The Morning Call from Allentown, Pennsylvania • 28

B14 THE MORNING CALL WEDNESDAY, SEPTEMBER 30, 1992 Update aiir Dean Witter, Coldwell Banker, share of Allstate to go on block CHICAGO (AP) Sears, Roebuck and Co. announced yesterday it will shed its financial services businesses to concentrate on the once-dominant retailing operation that issued its first catalog in 1888 but has fallen on hard times. The move, which comes 11 years after Sears expanded into brokerage and real-estate services, carves off some of the company's most profitable business lines. But it gives Sears a narrower focus and frees the successful Dean Witter Financial Group to operate Sears a stronger company both now and for the future," Brennan said in a statement. Walter Loeb, a retailing consultant in New York, called the announcement "the most important decision Sears has made in 10 years." Sears said it will dispose entirely of its Dean Witter Financial Services Group, which includes the Wall Street firm Dean Witter Reynolds through a combination stock offering and spinoff.

It also will sell its Coldwell Banker residential services business to either a private party or through a stock offering. In addition, Sears will sell up to 20 percent of its Allstate Insurance Group through a stock offering. The company said it expects to conclude the transactions by the end of 1993. The divestments would leave Sears with its retailing operations, including about 870 U.S. Sears stores; at least 80 percent ownership of Allstate; a mall and office-building development company called Homart Development and joint ownership with International Business Machines Corp.

of the Prodigy computer-services network and the recently announced Advantis voice-and-data communications network. "This development is definitely positive to the evaluation of their stock. How positive is a function of their turnaround in retail, which I expect to occur in the fourth quarter of concerns influenced the companies' management. But Brennan denied that shedding most non-retail operations was a surrender to critics, despite his stated opposition to such a move as recently as last May. "It's not a surrender to anybody," he said.

"It's responsive to our shareholders." Sears, which was founded in 1886 and issued its first mail-order catalog two years later, since 1989 has eliminat ed 48,000 retailing jobs, refinanced its landmark downtown Chicago headquarters and restructured its retail operations to compete more effectively. A public offering of up to 20 percent of its Dean Witter Financial Services Group will be made during the first quarter of 1993. The balance of Sears' ownership in Dean Witter will be distributed to Sears shareholders later in 1993. Dean Witter then would operate completely independent of Sears. The proposed sale of Dean Witter, which includes the Discover credit card, raised questions about Sears' federal court lawsuit in Utah in which Sears is seeking to issue Visa cards through a Utah thrift it owns.

Visa is opposed to permitting a rival to issue Visa cards. Dean Witter spokesman James Flynn said Sears intended to press ahead with the trial, which was to begin today. this year," said analyst John Land-schulz of Howe Barnes Investments in Chicago. Shareholders critical of Sears management have demanded such a move in recent years as Kmart Corp. and Wal-Mart Stores Inc.

surpassed Sears as the nation's top retailers. From 1987 to 1991, Sears' retailing profits dropped more than 38 percent to $486 million from $787 million despite a nearly 12 percent increase in retailing revenue, to $31.4 billion. During the same period, Dean Witter Financial Group's results improved from a $40 million loss in 1987 to a $345 million operating profit last year. Cold-well Banker produced $61 million in profits in 1991, a recession year, compared with $129 million five years ago. Brennan said Sears' venture into financial services "has been a resounding success." He said Sears was now planning to exit the brokerage and real-estate businesses because "a thorough assessment of today's economic and business climate led us to conclude that restructuring our business strategy, changing our structure and reducing leverage are all in the best interest of our shareholders and Sears." Robert A.G.

Monks, a Washington-based shareholder activist who has been Sears' most vocal critic, said it was "quite clear" that the shareholder Wall Street wel- Brennan corned the announcement. Sears was the most actively traded stock on the New York Stock Exchange, surging $3.37 to $44.75 with 5.9 million shares changing hands. The restructuring, which some large shareholders had been seeking for several years, will enable Sears to pay off $3 billion of corporate debt and continue a 3-year-old effort to energize store sales, Sears Chairman Edward A. Brennan said. "We believe the actions make Index Leading indicators, consumer confidence continue to slump of leading indicators Seasonally agisted index, 1962 100 150 41 WASHINGTON (AP) The economy handed George Bush more bad news yesterday as the govern 148 IN IKS REGION Camp Hill, Pa -based Harsco the parent of East Stroudsburg's Patterson-Kelley yesterday declared a quarterly dividend of 33 cents per share, payable Nov.

