TOP STORIES--APRIL 28-MAY 3

Jobless Rate Jumps to Near 8-Year High

The nation’s unemployment rate jumped to a near eight-year high of 6% last month, adding to signs that full economic recovery may be longer in coming and slower to help the jobless than previously thought.

The April rate unexpectedly climbed 0.3 of a point from March’s 5.7% pace as Americans flooded into the work force at a far faster pace than the economy created jobs, the Labor Department said. More than half a million people entered the job market, pushing the nation’s labor force to a record 142.6 million, according to department statistics.

But employers added only 43,000 new jobs in April. And even that skimpy figure was suspect as the government revised away earlier-reported job gains for February and March.

The 6% jobless rate was the highest since July 1994 and represented a substantial turnabout from the record low 3.9% rate the country enjoyed only 18 months ago. By now, 8.6 million Americans are unemployed, 3.1 million more than when the country hit its unemployment low in October 2000.

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WorldCom CEO Resigns Under Fire

Bernard J. Ebbers resigned as chief executive and president of WorldCom Inc., a telecom giant ensnarled in massive debt, declining revenue and questionable accounting practices.

Ebbers was succeeded by John Sidgmore, the company’s vice chairman, who immediately vowed to restructure the company.

Ebbers’ departure, which came amid growing pressure from company board members, makes him the highest-profile casualty thus far in a telecommunications bust so relentless that it has vaporized $2trillion in shareholders’ money over the last two years.

Ebbers, a former basketball coach and hotel manager, had built WorldCom through a series of mergers that included the acquisition of MCI in 1998.

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Hewlett-Packard Completes Compaq Deal

Hewlett-Packard Co. on Friday completed its acquisition of Compaq Computer Corp., a step made possible after a judge earlier in the week ruled that HP did not mislead shareholders or engage in vote buying to win shareholder support for the deal.

Following the ruling, Walter Hewlett, the dissident director who challenged the shareholder vote in Delaware’s Chancery Court, said he wouldn’t appeal the ruling and dropped his challenge of the vote count.

Trading of Compaq stock will be suspended Monday. Shortly afterward, HP will begin trading under the new NYSE symbol, HPQ. The official launch of the new company will take place Tuesday.

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Venture Capital Investments Up

Led by the telecom and biotech industries, total venture capital investment in Southern California companies rose in the first quarter from the previous quarter, bucking the national trend, a study found.

Venture investors committed $819.6 million to Southland companies in the quarter, up from $711million invested in regional firms in the previous quarter, according to the PricewaterhouseCoopers/Venture Economics/National Venture Capital Assn. quarterly MoneyTree survey.

By contrast, venture investment nationwide fell to a four-year low of $6.2 billion in the first quarter from $8 billion in the fourth quarter, the survey showed. Total venture investing peaked at $29 billion in the first quarter of 2000.

Report Says Gasoline Supplies Manipulated

The gasoline business is dominated by a handful of oil companies that can manipulate supplies to increase prices and profits, and California is a prime spot for such maneuvers, congressional investigators said.

A 396-page report by the Democratic staff of the Senate permanent investigations subcommittee did not accuse oil companies of violating federal antitrust laws, but noted that when only a few players control supply, then those companies have enormous power to control prices. The problem is worsened by the closure of dozens of refineries during the last 20 years, the report said.

In several instances, refiners have sought to increase prices by reducing supplies, said the report, commissioned in June by Sen. Carl Levin (D-Mich.), who chairs the subcommittee. The report, citing internal oil company documents from the 1990s, contended that refiners employ a variety of strategies to boost prices, including reducing refinery production and exporting supplies to other countries.

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ABC Television President Resigns

Walt Disney Co.’s troubled ABC network continued its revolving door of top executives, announcing that ABC Television President Steven M. Bornstein would resign after nearly a year in that position.

Disney executives said Bornstein, 50, who spent most of the last two decades helping mold ESPN into a cable TV sports powerhouse, was leaving “to pursue other interests.”

