Birmingham Post-Herald from Birmingham, Alabama • 33

I'osl-llrrald Thursday March 8 1990 Business C9 mmmmm Shearson to cut division Aaociatcd Pros NEW YORK Shearson Lehman Hutton Inc plans to lay off more than 20 percent of its highly paid investment banking division in the not two weeks during the overhaul of the Wall Street firm sources said yesterday The reductions are part of 2000 layoffs Shear-son announced last week under a broad business review ordered by parent American Express Co that is expected to result in thousands more employee firings by the end of 1990 Shearson officials said the firm is making the announced round of job cuts by the end of March so it can charge associated expenses such as severance payments against its first-quarter earnings Analysts estimated that Shearson would take a one-time charge of 8450 million to 8500 million against quarterly earnings to cover the cuts and reserves against bad loans The Investment banking layoffs are deeper than had been expected A source at the firm with knowledge of the cuts who asked not to be identified said 200 of 900 employees in the division or 22 percent would be fired in the next two weeks Shearson spokesman Michael said cuts we are doing are firmwide and include most He declined to address specific layoffs in investment banking in investment banking of 10 percent to 20 percent by May allowing laid-off workers time to search for new jobs The division employs about 500 professionals and 400 support staff But the new layoffs were expected to take effect immediately the source said Some employees who were told yesterday that they were losing their jobs were given until tomorrow to pack their belongings and personnel department staff members placed boxes outside of offices to help them The investment banking cuts are not a surprise given the slump in underwriting and mergers and acquisition activity According to Securities Data Co Shearson announced just five acquisition deals worth 856 billion from Jan 1 through Tuesday compared to 19 deals worth 5202 billion for the same 1989 period and 33 deals worth 8382 billion in 1988 Industrywide the total value of deals announced was down 51 percent from last year Newark NJ-based Securities Data said In a reflection of the slow times Shearson is No 1 in the market so far this year Shearson is hampered by overcapacity from its 1988 acquisition of EF Hutton Go i outstanding temporary loans that are in peril because of the junk bond collapse and a 5L1 billion real estate loans portfolio in a shaky market Other Wall Street firms have reduced their investment banking divisions where earnings of top performers can be in the six- and seven-figure range although not as sharply Because American Express wants to turn Shearson around fast analysts said they expect cuts there to occur quickly and in bulk last thing yos want Is nncertainty out said Lawrence Eckenf elder an industry analyst with Prudential-Bache Securities Inc soon as they identify a division or business they don't want to be in I see why they wouldn't move quickly to get Investment banking layoffs had been planned and some had occurred before the turmoil at Shearson grew in late January when American Express ousted Shearson Chairman Peter A Cohen and began taking a larger role in its securities affairs new chairman Howard Clark Jr is a former American Express executive He and top executives are deciding what areas to cut American Express this week said it was buying back all remaining shares of Shearson that it does not own boosting its stake from 61 percent The company also is injecting 51 billion in new capital to shore up finances Shearson repeatedly had planned gradual cuts Software designer warns of overprotection From Suit ud Pres Rcporti WASHINGTON One of the most successful computer software designers cautioned Congress yesterday against passing laws that would overprotect property" by extending copyright protection to ideas the nature of software for ideas to slosh back and forth between competitors companies and Mitchell Kapor told a House subcommittee as a software designer I can use a program and learn from it without copying its internals then I should be free to use the knowledge that pined as long as I expressed the ideas in my own The subcomittee is considering a revision of laws governing intellectual property a phrase covering copyrights patents and trade secrets and heard from Kapor software designer Daniel Bricklin and government officials concerned with copyrights and patents Software refers to sets of instructions for computers whether the instructions are stored on punched cards magnetic tape disks or chips Kapor designed a spreadsheet known as Lotus 1-2-3 which became a standard of the computer industry and made Lotus Development Corp which he founded one of the most successful software firms in the country The firm is involved in a copyright suit with two competitors Help-wanted index falls 3 points board says NEW YORK The Conference Board said yesterday its help-wanted advertising index which measures the local regional and national supply of Jobs fell 3 points in January The business research group said the seasonally adjusted index fell to 146 in January from 149 in December In January 1989 the index was at 155 Advertising volume in major newspapers rose in four regions of the country declined in four and remained unchanged in one according to the monthly survey The East South Central and Mountain regions posted the steepest declines 10 percent and 99 percent respktively while the West South Central area had the sharpest increase 77 percent In the East South Central region the newspapers are located in Birmingham Knoxville Memphis Nashville and Louisville Ky Hunt scheduled to announce recycling plant FLORENCE Gov Guy Hunt is scheduled to announce this morning that a Wisconsin firm will build a $350 million waste paper recycling facility in Colbert County Hunt and officials of the Chesapeake Corp are scheduled to hold a press conference at the University of North Alabama in Florence