Tallahassee Democrat from Tallahassee, Florida • Page 30

ECTuesday, August 17, 1993 TTn Tallahassee Democrat TODAY: Commerce Department reports on housing starts for July. TULRSDAY: Commerce reports merchandise trade for June. THURSDAY: Labor Department issues weekly jobless claims report. PERSOXAL FIXIXCE: 7C RKET REPORT: 7C wrness COMMUNICATIONS IN BRIEF buss wiroless-Dhoneleader cellular merger The merger of American Telephone Telegraph Co. and McCaw Cellular Communications Inc.

combines the leaders in long-distance and wireless telephone services. Us Inc. posted an 8.5-percent profit rise for the period. The profit decline at Kmart came despite record sales. Worldwide sales were up at Toys Us but its domestic sales slipped.

Kmart earned $102 million, or 22 cents a share, in the period ended July 28, compared with $168 million, or 37 cents a share, in 1992. Second-quarter sales were a record $10.2 billion, an increase of 11.6 percent from $9.14 billion for the same period in 1992. Toys Us based in Pa-ramus, said it earned $35.5 million, or 12 cents a share, in the three months ended July 31 from $32.7 million, or 11 cents a share, last year. Sales rose 5.4 percent to $1,317 billion from $1,249 billion, driven by increases at the company's European toy stores. Sales at U.S.

toy stores fell 1.9 percent. ECONOMY Hot weather boosts industrial production The deal is expected to speed the development of go-anywhere phones. By Evan Ramstad THE ASSOCIATED PRESS NEW YORK The nation's biggest long-distance company will buy the biggest cellular company in a deal announced Monday that stands to accelerate changes in the way people use telephones. acquisition of McCaw Cellular Communications Inc. also represents a major endorsement for the role cellular phones, the fastest-growing area of telecommunications, will play in the future.

Consumers can expect the companies to push forward the development of go-anywhere products like personal telephone lines, executives said. "That's where this natural marriage of the long-distance network and wireless products comes in, from personalized products," said Craig McCaw, chairman and chief executive of McCaw. Calling plans could change Analysts said the companies would also likely develop new kinds of customized calling plans and rates for mobile customers and further blur the separation of local and longdistance service that has existed since the 1984 breakup of American Telephone Telegraph Co. "From the perspective of the customer, the merger of the wired and wireless networks is going to be advantageous particularly because the long-distance industry is very competitive and cellular is going to get more competitive," said Mark Lowenstein, director of mobile-communications research at the Yankee Group in Boston. Long-distance carriers recently won the chance to begin offering some local services in California.

And local carriers have asked federal replators to draw up rules for them to get into the long-distance business. Several regional Bell operating companies, which have virtual monopolies in local phone service, said Monday that the McCaw acquisition puts into their business and is another reason they should be allowed into long distance. Firth-largest merger If completed, the merger would be the largest in telecommunications and fifth-largest in U.S. corporate history. It is also the biggest to illustrate the converging marketplaces of communications, computer and media companies.

In April, West, the Denver-based regional Bell company, decided to invest $2.5 billion in the cable TV business of Time Warner Inc. And in June, British Telecommunications PLC said it planned to take a CURRENCY DEALS Billionaire to increase stake in Salomon Billion aire Warren Buffett notified the government he plans to increase his 14.3-percent stake in securities firm Salomon it was disclosed LyY. Buffett Monday. In a filing with the Securities and Exchange Commission, Buffett reported that his Omaha, Berkshire Hathaway Inc. would increase its ownership of voting shares in Salomon above 15 percent.

The filing disclosed that Buffett, as required by federal antitrust laws, had notified the Federal Trade Commission and the Justice Department of his intent. Under FTC rules, Buffett could increase his stake up to 24.99 percent after a 30-day waiting period, but in a 1987 agreement with the brokerage firm he agreed not to acquire more than a 20-percent stake before October 1994. TREASURY BILLS Treasury bills Average auction rate i rr, i A May June July May June July SOURCE: Knight-Riddsr Financial News Knight-Ridder Tribune T-bill rates fall Interest rates on short-term Treasury securities fell in Monday's auction to the lowest level in six weeks. The Treasury Department sold $12.4 billion in three-month bills at an average discount rate of 3.03 percent, down from 3.05 percent last week. An additional $12.2 billion was sold in six-month bills at an average discount rate of 3.12 percent, down from 3.18 percent last week.

