The Los Angeles Times from Los Angeles, California on April 20, 1983 · Page 190
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The Los Angeles Times from Los Angeles, California · Page 190

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Wednesday, April 20, 1983
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Orange County Cos Angeles (Times CO Tart IV WitlnvMbiy. April 20. IM Selloff Halts Market's String of Record Highs; Dow Closes Down 8.70 A I Top 1 5Video Games Sl V V 1. Cantlpad At. 'fiaSS! Vt 2. Ms. Pae-Man aw, BSSBSS K I '"""'"on" (S(3) ' V 5. Pitfall Acuv.von (flaMM tiaV 6. FroggarPnkeM. P3aa2WrjT 9. Dragon Flra inuc " - Vif I 10. OonkayKonsvansMxi m fSa'aT W 11. Pac-ManAwi V ' fesjs;'!"' ijf 12. SpidarFlghtarAcuviwn p.-.'i'v.ij'-- 14. Swords & Sarpants inugic f 15. Zaxxoncoio MjO gSSiX c'- AVobi Timet WireServicn NKW YORK -Stock prices turned downward Tuesday, ending a run of eight straight gains that carried the market to a string of record highs. Many of the day's notable advances and declines stemmed from earnings developments as the quarterly reporting season nearcd its peak. The Dow Jones average of 30 industrials, up 11.90 to an all-time high on Monday, dropped back 8.70 to 1.174.54. Other indicators also fell back from record highs. They included the Big Board's composite index, off 0.54 to 91.18: Standard & Poor's 500-stock composite index, down 1.03 at 158.71: the American Stock Exchange's market-value index, down 0.89 to 407.97: NASDAQ's composite index for the over-the-counter market, down 0.97 at 281.86. and the Wilshirc index of 5.000 equities, off 8.409 at 1.659.828. 'Extremely Strong "The market has been extremely strong for eight sessions, and it is certainly due for a correction." said Bob Schonbmnn. Bernstein. Mac-Caulcy vice president "But this is nothing more than a short-term retrenchment." Volume on the New York Stock Exchange reached 91.21 million shares, from 88.56 million Monday. That included 1.523 large-block trades of 10.000 or more shares, compared to 1.5 10 on Monday. The overall tally on the NYSE showed three stocks falling in price for every two that advanced. International Business Machines, a leader of the market's recent advance, dropped l'fc to Ul'4. Among other recently strong ixsw-x. American Express lost 1 to MiV Sears Roebuck was down at 37 and Merrill Lynch gave up 2' to95'. Among companies that posted higher first-quarter profits. Rohm & Haas gamed G'.i to Iff!'.. VK Corp. rose 3'l to G7'-i and Pfizer rose Hi to 84 '-k Honeywell, off i at 99.. and RCA. down at 23'. reported lower quarterly earnings. American I lomc Products dropped 1 7 to !X)!4. amid some apparent disappointment over the size of the quarterly profit increase posted by the company. Bonds Retreat Nationwide turnover in NYSK-lislcd issues, including trades in those stocks on regional exchanges and in the over-the-counter market, totaled 106.27 million shares. The bond market staged a broad retreat, with long -term Treasury bonds falling more than $13 for each $1,000 in face value. Next week, the Treasury announces second-quarter borrowing plans. In the secondary market for Treasury bonds. 30-year government bonds fell 1 1032 points. The movement of a point is equivalent to a $10 change in the pnee of a bond with a $1,000 face value. Yields on 3-month Treasury bills rose 7 basis points to 8. 16. A basis point is one -hundredth of a percentage point. Six-month bills rose II basis points to 8.31 and 1-year bills were up 9 basis points at 8.33. The federal funds rale, the interest on overnight loans between banks and a peg for many other short-term interest rates, rose to 8.75 before settling back at 8.5 in late trading. BOB AU - K.N 1M PKTK BKNTUVOlA Ua Altftfca Tunn Video-Game Industry in Shakeout Sales Booming but Glut Forces Bankruptcies, Cutbacks By KATHRYN HARRIS. TimesStatt Writer Public Radio Chief to Step Aside Soon Mankiewicz Takes Blame for Unexpected Shortfall in Funding Hyl.KKMARGUl.tES. Times Stall Writer In a surprise move. Frank Mankiewicz. (ho man who guided the rapid growth of National Public Radio in the past five years, said Tuesday that he will step aside for a new chief operating officer. The action came xs NPR disclosed that us budget deficit has mushroomed, which is, likely to cause further programming and personnel cut-tucks in the non-commercial system. Responding to news that NPR's shortfall from its planned budget has grown to $5.8 million halfway into its current fiscal year, the organization's board of directors voted Tuesday at the annual Public Radio Conference in Minneapolis to appoint an acting chief operating officer for a 6- month period. Only last month, the board had acted to offset what it thought then was a $2.S-million deficit by ordering a 10 cutback of NPR's 435-pcrson staff and the cancellation of two series 'The Sunday Show" and "Jazz Alive!" Expects to Resign Mankiewicz. a former press secretary to the late Sen. Robert F. Kennedy and manager of Sen. George McGovcrn's 1372 Democratic presidential campaign, will remain NPR president for the time tH'ing. but the new executive will "have full responsibility for lay -to -day operational and managerial decisions an will report directly to the hoard," said Myron Junes. NPR chairman. Mankiewicz. 