was priced at a spread of 43 basis points above the Treasury 's 10-year note . The third part , consisting of $ 1 billion of noncallable bonds due Oct. 1 , 1994 , was priced as 8 1/4 % securities at 99.672 to yield 8.33 % . The five-year issue was priced at a spread of 43 basis points above the Treasury 's comparable note . The issue is rated triple-A by Moody 's and triple-A by S&P . Par Pharmaceutical Inc. said it named its interim president and chief executive officer , Kenneth I. Sawyer , to those posts permanently , and elected him to the board . Par also said it was advised by the U.S. attorney for Maryland that it is one of a number of companies being investigated by a federal grand jury for alleged violations of the federal Food , Drug and Cosmetic Act . Par , a generic-drug maker that has been plagued by management problems , was already the subject of a federal criminal inquiry into the drug-approval process and a Food and Drug Administration investigation . A Par spokesman said he understood the criminal investigation in Maryland relates to matters Par disclosed in July , when Par said it filed false drug information with the FDA . At the time , the company said it was recalling one of its drugs and had stopped selling two others . The spokesman said he also understood that the inquiry related to the existence of an `` off-the-record '' production book . The book noted changes made at the manufacturing level that were n't disclosed to the FDA . Par said it is cooperating in the investigation . Also yesterday , Ashok Patel , a former Par official who pleaded guilty to providing an FDA employee an illegal gratuity of $ 3,000 , was sentenced by a federal judge in Baltimore to one year of community service and a $ 150,000 fine . Mr. Patel also was placed on three years ' probation . Mr. Patel resigned as senior vice president of Par in April . In July , Par and a 60%-owned unit agreed to plead guilty in that inquiry , as did another former Par official . Mr. Sawyer began running the company on an interim basis in late September . Par said it selected him for the posts of president and chief executive on a permanent basis because of his experience in the industry and his performance at Par . Perry Levine , chairman , said Mr. Sawyer had `` taken significant steps '' to restore the company 's credibility and sense of professionalism and integrity . Just after midnight Monday , federal spending started to drop by $ 16 billion . What do you say we all close down the poker game , go home and bank the $ 16 billion ? That 's essentially what budget director Richard Darman is suggesting , and we think he deserves as much support as he can get . If human beings ca n't cut federal spending honestly -- and they ca n't -- let the computers do it . Congress , with a measure of White House complicity , has been manipulating the spending accounts for years under the cover of omnibus appropriations bills . ( Indeed without earlier manipulations , the current sequester of $ 16 billion would have been even larger . ) We suspect voters are fed up with the finagling . Consider , for instance , that even yesterday 's widely publicized sequester is likely to be traduced if business as usual is allowed to prevail . Under the law , Gramm-Rudman 's across-the-board-cuts in federal programs are supposed to be permanent . Social Security and spending for poor people are exempted . However , the Associated Press 's account of the Monday sequester order signed by President Bush neatly captured the contempt Congress shows toward the notion of a legally binding commitment : `` Lawmakers have been saying for weeks that they plan to roll back the cuts as soon as they agree to a compromise on a deficit-cutting bill . '' Mr. Darman 's inclination to save the sequester was backed up yesterday by White House Press Secretary Marlin Fitzwater : `` There is some feeling here that the cuts are the way to go . It will reduce spending in a very effective fashion . '' This attitude is being waved away by sophisticates around Washington as little more than tough talk . It looks to us like a golden opportunity for George Bush to chop off at the knees all this talk about a timid , unserious presidency . Mr. Bush would be acting in the public interest if he let the Washington elites who manipulate these budgets -- the bureaucrats , the lobbyists , the congressional staffers -- live for just one year on a restricted diet . Ask Tommy Lasorda ; thin is in . Senator Phil Gramm pointed out Monday that in the 20 years before Gramm-Rudman was enacted in 1985 , federal spending grew by about 11 % a year ; since the law , it 's grown at under 5 % annually . Another major factor in this positive trend was Ronald Reagan 's decision early in his presidency to fight the budget war on the expenditure side rather than raising taxes . George Bush 's continued support of the tax dam sustains this strategy of pressuring Congress to make choices among competing priorities , rather than just saying yes to all the grateful special-interest constituencies that fill the PAC trough . If Washington 's elites ever succeed in bursting the tax dam , Americans will be engulfed in a red sea of new spending programs , such as federalized child care . Child care was one of the many `` extraneous '' bills pulled out of the Senate 's reconciliation bill last Friday . Others were the capital-gains cut , Section 89 repeal , the disabled workers bill , and the unprecedented reconsideration of the catastrophic health act . All this stuff still is in the House 's 1,878-page reconciliation bill , and many Members say they 're reluctant to pull out cherished bills , just to see them die . Republicans especially want a guarantee from the House leadership that they 'll get an up-or-down vote on the bills . House Speaker Foley ought to deliver that promise . This is the way government is supposed to work , with politicians taking responsibility for votes that their constituents can identify , instead of concealing them in the great reconciliation garbage truck . We have as much nostalgia as anyone for those leafy , breezy days in Washington when honorable men and women dickered over budgets and even log-rolled a bit to see that the bridges got build , roads paved , soldiers paid or that the desperately poor were cared for . Those days are gone . Nor do we see any reason to believe that a metropolitan Washington that has gotten fat and rich and lazy in the shadow of the federal colossus will change much on its own initiative . Save the sequester , and let Washington scream . The New York Stock Exchange said a seat sold for $ 436,000 , down $ 39,000 from the previous sale Oct. 4 . Seats are currently quoted at $ 425,000 bid and $ 475,000 offered . The $ 475,000 sale price earlier this month was the lowest in nearly three years . Exchange seats hit a peak of $ 1,150,000 in September 1987 . The Canadian government auctioned 750 million Canadian dollars ( US$ 637.5 million ) of 9.25 % bonds due Dec. 15 , 1994 . The average accepted yield bid was 9.617 % for a price equivalent of 98.523 . Proceeds of the sale will be used to redeem C$ 675 million of government bonds maturing Nov. 1 and for general government purposes . Northern Trust Corp. said its board adopted a shareholder rights plan aimed at deterring unwanted takeover bids , but said it 's not aware of any plan to acquire the banking concern . Under Northern Trust 's plan , shareholders were issued rights that , in the event of certain attempted takeovers , allow holders to buy shares in the company at half price . National Patent Development Corp. said it plans to purchase as many as 200,000 common shares of its 81%-controlled Interferon Sciences Inc. unit in periodic , open-market purchases . The 200,000 shares are about 23 % of Interferon 's common shares outstanding , excluding National Patent 's stake . Noting the recent Food and Drug Administration approval of Interferon 's genital warts treatment , National Patent said it believes Interferon 's stock is undervalued . Japanese investors , reassured by Monday 's strong rally on Wall Street , erased most of that day 's losses on the Tokyo Stock Exchange . But analysts said the rebound did n't remove the cautious mood from the market . In London , stocks closed lower in volatile trading as an opening rally was obliterated by worse-than-expected U.S. trade figures . Paris shares had a similar reaction , but most other European bourses posted gains , as did all major Asian and Pacific stock markets . Tokyo 's Nikkei Index of 225 stocks jumped 527.39 points to close at 34996.08 . The rise came a day after the year 's biggest drop on Monday , when the Nikkei fell 647.33 , or 1.8 % , in response to Friday 's 6.9 % plunge on Wall Street . In early trading Wednesday in Tokyo , the Nikkei index rose 19.30 points to 35015.38 . On Tuesday , the broader-based Tokyo Stock Price Index of issues listed in the first section , which fell 45.66 Monday , rose 41.76 , or 1.61 % , to 2642.64 . Trading was relatively thin at an estimated 650 million shares , though brisker than Monday 's 526 million . Advancing issues outnumbered decliners 821-201 , with 103 unchanged . `` We 're back to square one , '' said Simon Smithson , an analyst in Japan for Kleinwort Benson International Inc . Japanese domestic institutions , including trust banks and investment management firms , that had been on the sidelines during Monday 's fall were back in the market , analysts said . Foreign investors reportedly started off selling but later joined in the buying . The Tokyo rally seemed to confirm the view , frequently expressed in Japan in the past few days , that the drop in New York was a local problem related to merger and acquisition activity in the U.S . `` This time we do n't really have to worry about Tokyo , '' said an official at Daiwa Securities Co . `` Nothing has changed fundamentally in the Tokyo market . '' But even though Tokyo appears unharmed by recent market volatility , analysts and traders say there are still a few concerns on the horizon . In particular , Japanese investors will be keeping a wary eye on Wall Street to see whether Monday 's 88.12-point rally holds up as fresh U.S. economic data are released . `` People are placing small bets . There 's no huge buying , '' said Stephen Hill , head of equity sales at Jardine Fleming Securities Ltd. in Tokyo . `` Really brave views right now would be foolhardy . '' Yesterday 's buyers favored real estate , construction and other large-capitalization issues , reflecting the fact that many Tokyo investors now feel safer with domestically oriented stocks , analysts said . They also are concerned about the persistent strength of the dollar against the yen , as a weaker yen leads to higher import prices in Japan and adds to domestic inflationary pressures . Currency concerns also weigh heavily on interest rate-sensitive stocks such as banking and other financial issues because of fears that Japanese interest rates might have to rise to keep the dollar in check . Among steel shares , NKK rose 19 to 705 yen ( $ 4.97 ) a share , and Nippon Steel gained 17 to 735 . Construction shares that gained included Shimizu , which rose 130 to 2,080 . In the real estate sector , Mitsui Real Estate Development was up 100 at 2,760 , and Mitsubishi Estate gained 80 to 2,360 . London 's Financial Times-Stock Exchange 100-share index fell 27.9 points to 2135.5 . It was down more than 