The new discount rates understate the actual return to investors 3.10 percent for three-month bills with a $10,000 bill selling for $9,923.40, and 3.21 percent for a six-month bill selling for $9,842.30. In a separate report, the Federal Reserve said Monday that the average yield for one-year Treasury bills fell to 3.48 percent last week, down from 3.55 percent the previous week. BUSINESS Confidence down among small businesses The nation's small-business people are pessimistic about the economy a possible signal of slow growth the rest of the year, the National Federation of Independent Business said Monday. Few small companies are planning to add workers and many small firms are backing away from capital investments, the federation concluded in a survey of 2,000 businesses. The likely result The growth rate for the nation's economy should be below 2 percent in the second half of the year, predicted William Dunkelberg, chief economist for the lobbying group which represents 607,000 small U.S.

companies. The survey was taken in July before Congress passed President Clinton's deficit reduction, which small businessmen generally opposed. EARNINGS Kmart earnings fall, Toys Is profits rise Kmart the na tion's second biggest gener al merchan-l dise retailer, said Monday its second- quarter earnings fell 39 percent while the children's retailer Toys -M il I I I 3 i i I it I rife I VI I 1k 1 fimmm: -YyYYY -mLyy. rVv i -1 1 1 I )i 44 3t I lift YY I i McCaw Cellular systems in 12 states, many under Cellular One name. Provides cellular phone service to 2 million customers of total 12 million in U.S.

Also operates paging, answering services. Owns 52 percent of LIN Broadcasting, operator of TV stations. Headquarters Kirkland, WA Employees 4,400 1992 revenue $1.74 billion 1992 loss $364.66 million plus1 ,900 LIN employees source: companies stake in MCI Telecommunications, the second-largest U.S. long-distance carrier after The deal, which is subject to regulatory and other approvals, would give McCaw shareholders one share of stock for each share of McCaw common. The companies last November announced plans for to take a one-third stake in McCaw.

But execu- ALISTAIR GRANTThe Associated Press have turned in good performances recently. An example of one of these issues that attracted investors was Intel, which gained 4 to 64. Interest rales decline Stock investors also were encouraged by falling interest rates in the bond market. The benchmark 30-year Treasury bond rose about point, depressing its yield to 6.30 percent, another historic low. Equity investments frequently are favored when interest rates decline.

Economic news failed to give Wall Streeters much incentive to buy or sell. A Federal Reserve report on industrial production was considered neutral for the market The Nasdaq composite index, which is heavily weighted toward telecommunications issues, roared ahead by 8.63 to 726.89, exceeding its previous closing high of 718.88 reached on Aug. 11. The index has closed at a record in six of the past nine sessions. Meanwhile, at the American Stock Exchange, the market value index rose 2.25 to 441.33.

It bettered the closing high of 440.95 set on June 4. 1 i 1 Holds 62 percent of U.S. long-distance market. Sells voice, data, image telecommunications equipment and services; owns computer maker NCR. The Associated Press tives decided a merger would be a better idea to contend with the fast advance of technology and the possibility that they would eventually become competitors.

McCaw said he has agreed to become a member of the board. James Barksdale, who joined McCaw in 1991, will remain president and chief operating officer of new wireless service business. INTEREST RATES Economists: Interest rates will stay low Economists believe the Federal Reserve officials won 't increase rates when they meet today. By Dave Skldmore THE ASSOCIATED PRESS WASHINGTON Despite Chairman Alan Greenspan's tough talk to Congress, Federal Reserve policy makers meeting behind closed doors today probably won't boost interest rates, economists believe. The reasons: Inflation is nowhere in sight and the economy is still weak.

Most analysts think the Federal Onen Market Cnmmiftpp thp PpH'q monetary policy arm, will opt to keep short-term interest rates unchanged, as they have been for nearly a year. "They're going to do absolutely nothing. Greenspan talked tough (last month) but at the time economic activity looked a little firmer than it does now and there was evidence that prices were on an upward trajectory," said economist Samuel D. Kahan of Fuji Securities Inc. in Chicago.

Tough talk In two appearances before congressional committees, Greenspan warned, much more bluntly than usually, that the central bank would not hesitate to use higher interest rates to dampen inflation. "At some point rates are going to have to move up," he said. After he spoke, economists said they wouldn't be surprised if the Fed acted sometime after Oct 1. But now, after examining the latest data on economic growth and prices, many think Fed action won't come until early next year. Reasons for a delay Since Greenspan's stern warning in mid-July, there's been a number of developments that argue for delay ing any increase in the key short-term rate set by the Fed, the rate charged on overnight loans between banks.

