The Los Angeles Times from Los Angeles, California • Page 35

WEDNESDAY, JANUARY 5, 1994 Fed Plan Would Have 2 Bank Regulators Pact Could Cut Gas Costs by $1.5 Billion From Reuters WASHINGTON The Federal Reserve Board, responding to a White House plan for a single bank regulator, on Tuesday laid out a plan to replace the four regulatory agencies with two that would add 7,000 banks to the Fed's domain. "Our plan is simple and straightforward and accomplishes the streamlining of the regulatory system without creating a monolith," Fed Gov. John La Ware said But top Treasury Department officials rejected the plan which was outlined by LaWare in a sevenrpage Fed proposal saying it would be wasteful and could cause confusion. The White House in November proposed merging the regulatory duties of the four agencies under a Federal Banking Commission, a plan that must be approved by Congress. Fed officials blasted that idea, saying it would create a "monopolistic" regulator and hamper the board's ability to deal with a crisis, such as a stock market crash.

They also said the Fed must have direct supervision over the movement of interest rates. "We must have some direct involvement in the supervisory process," LaWare said. The Fed proposed that it oversee all state-chartered banks adding most of the 7,000 institutions now regulated by the Federal Deposit Insurance Corp. It would continue to oversee bank holding companies and foreign banks. The Fed currently regulates about 1,000 banks and about 6,300 bank holding companies.

The Comptroller of the Currency, which regulates about 3,400 national banks, and the Office of Thrift Supervision, which governs about 1,700 thrifts, would be merged into one agency for federally chartered banks and thrifts. By MICHAEL PARRISH TIMES STAFF WRITER Southern California Gas Co. said Tuesday that it has signed agreements with two major gas suppliers that could result in as much as $1.5 billion in savings to utility customers over the next 19 years. The utility and its gas-supply affiliates will pay less for gas in exchange for lump-sum payments and flexibility in other terms for their suppliers of California offshore and Canadian natural gas, the utility said. The long-term net savings will cost the gas company $500 million counting payments to the suppliers and transporters and the cost of transferring some pipeline and gas treatment facilities to Exxon, which supplies gas to the utility from offshore California wells.

The new agreements "are fair both to our customers and the supplier of this gas," said Richard D. Farman, chief executive of the gas company. A spokesman for Exxon con firmed the agreement but declined to disclose the size of the payment it will collect or any other terms. Pan-Alberta Gas the Canadian supplier, said it will receive a payment of $192 million and will lower the price at which it sells gas to the utility to rates competitive with U.S. gas sources.

In recent years, natural gas utilities across the country have renegotiated long-term supply contracts first signed during the 1970s, a period of high gas prices Please see GAS, D1S LOtf ANGELES TIMES FINANCIAL MARKETS AST Research Sues TI Over Royalty Rights 1994 of damages it is seeking. Epperson said the suit was sealed upon filing Monday because it contains confidential competitive information. AST said the suit alleges that TJ violated federal antitrust laws governing anti-competitive practices and violated the California Unfair Practices Act. Both laws prohibit secret and discriminatory practice that give discounts to AST also alleged that TI violated an AST patent and that certain TI patents are invalid. It did not provide more information.

The patents were the subject of lawsuits between TI and computer makers Tandy, Dell Computer Zenith Data Systems and Samsung Electronics. The suits were settled last year, and a suit against computer maker Daewoo was settled in 1992. By DEAN TAKAHASHI TIMES STAFF WRITER IRVINE-Computer maker AST Research Inc. has sued Texas Instruments alleging that Dallas-based TI has failed to honor royalty rights AST acquired when it bought Tandy computer division last summer. Irvine-based AST alleged in a lawsuit filed in federal court in Santa Ana that it acquired the right to pay a reduced royalty on patents held by TI when it bought Tandy's computer manufacturing assets for $105 million in July.

Last year, in the wake of a patent lawsuit, Tandy reportedly negotiated a settlement with TI in which it won the right to pay smaller license fees than other companies, such as AST. Upon 3,820 Til Id tiff 80 Dow Jones High I 3,798.25 Industrials Close 3,783.90 Low 13,718.89 J40 I II I I 19 26 3 10 17 24 31 7 I II I ll I I 1-360 New York Volume IllFT jHHHj 326.60 million shares 19 26 3 10 17 24 31 7 I I I 8" Stocks Gain Broadly as Yields Drop From Times Staff and Wire Reports Market Overview A late round of computer-driven program buying pushed stocks broadly higher Tuesday, encouraged in part by falling interest rates. Smaller company stocks also rebounded. Treasury bond yields fell for the first time in six trading days, pushing prices briskly higher on a perception that investors had overreacted to recent news of economic strength. Stocks Stocks skipped higher in the morning, languished later in the session, then rose sharply in the last minutes of trading, roughly following the bond market's trajectory.

