February 4, 1992

NEW YORK CITY IN COLD BLOOD IN QUEENS Two young girls, ages 2 and 5, were gunned down in a quiet Queens neighborhood Sunday night, apparently by a band of robbers who ransacked the house for money and jewels, then shot them both in the head to guarantee their silence. And yesterday, the authorities said they believed that the couple next door -- the children's baby sitter and her husband -- had participated in the crime. A1. THE REFLECTIONS OF MR. GOTTI John Gotti, confidently urging his co-defendant not to be bitter about their racketeering case, declared that "we're going to beat this." In an impromptu conversation while waiting for jury selection to resume in Federal Court in Brooklyn, the accused mob chieftain mused about a series of subjects, from the Mike Tyson rape trial to the waistlines of his own lawyers (compared to those of the prosecutors). B3. WHAT WILL THEY THINK OF NEXT? It's not HBO, and maybe cable viewers won't love it the way they love their MTV. Crosswalks, New York City's new municipal cable network, is the place to dial for "Reducing Your Garbage" or "Early Warning Signs of TB" or "How to Polish Your Resume." B3. ONE ISLAND, INDIVISIBLE The Federal Government wants to take a piece of Ellis Island from New York and give it to New Jersey, at least for the duration of a lawsuit brought by a former Government employee. But an appeals court has refused to cooperate. B3. Lawyers give opening statements in second St. John's trial. B3. A new library for the handicapped. B3. REGION ASSURANCES ON WELFARE PLAN Governor Florio received the first direct assurances from the Bush Administration that it would help clear away Federal obstacles to New Jersey's controversial new welfare plan. B4. THE MORE THINGS CHANGE . . . Despite a bipartisan agreement to keep the 205th Legislature from turning into what legislative leaders call a "bill factory," New Jersey lawmakers have pre-filed the traditional glut of bills, from an act to outlaw surrogate parenting for money to one that would designate as the state song a five-stanza ditty that praises New Jersey's farmland, flowers and highways. B4. AN EMPTY ROOM WITH A VIEW The most obvious symbol of what the Port Authority of New York and New Jersey calls its new leaner image sits high above New York Harbor, on the 44th floor of the World Trade Center. Until Dec. 20, it was a plush executive dining room. Now it is an empty room. B5. INTERACTIVE TELEVISION For more than 20 minutes, 18 second-graders at the 13th Street School in Newark donned earphones, stared at television screens and answered questions posed by colorful puppets by pressing buttons on a remote-control unit. The pupils were demonstrating a new individualized television teaching program that its developers say is the first of its kind in the nation. B5. Nassau legislators agree on something. B5. Gas explosions cause fire in Wallington, N.J., diner. B5. Neediest Cases B2 Our Towns B5

When American automobile workers were seen on television last month bashing in the hood of a Japanese car, Ron Thornberry, a longshoreman on Puget Sound, did not like what he saw. As a dock worker at a port where the Japanese are the No. 1 customer, Mr. Thornberry fears that one international insult too many could escalate into a lost job for him and his union brothers. And when Japanese investors came forth two weeks ago with an offer to buy the Seattle Mariners as a way to keep the baseball team from leaving town, they were hailed here as civic heroes. As a delegation led by Gov. Booth Gardner of Washington got set to plead their case with Fay Vincent, the baseball commissioner, on Tuesday in New York, there were fears that the deal would be a casualty of the latest round of cross-Pacific insults.

Amid the kind of mayhem that can be created only by kids and public relations, Bobby Bonilla, the New York Mets' $29 million man, yesterday gave some of his windfall back to the Bronx schools that set him on his way. Nearly lost in the considerable hoopla was that his largesse will extend even to his old high school, which he has ignored since its principal forced the resignation of his beloved former baseball coach.

The LTV Corporation said today that it had agreed to sell its historic, and profitable, aerospace and missile businesses to a new company formed by the Lockheed Corporation and the Martin Marietta Corporation. Terms of the deal were not disclosed, but analysts estimated the price at about $350 million in cash. Most of the money will be used by the company, which has been in bankruptcy for more than five years, to meet its pension obligations.

The trial of a white Teaneck police officer accused of shooting a black teen-ager resumed this morning with the state police replacing sheriff's officers in handling security outside the courtroom and prosecutors raising questions about the crude handgun the police say they found in the teen-ager's pocket after his death. After concluding its cross-examination of the defendant, 31-year-old Officer Gary Spath, the prosecution attempted to determine who had possession of the handgun in the week after the shooting and how one of the eight .22-caliber cartridges the police say they found in the gun developed a nick on its rim, as if it had been struck by a firing pin.

SEVEN thousand feet above the desert of northern Chile, stars and galaxies blaze like beacons in the clear night sky, drawing legions of astronomers to this great United States observatory. But there is an uneasy feeling among many of the scientists here that the salad days of United States astronomy are drawing to a close and that new European supertelescopes are destined to leave American astronomy far behind. Already the European Southern Observatory, visible from here on the distant ridge line at La Silla, is operating a ground telescope that astronomers regard as the finest in the world.

