1995-96: REVIEW AND OUTLOOK : People, Companies and Trends to Watch in ’96

Mickey Mouse dons rehabber’s overalls for 1996, as Disneyland prepares to make Tomorrowland look like tomorrow again, not yesteryear.

Orange County hopes to emerge from the nation’s worst municipal bankruptcy by summer. National home builder Lennar Corp. of Miami plans to move into Orange County just as economists are predicting a rebirth of the moribund real estate market.

The pace of consolidation in the managed care industry quickens, with analysts targeting locals FHP and PacifiCare as prime acquisition targets.

Even James Edwards Sr., the dean of Southern California theater complexes who recently turned 89, shows no signs of slowing down.

1996 is shaping up to be an eventful year. Watch for the breakup of AT&T; (again); a merger of First Interstate Bank with one suitor or another; the demise of the Bullock’s department store name; a fierce battle by an Internet David to keep the Microsoft Goliath at bay; the end of the electric utility industry’s monopoly; the debut of the $100-million Jurassic Park--The Ride at Universal Studios Hollywood, and yet another epic U.S.-Japanese battle over semiconductors.

Here’s a look at these and other companies, people and trends that bear watching in the new year.

Fun and Games

A new Tomorrowland isn’t the half of it for Disney next year. Remember how the $100-million Indiana Jones Adventure ride Disney unveiled early this year single-handedly boosted Orange County tourism? There may be more economic benefits as it opens a show in June to complement its “Hunchback of Notre Dame” movie, while celebrating the final season, after 24 years, of the Main Street Electrical Parade. Disney also will reveal plans for a second park in Anaheim, replacing the ambitious plans for a $3-billion resort called Westcot, abandoned early this year. . . . Universal Studios Hollywood President Bob Gault predicts a record year thanks to the opening in early summer of the theme park’s $100-million Jurassic Park--The Ride. The six-acre attraction is a river ride through dense jungle, featuring 16 life-size dinosaurs, including a T. rex that munches cars. . . .

Out of the Ashes

Orange County prays it’ll extricate itself from bankruptcy court by summer. Having lost $1.64 billion through risky investments last year, the county is now offering a reorganization plan to pay its debts. The plan would pay creditors by diverting $50 million a year in public money otherwise intended for other purposes. It also requires approval of the court, Wall Street bond rating firms, public agencies that lost money in its investment pool, and other creditors. And a $500-million bond sale is planned for early next year. . . . Meanwhile, the Securities and Exchange Commission isn’t letting pool investors off the hook. Look for some fast talking next year by the Newport-Mesa Unified School District, North Orange County Community College District, Irvine Unified School District, the Orange County Department of Education, and the cities of Irvine and Anaheim.

Unreal Estate

Finally, someone’s bullish on Orange County residential real estate. Lennar Corp. of Miami, the nation’s seventh-largest home builder, has plans to open an Orange County office. It’s considering buying Newport Beach home builder Bramalea of California Inc. and perhaps one more. . . . Keep an eye, too, next year on Donald Bren, the billionaire developer who turned the Irvine Ranch into the nation’s largest master-planned community. For the first time, Bren is considering building or buying apartment projects outside of the ranch, which stretches over one-fifth of Orange County. His Irvine Co. might build or buy apartments in other markets, including San Francisco. . . . But not all’s well in the building biz. Newport Beach’s Baldwin brothers, who own a sizable but financially ailing real estate empire, are in bankruptcy. They aim to file a reorganization plan by Feb. 15, but in the interim will be laying off employees. Look for some of Baldwin Co.’s land holdings to go on the block. . . . Shaking off a five-year slump, California home prices should begin a modest rise. In Orange County, economists at Chapman College suggest looking for a 1.4% average price hike. . . . After years of wrangling, Orange County mogul Don Koll will face what could be the final hurdles to his plan to put 3,300 homes on the Bolsa Chica wetlands near Huntington Beach. The California Coastal Commission is slated to vote in January.

Does This Compute?

