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                             Newsday Online
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                             BUSINESS BRIEFS
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                  From Newsday and Wire Service Reports
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January 16, 1991 as of 11:05 PM


1. MARKETS TRADE FEVERISHLY, BUT NO PANIC
2. SOME OIL COMPANIES FREEZE GASOLINE PRICES
3. OIL PRICES UP AS WAR WITH IRAQ BEGINS
4. TOKYO MARKETS REACT CALMLY TO START OF WAR
5. INFLATION UP 6.1 PERCENT IN 1990
6. BOMB-SHELTER MENTALITY REFLECTED
7. INVESTORS SEEKING SAFE HAVENS
8. CONGRESS: GULF WAR COULD COST $86 B . . .
9. . . . . AND MAY BREAK A FEW BANKS
10.DIGITAL REPORTS HIGHER EARNINGS
11.AT&T HAS NCR RINGED, BUT...


 MARKETS TRADE FEVERISHLY, BUT NO PANIC
    NEW YORK (AP) - World financial markets traded feverishly as U.S.-
led forces attacked Iraq Wednesday, with cash oil prices leaping to $40
per barrel before retreating.
    After absorbing quick and violent hits in response to news of the
assault, markets for stocks, oil, bonds, the dollar and gold appeared to
stabilize worldwide.
    Many market participants said investors had factored the chances of
war into dealings and no panic was reported. They also said initial
reports of a successful military operation buoyed sentiments that a war
could be brief.
    Many markets, including U.S. stock exchanges, were closed and could
not respond, but traders were optimistic.
    ``The reports are very positive,'' said Eugene Peroni, a stock
analyst with Janney Montgomery Scott Inc. in Philadelphia. ``I think
this bodes well for the market.''
    Major U.S. securities markets said they would open as usual
Thursday. Regulators and officials for stock and futures exchanges were
in contact after war broke out.
    Crude oil almost instantly hit $35 per barrel in cash trading in New
Orleans and Houston and soared to $40, after closing at $32 Wednesday
afternoon on the New York Mercantile Exchange, where oil for future
delivery is traded.
    Oil settled back to about $35 a barrel in the cash market late in
the evening after the military operation was confirmed by government
officials. Deals are made informally in the cash market at points where
oil is loaded and delivered.
    As sounds of gunfire and airplanes were broadcast on television from
Baghdad, the dollar moved sharply higher against foreign currencies in
trading around the world. Gold prices surged and bond prices plunged.
    The U.S. dollar opened up 1.60 yen at 137.95 yen on the Tokyo
foreign exchange market, where it was already Thursday. The early gains
were later wiped out, and the dollar fell to 135.10 yen.
    The key Japanese stock index fell more than 330 points shortly after
the opening, then rebounded sharply to a gain of 433.12 points, or
nearly 2 percent, to 22,875.82 at the end of morning trading. The index
dropped 770.53 on Wednesday.
    ``Market players are trading calmly,'' said Nobuyuki Fujiki, a
trader with Nikko Securities in Tokyo. ``There was no panic selling at
all.''
    The Hong Kong stock market opened steady. The Australian stock
exchange suspended trading for 10 minutes to allow the market to adjust.
After trading resumed, the market's key index fell to levels not seen
since the 1987 stock market crash.
    Market professionals said trading around the world was cautious
because of uncertainty over the extent of the U.S. attack.
    ``It's not panicky yet but it's a fast market,'' said Jack Barbanel,
president of First Global Asset Management in Princeton, N.J.
    ``The belief of many traders is that it has been a one-sided
battle,'' he said. ``We have not heard of any damage to the American
side or the allied side.''
    The New York Stock Exchange was closed when the first reports of the
bombing emerged. The Dow Jones industrial average, the most familiar
measure of market activity, rose Wednesday 18.32 points to 2,508.91, and
NYSE officials said the exchange would open at its normal time of 9:30
a.m. EST.
    A Treasury Department spokeswoman, Barbara Clay, said the government
had been in contact with officials from Britain, Canada, France,
Germany, Japan and Italy, the other major world economic powers.
    She said the Treasury Department also had been in close
communication with the Federal Reserve, the nation's central bank, since
the attack began. The Treasury had put its ``market room'' monitoring
financial trading around the world on 24-hour alert.
    Gold prices climbed nearly $7 per ounce in trading on cash markets
around the world, slipping back to register gains of about $1.50 above
its New York close at $403 per ounce.
    U.S. Treasury 30-year bonds dropped more than $10 per $1,000 in face
amount in trading in Tokyo before rising sharply, erasing the losses and
notching gains of more than $10 per $1,000.
    ``The markets are fairly calm,'' said Jay Goldinger, of Capital
Insight Inc. in Beverly Hills, Calif.
    ``This is the most anticipated war in history,'' he said. ``Right
now the market is all right, but who knows?''

