July 17, 1986

The Defense Department suspended Litton Industries today from bidding for Government contracts, following a subsidiary's indictment Tuesday on 325 counts of criminal fraud. The decision leaves the military temporarily unable to turn to its 19th-largest supplier for many kinds of work, including construction of major combat ships for the Navy. The suspension does not cancel existing contracts, but they cannot be renewed, Pentagon officials said. The Government said the suspension was temporary pending a review of the circumstances surrounding yesterday's indictment. The company will be given an opportunity to appeal the suspension, and the Government promised to take into consideration that only a small unit of Litton was involved in the indictment, as well as the company's assertion that steps have been taken to remedy problems.

The blood bank that serves the New York metropolitan area said yesterday that it was working to identify about 700 people who received transfusions since 1977 that may have been contaminated with the AIDS virus. The agency, the Greater New York Blood Program, said it expected to begin notifying these patients this fall. The patients received blood given in earlier donations by people who have recently tried to donate blood and were found in a screening test to be carrying antibodies to the AIDS virus. Infection with the virus does not necessarily lead to AIDS, an incurable depletion of the immune system.

THE invitation reads: ''Jacqueline Kennedy Onassis requests the honor of your presence at the marriage of her daughter, Caroline Bouvier Kennedy, to Edwin Arthur Schlossberg on July 19, 1986, at 3 P.M., the Church of Our Lady of Victory, Centerville, Massachusetts.'' That was not Mrs. Onassis's only request. She has let it be known that advance publicity about her daughter's wedding was unwelcome. ''We made up our mind not to give out any information,'' Mrs. Onassis's longtime spokesman, Nancy Tuckerman, said. That is, not until a five-page fact sheet is released following the wedding. The wedding's suppliers - designers, caterer and hotel, for example - have all been asked to keep mum.

Outside the Roman Catholic church on East 116th Street, so much has changed. Gone are Ferraro's Bakery and Rosie's Candy Store. Gone are Dr. Miraglia the optometrist and Dr. Spinelli the urologist. Gone, in other words, is all but the shrunken shell of the Italian-American community that once flourished in East Harlem. But once each year, those who have left come back.

Because photographs were transposed, a caption in the Advertising Column in some copies yesterday misidentified the two partners in the design firm W.B.M.G. Inc. Milton Glaser was pictured on the right and Walter Bernard on the left.

Not that long ago, the computer experts were warning that if anything was going to slow the growth of I.B.M., it would be the aggressive electronics giants of Japan. Robert Sobel, a business historian, even entitled his latest book ''I.B.M. vs. Japan: The Struggle for the Future.'' Indeed, the International Business Machines Corporation has its hands full these days. But its problems have precious little to do with the Japanese - who are still floundering in their efforts to enter the American computer market - and a lot to do with problems at home that few predicted. That is only one of the many surprises underlying the prolonged malaise afflicting a company that just two years ago seemed among the last invincible champions of American high technology. The company's reversal of fortunes, many now fear, may not end until early 1988. Virtually no one disputes I.B.M.'s contention that many of its problems are directly linked to the downturn in capital spending. I.B.M.'s chairman, John F. Akers, gave that explanation on Monday when the company announced a 7.7 percent decline in second-quarter net income, and said that unless the trend was suddenly reversed the company would almost certainly post its second consecutive decline in yearly profits.

The first drama of the forthcoming prime-time television season is already being played out on Madison Avenue, and NBC, CBS and ABC do not much like the script. The networks are wrapping up advance sales of advertising time for their 1986-87 prime time schedules, and after decades of demanding and receiving sharply higher rates, they are being forced to cut prices or accept only moderate increases, compared with last year's levels. Weak advertising demand has actually led ABC and CBS to drop their rates for many advertisers from 1985 prices - the first time that has ever happened. NBC, which was the top-rated network last season, has been more successful, but still has been limited to price increases well below the double-digit increases that all the networks have commanded in past years.

International The U.S. is weighing a new arms plan that calls for simultaneously reducing both the number of underground nuclear tests by the United States and the Soviet Union and the number of strategic weapons on each side. The idea of the linkage is contained in a draft of a letter to Mikhail S. Gorbachev, the Soviet leader, that the State Department has asked President Reagan to sign. [ Page A1, Col. 6. ] A Haitian jury convicted Francois Duvalier's former chief of security of murder and torture and immediately sentenced him to death after a raucous 18-hour trial broadcast live on television. Cheers and cries of ''Murderer'' erupted from the jury box and the crowded public gallery as the verdict against the defendant, Luc Desyr, was announced. [ A1:2. ]

An article in Metropolitan Report yesterday about a state prosecutor's announcement that Judge Vito J. Titone of the State Court of Appeals had been cleared of bribery allegations incorrectly described, because of an omitted word, a transaction between the judge and the lawyer who made the accusations. A paragraph giving Judge Titone's account should have said that the lawyer had helped the judge obtain some kitchen appliances at wholesale costs, that the judge paid either the lawyer or the distributor for them and that there was no connection between the transaction and the judge's decision in a case pending before him.

Buoyed by strong sales of its Macintosh personal computer, Apple Computer Inc. today reported its first increase in revenues in five quarters and also reported a profit for the third quarter ended June 27. Meanwhile, at the Burroughs Corporation profits also increased. The company reported a 41 percent rise in earnings on a sales gain of 9 percent.

BRETT WEISMAN, 6 years old, wearing a red T-shirt, a white leather skirt, a plastic anklet and no shoes, grabbed the Porthault-printed bolster from her bed and rode it like a hobby horse, leaping from the bed to her handwoven pastel carpet. ''Brett doesn't care as much about her room as I do,'' said her mother, Carol Weisman. ''She doesn't take care of it. This room was done for Carol. The next one will be done for Brett.''

The State Supreme Court ruled today that a prosecutor's use of challenges to exclude blacks from a jury violated a defendant's constitutional right to an impartial trial. In deciding the case, 6 to 1, the court said its decision represented ''a break with the past'' and held that the state constitution barred the removal of potential jurors who are members of a specific group ''on the basis of their presumed group bias.'' The decision, affirming an appellate division ruling, ordered a new trial for the defendant, Curtis Gilmore, 25 years old, of Newark. Mr. Gilmore, a black, was convicted in 1981 by an all-white jury in Union County of armed robberies of three gasoline stations.