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but while the new york stock exchange did n't fall apart friday as the dow jones industrial average plunged N points most of it in the final hour it barely managed to stay this side of chaos
some circuit breakers installed after the october N crash failed their first test traders say unable to cool the selling panic in both stocks and futures
the N stock specialist firms on the big board floor the buyers and sellers of last resort who were criticized after the N crash once again could n't handle the selling pressure
big investment banks refused to step up to the plate to support the beleaguered floor traders by buying big blocks of stock traders say
heavy selling of standard & poor 's 500-stock index futures in chicago <unk> beat stocks downward
seven big board stocks ual amr bankamerica walt disney capital cities\/abc philip morris and pacific telesis group stopped trading and never resumed
the <unk> has already begun
the equity market was <unk>
once again the specialists were not able to handle the imbalances on the floor of the new york stock exchange said christopher <unk> senior vice president at <unk> securities corp
<unk> james <unk> chairman of specialists henderson brothers inc. it is easy to say the specialist is n't doing his job
when the dollar is in a <unk> even central banks ca n't stop it
speculators are calling for a degree of liquidity that is not there in the market
many money managers and some traders had already left their offices early friday afternoon on a warm autumn day because the stock market was so quiet
then in a <unk> plunge the dow jones industrials in barely an hour surrendered about a third of their gains this year <unk> up a 190.58-point or N N loss on the day in <unk> trading volume
<unk> trading accelerated to N million shares a record for the big board
at the end of the day N million shares were traded
the dow jones industrials closed at N
the dow 's decline was second in point terms only to the <unk> black monday crash that occurred oct. N N
in percentage terms however the dow 's dive was the <unk> ever and the sharpest since the market fell N or N N a week after black monday
the dow fell N N on black monday
shares of ual the parent of united airlines were extremely active all day friday reacting to news and rumors about the proposed $ N billion buy-out of the airline by an <unk> group
wall street 's takeover-stock speculators or risk arbitragers had placed unusually large bets that a takeover would succeed and ual stock would rise
at N p.m. edt came the <unk> news the big board was <unk> trading in ual pending news
on the exchange floor as soon as ual stopped trading we <unk> for a panic said one top floor trader
several traders could be seen shaking their heads when the news <unk>
for weeks the market had been nervous about takeovers after campeau corp. 's cash crunch spurred concern about the prospects for future highly leveraged takeovers
and N minutes after the ual trading halt came news that the ual group could n't get financing for its bid
at this point the dow was down about N points
the market <unk>
arbitragers could n't dump their ual stock but they rid themselves of nearly every rumor stock they had
for example their selling caused trading halts to be declared in usair group which closed down N N to N N delta air lines which fell N N to N N and <unk> industries which sank N to N N
these stocks eventually reopened
but as panic spread speculators began to sell blue-chip stocks such as philip morris and international business machines to offset their losses
when trading was halted in philip morris the stock was trading at N down N N while ibm closed N N lower at N
selling <unk> because of waves of automatic stop-loss orders which are triggered by computer when prices fall to certain levels
most of the stock selling pressure came from wall street professionals including computer-guided program traders
traders said most of their major institutional investors on the other hand sat tight
now at N one of the market 's post-crash reforms took hold as the s&p N futures contract had plunged N points equivalent to around a <unk> drop in the dow industrials
under an agreement signed by the big board and the chicago mercantile exchange trading was temporarily halted in chicago
after the trading halt in the s&p N pit in chicago waves of selling continued to hit stocks themselves on the big board and specialists continued to <unk> prices down
as a result the link between the futures and stock markets <unk> apart
without the <unk> of stock-index futures the barometer of where traders think the overall stock market is headed many traders were afraid to trust stock prices quoted on the big board
the futures halt was even <unk> by big board floor traders
it <unk> things up said one major specialist
this confusion effectively halted one form of program trading stock index arbitrage that closely links the futures and stock markets and has been blamed by some for the market 's big swings
in a stock-index arbitrage sell program traders buy or sell big baskets of stocks and offset the trade in futures to lock in a price difference
when the airline information came through it <unk> every model we had for the marketplace said a managing director at one of the largest program-trading firms
we did n't even get a chance to do the programs we wanted to do
but stocks kept falling
the dow industrials were down N points at N p.m. before the <unk> halt
at N p.m. at the end of the cooling off period the average was down N points
meanwhile during the the s&p trading halt s&p futures sell orders began <unk> up while stocks in new york kept falling sharply
big board chairman john j. phelan said yesterday the circuit breaker worked well <unk>
i just think it 's <unk> at this point to get into a debate if index arbitrage would have helped or hurt things