 SOME OIL COMPANIES FREEZE GASOLINE PRICES
    NEW YORK (AP) - Some oil companies responded to the war with Iraq by
immediately freezing wholesale prices of gasoline Wednesday night, but
the move provided no guarantee prices would stay down.
    The companies said they would hold down prices at stations they
control, but oil company officials stressed they have no control over
the pump prices set by independent retailers.
    ``We pledged to show restraint at the time Iraq invaded Kuwait, and
we can do no less now,'' Mobil Corp. Allen E. Murray said. Also holding
back prices were Chevron Corp., Atlantic Richfield Co. and Conoco Inc.
    ``We are headed into a period of great uncertainty, and Conoco will
help all its customers as best it can,'' Conoco said in a statement from
Houston.
    ``By holding the line on prices, we feel we can protect our
customers against possible initial price spikes while we assess the
effects of the Mideast conflict.''
    Chevron Chairman Ken Derr said he hoped ``that our jobbers and
dealers will follow our lead, so that consumers will receive the full
benefit.''
    Exxon Corp., Amoco Corp., and Shell Oil Co. said they would announce
pricing decisions later. There was no immediate comment from Phillips
Petroleum Co., Ashland Oil Co. and Texaco Inc.
    Many of the majors have also said they are trying to limit the
amount of gasoline their wholesale customers receive to avoid problems
caused by hoarding.
    In the hours before the air raids on Iraq and Iraqi troops in
Kuwait, critics of Big Oil had warned of a political backlash if
companies sought to take advantage of consumers as oil prices shot up
during the war. Crude oil prices almost instantly shot as high as $40
per barrel Wednesday night, but they fell back, unable to sustain that
level.

 OIL PRICES UP AS WAR WITH IRAQ BEGINS
    NEW YORK (AP) - Oil prices instantly soared to about $40 per barrel,
then backed off in cash trading as war with Iraq began Wednesday night,
traders said.
    As television news reports were broadcasting the sounds of bombs and
gunfire in the Iraqi capital of Baghdad, crude oil prices took their
biggest jump of the past five months in private cash trading in New
Orleans and Houston.
    The price of crude shot up dollars at a time from the closing price
of $32 per barrel Wednesday afternoon on the New York Mercantile
Exchange. Some oil dealers were refusing at one point to sell oil for
less than $41 per barrel, according to Thomas P. Blakeslee, an energy
analyst with Pegasus Econometric Group Inc., in Hoboken N.J.
    But within a few hours of the attack on Iraq, oil had eased back to
about $35 per barrel in the private, cash dealings between oil
companies, traders said.
    ``It sold off,'' said Ann-Louise Hittle of Shearson Lehman Brothers
Inc. ``It couldn't sustain that kind of surge.''
    The so-called cash market for petroleum is an informal system -
widely used in the days before energy futures were traded - in which oil
company representatives contact each others and make deals in private.
    Energy markets were just about to open for business in Asia as the
air raids on Iraq began. In early trading in Tokyo, oil prices were
about $1 per barrel higher than they had been in New York on Wednesday.
    Traders said the most solid indication of the direction oil prices
would take could come when the International Petroleum Exchange opened
in London Thursday morning.

