TOP 10 STORIES: July 31-Aug. 4

1. State Feels the Heat: California’s electricity grid came to the edge of meltdown this week, with state power officials warning of possible rolling blackouts as supplies stretched thin. Hundreds of commercial and industrial customers, by prearranged contract, had their power interrupted as electricity use soared on sizzling afternoons. California’s power crisis--evidenced by extremely tight supplies and record prices--prompted a series of actions by state and federal regulators and elected officials.

The state grid operator cut the price cap for emergency backup power in half to $250 a kilowatt-hour. The Public Utilities Commission approved measures to try to control wild electricity prices in hard-hit San Diego and south Orange County, but stopped short of freezing and rolling back retail rates. President Clinton ordered federal agencies to send as much power to California as possible.

(Nancy Rivera Brooks)

2. Jobless Rate Stays Stable: The U.S. jobless rate held steady at 4% in July as private sector employers added 138,000 workers, a moderate gain suggesting that America’s economic growth is slowing but still healthy. Inflation-minded Wall Street was pleased by the employment report. The Labor Department’s report showed that average hourly earnings rose a slight 0.4% in July to $13.76. The Dow Jones industrial average rose 61.17 points to close at 10,767.75, the Nasdaq composite index climbed 27.48 points to reach 3,787.36 and Treasury yields tumbled to eight-month lows.

3. Hospitals Dropping Blue Cross: In a further sign of deep fissures in the state’s health-care system, nearly a tenth of California’s hospitals say they may stop accepting health insurance sold by Blue Cross of California, despite the company’s venerable name. Blue Cross of California has seen its once-stellar reputation among doctors, hospitals and patients erode steadily in the last several years--despite good earnings and the respect of Wall Street. The company, owned and run by Thousand Oaks-based WellPoint Health Networks, has feuded with dozens of hospitals over the last several years. On Aug. 15, Blue Cross contracts are set to expire with Catholic Healthcare West, which operates 43 hospitals and two medical groups in the state, and both sides say they will not renew. A similar standoff took place earlier in the week between Blue Cross and St. John’s Hospital & Health Center in Santa Monica, whose contract was set to expire Friday.

(Sharon Bernstein)

4. FAA Fines Boeing: Boeing Co. faces a fine of $1.24 million, the largest in its history, for failing to report cracks on two separate aircraft and failing to assure that some of its suppliers followed quality-control procedures. Flight safety was never directly compromised, the Federal Aviation Administration and Boeing said. One of the suppliers cited by the FAA for quality problems was Northrop Grumman Corp. Boeing is negotiating to reduce the penalties, which result from audits and incidents that occurred in 1997 and 1998, when the company and it 3,000 suppliers struggled to meet a growing demand for new airplanes.

5. GM Fumes Over Ford Fuel Claim: General Motors Corp. thinks Ford Motor Co. is full of hot air--at least when it comes to its apparent claim to the title of fuel economy leader. Ford Chief Executive Jacques Nasser had made headlines with a speech that the No. 2 auto maker would improve gas mileage in its sport-utility vehicles by 25% in five years. But a visibly peeved GM Vice Chairman Harry Pearce summoned reporters Wednesday to remind them GM leads every model of Ford SUV in fuel efficiency. “End of story,” Pearce intoned solemnly. A day later, Ford unveiled the next generation of the Explorer, its top-selling SUV, with marginally increased mileage and numerous safety and handling improvements.

(Terril Yue Jones)

6. Sears Pulls Firestone Tires: Sears, Roebuck & Co. suspended sales of several Firestone truck and sport-utility tires pending a federal probe into scores of reports of accidents caused by tread failures. Twenty-one deaths were reported in the 193 cases reported to the National Highway Traffic Safety Administration. The tires in question are supplied as original equipment on several vehicles, including Ford Motor Co.’s popular SUV Explorer. Japanese tire maker Bridgestone/Firestone said customers can bring their vehicles to company-owned Firestone outlets for a free inspection.

