TOP 10 STORIES / AUG. 20-24

Letter-Writing Campaign Linked to Microsoft

Law enforcement officials of several states are fuming over an unusually sophisticated--and some say misleading--letter-writing campaign to make it appear as if there's a groundswell of grass-roots opposition to the government's antitrust lawsuit against Microsoft Corp.

One Microsoft-backed advocacy group is penning pro-Microsoft letters and then asking citizens to mail them in as if they had written them themselves. To disguise their role, the group is making each letter unique and using stationery that appears to be personalized. But officials became suspicious when they noticed that some return addresses appeared to be invalid and they received at least two letters from people who were deceased.

Microsoft is appealing a recent ruling that it violated federal and state antitrust laws. It was hoping that the citizen letters would pressure state attorneys general to drop out of the lawsuit.

Meanwhile, a new judge was named to preside over the landmark case. U.S. District Court Judge Colleen Kollar-Kotelly, who was chosen by lottery, will decide how to punish the company for violating federal antitrust laws.

Edmund Sanders and Joseph Menn

Recession Fears Prompt Fed Rate Cut

The Federal Reserve cut interest rates for the seventh time this year, warning that the economy may continue to weaken and signaling its willingness to ease rates even more to ward off a recession.

Fed policymakers reduced the benchmark rate for overnight loans between banks from 3.75% to 3.5%, the lowest level in seven years.

The so-called federal funds rate was 6.5% when the central bank began cutting in January.

Stocks fell sharply on the announcement, as investors signaled disappointment that the economy has shown few signs of responding to the central bank's aggressive efforts to engineer a recovery.

The Dow Jones industrial average finished the week at 10,423.17, and Nasdaq was at 1,916.80.

Warren Vieth

8 Arrested in Rigging of McDonald's Games

The FBI arrested eight people on charges of rigging McDonald's Corp. contests such as "Monopoly" and "Who Wants to Be a Millionaire" back to 1995, raking in about $13 million in the process.

At the center of the scam was an employee of Los Angeles-based Simon Marketing Inc., which ran the promotions until the arrests prompted the fast-food giant to fire it. Losing the account cost Simon 65% of its revenue. Simon's Chicago-based parent had cooperated in the FBI's yearlong probe.

Known as "Uncle Jerry" to the family and friends whom he allegedly brought into the con, 58-year-old Jerome Jacobson confiscated the most valuable game cards--offering such prizes as $1 million or a Dodge Viper--and passed them along to his associates before the cards could be randomly distributed at McDonald's restaurants, authorities said.

No one at McDonald's was implicated in the scheme.

Times Staff Writers

Release of Xbox Delayed in Japan

Microsoft Corp. will put off introducing its Xbox video game console in Japan until early next year, company sources confirmed. The software giant, however, said it was on track to meet its Nov. 8 launch in North America.

Meanwhile, Nintendo Co. said it will delay its U.S. launch of the GameCube until Nov. 18, two weeks later than promised.

While analysts say Nintendo's delay will not hurt sales of the GameCube because the system will still make it to store shelves before the crucial Thanksgiving weekend, many see Microsoft's tardiness as the latest in a string of problems plaguing the firm as it attempts to carve out a larger niche in the fiercely competitive $20-billion worldwide video game industry.

Alex Pham

Canada Takes Firm Stand on Softwood

Canadian Trade Minister Pierre Pettigrew turned up the heat in a long-simmering trade dispute with the U.S. when he filed a complaint with the World Trade Organization and threatened to restrict access to his country's oil and gas. The Canadians are miffed about a U.S. decision to impose a 19.3% duty on softwood lumber imports from Canada.

U.S. firms claim that Canada unfairly subsidizes its timber companies by charging low stumpage, or cutting, fees. Depressed Canadian timber companies, which predict job losses as high as 20,000 if the penalty is imposed, argue the U.S. government didn't consider Canada's vast timber resources and different bidding system.

Canada has asked the U.S. for emergency consultations, and the two sides are scheduled to meet Thursday.

Evelyn Iritani

Edison Rejects Bid by City Light & Power

A longshot plan by a tiny Long Beach street lighting company to engage Edison International executives in buyout talks focused new attention on what alternatives the power company's insolvent Southern California Edison utility faces if lawmakers fail to approve a rescue plan.

Edison promptly rejected the proposal by City Light & Power Inc., but the bid points to the possibility of Edison's being acquired by another entity.

Rumors about a possible purchase of Edison had been floating in Sacramento for several days against a background of dwindling support for a legislative solution to the utility's problems.

A Times Staff Writer

Excite@Home Fires Auditors After Report

Auditors for Internet service provider Excite@Home Corp. warned that the onetime Silicon Valley darling might not be able to survive as an independent company. The news Monday sent Excite@Home's stock plummeting 46% to 40 cents.

The firm, which is owned by a group of cable companies and controlled by telecommunications giant AT&T; Corp., is in danger of seeing its stock delisted. That could trigger a $100-million repayment to creditors and would wipe out the company's resources, according to the report by Ernst & Young.

Two days later, the company disclosed that the auditors had been fired, but said the switch to PricewaterhouseCoopers had been in the works for months.

Excite@Home's shares ended the week at 50 cents on Nasdaq. Karen Kaplan

AOL to Lay Off 1,700 Amid Ad Slowdown

America Online said it would lay off 1,700 employees worldwide--or nearly 11% of its work force--amid the economic slowdown and a sluggish advertising market.

Analysts said the Internet company is paying the price for promises made by parent AOL Time Warner Inc., which has assured Wall Street that it will boost earnings this year by 30%. As growth at other AOL Time Warner properties has slowed, the Internet division has become the star performer.

The job cuts, the second round this year, rank among the deepest in AOL's history. Edmund Sanders

Time Limit Extended on Work Bias Suits

A California Supreme Court decision in effect extended the statute of limitations on workplace disability lawsuits.

In a case over whether a company made reasonable efforts to accommodate a wheelchair-using engineer, the Supreme Court said the clock should start when resolution efforts end.

Under state law, the statute of limitations on discrimination claims is one year. The ruling overturned an appellate court decision that set that one-year clock ticking at the point discrimination is first suspected. Lisa Girion

Korn/Ferry Posts Loss, Will Cut 500 Jobs

In another sign of the weakness in the recruiting sector, Los Angeles-based Korn/Ferry International said it was posting a first-quarter loss and would cut 500 jobs, or about 20% of its work force.

It marked the second round of cuts this year for the world's largest executive search firm.

Chairman Paul C. Reilly, who started June 30 after serving as chief executive of global operations at KPMG International, said demand for senior executives began declining last fall. Lisa Girion

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