The Week In Review

1. Massive Ford Recall Ordered: Declaring that Ford Motor Co. deceived safety regulators and consumers about a stalling problem in millions of its vehicles, a state judge in Oakland ordered the firm to replace defective ignition devices or repay California customers who fixed the devices themselves, setting the stage for the first automotive recall in history to be initiated by a judge. Ford, contending that the components aren’t faulty, said it will appeal the decision. The ruling affects an estimated 3.5 million Californians who own or once owned 1983-95 Ford vehicles with TFI modules mounted on the distributor, which plaintiffs said exposed the vehicles to engine heat and made them vulnerable to failure. On Friday, a Chicago law firm filed suit against Ford seeking the nationwide recall of nearly 23 million vehicles with such modules.

(Myron Levin)

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2. Oil Prices Surge on Mideast Violence: Crude oil prices spiked nearly 15% during the week after rising Middle East violence made the possibility of oil-supply disruptions as likely as at any time in the last 10 years. The terrorist bombing of a U.S. Navy destroyer in Yemen and the heightened violence in the Israeli-Palestinian conflict renewed fears that Arab oil producers would halt or reduce shipments to punish the West. Although Persian Gulf countries, including Iran and Saudi Arabia, sought to assure markets that no such disruption was planned, energy observers were cognizant of how Arab leaders could, if violence worsens, be forced to react with the most potent political weapon at their disposal, their oil. Crude oil for November delivery rose from the previous week’s close of $30.86 a barrel to more than $36 before easing somewhat Friday to close at $34.99, down $1.07.

(Chris Kraul)

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3. Stocks Finish Rough Week on Up Note: A huge technology-stock rally Friday almost salvaged a rotten week on Wall Street but left open the question of whether the market has finally shaken off its traditional October blues. Friday’s 7.9% leap in the Nasdaq composite index was the biggest one-day gain in more than two years, but it still left the index down 1% for the week--its sixth straight weekly decline in a row. Warnings of earnings shortfalls Wednesday by Lucent Technologies and Thursday by Home Depot lopped 32% and 29%, respectively, off those stocks, although both had gained back a bit Friday on the New York Stock Exchange. Worries over Mideast violence rattled the markets Thursday, causing a 379-point loss in the Dow Jones industrial average. The Dow recovered 157.60 points Friday to close at 10,192.18.

(Thomas S. Mulligan)

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4. Americans Win Nobel in Economics: Two U.S. academicians shared the Nobel Memorial Prize in Economic Sciences for pioneering research into how people make basic lifestyle choices--from how many hours to work each day to whether to ride the subway in the morning. In awarding the prize to UC Berkeley’s Daniel L. McFadden and the University of Chicago’s James J. Heckman, the Royal Swedish Academy of Sciences cited their work in microeconometrics, developing “theory and methods widely used in the statistical analysis of individual and household behavior.” Tools developed by the researchers have helped policymakers plan transit systems, design job training programs and measure the economic cost of disasters such as the 1989 Exxon Valdez oil spill.

(Jerry Hirsch)

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5. Major Media Mergers Get Europe’s OK: European antitrust regulators formally approved America Online’s acquisition of Time Warner after the partners canceled a merger between Time Warner and music company EMI Group and agreed that AOL would sever its ties with German giant Bertelsmann. But several issues not considered by the European Commission--including “open access” to Time Warner cable connections--remain obstacles to the deal’s approval by U.S. regulators. The European Commission also cleared Vivendi’s purchase of Seagram Co. and Canal Plus, on condition that the French company sell its stake in British Sky Broadcasting Group.

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6. PacifiCare Reveals Ill Health: PacifiCare Health Systems Inc., which operates the nation’s largest Medicare HMO, took a huge blow as management announced the Santa Ana company would either break even or lose money for the third quarter because of rising costs. Shares of PacifiCare plunged on the warning, losing more than half their value Wednesday and falling further to a low of $10.86 before bouncing back slightly Friday to close at $11.19, up 31 cents, on Nasdaq. The shares had closed at $32.63 on Tuesday. The firm said that in parts of Texas and Washington it would freeze enrollment in its Secure Horizons Medicare HMO and would consider doing the same in all but three counties in California. Membership in Los Angeles, Orange and San Diego counties would not be affected.

(Sharon Bernstein)

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7. Bridgestone/Firestone Ousts Chief: Seeking to restore faith in its battered Firestone tire brand, Bridgestone/Firestone Inc. removed Chief Executive Masatoshi Ono and replaced him with John Lampe, its No. 2 executive. Lampe becomes the first American since 1991 to head the U.S. subsidiary of Japanese giant Bridgestone Corp. Lampe immediately announced a restructuring plan and expressed regret for the auto accidents involving Firestone tires and mostly Ford Explorers that have killed at least 101 people. In response to criticism of the firms’ handling of the crisis, Congress passed a sweeping bill Wednesday that raises the maximum fines and adds criminal penalties for auto firms that deceive regulators about safety problems.

(Terril Yue Jones)

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8. Global Crossing’s Hindery Quits: Global Crossing has a new chief executive--again. This week Leo J. Hindery Jr. resigned as CEO and was replaced by Thomas J. Casey, the company’s fifth CEO at the telecommunications company in less than four years. The Bermuda-based company, which has executive offices in Beverly Hills, said the change was made “by mutual agreement” and that it was effective immediately. The company’s stock price, already in the dumps, fell to a new 52-week low of $20.12 Wednesday, the day the management switch was announced. It closed the week at $25.75, up $3.94, on Nasdaq.

(Terril Yue Jones)

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9. State’s Employment Picture Remains Bright: Unemployment fell in California and the Los Angeles area last month, helped by both the robust economy and growth in construction and motion picture jobs, the California Employment Development Department reported. The state’s jobless rate slid to 4.8% in September from 5.1% in August, the lowest since April. Unemployment in L.A. dropped to 5.3% from 5.5% in the previous month, while the rate in Orange County dipped to 2.5% from 2.8%.

(Jerry Hirsch)

10. Major Bank Drops ATM Fees: Washington Mutual Bank said it would buck the trend of charging consumers more fees by dropping a surcharge in California when other banks’ customers use its automated teller machines. Consumer advocates celebrated the move, but analysts were skeptical that other banks would follow.

(Liz Pulliam Weston)