Known as the federal funds rate, it's been at 3 percent since September. President Clinton managed to push his deficit-reduction package through Congress with a razor-thin margin. While reducing the budget deficit by nearly $500 billion over five years may help the economy in the long run, in the short run the tax increases and spending cuts required to do it will tend to curb economic demand, and thus price pressures. The inflation data reported by the Labor Department has been extremely favorable and economic growth has been weaker than predicted. And the early signs are that growth in the third quarter, while a bit better, will remain subdued.

WAY Headquarters New York Employees 316,000 1992 revenue $64.9 billion 1992 profits $3.81 billion U.S. industrial production increased moderately in July after a two-month decline, helped by hot- weather demand for electricity, the government said Monday. Economists were expecting the seasonally adjusted 0.4-percent gain in the Federal Reserve's industrial production index, which followed drops of 0.1 percent in June and 0.2 percent in May. But they warned that the number was not as good as it looked. Sweltering temperatures in the East and elsewhere early in July kept air conditioners working overtime.

Consequently production at utilities jumped 3.3 percent, helped by a 4-percent gain in the output of electricity. THEME PARK Euro Disney denies 'potential closure' Struggling with sagging attendance and growing losses, Euro Disney on Monday denied reports it is considering shutting down but said temporary closure off-season hasn't been ruled out. On Friday, the Euro Disney group that operates the theme park and resort reported a 2.4 percent fall in operating revenue in its third quarter ending June 30. The Sunday Times of London reported that Euro Disney and California-based Walt Disney executives over the weekend discussed in "crisis talks" a number of options, including "potential closure," according to a Euro Disney spokesman the paper did not identify. "A shutdown of the park was never envisaged," Euro Disney President Philippe Bourguignon said in a statement responding to the report, adding that "no crisis meeting took place last weekend." RESTAURANTS Deal brings Big Boys to Spain, Portugal Elias Brothers Restaurants the franchiser of Big Boy restaurants, said Monday it has reached an agreement with Valy Trade S.L to open 16 Big Boy franchises in Spain, Portugal and the Canary Islands.

The Big Boy chain, headquartered Warren, currently includes about 925 restaurants in the United States, Canada and Japan, 145 of which are company-owned. AUTO INDUSTRY Survey: Recall didn't harm Saturn Saturn reputation apparently has been unharmed by last week's recall of nearly all the cars it has built, according to a survey of likely new car buyers released Monday. Fifty percent of 121 potential new car buyers interviewed in a weekend telephone poll by Market Opinion Research said their opinion of Saturn was unchanged. Twenty-seven percent said their view of the General Motors Corp. subsidiary is more favorable while 21 percent said it is less favorable.

The survey had a margin of error of 8.9 percentage points. Democrat news services Yen continues to rise Dealers In the dollar-yen pit at Midland Global Markets In London react to a new all-time low of the U.S. dollar to the yen on Monday. In London, the dollar dipped below 101 yen for the first time since modern currency rates were set In the late 1940s bringing a rate of 100 yen to the dollar "right In front of our eyes," said one Japanese dealer. Earlier, In Tokyo, the dollar fell to 101 .25 yen.

Deal pushes stock market higher WALL STREET of companies making acquisitions often weaken when merger plans are revealed. McCaw, which is traded on the Nasdaq system, jumped 5 to 56V4 in brisk turnover of more than 7.5 million shares. Other communications issues followed McCaw higher. LIN Broadcasting, which is 52 percent owned by McCaw, soared 12 to 115. Program buying boosts Dow Despite the drag from the Dow industrials rose 9.50 to 3,579.15.

A solid gain in Aluminum Co. of America stock, which rose 2y4 to 73, helped lift the blue-chip barometer. Rounds of program buying also supported the average and allowed it to overcome a decrease reflecting dividend-related adjustments. Advancing issues outpaced declines by about 3 to 2 on the New York Stock Exchange. Volume on the floor of the Big Board came to 229.20 million shares as of 4 p.m., up from 212.76 million in the previous session.

Steven Resnick, senior investment strategist at Cowen said outside the communications sector, investors concentrated on issues that Stocks rise on news of purchase of McCaw Cellular Communications. By Marybeth Nibley THE ASSOCIATED PRESS NEW YORK Strength in communications-company stocks inspired by news of a multibillion-dollar merger of two industry powerhouses drove the market higher Monday and carried two indicators to record closes. The Nasdaq market's composite index swept past its previous closing peak and the American Stock Exchange market value index also finished at a new high. Communications issues took center stage after American Telephone Telegraph and McCaw Cellular Communications, a cellular telephone company, announced plans to unite. Shares of many related companies surged on the news that will buy all of McCaw through a $12.6 billion stock swap.

a component of the Dow Jones industrial average, dropped 1 to 60 on heavy NYSE volume of nearly 3.8 million shares. Stocks.