under another post-crash system big board president richard <unk> mr. phelan was flying to <unk> as the market was falling was talking on an <unk> hot line to the other exchanges the securities and exchange commission and the federal reserve board
he <unk> out at a high-tech <unk> center on the floor of the big board where he could watch <unk> on prices and pending stock orders
at about N p.m. edt s&p futures resumed trading and for a brief time the futures and stock markets started to come back in line
buyers stepped in to the futures pit
but the <unk> of s&p futures sell orders weighed on the market and the link with stocks began to fray again
at about N the s&p market <unk> to still another limit of N points down and trading was locked again
futures traders say the s&p was <unk> that the dow could fall as much as N points
during this time small investors began ringing their brokers wondering whether another crash had begun
at prudential-bache securities inc. which is trying to cater to small investors some <unk> brokers thought this would be the final <unk>
that 's when george l. ball chairman of the prudential insurance co. of america unit took to the internal <unk> system to declare that the plunge was only mechanical
i have a <unk> that this particular decline today is something more <unk> about less
it would be my <unk> to advise clients not to sell to look for an opportunity to buy mr. ball told the brokers
at merrill lynch & co. the nation 's biggest brokerage firm a news release was prepared <unk> merrill lynch comments on market drop
the release cautioned that there are significant differences between the current environment and that of october N and that there are still attractive investment opportunities in the stock market
however jeffrey b. lane president of shearson lehman hutton inc. said that friday 's plunge is going to set back relations with customers because it <unk> the concern of volatility
and i think a lot of people will <unk> on program trading
it 's going to bring the debate right back to the <unk>
as the dow average ground to its final N loss friday the s&p pit stayed locked at its <unk> trading limit
jeffrey <unk> of program trader <unk> investment group said N s&p contracts were for sale on the close the equivalent of $ N million in stock
but there were no buyers
while friday 's debacle involved mainly professional traders rather than investors it left the market vulnerable to continued selling this morning traders said
stock-index futures contracts settled at much lower prices than indexes of the stock market itself
at those levels stocks are set up to be <unk> by index arbitragers who lock in profits by buying futures when futures prices fall and simultaneously sell off stocks
but nobody knows at what level the futures and stocks will open today
the <unk> between the stock and futures markets friday will undoubtedly cause renewed debate about whether wall street is properly prepared for another crash situation
the big board 's mr. <unk> said our <unk> performance was good
but the exchange will look at the performance of all specialists in all stocks
obviously we 'll take a close look at any situation in which we think the <unk> obligations were n't met he said
see related story fed ready to <unk> big funds wsj oct. N N
but specialists complain privately that just as in the N crash the <unk> firms big investment banks that support the market by trading big blocks of stock stayed on the sidelines during friday 's <unk>
mr. phelan said it will take another day or two to analyze who was buying and selling friday
concerning your sept. N page-one article on prince charles and the <unk> it 's a few hundred years since england has been a kingdom
it 's now the united kingdom of great britain and northern ireland <unk> <unk> northern ireland scotland and oh yes england too
just thought you 'd like to know
george <unk>
ports of call inc. reached agreements to sell its remaining seven aircraft to buyers that were n't disclosed
the agreements bring to a total of nine the number of planes the travel company has sold this year as part of a restructuring
the company said a portion of the $ N million realized from the sales will be used to repay its bank debt and other obligations resulting from the currently suspended <unk> operations
earlier the company announced it would sell its aging fleet of boeing co. <unk> because of increasing maintenance costs
a consortium of private investors operating as <unk> funding co. said it has made a $ N million cash bid for most of l.j. hooker corp. 's real-estate and <unk> holdings
the $ N million bid includes the assumption of an estimated $ N million in secured liabilities on those properties according to those making the bid
the group is led by jay <unk> chief executive officer of <unk> investment corp. in <unk> and a. boyd simpson chief executive of the atlanta-based simpson organization inc
mr. <unk> 's company specializes in commercial real-estate investment and claims to have $ N billion in assets mr. simpson is a developer and a former senior executive of l.j. hooker
the assets are good but they require more money and management than can be provided in l.j. hooker 's current situation said mr. simpson in an interview
hooker 's philosophy was to build and sell
we want to build and hold
l.j. hooker based in atlanta is operating with protection from its creditors under chapter N of the u.s. bankruptcy code
its parent company hooker corp. of sydney australia is currently being managed by a court-appointed provisional <unk>
sanford <unk> chief executive of l.j. hooker said yesterday in a statement that he has not yet seen the bid but that he would review it and bring it to the attention of the creditors committee
the $ N million bid is estimated by mr. simpson as representing N N of the value of all hooker real-estate holdings in the u.s.