58. accepted blame for the network's financial problems and said he plans to resign as president when the crisis has ebbed, probably in six months or so. In the interim he will concern himself with fund-raising efforts and with representing NPR before Congress, the federal Communications Commission anl the Corporation for Public Broadcasting, he said. Jones indicated that the board already has someone in mind to become the new chief operating officer but is not disclosing his name yet "because he needs time to seek leave from his present post." NPR started the fiscal year last October with an operating budget of $26 million, up $5 million from last year despite a $2.2-miIlion reduction in its appropriation from the federal government. No Ready Explanation The additional $3-million shortfall in projected income was discovered in the mid-year budget review conducted within the past few weeks. NPR officials said. No one had a ready explanation of why it hadn't been found at the same time as the first S2.S-million deficit that was dealt with in March. "It's simply that we vastly underestimated the amount of outside support we would raise, and then we didn't track how that was coming in so the crisis sort of sprang upon us." Mankiewicz said. Despite cuts in federal assistance to public broadcasting. Mankiewicz has been the most optimistic official in public television and radio about the non -commercial system's ability to raise funds independently. But he conceded Tuesday that. "We probably moved a little too fast in our rush to independence." Wallace Smith, general manager of station KUSC-FM in I-os Angeles and a member of the NPR board, said in a separate telephone interview that the details of how NPR will make up for the newly disclosed S3-million shortfall have not yet been worked out. Markets at a Glance Tuesday. Apni 19. i983 -8.70 -0.S4 -0.89 -0.97 -8.409 ' ' 1 1 1 1 1 1 ' 1 SAN JOSE-"Frankcnstein's Monster" looked like a promising video game to Dealerscope. a trade publication used by retailers, when it was selected as the "game of the month" for the March issue. Instead of appearing on retailers' shelves, however, the Monster will be part of a federal bankruptcy proceeding later this week. The game's manufacturer. Data Age Inc.. has filed a bankruptcy petition, seeking the court's permission to reorganize and continue its business, but its largest lender wants to have the company's assets liquidated. At least two other video game manufacturers have recently sought the protection of bankruptcy courts.- and a third. U.S. Camcs Corp.. has suspended manufacturing and laid off one -fourth of its work force. Video-game manufacturers arc experiencing a shakeout. despite evidence that consumers spent a stunning $1.5 billion on cartridges in 1382. up from $855 million in 1981. DOW 30 MYSt AtmX NASDAQ WfcSMRE I Zanuck, Brown Plan to Leave Fox Triggers Tiff By DALE POLLOCK. Times Stall Writer Hichard P. Simon, an industry analyst for Goldman. Sachs & Co. in New York, says purchases of video-game cartridges' will probably increase by another 35 this year. For manufacturers, the problem lies in the fact that consumers don't want all of the 300-plus titles glutting the marketplace. The top 20 titles account for 45 of the business, according to one industry survey considered reliable by video-game makers. "We all need that hit." says John Belden. vice president and general manager of U.S. Games, which was acquired a year ago by Quaker Oats Co. But the Santa Clara company along with many others hasn't had that hit In fact U.S. Games hasn't produced one video-game blockbuster among the nine titles it has shipped since it was acquired by the $2.7-billion conglomerate. By next week. Belden expects a signal from the parent company to "concentrate on one or two titles" or quit the video-game business altogether. ing it into a healthy bank. Isaac noted. During the merger, the depositsincluding the uninsured