13 to shareholders of record on Oct. 15. First Colonial Group the parent company of Nazareth National Bank and Trust declared a quarterly cash dividend of 1 7 cents per share, payable Oct. 20 to stockholders of record Oct. 9.

DEALS Philips NV, the world's largest lighting products maker, said yesterday it has agreed in principle to buy a 70 percent stake in Japanese lighting manufacturer Kon-do Sylvania. Terms of the deal were not disclosed. COMPARES General Motors Corp. is expanding a cost-cutting crusade beyond its inefficient North American car menu-' facturing and into the company's service businesses, the top GM supply executive said yesterday. J.

Ignacio Lopez de Arriotua said he met last week with executives of EDS, the computer services business GM purchased from Ross Perot in 1984. "We go through analysis with GM all the time to insure the competitiveness of our services," EDS spokesman Mark Fox said. EDS once counted on other parts of the GM empire for 70 percent of its business. At the end of the second quarter, it was 41 percent. Ralston Purina Co.

replaced the longtime head of its grocery products group yesterday after he resigned. The group has suffered several quarters of declining profits. W. Patrick McGinnis was promoted to chief executive, succeeding William H. Lacey, who resigned Monday.

The group also named Richard A. Pearce, vice president and chief executive of Beech-Nut Corp. as executive vice president of marketing. McGinnis had been corporate vice president and president and chief operating officer for the group. Barnes Noble Inc.

announced yesterday that it had canceled its proposed plans to sell to the public 6.8 million comrrion shares for $102 million. Instead, the publishing company said it would sell $1 00 million of new equity to its principal shareholders and a private investor group. The announcement makes Barnes Noble one of dozens of corporations, including Revlon Dr PepperSeven-Up MacAndrews Forbes Co. and Gulf stream Aerospace to cancel, delay or cut back the size of common stock offerings this year amid weak investor interest because of unsettled market conditions caused by a stumbling economy. Ford Motor Co.

said yesterday it is phasing out use of the main chemical believed to deplete the ozone layer of the atmosphere. Ford announced that it would cut the amount of chlorofluorocarbons it uses in manufacturing by 90 percent by the end of the year. That would eliminate about seven million pounds of the chemical. And, Ford announced it will re-engineer its car and truck air conditioning systems to operate on a CFC-free refrigerant so that all new 1 994 models will have CFC-free air conditioning systems. Moody's Investors Service Inc.

raised its rating on $1 3 billion in Chrysler Corp. debt yesterday, the first acknowledgment in more than two years that the No. 3 automaker is improving its finances. One week after unceremoniously dumping its chairman, Porsche AG unexpectedly announced yesterday that it was eliminating 1 ,000 jobs and restructuring all areas of the company. The German sports car maker said the weak global economy made the moves unavoidable.

Combined with job cuts announced in the spring, the plan announced yesterday means Porsche will have eliminated 1 ,850, or more than 20 percent of the company's 8,062 workers by the middle of 1 993. CUTBACKS Stratford, defense contractor Textron Lycoming has announced job cuts, saying it will eliminate as many as 1,400 jobs, or more than 40 percent of its work force, over the next year. HIKE COURTS Continental Airlines which is weighing four investment offers, asked for more time yesterday to file its reorganization plan with U.S. Bankruptcy Court. Continental's time to file its own reorganization plan was due to expire Oct.

6, but the carrier has asked for another 45 days, with a new deadline of Nov. 20, attorneys for the airline said. The extension would be the seventh for Continental since it filed for protection from its creditors in December 1990. RECALLS Ford and Nissan Motor Corp. U.S.A.

are recalling about 3,500 minivans to inspect and fix possible brake and seat belt problems, the companies announced yesterday. Ford is pulling about 2,000 Mercury Villagers. Nissan is recalling about 1,500 Quests. Both vehicles are 1 993 models assembled at a Ford plant in Avon Lake, Ohio. From ataff and wir reports Dow average slips back 9.46, closing at NEW YORK (AP) The stock market settled marginally lower yesterday, capping a dull, seesaw session.