not included in the bid are <unk> teller or b. altman & co. l.j. hooker 's department-store chains
the offer covers the massive N <unk> forest fair mall in cincinnati the N <unk> <unk> fashion mall in columbia s.c. and the N <unk> <unk> town center mall in <unk> <unk>
the <unk> mall opened sept. N with a <unk> 's <unk> as its <unk> the columbia mall is expected to open nov. N
other hooker properties included are a <unk> office tower in <unk> atlanta expected to be completed next february vacant land sites in florida and ohio l.j. hooker international the commercial real-estate brokerage company that once did business as merrill lynch commercial real estate plus other shopping centers
the consortium was put together by <unk> <unk> the london-based investment banking company that is a subsidiary of security pacific corp
we do n't anticipate any problems in raising the funding for the bid said <unk> campbell the head of mergers and acquisitions at <unk> <unk> in an interview
<unk> <unk> is acting as the consortium 's investment bankers
according to people familiar with the consortium the bid was <unk> project <unk> a reference to the film <unk> in which a <unk> played by actress <unk> <unk> is saved from a <unk> businessman by a police officer named john <unk>
l.j. hooker was a small <unk> company based in atlanta in N when mr. simpson was hired to push it into commercial development
the company grew modestly until N when a majority position in hooker corp. was acquired by australian developer george <unk> currently hooker 's chairman
mr. <unk> <unk> to launch an ambitious but <unk> $ N billion acquisition binge that included <unk> teller and b. altman & co. as well as majority positions in merksamer jewelers a sacramento chain <unk> inc. the <unk> retailer and <unk> inc. the southeast department-store chain
eventually mr. simpson and mr. <unk> had a falling out over the direction of the company and mr. simpson said he resigned in N
since then hooker corp. has sold its interest in the <unk> chain back to <unk> 's management and is currently attempting to sell the b. altman & co. chain
in addition robert <unk> chief executive of the <unk> chain is seeking funds to buy out the hooker interest in his company
the merksamer chain is currently being offered for sale by first boston corp
reached in <unk> mr. <unk> said that he believes the various hooker <unk> can become profitable with new management
these are n't mature assets but they have the potential to be so said mr. <unk>
managed properly and with a long-term outlook these can become investment-grade quality properties
canadian <unk> production totaled N metric tons in the week ended oct. N up N N from the preceding week 's total of N tons statistics canada a federal agency said
the week 's total was up N N from N tons a year earlier
the <unk> total was N tons up N N from N tons a year earlier
the treasury plans to raise $ N million in new cash thursday by selling about $ N billion of 52-week bills and <unk> $ N billion of maturing bills
the bills will be dated oct. N and will mature oct. N N
they will be available in minimum denominations of $ N
bids must be received by N p.m. edt thursday at the treasury or at federal reserve banks or branches
as small investors <unk> their mutual funds with phone calls over the weekend big fund managers said they have a strong defense against any wave of withdrawals cash
unlike the weekend before black monday the funds were n't <unk> with heavy withdrawal requests
and many fund managers have built up cash levels and say they will be buying stock this week
at fidelity investments the nation 's largest fund company telephone volume was up sharply but it was still at just half the level of the weekend preceding black monday in N
the boston firm said <unk> redemptions were running at less than one-third the level two years ago
as of yesterday afternoon the redemptions represented less than N N of the total cash position of about $ N billion of fidelity 's stock funds
two years ago there were massive redemption levels over the weekend and a lot of fear around said c. bruce <unk> who runs fidelity investments ' $ N billion <unk> fund
this feels more like a <unk> deal
people are n't <unk>
the test may come today
friday 's stock market sell-off came too late for many investors to act
some shareholders have held off until today because any fund exchanges made after friday 's close would take place at today 's closing prices
stock fund redemptions during the N debacle did n't begin to <unk> until after the market opened on black monday
but fund managers say they 're ready
many have raised cash levels which act as a buffer against steep market declines
mario <unk> for instance holds cash positions well above N N in several of his funds
windsor fund 's john <unk> and mutual series ' michael price said they had raised their cash levels to more than N N and N N respectively this year
even peter lynch manager of fidelity 's $ N billion <unk> fund the nation 's largest stock fund built up cash to N N or $ N million
one reason is that after two years of monthly net redemptions the fund posted net inflows of money from investors in august and september