40 points a half-hour before the close , marking a 61.5-point turnaround from its high , reached in the first 15 minutes of trading . The narrower Financial Times 30-share index fell 29.6 to 1730.7 . Volume was an active 643.3 million shares , about double the recent levels but down from 959.3 million the previous day , which U.K. traders have dubbed `` Manic Monday . '' Prices opened strongly on the basis of Monday 's Wall Street rally and yesterday 's gains in Tokyo . But the advance faltered as index-options traders and investors jittery about the U.K. economic outlook took over . The unexpectedly wide U.S. August trade deficit of $ 10.77 billion hit an already jittery U.K. market in midafternoon . Michael Hicks , who manages sales and trading for brokerage concern Societe Generale Strauss Turnbull , said : `` It 's a nervous market . It was all over the place . If you bought , you wish you had n't , and if you sold , you wish you had n't . '' He said the current market `` is all about sentiment , and the sentiment in London is 90 % anxiety and worry . '' Britain 's economic fundamentals , he said , `` do n't look very bright . '' Dealers said London showed signs of calming in midafternoon after Wall Street avoided sharp losses despite the trade report , but a wave of futures-related selling later in the session sent buyers back to the sidelines . Still , some sectors found buying interest after being actively sold in recent weeks . Merchant banks were stronger across the board . Morgan Grenfell , which has been mentioned in takeover rumors , rose 20 to 392 pence ( $ 6.18 ) a share . S.G. Warburg , a rumored target of some European banking concerns , finished 22 higher at 400 . Hambros rose 5 to 204 , and Schroders rose 25 to # 12.75 . On the corporate front , Ford Motor announced that it raised its stake in U.K. luxury car maker Jaguar to 10.4 % from 5 % . Jaguar shares jumped 23 before easing to close at 654 , up 6 . Amstrad , a British computer hardware and communications equipment maker , eased 4 to 47 . It announced a 52 % plunge in pretax profit for the latest year . Brewery stocks were firm to higher on talk of early bargain-hunting , but most ended below their peaks . Bass ended up 3 higher at 966 , Guinness closed at 589 , down 7 , and Scottish & Newcastle dropped 11 to 359 , but Whitbread Class A shares rose 17 to 363 . Dealers said there was late talk of a Whitbread sale of brewing operations to Scottish & Newcastle . The most active shares were major blue-chips , particularly oils and utilities such as British Gas and British Telecommunications . Traders attributed the action in them largely to defensive positioning in a volatile market . British Gas finished at 197 , down 2 , on 13 million shares , British Petroleum fell 8 to 291 on 9.4 million shares , and British Telecom was 4 lower at 261 on turnover of 10 million shares . Cable & Wireless fell 20 to 478 . Also in active trading , British Steel fell 1 to 124 as 20 million shares changed hands . Racal Electric , which traded 11 million shares , declined 12 to 218 . In other European markets , share prices closed sharply higher in Frankfurt and Zurich and posted moderate rises in Stockholm , Amsterdam and Milan . Paris closed lower , and most Brussels shares were unable to trade for a second consecutive day because of technical problems . South African gold stocks closed higher . Elsewhere , share prices rebounded in Hong Kong , Sydney , Singapore , Wellington , Taipei , Manila and Seoul . In Hong Kong , Sydney and Singapore -- the largest of those exchanges -- stocks recovered one-third to one-half of the ground they lost in Monday 's plunge , with major market indexes posting gains of 3.6 % to 4.4 % . Here are price trends on the world 's major stock markets , as calculated by Morgan Stanley Capital International Perspective , Geneva . To make them directly comparable , each index is based on the close of 1969 equaling 100 . The percentage change is since year-end . Zurn Industries Inc. said it received approval to proceed on four separate projects with a total contract value of $ 59 million . The projects include construction of a 29,400 kilowatt waste-to-energy plant for Ada Cogeneration L.P. , Ada , Mich. ; a steam generating plant at Ontario , Calif. , that Zurn will own and operate , and two waste-water control projects in Orange County , Calif . AVX Corp. and Unitrode Corp. said they completed the previously reported sale of Unitrode 's San Diego-based Passive Components division to AVX . AVX , a New York-based maker of passive electronic products , paid $ 11 million in cash to Unitrode , a Lexington-based maker of semiconductor products . Passive Components makes capacitors and filters used to protect electronics . Consolidated Papers Inc. said it plans to spend $ 495 million on new paper-manufacturing equipment and facilities . The producer of paper used in magazines and by commercial printers said spending on the expansion is planned to begin in the first quarter of 1990 . The expansion is subject to approval by federal and Wisconsin environmental regulators . THE STOCK of Applied Power Inc. , which split 2-for-1 in May , has risen since August 1988 . In yesterday 's edition , it was incorrectly stated that the company 's share price has softened since August 1988 . ( See : `` Who 's News : With One Turnaround Under His Belt , Sim Aims for Another at Barry Wright '' -- WSJ Oct. 17 , 1989 The stock market 's dizzying gyrations during the past few days have made a lot of individual investors wish they could buy some sort of insurance . After all , they wo n't soon forget the stock bargains that became available after the October 1987 crash . But while they want to be on the alert for similar buying opportunities now , they 're afraid of being hammered by another terrifying plunge . The solution , at least for some investors , may be a hedging technique that 's well known to players in the stock-options market . Called a `` married put , '' the technique is carried out by purchasing a stock and simultaneously buying a put option on that stock . It 's like `` fire insurance , '' says Harrison Roth , the senior options strategist at Cowen & Co . Because a put option gives its owner the right , but not the obligation , to sell a fixed number of shares of the stock at a stated price on or before the option 's expiration date , the investor is protected against a sudden drop in the stock 's price . But most investment advisers do n't recommend using married puts all the time . That 's because the cost of buying put options eats into an investor 's profit when stock prices rise . `` This is the type of fire insurance you only buy when the nearby woods are on fire , '' says Mr. Roth . `` You always want your house insured , but you do n't always feel the need for your investments to be insured . '' In addition to hedging new stock purchases , the married-put technique can be used to protect stocks that an investor already owns . In either case , the investor faces three possible outcomes : -- If the stock goes up in price between now and the put 's expiration date , the put will probably expire worthless . The investor will be out the cost of the put , which is called the `` premium , '' and this loss will reduce the stock-market profit . -- If the stock stays at the same price between now and the put 's expiration date , the investor 's loss will be limited to the cost of the put , less any amount realized from a closing sale of the put . The worst-case scenario would be if the put expires worthless . -- If the price of the stock declines , the put will increase in value . Once the stock price is less than the exercise price , or `` strike price , '' of the put , the gain will match the loss on the stock dollar for dollar . The put establishes a minimum selling price for the stock during its life . When a stock falls below the put 's strike price , the investor simply sells the stock at a loss and simultaneously sells the put at a profit . Or , the investor can exercise the put , by tendering the stock to his or her broker in return for payment from another investor who has sold a put on the same stock . Brokers handle such transactions through the Options Clearing Corp. , which guarantees all option trades . The accompanying table shows how this strategy would work for three stocks . Though not reflected in the table , an investor should know that the cost of the option insurance can be partially offset by any dividends that the stock pays . For example , Tenneco Inc. pays a quarterly dividend of 76 cents , which would be received before the February option expires and , thus , reduce the cost of using the technique by that amount . In this case , the investor 's risk would n't exceed 3.6 % of the total investment . To simplify the calculations , commissions on the option and underlying stock are n't included in the table . There are more than 650 stocks on which options may be bought and sold , including some over-the-counter stocks . But some investors might prefer a simpler strategy then hedging their individual holdings . They can do this by purchasing `` index puts , '' which are simply put options on indexes that match broad baskets of stocks . For instance , the most popular index option is the S&P 100 option , commonly called the OEX . It is based on the stocks that make up Standard & Poor 's 100-stock index . Unlike options on individual issues , index options are settled only in cash , and no stock is ever tendered . But while index options are convenient , they have several disadvantages . For one thing , an investor 's portfolio might not closely match the S&P 100 . As a result , the OEX insurance may or may not fully protect an investor 's holdings in the event of a market decline . In addition , OEX options were suspended from trading last Friday afternoon , after the stock-market sell-off got under way and trading in the S&P-500 futures contract was halted . So an investor who wanted to realize a profit on OEX puts after the trading suspension would have been out of luck . On the other hand , only a handful of individual issues were suspended from trading on Friday . Normally , once the underlying investment is suspended from trading , the options on those investments also do n't trade . Ultimately , whether the insurance provided by purchasing puts is worthwhile depends on the cost of the options . That cost rises in times of high market volatility . But it still might be cheaper than taking a major hit . The protection from using married puts is clearly superior to that afforded by another options strategy some investors consider using during troubled times : selling call options on stocks the investor owns . A call option is similar to a put , except that it gives its owner the right to buy shares at a stated price until expiration . Selling a call option gives an investor a small buffer against a stock-market decline . That 's because it reduces the cost of the stock by the amount of premium received from the sale of the call . But if the price of the stock rises above the strike price of the option , the stock is almost certain to be called away . And in that case , the investor misses out on any major upside gain. drop , but shrinks the return if stock prices rise . These calculations exclude the effect of commissions paid and dividends received from the stock . All prices are as of Monday 's close . Hopes for quick