 TOKYO MARKETS REACT CALMLY TO START OF WAR
    TOKYO (AP) - Tokyo's markets were calm early Thursday immediately
following the start of an attack by U.S.-led forces on Iraq, dealers
said. Early gains by the dollar were quickly reversed while stock prices
soared after initial losses.
    Oil and gold also rose.
    The 225-share Nikkei Stock Average plunged at the opening of trading
but quickly recovered. The index was up 433.12 points, or 1.93 percent,
from Wednesday's close to stand at 22,875.82 at the end of morning
trading.
    The dollar also was on a roller coaster in the morning, opening
sharply higher against the yen, then plunging below late Wednesday's
rate in New York. Traders said rumors of Japanese, German and U.S.
central bank intervention was depressing the dollar.
    The March contract of West Texas Intermediate crude oil, the
benchmark U.S. grade, was up $3.46 from its closing in New York late
Wednesday at $33.75 Thursday morning in Tokyo.
    North Sea Brent crude for March delivery was up $4.30 from prices
seen late Wednesday in New York at $33.50 a barrel in Tokyo.
    Gold opened at $416 a troy ounce in spot trading, up $13 from the
close in New York on Wednesday.
    The Tokyo Stock Exchange floor appeared calm Thursday morning, with
traders walking about casually. Traders said the market had already
factored in the likelihood of war.
    Nobuyuki Nishiguchi, an analyst at Daiwa Securities, said the stock
market was expecting the war would not last long.
    The exchange announced Thursday it would slow the pace of price
quotations and widen the range for quotes in order to reduce the
possibility of high volatility in the market.
    The stock exchange also released an annoucement calling for calm and
caution, a spokesman said.
    The dollar was down against the Japanese yen, the German mark, and
the British pound in Tokyo.
    The dollar tends to strengthen in times of war because it is
considered a safe investment, but traders said the dollar was pressured
by heavy profit-taking and unconfirmed rumors of Japanese and U.S.
central bank intervention through dollar sales.

 INFLATION UP 6.1 PERCENT IN 1990
    WASHINGTON (AP) - Consumer prices rose a moderate 0.3 percent in
December, pushing inflation for all of 1990 to 6.1 percent, the worst
rate in nine years, the government said today.
    Last month's seasonally adjusted gain in the Labor Department's
Consumer Price Index matched the increase in November but represented a
substantial moderation from August through October, when the monthly
increase averaged 0.7 percent.
    For the year, the price rise was the steepest since the cost of
living soared 8.9 percent in 1981. It represented a marked increase over
the 4.6 percent rate in 1989 and the 4.4 percent rate in both 1988 and
1987.
    The Labor Department also said U.S. workers earnings, adjusted for
both inflation and seasonal factors, rose 0.9 percent in December. But,
for the year, earnings failed to keep up with inflation, slipping 1.6
percent after adjustment for price rises.
    Separately, the Federal Reserve reported today that industrial
production fell 0.6 percent in December, continuing a three-month
decline that included a 1.8 percent plunge in November. For the year,
output was off 1.4 percent.
    ``The industrial production numbers say we're still declining. We're
not bottoming out'' in the recession, said economist Donald Ratajczak of
Georgia State University.
    The Commerce Department, meanwhile, said business inventories grew
0.3 percent in November while business sales fell 1.2 percent. Rising
inventories of goods held on shelves and backlots are a sign of economic
weakness and could foreshadow production cutbacks and layoffs at
factories if sales do not pick up.
    Analysts expect lower inflation this year because of the sluggish
economy. They also expect falling oil prices after the resolution of the
Persian Gulf crisis.
    Energy prices, which had risen sharply in the three months following
Iraq's Aug. 2 invasion of Kuwait, fell 0.4 percent in December,
following a 0.5 percent rise in November. For the year, energy was up
18.1 percent, the worst since 1979.
    For the year, food and beverage costs rose 5.3 percent, roughly in
line with the advances during the previous two years. Pork prices rose
16.7 percent during the year and beef was up 8.9 percent. However, egg
prices were 4.6 percent lower than a year ago and dairy products rose
only 3.1 percent, held back by a 1.1 percent drop in December.
    Prices excluding the volatile food and energy sectors, were up 5.2
percent in 1990, compared with 4.6 percent in 1989 and 4.7 percent in
1988.