Santa Ana-based Ingram Micro is already the largest distributor of computer products in the world, with sales expected to top $8 billion this year. But it’s about to get stronger. As part of a spinoff from its parent company, Ingram will sell stock to the public for the first time early next year, possibly netting it $250 million some to help it pull even farther away from rivals, including Merisel Inc. in El Segundo. . . . Now that Dennis Morin’s walked away from Wonderware Corp., the Irvine software company he helped found, colleagues are wondering what he’ll do next. He has enrolled in cooking school in London, so maybe he’ll become a chef. He’s building a house inside a rock in Laguna Beach, so maybe he’ll follow that up by building a treehouse. Or maybe Morin, 49, will surprise people by doing the obvious: finding another high-tech company to run. . . . Netscape Communications founder Marc Andreessen, 24, could become the nerd icon of the ‘90s as he takes on Microsoft’s Bill Gates in a contest to decide the king of the wild and woolly Internet. . . . The soap opera continues at Apple Computer, where CEO Michael Spindler fired a handful of veterans and now is being closely watched by A.C. “Mike” Markkula, the Apple co-founder who fired John Sculley. Although the Macintosh continues to eke out market share gains, the company’s long-term survival as an independent remains in doubt. . . . Speaking of which, IBM’s Louis Gerstner might be ready for another big move after buying Lotus Development. Possible targets: Novell and Apple. . . .

It’s Showtime!

James Edwards Sr. celebrated his 89th birthday with the Nov. 22 opening of The Big One, a 21-screen movie complex in the Irvine Entertainment Center that, based on its 6,000 seats, is the nation’s largest cineplex. With plans to outdo himself, his Newport Beach-based circuit should have 564 screens by next year’s end, up from 425 now. His biggest opening will take place in Fresno, where crews have started work on a 21-screen, 4,500-seat theater. . . . Meanwhile, the two Michaels (Eisner and Ovitz) will have their hands full merging Walt Disney with Capital Cities/ABC. Other possibilities for Disney include adding pro football and basketball teams to the company’s growing sports empire. . . . The most ballyhooed enterprise in Hollywood--trio Steven Spielberg, Jeffrey Katzenberg and David Geffen’s DreamWorks--will finally begin cranking out its first TV shows, records and films. In the works for ABC-TV in 1996 will be “High Incident,” a one-hour cop drama set in suburbia, and a half-hour comedy, “Champs.” George Clooney, star of NBC’s top-rated “ER,” has signed for the lead in DreamWorks’ first film, “The Peacemaker,” about the smuggling of nuclear weapons out of the former Soviet Union.

Healthy, Wealthy . . .

Merger mania in the managed care industry continues apace, with Fountain Valley-based FHP International Corp. and Cypress-based PacifiCare Health Systems Inc. high on analysts’ lists of possible takeover targets. The high numbers of Medicare recipients enrolled in their health plans makes them especially attractive. . . . Speaking of possible entanglements, Source Scientific Inc. wishes for a good match in the new year. Twice this past year, the small investment-starved maker of diagnostic instruments in Garden Grove called off separate plans to merge with a partner. And Milan Panic, the controversial chairman of drug maker ICN Pharmaceuticals Inc. in Costa Mesa, and ertswhile prime minister of Yugoslavia, is scheduled to stand trial March 4 in Orange County Superior Court on sexual harassment charges brought by a former ICN employee. Panic denies the allegations. . . . And revenue at last for fledgling AMDL Inc., the Tustin biomedical company. A deal to distribute its lung cancer test in Indonesia, plus similar arrangements being struck in other countries, may also enable it to break even next year.

Pacific Rim Shots

Former Orange County banker Donald Miller’s star may shine brightly in 1996 as a predicted boom in import-export trade makes the Orange County World Trade Center an increasingly important institution. The value of import-export trade is expected to grow by 15% in the county in 1996, to $9 billion. That’s about 11% of the county’s total economy. . . . Watch for more Japanese financial institutions to go under. . . . Will the Japanese become cult followers of Agents Mulder and Scully? “The X-Files,” Fox TV’s highly rated series, recently premiered on Asahi Television, dubbed in Japanese, after a $5-million promotional blitz. . . . Japan’s sleep-deprived “salarymen” will be able to pick up a Starbucks latte when the Seattle-based coffeehouse makes its debut next spring. . . . U.S. traders are bracing for another round of saber rattling in July, when the landmark U.S.-Japan semiconductor agreement expires. Japanese business leaders have resented its inclusion of a 20% market-share target for foreigners. . . . Japan’s beleaguered economy will have to emerge convincingly in 1996, or fears of a full-fledged depression could become self-fulfilling. With short-term interest rates near zero, the Bank of Japan’s ability to tweak the economy is just about exhausted. . . . Investors from Taiwan, Korea and other developing Asian nations are stepping into the U.S. market in a big way. . . . The hot and cold U.S.-China relationship promises to dominate the trade front, given the volatile mix of U.S. presidential politics, the Deng Xiaoping deathwatch, a key presidential election in Taiwan and a ballooning trade imbalance. All this uncertainty is causing temperatures to rise in Hong Kong, which is warily eyeing its return to Chinese control in July 1997.