William H. Gates, the chairman of the Microsoft Corporation and the world's wealthiest computer programmer, said yesterday that he was dismissing Michael R. Hallman, the president he selected two years ago. Mr. Gates, a brilliant and demanding boss known for bombarding employees with electronic mail at all hours of the night, bluntly said that Mr. Hallman just did not measure up. "He was doing a lot of the parts of the job well," Mr. Gates said in a telephone interview yesterday. "But as we were thinking through new strategy, I wasn't satisfied that he was the right person for the job."

Standing in a nondescript conference room in a convention hotel in East Brunswick, N.J., James T. Fitzgerald does what he has been doing for the last 25 years: pitching the Central Intelligence Agency to aspiring recruits. "It's not like the James Bond movies," he explains to 28 men and a woman, college graduates invited to the orientation on the basis of their resumes. "The more you learn about the C.I.A., the more you read about it, the more unromantic it becomes."

Companies LTV agreed to sell its aerospace and missiles divisions to a new company formed by Lockheed and Martin Marietta. [ Page D1. ] Pratt & Whitney appears to be making a comeback, after losing much of the aircraft engine business to G.E. [ D1. ] Microsoft's chairman is dismissing the president he selected two years ago. Michael R. Hallman will be replaced by a three-memberoffice of the president. [ D1. ] American Express plans to sell up to 45 percent of its Information Services Corporation in an initial public offering. [ D1. ] G.M. raised the dividend on its class E stock and declared a 2-for-1 split. [ D2. ] GM Hughes Electronics plans to use its flight-simulator technology to entertain the public. [ D6. ] RJR Nabisco had a fourth-quarter profit of $161 million and reported its first annual profit since a 1987 leveraged buyout. [ D12. ] Dow Corning's earnings fell 35.3 percent. [ D12. ] Capital Cities/ABC's net income fell 34.5 percent. [ D21. ] McGraw-Hill had lower earnings for the quarter and the year. [ D21. ] Bankers Trust has withdrawn from a tentative agreement under which it would have acquired Integrated Resources. [ D4. ] The Economy A White House effort to rally governors behind President Bush's economic plan degenerated into a confrontation. [ A1. ] U.S. purchasing managers said the overall economy expanded slowly last month, although business continued to deteriorate for manufacturers. [ D1. ] Construction spending declined 0.2 percent in December. For the year, spending tumbled 9.3 percent. [ D13. ] The New York State Legislature passed banking legislation that would save 1,400 jobs for Long Island but would raise credit card costs for millions of people across the country. [ D3. ] The Justice Department will increase the number of investigators assigned to the health-care industry. [ A16. ] International Japan's Prime Minister added his voice to those of Japanese politicians who have found fault with the way Americans work. Kiichi Miyazawa said that America "may lack a work ethic," and that some of its economic ills resulted from too many college graduates' heading to Wall Street instead of "producing things of value." [ A1. ] When one part of the U.S. bashes Japan, the Pacific Northwest winces. In the last month, the region has seen an outpouring of support for Japan unmatched in modern times. [ A1. ] German steel companies agreed to a 6.4 percent pay increase that is expected to set the pace for other wage negotiations. [ D3. ] Finnish frontier guards are ready to fend off Russian invaders. But instead of guarding against tanks and troops, they are watching for smugglers, con men and weary refugees. [ A7. ] Markets Bond prices dropped and long-term interest rates rose again, amid market concern that the economy may be recovering. [ D16. ] Stocks edged up in trading marked by swift, if moderate, drops and rebounds. The Dow industrials closed at 3,234.12, up 10.73. [ D8. ] The dollar fell against European currencies but rose against the yen. [ D17. ] Oat futures prices rose the limit. [ D17. ] Today's Columns A cloud behind the silver lining: Fewer companies are cutting or cancelling dividends, and more are raising dividends. Yet, in the past, such good news has often been followed by falling stock prices. Floyd Norris: Market Place. [ D1. ] Some executives have been surprised to find they have been spending more than they saved on elaborate programs to cut health care spending. Milt Freudenheim: Business and Health. [ D2. ] Voters could register complaints about political ads under a program to be introduced today. Stuart Elliott: Advertising. [ D21. ]

Just back from a quick visit to the United States, Prime Minister Kiichi Miyazawa added his voice today to those of other Japanese political leaders who have found fault recently with the way Americans perform in the workplace. He said that America "may lack a work ethic," and that some of the country's economic ills came about because too many American college graduates headed to Wall Street in the 1980's rather than "producing things of value."

TWO years after the first wave of highly educated, and often remarkably talented, Soviet immigrants arrived in Israel, thousands of research scientists, engineers, doctors and technicians remain without jobs or the hope of ever working here in their professions. With the help of the Government and their fellow Israelis, most now have homes, few are hungry, and many have even found sporadic employment. But the nearly 400,000 immigrants who have arrived here since 1989 have more than doubled the nation's already plentiful supply of scientists, severely straining its tiny university and research establishment.

As expected, the Republicans introduced legislation today to roll the 7 percent sales tax back to 6 percent, but they refused to say how they would replace the estimated $608 million in revenue that would be lost. The long-promised legislation had 54 Republican co-sponsors, enough to pass it with three votes to spare and without a single Democratic vote.