 INVESTORS SEEKING SAFE HAVENS
    NEW YORK (AP) - War fears have led many investors to take refuge in
the relative safety of gold, short-term bonds and other securities
easily converted to cash, but experts warn against letting the Persian
Gulf conflict determine where hard-earned dollars should go.
    As of last week, money market mutual fund assets, which include
individual money market accounts, soared to a record $438.39 billion,
said Investment Company Institute, the Washington mutual mutual fund
trade group.
    On Tuesday - the United Nations deadline for Iraq to pull out of
neighboring Kuwait - investors snapped up a record 31,000 ounces of the
U.S. Mint's one-ounce American Eagle gold bullion coin, according to
U.S. Treasury figures. That was close to the monthly average of coin
sales during last year and beyond the previous daily record of 30,000
ounces sold a day after the October 1987 stock market crash.
    The silver American Eagle bullion coin also reportedly sold at
higher-than-normal levels on Tuesday.
    Many investment advisers have urged clients to keep a significant
portion of their investments ``liquid,'' meaning in assets like U.S.
Treasuries or blue-chip stocks, which can be bought or sold quickly
without major price changes. But they maintain the uncertainty of the
current recession, not a war in the Persian Gulf, has prompted that
strategy.
    Not surprisingly, Bruce Kaplan, president of Kaplan & Co., a Santa
Monica, Calif., precious metals consulting firm, argues that gold is the
way to go given the steady rise in the nation's inflation rate as well
as the Mideast turmoil.
    ``It's a self-contained, complete investment,'' he said. ``It has
been identified by people as the ultimate money and ultimate currency
for thousands of years because it doesn't depend on any particular
company, government or currency.''
    Merrill Lynch & Co., on the other hand, has been advising clients to
keep 55 percent of their assets in certain stocks, 40 percent in
Treasury bonds and 5 percent in cash.
    Charles Clough, the brokerage firm's chief investment strategist,
said he sees emerging opportunities in the stock market as a result of
recent share price declines and the tend toward lower interest rates.
    The lower rates ``could mean more incentives for U.S. corporations
to invest because it's cheaper to invest,'' thereby boosting their stock
prices, Clough said. Among his recommendations: shares of financially
stable companies in the technology, oil well services and agriculture
equipment sectors.
    Clough also says he's recommending certain utility stocks,
particularly electricity companies, since they continue to pay their
regular dividends while others, including banks, have cut theirs.
    In addition, Clough and other investment advisors are recommending
that investors buy Treasuries or CDs now to lock in the current yields,
which are likely to weaken as the economy worsens.

 CONGRESS: GULF WAR COULD COST $86 B . . .
    WASHINGTON (AP) - War with Iraq could cost the United States from
$28 billion to $86 billion, depending on the turns of military
uncertainties, a congressional report said Wednesday.
    The projection by the Congressional Budget Office said that a
conflict in the Persian Gulf would cost from $17 billion to $35 billion
this fiscal year, depending on its length and the severity of U.S.
losses. Fiscal 1991 runs through Sept. 30.
    The costs for future years would range between $11 billion and $51
billion, depending on the extent to which spent ammunition and lost
equipment is replaced, the agency said.
    The CBO cautioned that its estimate should be taken as only a
``rough guide'' to Operation Desert Shield's actual cost.
    ``The duration and intensity of a war would influence costs
significantly, but no one can be certain about how long or how intense a
Persian Gulf war would be,'' the agency wrote.
    CBO's lower cost estimates assumed a war that would last less than a
month, fought mainly with U.S. air power. American losses were assumed
to include about 3,000 dead and wounded troops, 200 tanks - about one-
tenth of the tanks there - and 100 aircraft, about 8 percent of the
planes.
    The higher, more pessimistic projection assumed fighting lasting up
to six months, with repeated ground attacks. Losses were estimated at
45,000 dead and wounded, 900 tanks and 600 planes.
    CBO calculated that if the current deployment of more than 400,000
troops continued through 1991 without any fighting, it would cost $15
billion to $25 billion.
    If a negotiated settlement allowed the United States to reduce its
troop strength in the region to 100,000 by the end of the year, the
year's costs should range between $14 billion and about $18 billion, the
report said.
    The Bush administration has refused to openly discuss the potential
costs of a war, and did not provide CBO with new information for its
study.