amounts over $100.000 arc transferred to the new bank without any penalty. The FDIC will ask Congress to change the law to encourage depositors to find the safest places for their money, he said. Under one proposal, the FDIC might estimate in advance how much it would recover from the sale of the assets of a troubled bank, then give the uninsured depositor a payment after the bank is merged or closed. If the FDIC expects to recover 60. the uninsured depositor would get 60 of his account in excess of $100,000. Another proposal would be to set a specific limit for all cases, such as 75 of the uninsured deposit FDIC Seeks Less Protection for Big Depositors at Banks By ROBERT A. ROSENBLATT. TimnStatt Writer The impending departure of independent movie producers Richard Zanuck and David Brown from 20th Century -Fox Film Corp. has sparked an unusually public and nasty dispute between the film makers and the studio. Zanuck and Brown, whose productions include "Jaws." "The Sling" and the Oscar-nominated film "The Verdict." announced Tuesday that they will be affiliated with Warner Bros., a subsidiary of New York -based Warner Communications Inc.. effective Aug. 7. when their 3-year contract expires with Fox. Such comings and goings are not unusual in the film industry: Zanuck and Brown were previously with Universal Pictures before coming to Fox in 1979. What is unusual is the bitterness that this most recent departure has engendered. Zanuck said Tuesday of Fox's chairman and chief executive. "Alan Hirschficld is wishy-washy and two-faced." "Dick Zanuck is being very pctu- lant He would feel better if he was running the studio." Hirschficld responded. (Zanuck indeed did run Fox from 1969 to 1970. when he was forced out by his father, the late DarrylF. Zanuck.) Behind the apparent rancor is the story of two producers accustomed to seeing their projects immediately approved, a movie studio that went through a scries of management changes and owners, and an industry in which fewer films are being made while more projects are being developed. Hirschficld claims that Fox spent almost $10 million since 1979 on Zanuck Brown Co.. a sum that included all of the producers' devel -opmcnt costs, expenses and overhead. "For that investment, we got one picture we could release." Hirschficld said, referring to "The Verdict" "I think they were not focused on commercial projects. We were somewhat surprised by their inabil-Please see FOX. Page 2 A game's popularity is determined in just four to six weeks, according to distributors and manufacturers. Unsuccessful or overproduced titles backing up in distribution pipelines threaten to drown thinly capitalized entrepreneurs, such as Data Age. Data Age. in one instance, shipped 12.000 game cartridges to one distributor, only to have 11.400 cartridges returned unsold, says Martin Meeker, president of the Campbell. Calif.-based company. When this happened. Data Age's unwanted cartridges were sold below cost to a liquidator. Data Age reported debts of about J7.9 million and assets of about $5 million when it filed its bankruptcy petition on April 6. Games by Apollo, a manufacturer in Richardson. Tex., filed its bankruptcy petition on Nov. 12. about 1 1 months after it shipped its first game cartridges. "We grew too fast That's what went wrong." says Apollo founder Patrick Roper. Rop-Please tee VIDEO. Page 2 Ailing Utility Dodges Feared Bond Default By MARTIN BARON. Times Stajf Writer Taking steps that officials said would "buy us a little lime." the troubled Washington Public Power Supply System held off any decision Tuesday on whether to declare a default on $2.25-billion of its bonds or whether to set priorities on the payment of its bills. The holding action by the Richland. Wash.-bascd consortium of Pacific Northwest utilities, commonly called "Whoops" because of delays and cost overruns in building five nuclear power plants, came after most of the largest participating utility companies agreed to make contributions to an escrow account until their financial liability for two canceled plants is established in court. A default on supply system bonds would be the largest in history. Will Seek Forgiveness As of Tuesday evening. 