i 've let the money build up mr. lynch said who added that he has had trouble finding stocks he likes
not all funds have raised cash levels of course
as a group stock funds held N N of assets in cash as of august the latest figures available from the investment company institute
that was modestly higher than the N N and N N levels in august and september of N
also persistent redemptions would force some fund managers to dump stocks to raise cash
but a strong level of investor withdrawals is much more unlikely this time around fund managers said
a major reason is that investors already have sharply scaled back their purchases of stock funds since black monday
<unk> sales have rebounded in recent months but monthly net purchases are still running at less than half N levels
there 's not nearly as much <unk> said john <unk> chairman of vanguard group inc. a big valley forge pa. fund company
many fund managers argue that now 's the time to buy
vincent <unk> manager of the $ N billion wellington fund added to his positions in bristol-myers squibb woolworth and dun & bradstreet friday
and today he 'll be looking to buy drug stocks like eli lilly pfizer and american home products whose dividend yields have been bolstered by stock declines
fidelity 's mr. lynch for his part snapped up southern co. shares friday after the stock got <unk>
if the market drops further today he said he 'll be buying blue chips such as bristol-myers and kellogg
if they <unk> stocks like that he said it presents an opportunity that is the kind of thing you dream about
major mutual-fund groups said phone calls were <unk> at twice the normal weekend pace yesterday
but most investors were seeking share prices and other information
trading volume was only modestly higher than normal
still fund groups are n't taking any chances
they hope to avoid the <unk> phone lines and other <unk> that <unk> some fund investors in october N
fidelity on saturday opened its N <unk> investor centers across the country
the centers normally are closed through the weekend
in addition east coast centers will open at N edt this morning instead of the normal N
t. rowe price associates inc. increased its staff of phone representatives to handle investor requests
the <unk> group noted that some investors moved money from stock funds to money-market funds
but most investors seemed to be in an information mode rather than in a transaction mode said steven <unk> a vice president
and vanguard among other groups said it was adding more phone representatives today to help investors get through
in an unusual move several funds moved to calm investors with <unk> on their <unk> phone lines
we view friday 's market decline as offering us a buying opportunity as long-term investors a recording at <unk> & co. funds said over the weekend
the <unk> group had a similar recording for investors
several fund managers expect a rough market this morning before prices stabilize
some early selling is likely to stem from investors and portfolio managers who want to lock in this year 's fat profits
stock funds have averaged a staggering gain of N N through september according to lipper analytical services inc
<unk> <unk> who runs shearson lehman hutton inc. 's $ N million sector analysis portfolio predicts the market will open down at least N points on technical factors and some panic selling
but she expects prices to rebound soon and is telling investors she expects the stock market wo n't decline more than N N to N N from recent highs
this is not a major crash she said
nevertheless ms. <unk> said she was <unk> with phone calls over the weekend from nervous shareholders
half of them are really scared and want to sell she said but i 'm trying to talk them out of it
she added if they all were bullish i 'd really be upset
the backdrop to friday 's slide was <unk> different from that of the october N crash fund managers argue
two years ago unlike today the dollar was weak interest rates were rising and the market was very <unk> they say
from the investors ' standpoint institutions and individuals learned a painful lesson by selling at the lows on black monday said stephen boesel manager of the $ N million t. rowe price growth and income fund
this time i do n't think we 'll get a panic reaction
newport corp. said it expects to report <unk> earnings of between N cents and N cents a share somewhat below analysts ' estimates of N cents to N cents
the maker of scientific instruments and laser parts said orders fell below expectations in recent months
a spokesman added that sales in the current quarter will about equal the <unk> quarter 's figure when newport reported net income of $ N million or N cents a share on $ N million in sales
<unk> from the strike by N machinists union members against boeing co. reached air carriers friday as america west airlines announced it will postpone its new service out of houston because of delays in receiving aircraft from the seattle jet maker