Bornstein’s responsibilities had included oversight of ABC’s television stations, the revamping of the cable channel ABC Family--which Disney acquired and renamed last year--and the ABC-TV network. But ABC has struggled through a dismal season and is in fourth place in prime-time ratings.

Bornstein’s resignation follows statements by Disney President Robert Iger that he intends to become more involved in ABC’s operations.

Television industry sources and media analysts have long said that ABC is top-heavy in management and that the responsibilities of senior management are ill-defined.

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Grammy President Quits Amid Controversy

The music industry was abuzz over the sudden resignation of C. Michael Greene as president of the Grammy organization and about the future direction of the influential industry group.

The controversial Grammy chief abruptly resigned in an emergency board meeting arranged by Grammy Chairman Garth Fundis to present the findings of a sexual harassment investigation to the group’s board.

Greene, 52, had three years left on his employment contract and will be paid as much as $8 million as part of a severance package, sources said.

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Northrop Gets Contract for Stealth Ship

Northrop Grumman Corp. won a $2.9-billion contract to begin designing a new generation of destroyers, beating out archrival General Dynamics Co. for what Pentagon officials described as one of the most significant Navy programs in decades.

By winning the contract, Century City-based Northrop and its partner, Raytheon Corp., not only will design the new warship, dubbed DDX, but will give the team a leg up in garnering future contracts for other surface ships that analysts believe could represent an additional business valued at $60 billion.

The Navy wants a destroyer that would be stealthy, operate with about a third of the crew now required for similar class ships and have technologies that would be the foundation for future generations of warships. The proposed design released publicly by Northrop depicts a ship riding low in the water. It is devoid of many of the features of current destroyers and bears some resemblance to Civil War-era ironclads.

The Northrop win surprised analysts, however, because General Dynamics, along with partner Lockheed Martin Corp., was considered the favorite because it has dominated surface ship construction for the Navy in recent decades. Lockheed, for instance, has been the system integrator for a significant portion of the Navy’s fleet.

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Cable Firms Agree to Add Digital TV

The country’s 10 largest cable television companies pledged to add high-definition digital TV to their lineups by next year.

The cable companies, including AT&T; Broadband, AOL Time Warner Inc. and Adelphia Communications Corp., didn’t specify when they would make HDTV available to their customers. But they committed to offering free space in their channel lineups by Jan. 1 to as many as five broadcasters or cable networks that air significant amounts of HDTV.

The pledge marks the first significant progress for the troubled transition to digital TV, which the Federal Communications Commission mandated in 1997.

The switch from analog to digital promises clearer pictures, better sound and more sophisticated services, but it forces broadcasters to invest millions of dollars in new equipment and consumers to buy digital TVs.

Yet cable operators were reluctant to set a date for rolling out the services. And their commitment left several disputes among the cable operators, set manufacturers and broadcasters still to be resolved.

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Allstate Granted Large Hikes in Insurance Rates

State regulators granted Allstate Corp. hefty increases in auto and homeowners insurance premiums--more bad news for California consumers already grappling with rising premiums and diminishing options.

Allstate, California’s third-largest insurer, asked for a 22.3% increase for homeowners policies and was granted 18.5%. For auto coverage, it requested 20.1% and was granted 8.9%.

The decision by the state Department of Insurance came on the heels of several other rate increases, including a hike of more than 14% for State Farm homeowners in two steps late last year and early this year.

In addition, State Farm General Insurance Co. said it will stop writing new homeowner policies in California because of rising losses.

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Markets Decline Amid Profit Doubts

U.S. stocks ended the week on a down note as the highest jobless rate since 1994 and slower-than-expected growth in service industries cast doubt on the strength of a rebound in profits.

For the week, the S&P; 500 slipped 0.3%. It has lost 6.5% this year. The Nasdaq fell 3.1%, bringing its decline for the year to 17%. The Dow gained 1%, boosted by better-than-expected sales from General Motors Corp. It’s off 0.2% this year.

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For a preview of this week’s business and economic news, please see Monday’s Business section.