The Dow Jones average of 30 industrials lost 9.46 points to close at 3,266.80. The broader market, however, settled higher. Advancing issues narrowly outnumbered declining ones on the New York Stock Exchange. Volume on the floor of the Big Board came to 170.36 million shares as of 4 p.m., up from 157.48 mil- Please See STOCKS Page B18 146 ment chief forecasting gauge detected widespread weakness and Americans' economic confidence declined for the third straight month. The Commerce Department said that its index of leading indicators fell 0.2 percent in August, marking 142 rtt Air products plans 2 new Japan plants Air Products and Chemicals Inc.

yesterday said it would build two new facilities in Japan, further expanding its industrial gas and chemicals business in Asia. The project the company's first wholly-owned investment in Japan will be built in Tsukuba, a technology center about 50 miles northeast of Tokyo that houses 55 national research institutes and more than 100 private technical centers, Air Products said. The two facilities will serve manufacturers of semiconductors and chemicals throughout Asia with a chemical plant, a gas warehouse and an analytical lab for four of its chemical lines. "This is indicative of Air Products' long-term commitment to serving the Japanese market and other high-growth markets throughout Asia," said Andrew E. Cummins, president of Air Products Asia Inc.

When in operation, the site will employ about 50 people, the company said. Air Products, which first entered Japan in 1973, sells chemicals, gas and equipment directly and through commercial alliances with companies including Sanyo Chemicals and Nitto Chemical. The company plans to increase its gas capacity in Asia by more than 70 percent by next year and hit sales of $500 million in the region by 1996. slight 0.1 percent July increase and a 0.3 percent drop in June. The June decline had been the first in six months.

Three straight declines in the leading index often have signaled an impending recession, and analysts said the past three months showed the economy was getting very close to another downturn. "This indicates a flat economy at best over the next six to nine months and a real risk of a full-fledged recession again," said Allen Sinai, chief economist of the Boston Co. Sinai rated the risk of a new recession starting in the last part of this year as 50-50. He said he believed the overall economy probably grew at a barely perceptible 0.5 percent annual rate in the just-ending July-September quarter, as measured by the gross domestic product. With growth at such a low pace, SONO A A 1991 1992 Aug, '91 July '92 Aug.

"92 U5l 1 149.71 1149.4 AP "This indicates a flat economy at best over the next six to nine months and a real risk of a full-fledged recession again. Allen Sinai economist the second decline in the past three months. Some economists viewed the weakness as a dangerous signal that the economy was once again flirting with recession. Meanwhile, the Conference Board reported that its consumer confidence index fell to 56.4 in September, representing a drop of 22 percent since June. The private business research group said that the September level was the lowest it has ever found in the period immediately preceding a presidential election.

The current survey was begun just over 20 years ago. The previous pre-election low for the index, based on a survey of 5,000 American households, was 80 in 1980, a year in which the incumbent, Jimmy Carter, lost to Ronald Reagan. The Conference Board said that during the past 20 years, a confidence reading significantly below 100 right before the election has spelled defeat for the party residing in the White House. That occurred twice, in 1980 and 1976, when Gerald Ford lost to Jimmy Carter. "The incumbent party has remained in office whenever the index reading was 100 or over, but lost when the measure of confidence fell significantly below 100," the research group said.

"The nation's sluggish job economy and weak job market are continuing to dampen consumer spirits," said Conference Board economist Fabian Linden. Because consumer spending accounts for two-thirds of economic activity, analysts said it is hard to see how the economy can regain momentum until Americans become more confident and thus more willing to spend. The 0.2 percent decline in the August leading index followed a Many analysts believe the jobless rate of 7.6 percent in August could climb again, perhaps to 7.8 percent, in September. That would match an eight-year high set last June. For August, seven of the 11 statistics in the leading index declined.