The Dow Jones industrial average closed at its high for the day, rising 27.30 to 3,783.90 on Big Board volume totaling 326.6 million shares. acquiring the Tandy unit, however, AST discovered that TI would not honor the same royalty terms with AST. "We want to pay the same rates as paid by our competitors," AST spokesman Emory Epperson said Tuesday. Terri West, a spokeswoman for TI, said the company could not comment because officials had not seen a copy of the lawsuit. She said the patents involved govern the ways in which a computer's brain, or microprocessor, sends or receives data from other computer components.

As an example, TI holds basic patents that govern the diagnostic routine that occurs when a personal computer is turned on, West said. AST did not disclose the amount previously limited its investment in the nascent multimedia industry to 3DO, a high-tech video game hardware firm. "We have gone prudently and rationally into this area, as opposed to just throwing money at little investments in outside companies," said Paul, one of the few senior Hollywood executives who has had extensive experience in the interactive realm from his days at Atari during the first video game boom. "Our goal is to be a higher-end producer," he said. Paul said that Universal Interactive will focus on producing software for the more sophisticated 32-bit video game systems that are just going on the market.

These allow for more realistic graphics MCA Branching Out to Video Game Publishing; 1 V-4 ImvearT-Rnnrf 6 34M L0J-I4-I4 1 1 1 l-year T-Bill 3.601- 2 1 i 1 1 By AMY HARMON TIMES STAFF WRITER MCA Inc. has formed a multimedia entertainment division to develop and publish video games and interactive software, the company said Tuesday. The new business unit, Universal Interactive Studios, will be headed by Skip Paul, MCA executive vice president. Its first title, expected to be released within a few months, will be a CD-ROM game based on Steven Spielberg's blockbuster movie "Jurassic Park." While nearly all the major film studios have invested in software firms and started interactive units of their own in the last two years, Matsushita subsidiary MCA had 1 4 1 i I lv, Daily performance January OCT NOV I AMEX 477.36 Still, MCI Communications which led the Nasdaq most-active list, lost 1 to 26. The company said that, along with partners, it plans to invest more than $20 billion to create new services.

Time Warner fell 2V4 to 41. Alex. Brown downgraded the stock to "buy" from "strong buy," citing a larger than expected slowdown in the media giant's cash flow. Stocks ended lower abroad. Mexican stocks rebounded in late trading to close up sharply on reports that civil unrest in the southern state of Chiapas appeared to be easing, traders said.

The Bolsa was up 56.66 points at 2,558.89. In Tokyo, the 225-share Nikkei average edged 47.50 points lower to 17,369.74. London shares fell on profit taking. The Financial Times 100-share average ended down 9.9 points at 3,408.5. In Frankfurt, the 30-share DAX average closed down 14.4 points at 2,253.58.

Credit The bond market strength came in extremely volatile trading, and the outlook remained generally bearish ahead of Friday's report on December employment. The monthly jobs report is expected to add to recent signs that the economy grew vigorously in the last quarter of 1993, raising the prospect of higher demand for goods and services, which could The yield on the Treasury's key 30-year bond receded to 6.34 from 6.42 on Monday. The long bond's price, which moves in the opposite direction, jumped 3132 plant. Alabama matched the offer, though, and also agreed to pay workers' salaries while in training. Scheduled for completion late next year, the plant will be Mercedes' first U.S.

factory to produce passenger vehicles. A Mercedes subsidiary, Freightliner Corp. in Portland, makes trucks for commercial use. Mercedes will build a new sport utility vehicle at its Alabama plant, which is expected to employ 1,500 people. The car designed to compete with Ford Motor popular Explorer and Chrysler Jeep Grand Cherokee will sell for between $20,000 and $30,000, making it the least expensive vehicle in the Mercedes lineup.

More than half of Fluor's new work orders last year came from outside the United States, spokeswoman Deborah Land said. However, U.S. contracts still represent 60 of the company's backlog of projects. "The strongest markets for new construction, particularly of energy-related facilities, have been in the Far East," analyst Altman said. DOW 30 1-45 M- 3 466.89 iPniZl ZZ X.

I 1 I 1 I I i 8 15 22 29 5 12 I I I I I I i NYSE rjp: 1 III illll IllllMlfcHili 1 llMl'l rflMM 8 15 22 29 5 12 4,652.226 1 XTT I LJ ,111 Interest Rates 1 11 1 4, Smaller-company shares bounced back after the previous session's declines, buoying the Nasdaq composite index, which rose 3.52 to 774.28. In the broader market, advancing issues outnumbered losers by about 4 to 3 on the New York Stock Exchange "Stocks took their cue from the strong bond market," said Ricky Harrington, senior vice president at Interstate Johnson Lane. Stock investors like to see bond prices rise because that makes share prices more appealing and cuts the cost of money to corporations. Harrington also attributed the late activity to the so-called January effect. The seasonal trend is the result of market players buying back losing stocks sold off at the end of the year to offset gains on winners.