peter <unk> vice president for planning at the phoenix ariz. carrier said in an interview that the work <unk> at boeing now entering its 13th day has caused some turmoil in our scheduling and that more than N passengers who were booked to fly out of houston on america west would now be put on other airlines
mr. <unk> said boeing told america west that the N it was supposed to get this thursday would n't be delivered until nov. N the day after the airline had been planning to <unk> service at houston with four daily flights including three <unk> to phoenix and one <unk> to las vegas
now those routes are n't expected to begin until jan
boeing is also supposed to send to america west another N <unk> aircraft as well as a N by year 's end
those too are almost certain to arrive late
at this point no other america west flights including its new service at san antonio texas newark n.j. and <unk> calif. have been affected by the delays in boeing deliveries
nevertheless the company 's reaction <unk> the <unk> effect that a huge manufacturer such as boeing can have on other parts of the economy
it also is sure to help the machinists put added pressure on the company
i just do n't feel that the company can really stand or would want a prolonged <unk> tom baker president of machinists ' district N said in an interview yesterday
i do n't think their customers would like it very much
america west though is a smaller airline and therefore more affected by the delayed delivery of a single plane than many of its competitors would be
i figure that american and united probably have such a hard time counting all the planes in their fleets they might not miss one at all mr. <unk> said
indeed a random check friday did n't seem to indicate that the strike was having much of an effect on other airline operations
southwest airlines has a boeing N set for delivery at the end of this month and expects to have the plane on time
it 's so close to completion boeing 's told us there wo n't be a problem said a southwest spokesman
a spokesman for amr corp. said boeing has assured american airlines it will deliver a N on time later this month
american is preparing to take delivery of another N in early december and N more next year and is n't anticipating any changes in that timetable
in seattle a boeing spokesman explained that the company has been in constant communication with all of its customers and that it was impossible to predict what further disruptions might be triggered by the strike
meanwhile supervisors and <unk> employees have been trying to finish some N aircraft mostly N and N jumbo jets at the company 's <unk> wash. plant that were all but completed before the <unk>
as of friday four had been delivered and a fifth plane a N was supposed to be <unk> out over the weekend to air china
no date has yet been set to get back to the bargaining table
we want to make sure they know what they want before they come back said doug hammond the federal mediator who has been in contact with both sides since the strike began
the investment community for one has been anticipating a <unk> resolution
though boeing 's stock price was battered along with the rest of the market friday it actually has risen over the last two weeks on the strength of new orders
the market has taken two views that the labor situation will get settled in the short term and that things look very <unk> for boeing in the long term said howard <unk> an analyst at <unk> j. lawrence inc
boeing 's shares fell $ N friday to close at $ N in composite trading on the new york stock exchange
but mr. baker said he thinks the earliest a pact could be struck would be the end of this month <unk> that the company and union may resume negotiations as early as this week
still he said it 's possible that the strike could last considerably longer
i would n't expect an immediate resolution to anything
last week boeing chairman frank <unk> sent striking workers a letter saying that to my knowledge boeing 's offer represents the best overall three-year contract of any major u.s. industrial firm in recent history
but mr. baker called the letter and the company 's offer of a N N wage increase over the life of the pact plus bonuses very weak
he added that the company <unk> the union 's resolve and the workers ' <unk> with being forced to work many hours overtime
in separate developments talks have broken off between machinists representatives at lockheed corp. and the <unk> calif. aerospace company
the union is continuing to work through its expired contract however
it had planned a strike vote for next sunday but that has been pushed back indefinitely
united auto workers local N which represents N workers at boeing 's helicopter unit in delaware county pa. said it agreed to extend its contract on a <unk> basis with a <unk> notification to cancel while it continues bargaining
the accord expired yesterday
and boeing on friday said it received an order from <unk> <unk> for four model N <unk> <unk> valued at a total of about $ N million
the planes long range versions of the <unk> <unk> will be delivered with <unk> & <unk> <unk> engines
<unk> & <unk> is a unit of united technologies inc
<unk> <unk> is based in amsterdam
a boeing spokeswoman said a delivery date for the planes is still being worked out for a variety of reasons but not because of the strike