enactment of pending deficit-reduction legislation faded as efforts to streamline the House version in advance of a House-Senate conference broke down . House leaders had hoped to follow the Senate 's lead by getting an agreement from House committee chairmen under which they would drop items that would n't reduce the fiscal 1990 budget deficit from the House-passed bill before the negotiations with the Senate began . But the effort became snagged on the question of what would become of other issues , ranging from cutting the capital-gains tax to child care to repeal of catastrophic-illness insurance . `` Many members feel there are important features of the House bill that should be enacted , '' Speaker Thomas Foley ( D. , Wash . ) said . `` If there is any support for reducing the bill , it is conditioned on their desire to see them passed in another form . '' Now those items will be discussed in a House-Senate conference , which could begin as soon as today , with the expectation that they could either be resolved there or placed into other legislation . `` You 've got to give these chairmen the opportunity to see if they can work things out , '' said House Budget Committee Chairman Leon Panetta ( D. , Calif . ) . `` This is a democratic process -- you ca n't slam-dunk anything around here . '' White House Budget Director Richard Darman has said he would continue to press to keep the capital-gains provision in the final version of the bill unless the House drops many of its costly provisions . Senate leaders had hoped to be able to send a compromise version of the measure to President Bush by the end of the week , but Speaker Foley said that was n't likely . Failure to pass the bill meant that $ 16.1 billion in across-the-board spending cuts took effect Monday under the Gramm-Rudman budget law . The bill must be enacted before the cuts can be restored . TRADING VOLUME in Standard & Poor 's 500 stock-index futures contracts on the Chicago Mercantile Exchange Monday totaled 73,803 contracts . Yesterday 's edition incorrectly reported Monday 's trading volume as a record for the S&P 500 contract . ( See : `` After the Fall : Stock-Index Futures Provide a Windfall for Some Traders -- Chicago Merc 's Trading Pit Gets Liquidity Infusion After a Two-Year Wait '' -- WSJ Oct. 17 , 1989 NCNB Corp. raised $ 1 billion in new capital during the third quarter . In yesterday 's edition , the amount of new capital was misstated . ( See : `` Morgan Reports 3rd-Period Loss off $ 1.82 Billion -- NCNB Says Net Doubled , While Security Pacific Posts 10 % Rise in Profit '' -- WSJ Oct. 17 , 1989 McCormick Capital Inc. said its tender offer to buy back as many as 1.1 million , or 44 % , of its common shares at $ 3 apiece , which expired Friday evening , was oversubscribed . The developer and manager of futures-investment limited partnerships said preliminary results indicate that about 1,749,000 shares had been tendered , giving a preliminary proration factor of 0.6287 . The final proration factor will be announced Monday . Northgate Exploration Ltd. said it is proposing to amalgamate four of its associated companies . Under a proposed two-step amalgamation involving share swaps , ABM Gold Corp. , a gold exploration and management company , will merge with Neptune Resources Corp. , United Gold Corp. and Inca Resources Inc . ABM will also increase its stake in Sonora Gold Corp. to 42 % from 26 % . Northgate said it will own about 50 % of the equity and 81 % of the votes of ABM after the amalgamation . The amalgamations are subject to regulatory approval and require approval by shareholders of ABM , Inca , United and Neptune at special meetings on Nov. 10 . Steven C. Walker , senior vice president of this bank holding company , was named president , chief executive officer and a director of both Commercial National and Commercial National Bank . He succeeds James E. Burt III , who resigned from all three posts to pursue other interests . Cincinnati Microwave Inc. said it introduced two radar detectors . One unit , called the Escort , uses a new digital signal-processing technology to detect radar signals much sooner than was previously possible , the company said . The other , called the Solo , is battery operated and is the first high-performance radar detector that does n't need a power cord , the company said . A surprising surge in the U.S. trade deficit raised fears that the nation 's export drive has stalled , and caused new turmoil in financial markets . The merchandise trade deficit widened in August to $ 10.77 billion , the Commerce Department reported , a sharp deterioration from July 's $ 8.24 billion and the largest deficit of any month this year . Exports fell for the second month in a row , while imports rose to a record . `` This is one of the worst trade releases we 've had since the dollar troughed out in 1987 , '' said Geoffrey Dennis , chief international economist at James Capel Inc . Like most analysts , Mr. Dennis was hesitant to read too much into one month 's numbers ; but he said , `` It indicates perhaps that the balance in the U.S. economy is not as good as we 've been led to believe . '' The number had a troubling effect on Wall Street , suggesting that more fundamental economic problems may underlie last Friday 's stock market slide . The Dow Jones Industrial Average tumbled more than 60 points after the report 's release , before recovering to close 18.65 points lower at 2638.73 . `` This bad trade number raises some deeper issues about the market decline , '' said Norman Robertson , chief economist for Mellon Bank . `` It raises questions about more deep-seated problems , the budget deficit and the trade deficit and the seeming lack of ability to come to grips with them . '' The trade report drew yet another unsettling parallel to October 1987 . On Oct. 14 of that year , the announcement of an unusually large August trade deficit helped trigger a steep market decline . The slide continued until the record 508-point market drop on Oct. 19 . In 1987 , however , the news was the latest in a string of disappointments on trade , while the current report comes after a period of improvement . The bleak trade report was played down by the Bush administration . Commerce Secretary Robert Mosbacher called the worsening trade figures `` disappointing after two very good months . '' And White House spokesman Marlin Fitzwater said the deficit was `` an unwelcome increase , '' adding that `` we 're hopeful that it simply is a one-month situation and will turn around . '' But the figures reinforced the view of many private analysts that the improvement in the U.S. trade deficit has run out of steam . `` The figures today add further evidence to support the view that the improvement in the U.S. trade deficit has essentially stalled out at a level of about a $ 110 billion annual rate , '' said Jeffrey Scott , a research fellow at the Institute for International Economics here . `` That 's still an improvement over last year , but it leads one to conclude that basically we 've gotten all the mileage we can out of past dollar depreciation and past marginal cuts in the federal budget deficit . '' Exports declined for the second consecutive month in August , slipping 0.2 % to $ 30.41 billion , the Commerce Department reported . Imports , on the other hand , leaped 6.4 % to a record $ 41.18 billion . Not only was August 's deficit far worse than July 's , but the government revised the July figure substantially from the $ 7.58 billion deficit it had initially reported last month . Many economists contend that deep cuts in the U.S. budget deficit are needed before further trade improvement can occur . That 's because the budget deficit feeds an enormous appetite in this country for both foreign goods and foreign capital , overwhelming the nation 's capacity to export . `` People are sick and tired of hearing about these deficits , but the imbalances are still there and they are still a problem , '' said Mr. Robertson . In addition , the rise in the value of the dollar against foreign currencies over the past several months has increased the price of U.S. products in overseas markets and hurt the country 's competitiveness . Since March , exports have been virtually flat . At the same time , William T. Archey , international vice president at the U.S. Chamber of Commerce , notes : `` Clearly the stronger dollar has made imports more attractive '' by causing their prices to decline . Most economists expect the slowing U.S. economy to curb demand for imports . But they foresee little substantial progress in exports unless the dollar and the federal budget deficit come down . `` The best result we could get from these numbers would be to see the administration and Congress get serious about putting the U.S. on an internationally competitive economic footing , '' said Howard Lewis , vice president of international economic affairs at the National Association of Manufacturers . `` That must start with cutting the federal budget deficit . '' August 's decline in exports reflected decreases in sales of industrial supplies , capital goods and food abroad and increases in sales of motor vehicles , parts and engines . The jump in imports stemmed from across-the-board increases in purchases of foreign goods . The numbers were adjusted for usual seasonal fluctuations . Alan Murray contributed to this article . ( In billions of U.S. dollars , not seasonally adjusted ) * Newly industrialized countries : Singapore , Hong Kong , Taiwan , South Korea Source : Commerce Steve Jobs took a step back from the frontier of personal-computer technology in an effort to spur sales of Next Inc. 's new machine . Mr. Jobs moved to remedy a couple of his computer 's drawbacks yesterday by lowering the entry-level price for a Next machine by $ 1,500 , or 23 % , if the buyer chooses a hard-disk drive as an alternative to Next 's optical-storage device . The hard drive , which is the storage device of choice for virtually every desktop computer user , also now will supplement Next 's futuristic optical device if buyers pay full price . Mr. Jobs , co-founder of Apple Computer Inc. , founded Next four years ago in the hopes of fomenting a revolution in the way desktop computers are designed and used . His Next computer , introduced about a year ago and aimed primarily at university computer users , sports snazzy graphics , digital sound , built-in networking and a sleek black design . But the computer was proving a hard sell because of its high price , a lack of software and an optical data-storage device that was too slow . The machine began shipping at the end of last year . The closely held company has n't disclosed sales . However , most universities that have bought the machines say they are buying small numbers for evaluation purposes . Universities can now buy a Next computer without an optical storage device for $ 4,995 . A computer with the optical device will still cost $ 6,495 , but from now on Next will outfit every computer with a hard drive and supply one at no cost to those who have already bought Next machines . Commercial customers can purchase the same system through Businessland Inc. , a computer retailer based in San Jose , Calif. , for roughly $ 3,000 more . Mr. Jobs said the changes were prompted by requests from customers who are frustrated with the performance of the optical device , which is n't offered as standard equipment by any rivals . Another factor was that customers were asking , `` Why do n't you give us a cheaper system ? '' Mr. Jobs said at a conference on university computing here . Optical-storage devices can handle very large amounts of data and make it far easier to edit film clips or audio recordings with a computer . But the technology , while reliable , is far slower than the widely used hard drives . To get around the delays caused by the optical device , Businessland , which is Next 's exclusive dealer to corporations , has for months been advising customers to purchase hard drives with the machines . Next 's decision to rely on the more-established hard drive in every Next computer does n't signal a retreat from optical storage , said Mr. Jobs , who for years has said this technology will play a crucial role in the next decade . `` We 're extremely committed to optical storage technology '' he said . `` We think everything will go this way in a few years . '' He said that the next generation of optical drives will be as fast as hard drives , but he depends on outside suppliers for the devices . But university computer specialists , who welcomed the move , called it a necessary retreat from the cutting edge of technology and one that 's likely to increase Next 's sales on campuses . `` From the standpoint of being on the forefront of technology , this is a step backward , '' said Jerry W. Sprecher , a senior computing manager for the California state university system . `` But it will definitely boost Next 's sales . '' Universities , however , say Next 's prices must go even lower before large numbers of students purchase the machine . `` We 'd still like to see a student model , '' priced at about $ 3,500 , said Ronald Johnson , director of academic computing at Minnesota 's Gustavus Adolphus College , which has bought eight Next machines . Broad acceptance of Next 's computer also is hindered by difficulty in distributing software for it . Most software is distributed on cheap floppy disks , but the Next computer does n't come with a device that reads them . Next 's computer also needs more software applications , but Mr. Jobs said he expects more soon . He said he expects Lotus Development Corp. to introduce a Next version of its popular 1-2-3 spreadsheet program in 1990 . Educators added that Next needs to soon offer a color version of its computer . Every major maker offers computers with color displays . Next wo n't comment on when it will do the same , but is believed to have a color model under development . Donald J. Amaral , 37 years old , was named president and chief operating officer of this owner and operator of hospitals , nursing centers and retirement hotels . He succeeds as president , Don Freeberg , who remains chairman and chief executive officer . The position of chief operating officer is new . Ashton-Tate Corp. reported a net loss of $ 19.4 million , or 74 cents a share , for the third quarter , which was burdened by severance costs and the expense of upgrading its database software inventories . The software company said revenue slid 28 % to $ 53.9 million . This contrasts with the year-ago quarter , when the company had net income of $ 11.7 million , or 45 cents a share , on revenue of $ 75.7 million . For the nine months , Ashton-Tate had a loss of $ 27.6 million , or $ 1.05 a share . In the year-ago period , the company had profit of $ 34.3 million , or $ 1.32 a share . Revenue in the period slid almost 8 % to $ 203.2 million from about $ 220 million last year . Edward M. Esber , chairman , president and chief executive officer , attributed the decline to reduced domestic revenue because of $ 4.9 million spent to upgrade existing software inventories to the new database IV Version 1.1 , and $ 1.8 million spent on the recent reduction in work force . He said the company was `` encouraged by feedback '' it received from selected customers now testing Version 1.1 . The red ink came as no surprise to Wall Street , but analysts said they saw ominous hints of a further delay in volume shipments of Version 1.1 , a harbinger of continued losses in the fourth quarter . `` The loss is in line with our expectations , '' said John C. Maxwell III , an analyst with Dillon , Read & Co. in New York . He added gross margins and operating profit `` eroded quite dramatically '' from the prior quarter , along with sales of existing software product lines like Multimate and Framework . `` The success of a new product in the database line is needed . And while the company has n't made a definite statement , it now looks like that 's not going to be anytime soon , '' Mr. Maxwell said . The company said in a statement that it expects to ship new products `` during the next two quarters . '' `` It now looks like database IV Version 1.1 is n't going to be { widely } available until the first quarter of 1990 , '' said David Bayer , an analyst with Montgomery Securities in San Francisco . `` This is the second delay now in getting the product out the door . It does prolong the pain somewhat . '' Mr. Maxwell said unless the company can start shipments of the new product sometime this quarter , the fourth-quarter loss is likely to be `` comparable to the third quarter 's . '' If the company can start to ship during this quarter , it could stem some , if not all of the red ink , he said . In national over-the-counter trading , Ashton-Tate closed yesterday at $ 10 a share , up 62.5 cents . Tuesday , October 17 , 1989 The key U.S. and foreign annual interest rates below are a guide to general levels but do n't always represent actual transactions . PRIME RATE : 10 1/2 % . The base rate on corporate loans at large U.S. money center commercial banks . FEDERAL FUNDS : 8 11/16 % high , 8 5/8 % low , 8 5/8 % near closing bid , 8 11/16 % offered . Reserves traded among commercial banks for overnight use in amounts of $ 1 million or more . Source : Fulton Prebon ( U.S.A . ) Inc . DISCOUNT RATE : 7 % . The charge on loans to depository institutions by the New York Federal Reserve Bank . CALL MONEY : 9 3/4 % to 10 % . The charge on loans to brokers on stock exchange collateral . COMMERCIAL PAPER placed directly by General Motors Acceptance Corp. : 8.40 % 30 to 44 days ; 8.325 % 45 to 59 days ; 8.10 % 60 to 89 days ; 8 % 90 to 119 days ; 7.85 % 120 to 149 days ; 7.70 % 150 to 179 days ; 7.375 % 180 to 270 days . COMMERCIAL PAPER : High-grade unsecured notes sold through dealers by major corporations in multiples of $ 1,000 : 8.50 % 30 days ; 8.40 % 60 days ; 8.375 % 90 days . CERTIFICATES OF DEPOSIT : 8.05 % one month ; 8.02 % two months ; 8 % three months ; 7.98 % six months ; 7.95 % one year . Average of top rates paid by major New York banks on primary new issues of negotiable C.D.s , usually on amounts of $ 1 million and more . The minimum unit is $ 100,000 . Typical rates in the secondary market : 8.50 % one month ; 8.50 % three months ; 8.45 % six months . BANKERS ACCEPTANCES : 8.38 % 30 days ; 8.28 % 60 days ; 8.23 % 90 days ; 8.13 % 120 days ; 8.03 % 150 days ; 7.93 % 180 days . Negotiable , bank-backed business credit instruments typically financing an import order . LONDON LATE EURODOLLARS : 8 5/8 % to 8 1/2 % one month ; 8 9/16 % to 8 7/16 % two months ; 8 9/16 % to 8 7/16 % three months ; 8 1/2 % to 8 3/8 % four months ; 8 7/16 % to 8 5 16 % five months ; 8 7/16 % to 8 5/16 % six months . LONDON INTERBANK OFFERED RATES ( LIBOR ) : 8 5/8 % one month ; 8 9/16 % three months ; 8 7/16 % six months ; 8 7/16 % one year . The average of interbank offered rates for dollar deposits in the London market based on quotations at five major banks . FOREIGN PRIME RATES : Canada 13.50 % ; Germany 8.50 % ; Japan 4.875 % ; Switzerland 8.50 % ; Britain 15 % . These rate indications are n't directly comparable ; lending practices vary widely by location . TREASURY BILLS : Results of the Monday , October 16 , 1989 , auction of short-term U.S. government bills , sold at a discount from face value in units of $ 10,000 to $ 1 million : 7.37 % 13 weeks ; 7.42 % 26 weeks . FEDERAL HOME LOAN MORTGAGE CORP . ( Freddie Mac ) : Posted yields on 30-year mortgage commitments for delivery within 30 days. 9.88 % , standard conventional fixed-rate mortgages ; 7.875 % , 2 % rate capped one-year adjustable rate mortgages . Source : Telerate Systems Inc . FEDERAL NATIONAL MORTGAGE ASSOCIATION ( Fannie Mae ) : Posted yields on 30 year mortgage commitments for delivery within 30 days ( priced at par ) 9.80 % , standard conventional fixed-rate mortgages ; 8.70 % , 6/2 rate capped one-year adjustable rate mortgages . Source : Telerate Systems Inc . MERRILL LYNCH READY ASSETS TRUST : 8.50 % . Annualized average rate of return after expenses for the past 30 days ; not a forecast of future returns . Ethyl Corp. reported that third-quarter net income fell 12 % from a year-earlier quarter helped by a gain from discontinued operations . Profit from continuing operations rose 19 % . The chemicals and insurance company said net in the latest quarter was $ 54.8 million , or 45 cents a share . In the year-earlier quarter , net was $ 62.2 million , or 51 cents a share . The previous-year quarter included $ 16.1 million from businesses spun off as Tredegar Industries Inc . Revenue was $ 613.7 million , up 18 % from $ 521.2 million a year ago . Ethyl said pretax profit from its insurance segment , excluding investment gains , rose 28 % in the latest quarter to $ 28.6 million from $ 22.4 million . In the chemicals segment , pretax profit rose 7 % to $ 69.2 million from $ 64.9 million . The company 's chemicals interests include , among other things , petroleum additives , pharmaceuticals ingredients and polysilicon used by the semiconductor industry . For the nine months , Ethyl said net fell 2 % to $ 168.7 million , or $ 1.40 a share , from $ 172.2 million , $ 1.42 a share , a year ago . Net in the latest period included $ 11.9 million from discontinued operations and a charge of $ 6.2 million from a plant closing . In the year-ago period , net included $ 32.7 million from discontinued operations . Revenue was $ 1.79 billion , up 18 % from $ 1.52 billion a year earlier . In New York Stock Exchange composite trading , Ethyl closed at $ 25.875 a share , up 12.5 cents . Tribune Co. , helped by a hefty boost in performance at its broadcasting and entertainment operations , said net income jumped 21 % in its third quarter ended Sept. 24 on a 3 % increase in revenue . The broadcasting and newspaper concern , based in Chicago , said net was $ 62.7 million , or 77 cents a primary share , up from $ 51.6 million , or 69 cents a share . Per-share figures this year reflect $ 6.8 million in preferred-share dividends ; the 1988 quarter did n't have such a payout . Revenue rose to $ 590.7 million from $ 575.1 million . Nine-month net climbed 19 % to $ 174.8 million , or $ 2.21 a primary share , from $ 147.5 million , or $ 1.94 a share . Nine-month per-share figures for 1989 reflect $ 12.9 million in preferred dividends that had no counterpart in the year-earlier quarter . Revenue rose 4 % to $ 1.79 billion . In New York Stock Exchange composite trading Friday , Tribune closed at $ 49.375 , down $ 4.75 . Enserch Corp. said about 12 million , or 93 % , of the publicly traded units of its limited partnership , Enserch Exploration Partners Ltd. , were tendered in response to an offer that expired Monday . Enserch said the tendered units will raise its ownership of the partnership to more than 99 % from 87 % . About 900,000 units will continue to be publicly traded on the New York Stock Exchange , Enserch said . Enserch had offered one-half a share of its common and $ 1 in cash for each unit . The public sector borrowing requirement , the most widely used measure of Britain 's government deficit or surplus , showed a deficit of # 200 million in September , compared with a deficit of # 765 million in August and a deficit of # 1.08 billion in September 1988 , the Treasury said . In the six months since the current fiscal year began April 1 , the surplus totaled # 500 million , compared with a surplus of # 3.6 billion in the year-earlier period . The government is projecting a # 14 billion surplus for the fiscal year . The reported figures for the public sector borrowing requirement include receipts from the sale of state-owned industries . Excluding those receipts , the government deficit would have totaled about # 2.5 billion in the first six months , compared with # 1.3 billion a year earlier , the Treasury said . French crude-steel production in September was 1,616,000 metric tons , unchanged from a year earlier , according to the National Steel Manufacturers ' Association . The association said the September total brought French output for the first nine months this year to 14,789,000 tons , up 4.5 % from a year earlier . Prospect Group Inc. , whose recent hostile tender offer for Recognition Equipment Inc. failed for lack of financing , apparently has gained a measure of control over the troubled company anyway . As part of what a Recognition spokeswoman termed an `` amiable agreement , '' Prospect Group will wind up with control of top management posts and an increased stake in the maker of data management equipment . In a management restructuring , Thomas L. Ringer resigned as chairman , chief executive and a director , while Israel Sheinberg resigned as a director . Mr. Sheinberg remains as executive vice president . Thomas M. Hurley and Robert A. Vanourek , who had been designated to take over Recognition 's top spots had Prospect 's tender offer succeeded , were named co-chief executives and directors . Mr. Hurley was formerly a vice president and general manager of an Avery International division ; Mr. Vanourek was a former group vice president of Pitney Bowes Inc . In addition , the agreement calls for Gilbert H. Lamphere , chairman of Prospect Group 's executive committee , to be named chairman of a restructured board that will include four new independent directors . Also named to the revised board was Thomas A. Loose , Recognition 's senior vice president and general counsel . Prospect , a New York-based leveraged buy-out firm , also agreed to invest $ 15 million in Recognition , which in turn agreed to repurchase as much as $ 20 million of its stock . That would increase Prospect 's ownership of the company 's fully-diluted shares outstanding to 20 % from 14.1 % . Under the agreement , Prospect is permitted to increase its stake in Recognition to 30 % . Beyond that , Prospect said it would n't offer to acquire additional shares for less than $ 11.25 a share during the next year or less than $ 14.06 a share during the subsequent two years . Recognition also said it obtained a commitment from Chemical Bank and Bank of Boston to convert an estimated $ 18 million in bank debt to a new , 24-month secured term loan to be repaid through the sale of certain assets . In August , Recognition said it was in violation of certain terms of its debt agreements with bank lenders because of a $ 3.9 million loss for the third quarter ended July 31 . The company attributed the loss to declining revenue and litigation costs relating to criminal charges against the company and two former executives , William G. Moore Jr. and Robert W. Reedy . The former executives were indicted last October on charges of fraud , theft and conspiracy related to efforts by the company to win $ 400 million in Postal Service contracts . Recognition Equipment said it expected to put the agreement with Prospect to a vote of its stockholders at a special meeting in January . In New York Stock Exchange composite trading , Recognition rose 87.5 cents to $ 6.625 . Prospect slipped 25 cents to $ 10.50 in national over-the-counter trading . General Motors Corp. 's Chevrolet division , reacting to slow sales , said it will offer $ 800 rebates on its 1990 Beretta , the two-door version of its core compact-car line . Sluggish sales of the Beretta , and its four-door sister car , the Corsica , prompted GM to idle the two plants that build the automobiles for a total of three weeks this month . The Corsica and Beretta make up the highest-volume car line at Chevrolet , but sales of the vehicles are off 9.6 % for the year , and fell a steep 34 % during early October . Chevrolet already is offering an $ 800 rebate on the 1990-model Corsica . The latest rebate is good for all Beretta models . Chevrolet buyers can take the rebate , or get discount financing at rates ranging from 6.9 % on 24-month loans to 10.9 % on 60-month loans . StatesWest Airlines said it submitted an offer to the directors of Mesa Airlines to acquire the Farmington , N.M. , carrier . Except to characterize its offer as `` fair and generous and in the best interests of Mesa shareholders , '' StatesWest declined to discuss details of its proposal . It also asked Mesa to keep the proposal confidential . A Mesa official confirmed receipt of the offer and said directors would meet to consider it . Last week , Mesa rejected a proposal by StatesWest to acquire it or merge . StatesWest has a 7.25 % stake in Mesa , which operates 20 twin-engine and two single-engine turboprops among 42 cities in New Mexico , Arizona , Wyoming , Colorado and Texas . StatesWest operates four twin-engine turboprop aircraft , connecting 10 cities in California , Arizona and Nevada . The carrier has n't yet turned a profit . The former president of FirstSouth F.A. , a defunct Arkansas thrift , pleaded guilty to conspiring to inflate the institution 's earnings by concealing worthless loan guarantees . Roderick D. Reed III , who was also chief operating officer of FirstSouth , could receive a maximum sentence of five years in federal prison and a $ 250,000 fine . A sentencing date has n't been set . Mr. Reed admitted he conspired to conceal an agreement not to enforce loan guarantees executed by Dallas real-estate developers A. Starke Taylor III and George S. Watson , both of whom were FirstSouth stockholders . Neither Mr. Taylor nor Mr. Watson have been charged with criminal wrongdoing . By concealing the non-enforcement agreement , certain transactions with Messrs. Taylor and Watson were entered on FirstSouth 's books as loans , allowing the thrift to report fees and interest as current income , according to the U.S. attorney 's office in Little Rock , Ark . The conspiracy was part of an effort by Mr. Reed to hide FirstSouth 's shaky financial condition from federal regulators , according to federal prosecutors and regulators . The $ 1.68 billion thrift was declared insolvent and closed in December 1986 . FirstSouth 's former chairman and chief executive officer , Howard Weichern , is also charged with conspiring to conceal the agreements with Messrs. Watson and Taylor . Mr. Weichern is scheduled for trial Jan. 3 before federal Judge Stephen Reasoner of Little Rock . I approached `` Mastergate , '' Larry Gelbart 's new comedy at the Criterion Center , with considerable trepidation . Nothing , I assumed , would be more hopelessly dated than a political satire on the Iran-Contra affair . I had underestimated , however , both Mr. Gelbart 's wit and the persistence of scandal in Washington . Though the play clearly is framed around the events of Iran-Contra , it takes in the wide sweep of scandals over the past 30 years . In fact , at one point Merry Chase ( Melinda Mullins ) , a cool , carefully coiffed television announcer , recites a list of a dozen or more scandals of recent years , concluding with those affecting the Department of Housing and Urban Development and the savings and loan industry . Onstage , a congressional hearing is in progress , complete with elegant crystal chandelier overhead and a lifesize reproduction of the signing of the Constitution in the background . The witness table is center stage and below it , the paraphernalia for the ever-present media , in this case TNN , the Total News Network . Not only are there camera operators on all sides , but the proceedings are shown on monitors throughout the theater . The metaphor of theater is not entirely coincidental . Mr. Gelbart clearly feels that all the participants in a congressional hearing -- the witnesses , the lawyers , the interrogators and the news media -- are performers . As the story of `` Mastergate '' unfolds , we learn that the Internal Revenue Service confiscated one of the properties of a foreign financier who owes the government millions in taxes . The man , it seems , has a Lichtenstein corporation , licensed in Libya and sheltered in the Bahamas . He himself lives in a `` consecutive series of unnumbered houses in a town in Switzerland . '' The property seized by the IRS is a Hollywood film studio , Master Pictures Incorporated ( MPI ) . Supposedly the IRS will sell off the assets of MPI , but before it can , a lowly IRS agent is called into the hospital room of Wylie Slaughter , the dying head of the Central Intelligence Agency . The lowly agent , Abel Lamb , who as you might guess , is being led to the slaughter , is ordered to take over the studio . Soon the studio is producing a $ 40 million picture called `` Tet , the Motion Picture , '' to distinguish it from `` Tet , the Offensive , '' as well as `` Tet , the Book '' and `` Tet , the Album . '' The picture , to be made in the Central American country of San Elvador , is a cover for sending $ 800 million of arms to Los Otros , the rebel group attempting to regain neighboring Ambigua , which has been taken over by the leftist dictator Dr. Overtega , a former podiatrist , who leads a revolutionary band of foot soldiers . The man handling all this for the now-deceased Slaughter is Major Manley Battle , Mr. Gelbart 's stand in for Col. Oliver North . Director Michael Engler has assembled a top-flight cast to carry out the impersonations of well-known political figures and to play the stock characters who invariably show up at congressional hearings . Daniel von Bargen is ramrod-stiff but totally assured as Major Battle , mixing just the right brand of self-righteousness and patriotism ; Jeff Weiss is fire , brimstone and teary-eyed emotionalism as the far-right senator who serves as a friendly interrogator of Major Battle ; Zach Grenier is maddeningly officious playing a succession of lawyers ; Joseph Daly has the perfect `` aw , shucks '' demeanor of George Bush in his portrayal of the vice president ; and Ann McDonough is first-rate as a succession of witnesses ' wives . With one she is pregnant , with Major Battle she is knitting an American flag , and as the vice president 's wife she rushes in with white hair , wearing a tailored suit and pearls , imitating Barbara Bush 's gestures down to the last detail . Though it 's clear that Mr. Gelbart 's sympathies do not lie with the far right , it 's also true that he is evenhanded in dispensing his satirical jabs , taking sharp aim at senators and congressmen of all stripes and particularly at the media . Mr. Gelbart