today to announce the new facility Local elected leaders and industrial development officials met with officers of Chesapeake last night and were told that Wisconsin Tissue Mills Inc a subsidiary of Chesapeake will build a facility on 1200 acres in Colbert County on the banks of the Tennessee River The facility could eventually employ as many as 1500 workers Chesapeake has had an option on the property since February 1989 It is owned by Auburn University The property was deeded to Auburn in 1970 The university was obligated to keep it for at least 20 years Louisiana gas pipeline proposal announced Southern Natural Gas Co announced yesterday a proposed $38 million construction project to expand its natural gas pipeline capacity in northern Louisiana Southern Natural is the interstate gas transmission unit of Sonat Inc an energy company with headquarters in Birmingham Southern Natural's project the Lake St John Connection designed to move initially 175 million cubic feet of gas per day will consist of about 10000 horsepower of compression and 80 miles of 20-inch pipeline extending from Winn Parish in north Louisiana to the south system in Tensas Parish near ijfc St John Field Sonat officials said construction of the St John Connection is contingent upon Southern Natural receiving enough long-term commitments from customers to transport natural gas received on the company's north Louisiana system and upon the receipt of necessary authorizations Construction is scheduled for 1991 and the Lake St John Connection is projected to be in service for the 1991-1992 winter season Alabamian sells Moscow keys Birmingham businessman Allen Montgomery sec- in front of the new McDonald's restaurant in ond from right is flanked by Soviet police officers Moscow Former trade diplomat analyzes US position on spending world economics Travel firm's contacts help businesses By Patrick Rupinski Poet-Herald Reporter Fourteen trips to Moscow have taught Birmingham businessman Allen Montgomery that contacts are the key to business success with the Soviets "Doing business in the Soviet Union is not like doing business in Selma London or even Germany unique no Yellow Pages in Moscow Even with glasnost and perestroika everything still is done through personal he said Montgomery has used his contacts to develop one of the newest joint ventures between an American and a Soviet business The venture has Montgomery's Birmingham company American Group Travel International working with a new privately owned Soviet company AMSCORT Inc in setting up meetings for American professionals and their Soviet and Eastern European counterparts One of the key groups it works to match are business professionals McDonaldism is replacing Marxist-Leninism in Soviet Montgomery said "But the Russians have any MBAs There are no business schools in the Soviet Union They need to learn capitalist management if they are to transform their He said an official of a Soviet scientific-engineering association told him during a January visit that the Soviet Union "must depend on the West to share its management techniques if the country is to move to a free enterprise Montgomery who made his first trip to Moscow in 1974 as an aide to the late US Sen John Sparkman D-Ala said his joint venture is staying away from putting together trade missions Instead it is working on fact finding minions and continuation of the to tours which Montgomery has worked on for several years to was set up by President Dwight Eisenhower in the 1950s to foster world peace by having professionals meet with their foreign counterparts we did to in the Soviet Union in the past we always had to depend on the Soviet bureaucracy to put together our professional meetings When we got over there we never knew if the meetings would occur because of the bureaucracy" he said The new openness in the Soviet Union has changed that It has made Soviet professionals more accessible and more willing to meet their foreign counterparts he said It also has allowed the development of small companies like AMSCORT which cuts through the bureaucracy in advance to set up itineraries for visitors Its itineraries include meetings and discussions between professionals from both countries site visits and occasionally preliminary discussions on joint ventures But Montgomery said American businessmen should be aware joint ventures are not easy to do in the Soviet Union American professional on such a trip is starting a long-term he said got to have perseverance if your goal is a joint venture" Please turn to SOVIETS page Cl 1 Wal-Mart Stores Inc reports business impact Wal-Mart Stores Inc of Bentcnville Ark the fast growing retailer that reported more than 1 billion in annual profits in 1989 had the following business impact in Alabama: Wal-Mart stores totaled 68 There were five Wholesale Clubs The firm employed 14418 associates There were 1250 employees exceeding age 55 There was me distribution center located in Cullman There were 66 scholarships totaling $66000 There were 8613509021 purchases at retail There were 104 vendors Wal-Mart paid 87114987 in revenue Community involvement-matching grant dollars totaled 8384085 Wal-Mart collected and remitted 571307864 in sales taxes in Alabama Southern Co announces first-month earnings Southern Co has announced that earnings for the first month of 1990 totaled 557 million or 18 cents a share That is down 811 million or 4 cents a share from the results of January a year ago financial results for the first month of 1990 dropped below our performance for the first month of 1989 reflecting higher costs for producing and delivering electricity" Southern Co President Edward Addison said in a prepared statement Southern Co is the parent company of Alabama Power Co Georgia Power Gulf Power Mississippi Power and Savannah Electric People in business Paul Watry has been named conference center manager for Twin Pines Conference Center said Tom Scott executive vice president and general manager Watry is returning to Alabama after having held management