Wired to the Max

Ambitious Graphix Zone in Irvine expects 1996 to be its go-ahead year, thanks to the signing of jazz legend Herbie Hancock and Oscar-winning filmmaker Oliver Stone to produce interactive CD-ROM discs. The Irvine multimedia company expects to have discs drawing from Stone’s movie Nixon on retail shelves in March. It’ll follow up with Hancock’s three-part CD-ROM series on the history of jazz by midyear. . . . Insiders are waiting to see what Marina del Rey advertising agency Fattal & Collins does for an encore to “The Spot,” its splashy, on-line soap opera that is spawning imitations. . . .

Location, Location

Federated Department Stores Chairman Allen Questrom will reshape Southern California retailing early in the year, with Broadways at Brea Mall, Laguna Hills Mall and Fashion Island in Newport Beach converting to the Macy’s name and the Broadway in the Mall of Orange closing down early next year. He’s expected to decide by early next year where to put a Bloomingdale’s in the county. . . . Disappearing from the map will be nine Clothestime Inc. stores across Orange County, as part of the financially ailing Anaheim retailer’s plan to reorganize itself financially. Those slated for shuttering include: Clothestime stores in Anaheim’s Brookhurst Shopping Center, La Habra Plaza, Westminster’s Brookhurst Fashion Plaza, and Placentia Town Center; Lingerie Time shops in Anaheim Plaza, Crossroads Mall in Dana Point, Five Points Plaza in Huntington Beach, and Tustin Marketplace.

The Sound of Music

R.E.M., the rock act from Athens, Ga., has only one album left on its Warner Bros. Records contract and is the hottest free agent in the music business. A decision to jump ship could spell big trouble for Warner Music, where 18 months of infighting has destabilized a once robust company. . . . Ted Field and Jimmy Iovine, founders of Interscope Records, were dumped in September by Time Warner in a controversy over explicit lyrics, but the label is on the verge of signing a lucrative new deal with EMI Music or PolyGram. . . . Doug Morris, who became chairman of MCA Music Entertainment Group after being fired from Time Warner, will seek to beef up the rock roster at the beleaguered company. . . . Jocelyn Cooper-Gilstrap, former president of New York publishing firm Midnight Songs, will take over in January as senior vice president at MCA Music’s Universal Records in New York. . . .

Taking Stock of Finance

Federal investigations of the Nasdaq stock market are likely to come to a head, with the Securities and Exchange Commission announcing enforcement action on trading rules as early as January. . . . Likewise, federal criminal charges are expected to emerge in investigations into shady dealings between Wall Street brokerage firms and municipal governments. The events that led to Orange County’s bankruptcy filing are among many under the microscope. . . . Fidelity Magellan fund honcho Jeff Vinik might be in hot water with the feds after making favorable public comments about Micron Technology in November--about the time he was dumping massive amounts of the stock. . . . The toughest test lies ahead for Internet-related companies such as Netscape Communications and Uunet Technologies, among 1995’s hottest issues. Some analysts suggest it’s too early to call a peak in Internet mania, noting that biotech stocks enjoyed a three-year boom based purely on hopes and dreams.

Moving Targets

Bargain air fares will be rare as American, Delta, Northwest and other carriers try to keep profits rising. . . . Keep an eye on Northrop Grumman and Litton Industries, Southern California aerospace concerns that are ripe to become targets of the industry’s merger mania. . . . Followers of defense king Lockheed Martin are bracing for more change as Norman Augustine becomes CEO on Jan. 1. Look for Augustine to accelerate the merging of Lockheed Martin divisions, which could mean more layoffs. . . . Harry Stonecipher, McDonnell Douglas’ CEO, will nail down more orders for the MD-95, now that the 120-seat jet has been formally launched. It will be built in Long Beach. . . . TRW Chairman Joseph Gorman has defied the odds by being conspicuously absent in the defense merger frenzy, and the company’s order backlog has grown apace, with expectation of further growth in ’96. . . .

One Ringie Dingie. . . .