Other analysts pointed out that early January is typically the strongest period of the year for the influx of new capital to money managers, who then must turn around and invest. Among the market highlights: Leaders on the NYSE were economically sensitive, or cyclical, shares such as International Paper, up 1 to 69; General Motors, up IVi to and Caterpillar, up 1 to 91., Among individual stocks, drug company Bristol-Myers Squibb became the latest firm to announce job cuts, saying it will slash its work force by 5,000 worldwide in a restructuring. Its shares closed up lto58. In the technology group, Intel rose 2V4 to 63 and Apple Computer gained 1 to DEC JAN Lot Angeles Times point, or $9.69 per $1,000 in face value. Bond strategists traced the rebound to a perception that the weakness Monday was an overre-action that created bargains in the market.

Enticed by Monday's price decline, many traders had set up "short-selling" strategies that allowed them to profit from further price declines. In short selling, traders borrow bonds, then sell them immediately, anticipating that the value will decline. If it does, the traders buy contracts at the lower price, then repay the loan and pocket the difference. But many of these traders bailed out by buying bonds when prices began rising Tuesday, generating what is known as a short-covering rally. However, prices fell sharply around early afternoon as the market's recent bearish sentiment crept back in.

Then, in yet another turnaround, prices reversed course in a last-minute rally that some analysts traced to fresh indications of economic weakness. Other Markets The dollar fell against most major currencies. Elsewhere, gold for current delivery closed at $394.10 an ounce, up 40 cents on the New York Comex. Silver closed at $5.20 an ounce, off 2 cents. Meanwhile, light, sweet crude for February delivery rose 11 cents to $14.67 a barrel on the New York Merc.

Market Roundup, D8 "Domestically, market conditions are tough." Fluor Daniel, the core engineering and construction unit of Fluor has been involved in the construction of more than 60 automobile plants. Among those was a $660-million Nissan factory in Smyrna, which Fluor built 13 years ago, followed by a $450-million expansion of it in 1992. By U.S. auto factory standards, the Mercedes plant will be relatively small, assembling about 60,000 vehicles a year. "Typically, plants in the U.S.

produce 200,000 vehicles," said Michael Luckey, an automotive industry consultant in WoodcliffLake.NJ. "Production costs here are lower than in Germany, where unions are very strong," Luckey said. "This is a case study for Mercedes to see if it makes sense for the company to build more plants in the U.S." News of Fluor's selection first appeared in a Birmingham news-, paper Tuesday. In trading on the New York Stock Exchange, Fluor's stock closed at $41 a share, up 50 cents. and near-broadcast-quality video.

One of its main tasks will be to develop titles for 3DO, whose success depends largely on developing games that will be attractive enough to make consumers want to go out and buy the machines on which to play them. Other titles in the works include several projects developed at an interactive "skunk works" set up at MCA's music group earlier this year such as interactive liner notes for Elton John's recently released album and a BB King CD-ROM. Robert Biniaz, MCA Music and Entertainment's senior vice president for business develop-ment, was involved in the skunk works and will be chief operating officer at Universal Interactive. 0) to fit your needs 1 No-Point Options Low Closing Costs Flexible Financing Programs Prompt Loan Decisions Personal, Professional, One-To-One Service ''I No'point mortgages from $350,000 tailored FLUOR: Apparent Winner of Mercedes Bid JEJk CHASE can help you realize significant "CJr savings on closing costs when you are purchasing a new home. For example, on a typical $500,000 mortgage with two points, you would pay $10,000 in points at closing.

With Chase, you have the option of paying no points saving you as much as $10,000 or more up front depending on your loan amount. Furthermore, Chase can help you choose from a broad array of flexible financing options. Your Chase Relationship Manager will work with you from application to closing helping to tailor a program cally to meet your cash flow objectives. Discover Chase No-Point Jumbo Mortgages today, and learn how to substantially reduce your closing costs. Continued from Dl getting in the foreign market" Among its more lucrative deals in the past year, Fluor won a contract to build an oil refinery in Belgium and a contract to construct a refinery in Thailand.

The company, which has rebounded in recent years after a severe downturn in the early to mid-1980s, earned a record $167 million in 1993 on revenue of nearly $8 billion. Mercedes spokeswoman Linda Paulmeno said Tuesday that negotiations with Fluor are still under way and that "anything can However, she noted that Fluor is in a strong position because it has already worked with Mercedes in scouting out a site for the plant. "We have a very good relationship with Fluor, so obviously that can help," Paulmeno said. Mercedes chose Alabama in October from half a dozen states that courted the auto company with generous incentives. North Carolina proposed building a $35-milIion employee training center at the CHASE MANHATTAN.

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