positions with Bergstrom Hotels in Wisconsin and Park Suite Hotel in Altamonte Springs Fla Twin Pines Conference Center located in Sterrett south of Birmingham is a setting for meetings training seminars banquets receptions weddings reunions and picnics Michael McKay has joined Complete Health Inc as director of underwriting He formerly was the underwriter for AV-MED a Florida HMO and PPO with 220000 members Management appointments Watry and reassignments have been made at Secor Bank of Birmingham said Jack Shannon chairman Charles Bates has been named executive vice president-president Southern Division Jerry Morrison vice president-president northern division Brenda executive vice president credit administration division John Seymour vice president planning and marketing Jack Phillips executive vice president human resources and support services Garry McClure senior vice president and director of internal audit Tim Speegle vice president accounting and Vita Padalino vice president stockholder relations cost control and productivity management Secor is a regional financial services company serving Alabama Louisiana Florida and Tennessee The Birmingham Business Network an incubator for start-up service and light manufacturing businesses has announced officers and directors for 1990 Chairman of the board of directors is Frank Young III vice chairman (and chairman-elect) Russ Maddox second vice chairman Jim Addams treasurer Rebecca Lee secretary (also executive director) Susaa Matlock Armond Bragg John Gaffney Walter Harris Ed LaMoute and Charlton McArthur are other executive committee members Other members of the board of directors are William Bell Joseph Bruno Michael Calvert Fred Crum Thomas Falls Ed Finch Jim Gunter Emil Hess Gene Newport Ken Owens and Gary Youngblood The incubator is located at 1801 First Ave South Call 250-8000 to inquire about program eligibility By Patrick Rupinski Port-Herald Reporter Changes in the Soviet Union and Eastern Europe will have a major impact on the UK economy and American business according to a former US diplomat and trade official Kempton Jenkins said the breakup of the Wap saw Pact and the Soviets' reduction in military spending already have resulted in cutbacks in defense spending That should continue and definitely will result in a major peace dividend he said during an interview yesterday before addressing students at the University of Alabama at Birmingham The peace dividend should slow government spending and ease the federal deficit which will greatly helj) American business Jenkins Jenkins now a vice president of Armco a major American steel company said the greatest challenge facing America is not to get out of step with events in Eastern Europe "We don't want to cut the defense budget too much before the Soviets make their cuts But at the same time we want to buy expensive military hardware that we will not need "If we do it in the right synchronization we will encourage the Soviets to continue with their reforms" While the peace dividends should help the economy and American business Jenkins said he did not see the Soviet reforms opening any major doors to American investment or trade "I do not see a huge market in Eastern Europe anytime The economic reforms in the Soviet Union could take 10 years just to create a market like or the "Right now we do more trading with Canada on a weekend than we do with the Soviet Union in a An exception is oil exploration There is some potential for American companies to sell drilling equipment and technology to the Soviet Union he said Soviets have very little hard currency to spend What they have they almost have to devote to oil drilling if they want to get more hard In contrast Czechoslovakia East Germany and Hungary could develop a good trading market in five years Those three countries have the most deve loped economies and had capitalist systems before World War II them would come Poland and then Romania and Bulgaria pulling up the rear The Soviet Union is on the bottom It is a military superpower but it is a Third World country he said Jenkins gave President Bush high marks for what he described as very sophisticated quiet behind-the-scenes diplomacy in dealing with the Eastern bloc changes He criticized some politicians who have accused Bush of not doing enough to accelerate the reforms country does not need to do everything like it did in 1945 There is no need for another Marshall Plan by the United States Today we have a global industrial economy where West Germany Japan and the United States are all industrial giants" The Marshall Plan named after the late Secretary of State George Marshall was a program of UK economic and technical assistance to 16 Western and Southern European nations put in place after World Warll No one should expect the United States to pay for all the aid Jenkins said If anything "we should pay less than the rest because we are least able to afford Most of the aid to the Eastern bloc should come from Western Europe he said "The Europeans already have jumped in first as they well should The Japanese watched but are coming in with Jenkins said the West must be careful not to give too much too soon "We must hold out the carrot to make sure they follow through with the The aid also should be in the form of training in Western management techniques rather than money Jenkins said "It's more important to give 2000 accountants on a loan for two years through the Peace Corps to Poland than to give them he said Of all the Warsaw Pact countries Jenkins praised Poland the most for its reforms went cold he said of its movement six months ago to a free market economy the best way to go" did a heroic thing and it needs to be rewarded" with foreign investment By contrast he said the Soviets have been the most timid in reforms Three times the Soviet Politburo promised price reforms and three times it backed off Jenkins said True price reform would mean an end to central state planning the core of Marxism he said That's something Moscow does not want to do he said I 7.