Henry Schacht, former CEO of Cummins Engine, will be in the hot seat as he tries to get AT&T;’s newly independent equipment business into fighting trim. Look for layoffs and acquisitions as Schacht fills in holes the slow-moving giant left to small entrepreneurs. . . . Long-distance providers such as AT&T;, Sprint and MCI will start competing with Baby Bells in local phone markets. In one of the most formidable assaults, William Esrey, the unassuming chief of Sprint, and his cable TV partners will spend $3 billion on a wireless system. . . . Pacific Telesis and other regional Bell companies expect a booming business selling high-speed connections to businesses and home Netsurfers--and are preparing to offer standard cable service. . . . Watch for the Baby Bells to merge--with each other or with long-distance providers or cable companies.

TV or Not TV?

Westinghouse Electric, the new owner of CBS, has the hots for Gaylord Entertainment, owner of the Country Music Television and The Nashville Network cable channels. But Gaylord might prefer to sell to another suitor, such as MCA or ITT. . . . Some cynics predict that Westinghouse will encounter big trouble with CBS later in 1996, unless new programming chief Leslie Moonves can reverse the network’s ratings slide. . . . General Electric is waiting for challenges to the Time Warner-Turner Broadcasting System merger to be resolved before choosing a strategic partner or acquisition candidate. GE’s NBC had had its heart set on Turner, which owns CNN, but maybe Microsoft, NBC’s 50-50 partner in an all-news cable channel, is all the partner it needs. By the way, cable news channels are all the rage, with ABC, NBC and Fox all hoping to weigh in. . . . Michael Fuchs, who steered Home Box Office to success then was ousted from Time Warner six months after taking the helm at Warner Music, will rise again. One scenario: Financier Ronald Perelman spins off his New World Fox affiliates to Murdoch, buys Sony Pictures Entertainment and puts Fuchs in charge. . . . It will be a make-or-break year for Gerald Levin, chairman of Time Warner, who was on the shareholders’ hit list in 1995 because of the company’s poor stock performance. He has bet the farm on the Turner merger, and his fate rests largely on whether he can pull it off with regulators and ornery partner US West.

For the People

Keep an eye on George McCabe, senior vice president at Mazda Motor of America in Irvine. McCabe was passed over for the top operating post at the Japanese auto importer and distributor’s U.S. headquarters in 1989. But after a string of increasingly dismal years, Mazda has pulled him in from the outfield and turned the team over to his stewardship. His job? Revive sales at a company that is applauded by industry watchers for having great cars but that saw U.S. sales drop by 21% in 1995 because its marketing image is ephemeral at best. . . . Across the Southland, Patty DeDominic, president of Los Angeles-based PDQ Personnel Services, will globe-hop in her new post, liaison to Les Femmes Chefs d’Entreprises Mondiales (the World Assn. of Women Entrepreneurs). In February, she meets with Asian business owners in Bangkok. . . . Nine labor unions, operating under the name Los Angeles Manufacturing Action Project, or LAMAP, are expected to get an AFL-CIO grant to start organizing hundreds of thousands of immigrant workers in the Alameda Corridor area. . . .

Booting Up Baby

Microsoft’s Bill Gates and his wife, Melinda French, are expecting delivery in late May of what has been referred to as the ultimate laptop, with an emphasis on soft wear. The big question is: Will Baby Gates be a chip off the old block?

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Contributing to this report were staff writers James Bates, Nancy Rivera Brooks, Claudia Eller, Denise Gellene, Amy Harmon, Leslie Helm, Michael A. Hiltzik, Sallie Hofmeister, David Holley, Evelyn Iritani, Greg Johnson, Don Lee, Patrick Lee, Hilary MacGregor, Barbara Marsh, Greg Miller, Thomas S. Mulligan, Donald Nauss, John O’Dell, David Olmos, Scot Paltrow, James Peltz, Tom Petruno, Julie Pitta, Chuck Philips, Jesus Sanchez, Stuart Silverstein, Vicki Torres, Ralph Vartabedian, Debora Vrana and George White. Times correspondent Dan Margolis also contributed.

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Looking Ahead

Today’s Times Business section marks the start of more than a week’s worth of coverage on what’s ahead for the world of business in 1996 and what happened in 1995 that’s worth remembering. Here’s what’s in store:

Wednesday: Times staff writer Amy Harmon writes about why 1995 will be remembered as the year of the Internet.

Friday: Company Town looks back at an amazing year in Hollywood marked by stunning mergers, firings and hirings.

Dec. 31: Complete year-end section, with columns, predictions, news analyses and rankings.

Jan. 1: Special international outlook section.

Jan. 2: Company Town looks at the year ahead for Hollywood.