 . . . . AND MAY BREAK A FEW BANKS
    NEW YORK (AP) - A protracted war in the Persian Gulf probably will
make things worse for America's troubled banks, industry strategists
said Wednesday.
    A long war to extract Iraq from Kuwait would increase uncertainty
among consumers who already are spooked by the current recession,
causing them to further curb the spending and borrowing that help drive
the U.S. economy.
    Fewer loans would mean banks profit less on their main business, the
difference between what it costs them to borrow and what they charge to
lend.
    Higher energy prices could prolong the pain for banks by making it
more difficult for the country to climb out of the current recession,
analysts who follow banking say.
    ``Absent a war, already the banking industry is under considerable
stress,'' said James J. McDermott Jr., president of Keefe Bruyette &
Woods, a New York investment firm that specializes in banks. ``War
conditions over time will only aggravate the fundamental problems the
industry is facing.''
    Banks face rising defaults in loans for commercial office buildings
and highly leveraged takeover deals, two of the leading areas of
reckless bank lending in the 1980s.
    These problems are reflected in the fourth-quarter earnings reports
of many large banks, which show substantial losses, dividend cuts, and
millions salted away to cover future delinquent loans.
    The only positive result for banks, and the economy in general,
would be a ``short, sweet war with a decisive victory. Then the price of
oil comes down and everyone breathes a sigh of relief and they go out
and spend money,'' said Bob Kuttner, economics editor of The New
Republic magazine.

 DIGITAL REPORTS HIGHER EARNINGS
    MAYNARD, Mass. (AP) - Digital Equipment Corp. reported on Wednesday
a 28 percent drop in second quarter earnings, but company officials said
the results show the computer maker has started to reverse its recent
troubls.
    For the quarter that ended Dec. 29, Digital had net income of $111.1
million, or 92 cents per share, compared with $155.4 million, or $1.25
per share, during the same period a year earlier.
    Digital had total operating revenues of $3.3 billion, up 5 percent
from $3.1 billion during the second quarter a year ago.
    Product sales for the quarter were down to $1.9 billion from $2
billion a year ago. But service and other revenues rose 16 percent to
$1.3 billion.
    John F. Smith, senior vice president for operations, said Digital
has benefited from healthy investments and cost-cutting measures,
despite the uncertain economic environment.
    Sales of Digital's UNIX-based workstations and the new VAX 4000
system strengthened while customer interest in the company's mainframe
VAX 9000 system remained high, Smith said. Overseas demand and revenue
also expanded, he said.
    Digital has undertaken a $1 billion cost-cutting program and last
week announced the first layoffs in the company's 33-year history,
eliminating more than 3,000 jobs.
    For the six months that ended Dec. 29, the company reported net
income of $137.3 million, or $1.12 per share, down 55.1 percent from
earnings of $306.1 million, or $2.44 per share, a year ago.
    Six-month revenue rose 1.6 percent to $6.4 billion from $6.3 billion
a year earlier.

 AT&T HAS NCR RINGED, BUT...
    NEW YORK (AP) - AT&T appears to be winning its $6.1 billion battle
to buy NCR Corp., information released Wednesday by the phone company
showed. But AT&T still faces the hurdle of removing NCR's takeover
defenses and the hostile opposition of the computer maker's management.
    Owners of about 70 percent of NCR's shares have indicated they would
sell their holdings to American Telephone & Telegraph Co., AT&T
announced, exceeding a condition of the offer that requires two-thirds
approval.
    AT&T has asked NCR shareholders to send it written requests that NCR
directors convene a special meeting. At the meeting, AT&T would seek to
replace a majority of the directors and remove the takeover defenses.
    AT&T said Wednesday that owners of more than half of NCR shares have
sent in the requests. Under the laws of Maryland, where NCR is
incorporated, the company must call a special meeting ``as soon as
possible'' after it receives such written notices from 25 percent of
stockholders. AT&T said it will deliver the statements to NCR in a few
days.
    However, AT&T said it hoped the favorable showing for its tender
offer meant that step won't be needed.
    AT&T has filed several lawsuits seeking to compel NCR to remove its
takeover defenses, which would make a takeover extremely costly and
drawn out.
    Among the measures are a ``poison pill'' plan that, in the event of
a takeover, would give NCR stockholders the right to buy shares of the
acquiring company's stock at half price, or to buy NCR's preferred stock
at half price.
    NCR said in a statement Wednesday from its Dayton, Ohio,
headquarters that it ``reaffirmed its determination to stay
independent.'' NCR Chairman Charles E. Exley Jr. has said he would be
willing to accept an AT&T offer of $125 a share, up from the currrent
$90-a-share offer. The phone company called the figure too steep.
    Meanwhile, 22 members of the U.S. House urged the President's
Council on Competitiveness to review the proposed takeover. The
congressmen said past mergers in the computer industry have failed,
resulting in the loss of millions of dollars and tens of thousands of
jobs. The letter was drafted by Rep. Tony Hall, D-Ohio, whose district
includes Dayton.