<unk> <unk> contributed to this article
<unk> ltd. said its utilities arm is considering building new electric power plants some valued at more than one billion canadian dollars us$ N million in great britain and elsewhere
<unk> <unk> <unk> 's senior vice president finance said its <unk> canadian utilities ltd. unit is reviewing <unk> projects in eastern canada and conventional electric power generating plants elsewhere including britain where the british government plans to allow limited competition in electrical generation from private-sector suppliers as part of its privatization program
the projects are big
they can be c$ N billion plus mr. <unk> said
but we would n't go into them alone and canadian utilities ' equity stake would be small he said
<unk> we 'd like to be the operator of the project and a modest equity investor
our long suit is our proven ability to operate power plants he said
mr. <unk> would n't offer <unk> regarding <unk> 's proposed british project but he said it would compete for customers with two huge british power generating companies that would be formed under the country 's plan to <unk> its massive water and electric utilities
britain 's government plans to raise about # N billion $ N billion from the sale of most of its giant water and electric utilities beginning next month
the planned electric utility sale scheduled for next year is alone expected to raise # N billion making it the world 's largest public offering
under terms of the plan independent <unk> would be able to compete for N N of customers until N and for another N N between N and N
canadian utilities had N revenue of c$ N billion mainly from its natural gas and electric utility businesses in alberta where the company serves about N customers
there seems to be a move around the world to <unk> the generation of electricity mr. <unk> said and canadian utilities hopes to capitalize on it
this is a real thrust on our utility side he said adding that canadian utilities is also <unk> projects in <unk> countries though he would be specific
canadian utilities is n't alone in exploring power generation opportunities in britain in anticipation of the privatization program
we 're certainly looking at some power generating projects in england said bruce <unk> vice president corporate strategy and corporate planning with enron corp. houston a big natural gas producer and pipeline operator
mr. <unk> said enron is considering building <unk> power plants in the u.k. capable of producing about N <unk> of power at a cost of about $ N million to $ N million
pse inc. said it expects to report third earnings of $ N million to $ N million or N cents to N cents a share
in the year-ago quarter the designer and operator of <unk> and waste heat recovery plants had net income of $ N or four cents a share on revenue of about $ N million
the company said the improvement is related to additional <unk> facilities that have been put into operation
<unk> <unk> flights are $ N to paris and $ N to london
in a centennial journal article oct. N the fares were reversed
diamond <unk> offshore partners said it had discovered gas offshore louisiana
the well <unk> at a rate of N million cubic feet of gas a day through a N <unk> opening at <unk> between N and N feet
diamond <unk> is the operator with a N N interest in the well
diamond <unk> offshore 's stock rose N cents friday to close at $ N in new york stock exchange composite trading
<unk> & broad home corp. said it formed a $ N million limited partnership subsidiary to buy land in california suitable for residential development
the partnership <unk> & broad land development venture limited partnership is a N joint venture with a trust created by institutional clients of <unk> advisory corp. a unit of <unk> financial corp. a real estate advisory management and development company with offices in chicago and beverly hills calif
<unk> & broad a home building company declined to identify the institutional investors
the land to be purchased by the joint venture has n't yet received <unk> and other approvals required for development and part of <unk> & broad 's job will be to obtain such approvals
the partnership runs the risk that it may not get the approvals for development but in return it can buy land at wholesale rather than retail prices which can result in sizable savings said bruce <unk> president and chief executive officer of <unk> & broad
there are really very few companies that have adequate capital to buy properties in a raw state for cash
typically developers option property and then once they get the administrative approvals they buy it said mr. <unk> adding that he believes the joint venture is the first of its kind
we usually operate in that conservative manner
by setting up the joint venture <unk> & broad can take the more aggressive approach of buying raw land while avoiding the negative <unk> to its own balance sheet mr. <unk> said
the company is putting up only N N of the capital although it is responsible for providing management planning and processing services to the joint venture