7. Computer Sciences Gets Big Boost: Nortel Networks awarded Computer Sciences Corp. a $3-billion contract to provide technology support services, one of the largest such deals ever in the technology consulting industry. The award should help El Segundo-based CSC land new clients in the booming telecommunications and high-tech industries, analysts said. The announcement came two days after CSC reported quarterly profit slightly below expectations on a 12% gain in revenue to $2.46 billion, meeting lowered forecasts. In June, CSC had warned of weaker revenue but said that it would soon be announcing several large contracts. News of the contract Wednesday boosted CSC shares $2.88, or 4%, to $70.69, on the New York Stock Exchange. The shares closed the week at $72.63.

8. Giacchetto Makes Plea Deal: Dana Giacchetto, onetime investment advisor to several of Hollywood’s hot young stars, pleaded guilty to one count of investment fraud for misappropriating as much as $10 million from his clients’ accounts. Under his plea agreement, Giacchetto’s prison sentence will range from 46 to 57 months. Sentencing is scheduled for Nov. 3. Giacchetto, who had faced five criminal counts, was in tears as he told a federal judge in Manhattan that he started his operation to empower artists, but that it grew too large for him to control. Ronald P. Fischetti, attorney for the 37-year-old, said that Giacchetto’s entertainment industry friends have all abandoned him, even those who made money investing through him. “I guess that’s Hollywood,” he said.

9. Sizzler’s Future at Stake: The number of E. coli victims from a Sizzler restaurant in Milwaukee continued to climb, reaching 49 on Thursday, and two new illnesses at the same franchisee’s outlet nearby forced its closure. The death of a 3-year-old girl who had eaten at the Milwaukee restaurant led to its closure last week. Officials believe contaminated watermelon on the salad bar to be the cause of the outbreak. But they aren’t sure whether it was contaminated before it reached Sizzler or if a server transferred the bacteria from ground beef. Analysts say, the taint of the outbreak will probably depress Sizzler International’s sales and recruitment of new franchisees, not to mention bring a barrage of lawsuits. (Melinda Fulmer)

10. DEN Woes Grow: Court-appointed officials liquidating collapsed Internet start-up Digital Entertainment Network are investigating possible fraud at the company. DEN officials sold off hundreds of thousands of dollars worth of computers and other assets, much of it to DEN insiders, in the three weeks before the company filed for Chapter 7 bankruptcy in June. The bankruptcy trustee and his attorney are also looking at whether the million-dollar-plus annual compensation to top officers might qualify as reversible “fraudulent conveyances.” DEN had been slated to be the first video entertainment Web site to sell shares to the public, but it burned too quickly through more than $60 million in investor money and never recovered from sex misconduct allegations against its founder, Marc Collins-Rector.

(Joseph Menn)

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Pigskin Paradox

Low-carb dieters have helped make pork rinds one of the nation’s most unlikely diet aids and fastest-growing snack foods. Sales of the no-carbohydrate snacks grew three times faster than the entire snack-food industry last year, boosted by weight watchers who are gobbling them straight out of the bag and tossing them in recipes from French toast to meatloaf. . (Marla Dickerson)

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QUIZ:

1. A sign of hope that the honor system can live on the Internet came with a report that nearly 100,000 people paid to download a popular item from a celebrity that they could have taken for free. What was the attraction?

2. What move by cooperative Sunkist Growers has soured relations with many of its California and Arizona members?

Answers:

1. The first installment of Stephen King’s latest novella, “The Plant,” was downloaded by about 152,000 people, about 76% of whom paid up. King, who is offering the series without a publisher, will keep sending installments as long as more than 75% of downloaders pay.

2. Sunkist plans to put its label on foreign fruit for the first time, to market lemons imported from Argentina. The Sherman Oaks-based co-op cited competitive market conditions for the move, which will hit Ventura County growers particularly hard.