22 of 65 utilities that had previously withheld payments to the consortium had agreed to place $15 million in the escrow account. The 22 utilities represent 50 of the participating shares in supply system's Projects 4 and 5. The supply system said it will seek court approval to gain access to funds in escrow while proceeding with lawsuits against utilities still withholding payments. The supply system also will ask Chemical Bank, trustee for bondholders, to momentarily forgive a scheduled $15.6-million April payment into a bond reserve fund by treating an $18-million surplus in the fund as equivalent to the monthly payment While $93.8 million is needed for a scheduled July 1 semiannual interest payment to bondholders. New York City-based Chemical Hank holds $102 million in reserve. WASHINGTON The chairman of the Federal Deposit Insurance Corp. said Tuesday that bank customers with deposits of more than $100,000 should receive less government protection in the event of bank failures so they will be encouraged to keep their money only in sound financial institutions. The FDIC will urge banks later this year to give their big depositors detailed disclosures about bank finances, information that will help assure that deposits flow "to good, sound institutions." William M. Isaac said at a meeting with reporters. The agency guarantees deposits up to $ 100.000 in the event of a bank failure. Practically speaking, there has been no limit on insurance because the FDIC usually solves the problem of a failing bank by mcrg- Paine Webber Joins Merger Binge, to Buy Rotan Mosle By MARTIN BARON. TimesStafl Writer Earnings Roundup Warner Reports $18.9-Million Loss NEW YORK-Painc Webber Inc. on Tuesday made its first major expansion move in years by announcing its intention to acquire Houston-based Rotan Moslc Financial Corp.. the largest brokerage firm in the Southwest Rotan Moslc's fortunes in recent years have closely paralleled the boom -and -bust cycle of the energy business, which it promoted with research and helped finance with super -salesmanship. In a transaction that would be worth about $77.5 million at Tuesday's closing stock prices, the owners of Rotan Moslc would receive 1.49 million shares of Paine Webber's common stock. The agreement is subject to approval by directors of both firms. With the acquisition. Paine Webber joins other large financial - service firms in a merger wave that has seen some of the nation's largest and most prestigious independent regional brokerages swallowed up by larger national firms. Although there has been a hiatus in the merger fever in the past year, five prominent regional brokerages were acquired by financial conglomerates in the seven months between August. 1381. and March. 1382. More significantly for Paine Webber, the acquisition reflects how dramatically the brokerage that ranks eighth nationally in rapi -tal base has resurrected itself from 1380 back-office foul-ups thai stemmed from the confluence of its acquisition of lilyth Eastman Dillon & Co. and surging stork market volume for which the brokerage was unprepared. Please see PAINE. Pane 2 Warner Communications Inc. said Tuesday it lost W.) milium in the first quarter of this year, compared Attn a year-earlier profit of $77.9 million. The rompany cited sluggish sales of its Atari video -game cartridges and increased competition in the video, game market. It also lost money from its Warner -Amex rahle television operation which it owns i'.inflv with American KxprrssCo. W-iriier'- consumer electronics division, headed by 'he Atari operation that manufactures video games and related products, recorded an operating loss of S45.fi onilioii. The division's revenue slipped to $323.1 million fatl $120 3 Million. Warner" revenue for the three months ended March !l fell to SMI I million from $948.8 million in the 'ittittar.ihle quarter last year. vev.-ii Ito-t'. chairman and chief executive, said W.ttt;er filmed entertainment and recorded music !:. .t-.ti; p-forded gains 111 net. income tn the latest i .at ' ' T A . antu tpate.l. high level of retail inventory of Atari video game cartridges and increased competition atlverscly affected Alan's first-quarter results." Ross said. "Although we arc not pleased with these results, they are not entirely unexpected." Banks Hank America Corp.. parent of the nation's largest hank, said Tuesday its profit fell 19.6 in the first quarter from revised figures a year ago as problem loans more than tripled. Hut Citicorp, the holding company that owns No. 2 Citibank, said its earnings rose as interest income from loans outstripped the cost of borrowing by a much wider margin than a year ago. HankAmcrtca. based in San Francisco and corporate parent of Hank of America, said profit slipped to $120.3 million on revenue of $1.12 billion, from profit of $149.6 million, on revenue of $1.02 billion in the first three months of last year. A one-time-only revision changing Please see EARNINGS, Page 2

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