also has fun with language . `` Mastergate '' is subtitled `` a play on words , '' and Mr. Gelbart plays that game as well as anyone . He describes a Mastergate flunky as one who experienced a `` meteoric disappearance '' and found himself `` handling blanket appeals at the Bureau of Indian Affairs . '' This interest in words goes beyond puns and playfulness , however . Mr. Gelbart deplores the obfuscation , the circumlocution and the debasement of language he sees on all sides . As the hearings begin , the self-important Sen. Bowman ( Jerome Kilty ) announces : `` Let me emphaticize one thing at the outset : We are not looking for hides to skin nor goats to scape . '' Major Battle himself speaks in pure Pentagonese : `` Without further monetary-stroke-military aid , scores of Ambiguan freedom lovers , who had gone way out on their life and limbs for us , were literally cut off at the knees without a paddle . '' At another point he intones : `` Publicity is a small price to pay for secrecy . '' The evening is short -- 95 minutes without an intermission -- but even so , as the play progresses the thrust of Mr. Gelbart 's satire loses its sharpness as his targets pop up ever more predictably . Most of the evening , though , is filled with rare and welcome wit . In `` Mastergate , '' Mr. Gelbart has provided us not just one but two commodities that have all but disappeared from the Broadway theater : sharp political satire and an even sharper appreciation of the value of language . The Federal National Mortgage Association set up a three-member office of the chairman and elected James A. Johnson as vice chairman , effective Jan. 1 . Mr. Johnson has been a managing director at Shearson Lehman Hutton since 1985 , and before that was president of Public Strategies , a Washington consulting firm . He is well-known in Democratic circles , having been executive assistant to Vice President Walter Mondale and chairman of Mr. Mondale 's 1984 presidential campaign . At Fannie Mae , he will take responsibility for the corporation 's financial and legal areas and will work with David Maxwell , chairman and chief executive officer , and Roger Birk , president and chief operating officer , on strategic planning . Mr. Johnson , 45 years old , has been a consultant on strategy to Fannie Mae for the past 3 1/2 years . In an interview , he said Fannie Mae faces a number of challenges with the restructuring of the thrift industry and the push to broaden its activities overseas . `` There 's no shortage of major things to do , '' he said . Fannie Mae also said James A. Aliber , chairman of First Federal of Michigan and a director since 1985 , moved up the date of his retirement from the board to accommodate Mr. Johnson 's election as a director . The board has 13 members elected by holders and five presidential appointees . Fannie Mae , a federally chartered , shareholder-owned corporation , operates a secondary market for mortgage loans , buying loans from lenders , packaging some into securities for sale to investors and keeping the rest in its portfolio . `` The New Crowd '' by Judith Ramsey Ehrlich and Barry J. Rehfeld ( Little , Brown , 444 pages , $ 19.95 ) , describes the displacing of the old `` our crowd '' Jewish Wall Street banking grandees by such new business barons as Saul Steinberg , Carl Icahn , Sanford Weill and Bruce Wasserstein . Its many lively stories include the Gutfreund-Postel holiday cheer imbroglio . These two New Crowd families lived in the same apartment building , with the Postel penthouse perched on top of the Gutfreund duplex . The penthouse elevator started up from the Gutfreund landing , and Susan Gutfreund used to turn off its light , to give the impression that there was no higher floor . Eventually , Mr. Postel broke his toe in the dark . Then the Gutfreunds determined to put up a 22-foot Christmas tree , weighing a quarter of a ton , to amaze their holiday guests . For this , a crane needed to be mounted on the Postels ' terrace . The Postels did not give permission . But the Gutfreund workers went ahead anyway , only to be captured `` in flagrante '' by Joan Postel , who called the police . Before the Gutfreunds finally left this unfriendly environment for a prodigious duplex on Fifth Avenue and an 18th-century mansion with a specially excavated $ 1 million garage in Paris , the Postels had obtained an injunction to prevent any future hoisting of trees , and in a neighborly spirit hit both the Gutfreunds and the building with a $ 35 million lawsuit . Nothing less , it seemed , could console them for their traumas . Where had all the money come from ? The young John Gutfreund had been discovered by Billy Salomon of Salomon Bros. when he was still a bearded liberal , and put to work as a trader , and then as a rough-and-tumble syndicator . `` ` Get off your ... , ' he would bellow , '' say the authors . Rising in the firm , he became powerful and bland , though his new wife , Susan , made him shine in the gossip columns with her profligate spending habits and flamboyant frocks . After he had been head of the company for 3 1/2 years , he and his partners sold it to Phibro , a powerful commodity trading outfit , for $ 550 million in Phibro stock . Limited partner Billy Salomon , whose family name had been on the firm 's door for 70 years and who had hoped it would be there forever , was not consulted . Mr. Gutfreund collected $ 32 million , while Billy Salomon got $ 10 million , much less than if he had conducted the sale . `` I felt betrayed , '' he later said . Worse , Salomon 's timing had been off . Its profits , unlike Phibro 's , soared over the next two years , and had it held out , Salomon could have gotten an even bigger bundle . The book also recounts the not dissimilar maneuvers surrounding the changing of the guard at Lehman Bros. and other grand old firms . Often the genteel , conservative , long-term-oriented investment bankers were displaced by crude traders : `` When angered , he cursed so forcefully that his face reddened and his pale-blue eyes narrowed into tiny slits , '' the authors say of Lehman 's Lewis Glucksman . The earlier generation of `` our crowd '' bankers -- Belmonts , Warburgs , Lehmans , Baches and Schiffs -- had stressed above all probity , tradition , continuity and reputation . They were old-fashioned elegant gentlemen , who happened to be of German Jewish extraction . But in the harsh world of today 's Wall Street they have lost out to more aggressive and sometimes less scrupulous successors . The cuckoo prefers the nests of other birds and heaves out their eggs . But the old guard hired the New Crowd people : It brought in its own cuckoos . So , as the Old Crowd toppled from the branch , it should n't have been too surprised . The old guard had every right , however , to disdain the newcomers ' new ways of making money , such as greenmail . ( A Fortune article on Saul Steinberg was entitled , `` Fear and Loathing in the Corporate Boardrooms . '' ) Their other staple has been corporate takeovers , often hostile and financed by junk bonds . Hostile takeovers are quite a new phenomenon . Sometimes they are constructive , but often not . First , by making management focus on short-term results , they inhibit building for the future -- just the opposite of Japan . Second , a long-term shareholder of a good company need n't worry too much when the stock price drops temporarily : It will bounce back . But if a raider takes over when the stock is weak , the shareholder never gets his recovery . The raiders , meanwhile , have evolved their own pattern for spending their new millions . As described in `` The New Crowd , '' they take on ambitious new wives , move to Greenwich , Conn. , or Bedford , N.Y. , buy OK pictures , and let their wives share the wealth with decorators . Having donated heavily to museums , they demand a place on their boards . The book is patronizing about this nouveau riche struggle for respectability , which has its tawdry aspects . However , on balance , the charity game helps America . If those who have the money do n't get involved with the museums and the charities , then City Hall will do it , badly . It has been rightly observed that the main thing wrong with tainted money is , t'aint enough of it . A handful of the New Crowd operators have crossed the line from the immoral to the illegal , and have ended up in the slammer or paying huge fines : Ivan Boesky , Dennis Levine , Martin Siegel , Victor and Steven Posner , and now Michael Milken and perhaps Leona Helmsley . The glitzy office that Ivan Boesky vacated for a prison cell had previously contained commodity operators Marc Rich and `` Pinky '' Green , today fugitives from a potential century apiece of jail sentences . The Old Crowd is deeply concerned by the backlash from all this . However , the phenomenon is not specifically Jewish . It has always been true that those outside the club want to climb in , and that a few will cut corners in the process . Some pretty seamy stuff built the turn-of-the-century families ' Fifth Avenue and Newport palazzi and endowed their daughters ' weddings to foreign noblemen . Mr. Boesky was a piker compared to Jay Gould and Jim Fiske , and Commodore Vanderbilt thought nothing of bribing judges and legislators . So who knows ? In a generation or two some of the New Crowd may attain true respectability , perhaps to be displaced in turn by a later flock of unscrupulous raptors . Or perhaps Wall Street , when it has suffered enough , will realize that finance is a service industry , and change its ethos . Mr. Train is president of Train , Smith Investment Counsel , New York . Dallas investor Harold C. Simmons said he raised his stake in Lockheed Corp. to 10.62 % from 10.43 % of the aerospace and electronics concern 's common shares . In a Securities and Exchange Commission filing , Mr. Simmons said he and companies he controls , NL Industries Inc. and NL Chemicals Inc. , hold 6,744,600 shares of Lockheed , of Calabasas , Calif . They include 122,700 shares bought Friday for between $ 47.125 and $ 48 each . In composite trading on the New York Stock Exchange , Lockheed closed at $ 46.125 a share , down 12.5 cents . Earlier this week , Mr. Simmons objected to published reports quoting him as saying he planned to sell his Lockheed stake because `` the defense industry seems to be getting more uncertain . '' Valhi Inc. , another of Mr. Simmons ' companies , responded to an article Monday in The Wall Street Journal , which credited a story in the Sunday Los Angeles Daily News . Valhi said the articles did n't accurately reflect Valhi and its affiliates ' intentions toward Lockheed . Instead , Valhi said , they may increase , decrease or retain their Lockheed holdings , depending on a number of conditions . Canada , which is preparing to speed up tariff cuts with the U.S. , recorded a 47 % narrowing in its trade surplus with the U.S. in August , Statistics Canada , a federal agency , reported . U.S. exports to Canada jumped 11.2 % in August from July while U.S. imports from Canada rose only 2.7 % . As a result , Canada 's trade surplus with the U.S. narrowed to C$ 656.5 million ( US$ 558 million ) in August from C$ 1.23 billion ( US$ 1.04 billion ) in July . U.S. exports benefited in August from heavy Canadian spending on new plant and equipment and a pickup in Canadian auto demand , Canadian officials said . The U.S. and Canada , which do more trade than any other pair of nations , are to meet next month to arrange an acceleration of planned tariff cuts under the U.S.