Among the sagging indicators were sensitive materials prices, a rise in average weekly unemployment claims, declining business delivery times, lower backlogs of unfilled orders, a drop in demand for consumer goods. In addition, building permits fell and growth in the money supply slowed. Three indicators made positive contributions, the largest from a slight gain in consumer expectations, based on a different survey from the one used by the Conference Board. Rising stock prices and an increase in plant and equipment orders were also positive factors. The average workweek was unchanged.

The changes left the leading index at 149.4 in August following a reading of 149.7 in July. The 56.4 reading for consumer sentiment followed a revised August level of 59.0. The reading a year ago was 72.9. In the latest survey, people were slightly more positive in their assessment about current conditions but markedly less optimistic about the future. Of those surveyed, 46 percent said jobs were hard to get while only 6 percent thought they were plentiful.

there' is a chance the GDP could turn negative again, Sinai said. David Wyss, an economist at DRI-McGraw Hill, predicted the economy would continue muddling along with the weakest recovery on record, rather than toppling back into recession. "What you are seeing is not a double-dip or a triple-dip recession but a non-recovery," Wyss said. "The trouble is that the recession has ended, but we have never really gotten a recovery. Given all the problems left over from the 1980s, this economic dislocation could last for a number of years." Economists anticipated more bad news Friday when the government releases its final unemployment figure before the election.

Union gets grant to study buying Ashland Shirt The union that represents 325 workers at the Ashland Shirt Schuylkill County, has been awarded a $75,000 state grant they will use to determine whether employees should assume ownership of the company. The money, approved yesterday by the state Department of Commerce, comes through the state's Employee Ownership Assistance Program. The program awards funds to examine possible employee purchases of new, expanding or troubled businesses interested in ownership sharing. It will enable the Amalgamated Clothing Textile Workers Union to study the feasibility of maintaining the plant at full operational level via employee ownership. Gitman Brothers Holding the parent company of Ashland Shirt, filed for bankruptcy in May.

Since that time, the company has changed management and returned to its core business of producing men's cotton shirts. Commerce Secretary Andrew T. Greenberg said that "recent actions taken by new management at Gitman Brothers are supported by the company's creditors, and the the company believes these changes will produce a profitable business." Greenberg said union officials believe there is no guarantee that an outside buyer would continue to operate the company at full capacity. Greenberg said the union plans to use the $75,000 grant to evaluate: Short- and long-term market potential for the company's products. Current and future impact of competition on the company.

Future availability of supplies required for efficient operations. Current facilities and equipment. Financing structure and possible financing nnrrpi ECONOMIC SNAPSHOTS OF THE LEHIGH VALLEY First Eastern expects loss for quarter The averaaa monthlv charm to service one television in the Lehigh valley with either a community antenna or cable television was in March of 1992, according to The Morning Call-Kamran Afshar Consumer Price Index. This was an increase of 12 from March 1991. earnings in late October, said Frederick A.

Deal, who took over as the bank's president and chief executive officer earlier this month. Deal attributed the need for the special provision to the economic environment in northeastern Pennsylvania First Eastern's primary marketplace. "To deal forcefully with the challenges of today's economy and the impact it has had on our operating area required us to make some tough decisions," he said. "Accordingly, it was necessary to charge off certain loans and provide additional funds to the allowance for loan and lease losses." Many, but not all, of those loans are in real estate. Deal said.

Joseph Duwan, an industry analyst with Keefe Bruyette in New York, said First Eastern recently underwent a regular examination by the Office of the Comptroller of the Currency. "I think First Eastern had been sending some signals that they would be accelerating their loan-loss provisions," he said. First Eastern closed at $11 in over-the-counter trading yesterday, unchanged from Mondav. By CONSTANCE WALKER Of The Morning Call First Eastern Bank, the principal subsidiary of First Eastern Corp. of Wilkes-Barre, will be setting aside $18 million in the third quarter for bad loans, $12 million more than budgeted, bank official said yesterday.

Because of the special-loan loss provision. First Eastern expects to report a loss for the three-month period ending today. The bank, which has branches in Nazareth and Leighton. will release third-auarter L. Iw llllili II ml 1 1 ill 'iM'tm I It WW LARRY PRINTZThe Mornina Call.