this is one of the best ways to assure a pipeline of land to fuel our growth at a minimum risk to our company mr. <unk> said
when the price of plastics took off in N quantum chemical corp. went along for the ride
the timing of quantum 's chief executive officer john <unk> <unk> appeared to be nothing less than inspired because he had just increased quantum 's reliance on plastics
the company <unk> much of the chemical industry as annual profit grew <unk> in two years
mr. <unk> said of the boom it 's going to last a whole lot longer than anybody thinks
but now prices have <unk> and quantum 's profit is <unk>
some securities analysts are looking for no better than break-even results from the company for the third quarter compared with year-earlier profit of $ N million or $ N a share on sales of $ N million
the stock having lost nearly a quarter of its value since sept. N closed at $ N share down $ N in new york stock exchange composite trading friday
to a degree quantum represents the new times that have arrived for producers of the so-called commodity plastics that <unk> modern life
having just passed through one of the most profitable periods in their history these producers now see their prices eroding
pricing cycles to be sure are nothing new for plastics producers
and the financial decline of some looks steep only in comparison with the <unk> period that is just behind them
we were all wonderful heroes last year says an executive at one of quantum 's competitors
now we 're at the bottom of the <unk>
at quantum which is based in new york the trouble is magnified by the company 's heavy <unk> on plastics
once known as national <unk> & chemical corp. the company <unk> the wine and spirits business and <unk> more of its resources into plastics after mr. <unk> took the chief executive 's job in N
mr. <unk> N years old declined to be interviewed for this article but he has consistently argued that over the long haul across both the <unk> and the <unk> of the plastics market quantum will <unk> through its new direction
quantum 's lot is mostly tied to polyethylene <unk> used to make garbage bags milk <unk> <unk> toys and meat packaging among other items
in the u.s. polyethylene market quantum has claimed the largest share about N N
but its competitors including dow chemical co. union carbide corp. and several oil giants have much broader business interests and so are better <unk> against price swings
when the price of polyethylene moves a mere penny a pound quantum 's annual profit <unk> by about N cents a share provided no other <unk> are changing
in recent months the price of polyethylene even more than that of other commodity plastics has taken a dive
benchmark grades which still sold for as much as N cents a pound last spring have skidded to between N cents and N cents
meanwhile the price of <unk> the chemical building block of polyethylene has n't dropped nearly so fast
that <unk> <unk> quantum badly because its own plants cover only about half of its <unk> needs
by many accounts an early hint of a price rout in the making came at the start of this year
china which had been putting in huge orders for polyethylene abruptly halted them
<unk> that excess polyethylene would soon be <unk> around the world other buyers then bet that prices had peaked and so began to draw down inventories rather than order new product
kenneth mitchell director of dow 's polyethylene business says producers were surprised to learn how much inventories had swelled throughout the distribution chain as prices <unk> up
people were even <unk> bags he says
now producers hope prices have hit bottom
they recently announced increases of a few cents a pound to take effect in the next several weeks
no one knows however whether the new posted prices will stick once producers and customers start to <unk>
one <unk> is george <unk> a <unk> analyst at oppenheimer & co. and a bear on plastics stocks
noting others ' estimates of when price increases can be sustained he remarks some say october
some say november
i say N
he argues that efforts to firm up prices will be undermined by producers ' plans to expand production capacity
a quick turnaround is crucial to quantum because its cash requirements remain heavy
the company is trying to carry out a three-year $ N billion <unk> program started this year
at the same time its annual payments on long-term debt will more than double from a year ago to about $ N million largely because of debt taken on to pay a $ <unk> special dividend earlier this year
quantum described the payout at the time as a way for it to share the <unk> with its holders because its stock price was n't reflecting the huge profit increases
some analysts saw the payment as an effort also to <unk> takeover speculation
whether a cash crunch might eventually force the company to cut its quarterly dividend raised N N to N cents a share only a year ago has become a topic of intense speculation on wall street since mr. <unk> <unk> dividend questions in a sept. N meeting with analysts
some viewed his response that company directors review the dividend regularly as nothing more than the standard line from executives