-Canada free trade agreement . Industries in both countries have requested a speedup of tariff cuts on hundreds of products . Some tariffs were eliminated when the trade pact took effect Jan. 1 . The remainder were to be phased out in five or 10 annual installments , with all tariffs eliminated by January 1998 . The two countries aim to reach an agreement by early December on a package of accelerated tariff cuts that would take effect early next year . Canadian officials said the trade pact has kindled an export interest among many small Canadian companies that previously had little or no foreign sales . For such businessmen , the Canadian government is organizing 55 missions this year to U.S. states bordering on Canada . The businessmen are introduced to potential agents and distributors and instructed in trade procedures . The U.S. Commerce Department is planning to try out similar trips on U.S. businessmen in coming months under its Canada First Outreach Program . Participants in the U.S. missions to Canada are to be assisted by members of the Service Corps of Retired Executives , a volunteer group , in dealing with their export challenges . The Canadian government also has recently opened new trade offices in San Diego ; San Juan , Puerto Rico ; Miami ; Princeton , N.J. , and Denver , bringing the total number of such Canadian offices in the U.S. to 27 . The U.S. has six trade promotion offices in Canada . Canada 's export effort has been blunted by robust home market demand and by an 18 % appreciation of the Canadian dollar against its U.S. counterpart in the past three years that has made Canadian goods more costly in the U.S . Canada 's trade surplus with all countries narrowed to C$ 203.5 million in August from C$ 528.3 million in July , Statistics Canada said . Loral Corp. said it received a $ 325 million order from Turkey 's Ministry of Defense , the largest contract the company ever has received . Loral will provide to Turkey an electronic countermeasures system for its fleet of F-16 aircraft . The system provides radar-threat warning and electronic jamming capabilities . The defense electronics maker said delivery will begin in October 1991 and run through mid-1995 . Loral said the contract with Turkey will provide opportunities for Loral to supply that country with other defense systems . Crown Resources Corp. said it reached a definitive agreement to acquire the Gold Texas Resources Ltd. shares it does n't already own . Under the proposed agreement , Gold Texas holders will receive 1.43 Crown shares for each of the 1.1 million Gold Texas shares not owned by Crown , which already owns 65 % . The arrangement is subject to approval by the Supreme Court of British Columbia province , Crown said . Gold Texas is based in Vancouver , British Columbia , and Crown Resources is based in Denver . Both are mining concerns . Apogee Robotics Inc. said its board extended until Feb. 1 the exercise period of Apogee 's existing stock purchase warrants outstanding . The expiration date had been Nov. 3 . Each of the 1,075,000 warrants entitle the holders to purchase one share of Apogee common stock for $ 2.25 . Apogee was quoted in the over-the-counter market yesterday at $ 2 bid . Bank of New England Corp. , seeking to streamline its business after a year of weak earnings and mounting loan problems , said it will sell some operations and lay off 4 % of its work force . The bank holding company also reported that third-quarter profit dropped 41 % , to $ 42.7 million , or 61 cents a share , from the year-earlier $ 72.3 million , or $ 1.04 a share . Among its restructuring measures , the company said it plans to sell 53 of its 453 branch offices and to lay off 800 employees . Altogether , employment is expected to decline to less than 16,000 from the current level of about 18,000 . Walter Connolly , chairman , said in an interview that the company expects to record pretax gains of $ 100 million to $ 125 million from the sale of its leasing operations and of certain financial processing services . In a prepared statement , the company said it expects to realize those gains before year end . Nonperforming assets continued to pile up in the latest quarter , rising to $ 900 million , or 3.52 % of loans and leases , from $ 667 million , or 2.68 % , at the end of the second quarter . Some $ 170 million of the $ 233 million increase in nonperforming loans was related to real estate , and roughly three-quarters of that was in the troubled New England market , according to Richard Driscoll , vice chairman . Mr. Driscoll said that , despite continued weakness in the region 's real estate market , Bank of New England expects the rate of increase in nonperforming assets to slow in coming quarters . Mr. Connolly noted that net third-quarter charge-offs , at $ 63 million , improved slightly from the $ 67 million in the second quarter . And he indicated that more substantial improvement is expected in the next couple of quarters . The company increased its loan loss reserve to $ 354 million from $ 342 million at the end of the second quarter . Total assets slipped to $ 31.4 billion , from $ 32 billion as of June 30 . Among other restructuring measures , the bank said it will close its loan production offices in Chicago , New York and Philadelphia . The Chicago office figured prominently in the bank 's problems earlier this year , when $ 65 million in loans to Chicago businessman William Stoecker went sour . In an internal memorandum to employees , Messrs. Connolly and Driscoll described the restructuring as an effort to continue rationalizing operations assembled during a series of mergers over the past five years . Italy 's wholesale price index rose 0.4 % in August from July and was up 6.1 % from a year earlier , the state statistical institute reported . The index registered 196.1 in August , compared with 195.4 in July and with 184.9 in August 1988 . The year-on-year rise in August was slightly down from the 6.4 % rate in July . The index has a base of 100 set in 1980 and is n't seasonally adjusted . U.S. steel imports in August fell 14 % from a year earlier to 1,531,000 tons , according to the American Iron and Steel Institute . The trade group 's compilation of Commerce Department data showed that August imports , the second largest monthly total of the year , were up 5 % from July 's 1,458,000 tons but below last year 's high of 1,979,000 tons in June 1988 . August imports claimed 18.5 % of the U.S. market , compared with 19.3 % in July and 20.5 % in August 1988 . The latest month 's figures show that imports of steel from European Community nations fell to 466,000 tons from 481,000 a month earlier , while imports from Japan rose to 323,000 tons from 288,000 in July . Imports from Canada rose to 272,000 tons in August from 209,000 in July . The American Institute for Imported Steel said imports for the first eight months of 1989 were below the level allowed by the Voluntary Restraint Agreement program . The institute said that , excluding semifinished steel products , year-to-date imports represented 15.2 % of consumption , compared with a permitted maximum of 18.5 % . Japanese machinery makers received orders totaling 1.465 trillion yen ( $ 10.33 billion ) in August , up 14 % from a year earlier , the Economic Planning Agency said . `` Equipment orders on the domestic side were particularly strong in shipping and power utilities , '' said an agency official . The latest report compares with a modest 9.9 % increase in July machinery orders from a year earlier . In August , soon after Wang Laboratories Inc. reported a staggering $ 424.3 million loss and replaced its president , two Boston sales representatives sent customers a letter saying : `` We fully expect that you will soon be reading stories in the press reporting the ` Amazing Comeback at Wang . ' '' How soon Wang will stage a comeback , or if it will at all , are still matters of debate . But Wang salespeople are trying to cope with the biggest challenge any marketer can face : selling the products of a company that is on the ropes . `` If your prospect is feeling risk the whole time and you 're not feeling as if you 're backed up by a stable company , you 've lost it before you 've begun , '' says Mary Ann Cluggish , a Wellesley , Mass. , sales trainer and consultant who works with high technology companies . It can happen in any industry . Consider the difficulties faced by Audi salespeople when the car was tainted by false charges of sudden acceleration , or Exxon dealers ' problems in the wake of the Valdez oil spill . Like thousands of salespeople before them , Wang 's are finding ways to combat the bad news . `` It 's very important that we exude confidence , even though within the family we know there 's a lot of hard work ahead , '' said Richard Miller , the Lowell , Mass. , computer concern 's new president , in a video message to salespeople a month after he took over . Wang got into financial trouble because of bloated overhead and overly optimistic sales forecasts . Its mainline minicomputers and word processors have lost ground to cheaper personal computers . Last year it funded its high employment by heavy borrowing , and it suffered huge losses when sales turned down instead of rising . After the company reported red ink for the fiscal third quarter , Wang 's marketing department provided the sales force answers to questions such as `` How could you not have known you were going to lose $ 55 million ? '' and `` Is Wang still a viable company ? '' Salespeople try to push their products and avoid discussions of finances . Responding to such questions is `` defensive , '' says Kenneth Olissa , Wang 's vice president , marketing . `` That 's antithetical to the art of selling . '' Moreover , he notes that analyzing financial results `` poses a problem for a salesman who is n't particularly familiar with a balance sheet . '' At one sales strategy meeting , an executive suggested ordering salespeople to become experts on the annual report . Mr. Miller vetoed that : `` Even I ca n't understand all the footnotes , '' he says . Instead , he says , if the salespeople can get the customers to consider Wang 's products on their merits , he or a top financial officer will try to assuage the fears about finances . Mike Metschan , a salesman in Wang 's Austin , Texas , office , has a breezier method : `` We tell them $ 3 billion companies do n't go out of business . We tell them all the major companies are having financial difficulties . '' Numerous computer companies are having sales slumps and earnings declines , but very few have had losses comparable to Wang 's or are carrying such a large debt load . Mr. Miller says that after a sharp sales slump in July and August , sales stabilized in September . Although Wang will report a loss for the first quarter ended Sept. 30 and the full fiscal year , Mr. Miller says he expects the company will return to profitability by the fourth quarter . Experts on sales technique say anyone representing a troubled company must walk a fine line . `` If a salesman jeopardizes his credibility in this time of trouble , it will be a problem for the long run , '' says George Palmatier , a Minden , Nev. , sales consultant and author of `` The Marketing Edge . '' Still , says John Sullivan , a management recruiter with Daniel