BRIEFCASE BANKRUPTCY JUDGE CLEARS PG&E PLAN.

Byline: - Staff and Wire Services

SAN FRANCISCO - California's largest utility has sufficiently explained how it intends to climb out of debt; reassemble itself into several new, federally regulated companies; and pay its creditors, a federal bankruptcy judge ruled Wednesday.

That moves bankrupt Pacific Gas and Electric Co. one step closer to putting its plan for reorganization to its creditors for a vote, which U.S. Bankruptcy Judge Dennis Montali continues to estimate could happen as early as mid-June.

However, Montali said a competing plan for PG&E's future from state power regulators also looks likely to appear on the same ballot, despite a pending lawsuit from a consumer advocacy group that calls the plan illegal and a bad deal for California ratepayers.

PG&E filed for Chapter 11 bankruptcy protection more than a year ago, after California's energy crisis forced it into debt, which the utility claims stands at roughly $13.5 billion.

Windows removal abilities debated

WASHINGTON - Microsoft Chairman Bill Gates said Wednesday that the company has not tried to figure out how to remove elements of its Windows operating system, because the task would be impossible.

But Steven Kuney, a lawyer for nine states seeking tougher penalties against the software giant, pointed to a product Microsoft already offers that lets companies choose which components they want to put into Windows and automatically adds other, required portions.

The product, mentioned periodically during the case, is Windows XP Embedded. XP Embedded is made for devices like television set-top boxes and automatic teller machines, although it is possible to configure it as a full-featured desktop operating system.

HP boss becomes testy in testimony

WILMINGTON, Del. - Hewlett-Packard Co. chief Carly Fiorina became agitated on the witness stand Wednesday under questioning about company documents that reportedly show that the purchase of Compaq Computer Corp. would fall short of its financial goals.

In the second day of dissident HP director Walter Hewlett's lawsuit against the company, Hewlett attorney Stephen Neal asked Fiorina how the teams that were planning the merger arrived at their financial estimates. Charts introduced as evidence Tuesday showed growing gaps between the latest revenue and earnings projections and the figures HP had promised to investors.

Sighing several times in exasperation, Fiorina said Neal was drawing the wrong conclusions about the meaning of the charts because they were taken out of context, as if someone looked at selected snapshots instead of ``the whole movie.''

Recovery's pace has Fed upbeat

WASHINGTON - The economy showed more signs that it was on the road to recovery in March and early April, helped along by solid retail sales, brisk housing activity and some improvements in the nation's battered manufacturing sector, the Federal Reserve said Wednesday.

``The overall tone was positive,'' the Fed said in its latest survey of business conditions around the country. However, ``a few districts expressed qualifications about the pace of the recovery or the strength of their regional economies,'' the Fed added.

Xerox expecting $64 million loss

HARTFORD, Conn. - Xerox Corp. on Wednesday delayed reporting details of its first-quarter earnings, but said it was looking at a $64 million loss before the effects of changes in the way it records revenues from copier leases.

Xerox is paying a record $10 million civil penalty and revising financial statements back to 1997 to settle accounting fraud charges by the Securities and Exchange Commission.

Xerox is refiguring its earnings and paying the fine, but neither admits nor denies wrongdoing.