Roberts Inc. of Boston , who has held senior sales positions at Polaroid and Atari : `` The customer will react to strength . Ignore the present condition . Show it 's business as usual . '' That is n't easy . Wang 's customers are data processing managers who want to be sure that their suppliers are stable , wellrun companies that will be around to fix bugs and upgrade computers for years to come . For buyers , `` these are career-risking decisions , '' says Jean Conlin , who supervises a network of Wang computers in the admissions department at Boston University . The university is considering installing a $ 250,000 system to store applications electronically . `` Before the really bad news , we were looking at Wang fairly seriously , '' she says . But `` their present financial condition means I 'd have a hard time convincing the vice president in charge of purchasing . '' Ms. Conlin adds : `` At some point we 'd have to ask , ` How do we know that in three years you wo n't be in Chapter 11 ? ' '' During the past year , Wang has developed new products and a new strategy and hired a new president . Wang 's overall product line is `` still not as good as other vendors , but they 've come a long way , '' says Steven Wendler , a consultant with market researcher Gartner Group , Stamford , Conn . `` They were on the road to recovery in terms of customer attitudes until this bad quarter happened . '' The first priority for Wang 's sales force is to make sure it holds on to existing customers . Wang 's installed base is one of its greatest assets , and many of those customers remain extremely loyal . But even before Wang 's latest financial troubles surfaced , some customers `` were trying to wall off their Wang installations '' so other departments would n't add Wang , says Chris Christiansen , a former Wang marketer who is now a market analyst with Meta Group , a market research firm in Stamford , Conn . One Wang salesman who left the company in July recalls that when he tried to sell products to Eastman Kodak , he worked `` to muster support from internal allies , '' but `` those allies became skeptical as they saw the downtrend . The more recent losses were really devastating . '' New customers , the source of higher commissions for salespeople and the key to Wang 's long-term viability , are even tougher . Rick Lynch , a former top salesman in Wang 's Boston office , referring to Wang 's mainstay computer line , says : `` You ca n't sell a VS to a new customer . '' Mr. Lynch left Wang this summer for Oracle Systems Inc. , a software vendor . The financial problems are particularly frustrating for salespeople pushing Wang 's image systems , which convert paper forms to electronic documents . Consultants say that Wang 's technology is among the best available in the image market . But salespeople often found that news of Wang 's problems superseded their sales efforts . William Tait , a former sales manager in Indianapolis , says that his office had all but sold a $ 1.5 million image system to pharmaceutical maker Eli Lilly & Co . `` When they were making the decision , all hell broke loose with the finances . '' He says the Lilly executives told him they could n't take the risk with Wang . Mr. Tait say he does n't blame Lilly . Buyers have to rely on a supplier `` continually upgrading and replacing the product , '' he says . `` When a company realizes that , it 's hard to go with Wang . '' For Mr. Tait , who says he used to earn as much as $ 150,000 a year at Wang , it was one more reason to quit . He is now president of Eastate Homes Inc. , an Indianapolis contractor . It can be hard for a salesperson to fight off feelings of discouragement . Brian Petre , a former Wang salesman in upstate New York , says : `` You have pride in your job . You think you can go out and turn things around . It 's a tough thing when you ca n't . The reason does n't relate to your selling skills . '' Discouragement feeds on itself . `` The problem is , if people get down in the dumps , they stop selling , '' says Mike Durcan , a laid-off sales manager in Wang 's Austin office . One key for salespeople is to boost their own morale . Paul Hellman , a Framingham , Mass. , sales and management consultant and author of `` Ready , Aim , You 're Hired , '' says : `` The bad news is , you 'll be rejected more . The good news is , it 's not your fault . '' So , he advises , make goals achievable . For instance , he suggests that salespeople making telephone calls should say to themselves : `` All I want to do today is get 50 rejections . '' But Mr. Miller , Wang 's new president , recently warned his salespeople about negativism . `` Our customers watch us for the hidden message , '' he said . `` Look a customer right in the eye and say , ` I 'm glad to be at Wang . ' '' Blinder International Enterprises Inc. , the parent of beleaguered penny-stockbroker Blinder , Robinson & Co. , said its shareholders approved a previously announced name change to Intercontinental Enterprises Inc . `` The parent company is diversifying into other industries around the world , '' said president Meyer Blinder in explaining the name change . `` Everytime we talked about Blinder International , { people } thought it was the brokerage house . '' Mr. Blinder said the change was n't related to the brokerage 's recent troubles , which have included sharp declines in earnings , run-ins with the securities regulators and lawsuits by former customers . The company said it expects the name change to take effect within a week . Olin Corp. said third-quarter net income rose 26 % on the strength of its chemical business . Net was $ 24 million , or $ 1.15 a share , up from $ 19 million , or 90 cents a share , a year earlier . Sales rose 7.4 % to $ 580 million from $ 540 million . Olin said its chemical segment had profit of $ 22 million , up from $ 15 million a year ago , largely because of gains in electrochemicals such as caustic soda . The company said the gains were tied to volume increases and higher prices . The market for electrochemicals include the paper , water-purification and textile industries . The chemical segment had a $ 6 million gain on the sale of ammonia and urea businesses , which was offset by a $ 6 million charge for future environmental expenditures . Profit in Olin 's defense and ammunition segment rose to $ 8 million from $ 7 million . The metals segment , hurt by a strike , had break-even results , against $ 3 million a year ago . In the first nine months , net rose 21 % to $ 93 million , or $ 4.52 a share , from $ 77 million , or $ 3.62 a share a year ago . Sales rose 13 % to $ 1.91 billion from $ 1.69 billion . In New York Stock Exchange composite trading , Olin closed at $ 58.50 a share , down 25 cents . GTE Corp. and MCI Communications Corp. reported strong earnings gains to record levels for the third quarter . Southwestern Bell Corp. and Cincinnati Bell posted slight declines . GTE Corp . GTE said net income rose 18 % , aided by higher long-distance calling volumes and an increase in telephone lines in service . Pretax operating profit from telephone operations rose 8.2 % but profits from telecommunications products and electrical products were flat . Revenues rose 8.8 % to $ 4.35 billion from $ 4.0 billion . The company said the quarter included a 10 % increase in local-exchange usage for long-distance calling and a 5 % increase in the number of access lines in service . Earlier rate reductions in Texas and California reduced the quarter 's revenue and operating profit $ 55 million ; a year earlier , operating profit in telephone operations was reduced by a similar amount as a result of a provision for a reorganization . Revenue in the telecommunications products and services unit rose 27 % to $ 728.8 million , but operating profit was unchanged at $ 26.3 million , partly because of start-up expenses . Electrical products ' sales fell to $ 496.7 million from $ 504.5 million with higher world-wide lighting volume offset by lower domestic prices and the impact of weaker currencies in Europe and South America . Operating profit of $ 37.2 million was unchanged . In composite trading on the New York Stock Exchange , GTE rose $ 1.25 to $ 64.125 . MCI Communications Corp . MCI , which stepped up efforts to sell long-distance telephone service to residential customers , reported a 59 % jump in earnings . Revenue rose 23 % to $ 1.67 billion from $ 1.36 billion . Operating profit grew 57 % to $ 269 million from $ 171 million , while operating margins rose to 16.1 % from 15.9 % the previous quarter and 12.6 % a year ago . Daniel Akerson , MCI chief financial officer , said the company sees further improvements in operating margins . `` We think we can take it to the 18 % range over next 18 to 24 months , '' he said . In national over-the-counter trading , MCI fell $ 2.625 to $ 42.375 . Charles Schellke , an analyst with Smith Barney , Harris Upham & Co. , said some investors apparently expected slightly better revenue growth . The company said that residential traffic grew faster than business traffic and attributed that to its new PrimeTime calling plan that competes with American Telephone & Telegraph 's Reach Out America plan . MCI claims about 12 % of the overall long-distance telephone market but just under 10 % of the $ 23 billion residential market . It has been trying to improve its share of the residential market . The company wants its business mix to more closely match that of AT&T -- a step it says will help prevent cross subsidization . Mr. Akerson said MCI recorded `` another solid cash positive quarter , '' its fourth in a row , but declined to comment on whether the company is considering a dividend or is planning any acquisition . The current quarter , he said , `` looks fine . We think revenue will continue to grow and that we can control costs and thus improve profitability . '' Southwestern Bell Corp . Southwestern Bell Corp. said net dropped 8.7 % , mainly the result of four extraordinary items : a franchise tax refund that its Southwestern Bell Telephone Co. unit received last year ; a production shift of several Yellow Pages directories to the fourth quarter from the third ; a rate refund in Missouri and a one-time adjustment to phone company revenues . Revenue slipped 1.2 % to $ 2.21 billion from $ 2.23 billion . The earnings drop had been expected . Chairman Zane E. Barnes said Southwestern Bell 's `` businesses are healthy and are continuing to grow . '' The company reported a 3.1 % increase in the number of access lines in service , and also said its Southwestern Bell Mobile Systems unit added 30,000 new customers , with a current total of about 333,000 . Southwestern shares fell 50 cents to $ 55.875 in composite trading on the New York Stock Exchange . Cincinnati Bell Inc . Cincinnati Bell Inc. said net declined 1.8 % . The company noted that the year-ago period was particularly strong , with an increase of nearly 70 % . Revenue jumped nearly 17 % to $ 223.3 million from $ 191.4 million . In composite trading on the New York Stock Exchange , Cincinnati Bell fell 25 cents to $ 29 . The company said that the number of access lines dropped slightly in the quarter , a decline attributed to seasonal fluctuations . For the year , however , access lines in service have increased 5.5 % . Chairman D.H. Hibbard said the company has set a new five year goal of doubling revenues to about $ 1.8 billion while steadily increasing net .