BIZ WATCH

By JOHN GREENWALD, ANITA HAMILTON, DANIEL KADLEC, VALERIE MARCHANT AND JANE VAN TASSEL

WALL STREET'S ELECTION WIN

Clinton may be President, but Wall Street won the election, in the form of a "status quo" rally that has even seasoned traders shaking their heads. The prospect of at least two more years of Democratic President Bill Clinton pitted against a Republican-controlled Congress is just the tonic investors seem to want. Since Nov. 1, when Clinton looked to be a lock, the Dow Jones industrial average has zipped past 6100,6200 and 6300, en route to a near 6% gain.

How long will the celebration last? "Common sense tells you it's got to end," says Hugh Johnson, market strategist at First Albany Corp. But he also points out that on a trailing 12-month basis, the Dow is up 15% or more for 18 consecutive months--a streak unparalleled since the 1950s. As long as the Clinton-Congress stalemate holds, "it's very hard to shoot holes in this picture," he says.

THE SURPRISING, UGLY FIGHT FOR CONRAIL

A nasty fight over a railroad? Not since the robber barons has the ownership of a set of tracks been so contested. The target: Conrail, the once tattered collection of government-owned freight lines that was created in 1976 and went public in 1987. CSX Corp. agreed to buy Conrail last month for more than $8 billion in cash and stock. Rival Norfolk Southern swiftly countered with a massive all-cash bid for Conrail of $10 billion, or $110 a share.

That's when the fight started. Despite Norfolk's munificence, Philadelphia-based Conrail is using Pennsylvania's antitakeover laws to reject the bid. Conrail says the CSX offer will be better in the long haul.

Wall Street isn't getting off at that station. "CSX and CRR, with the complicity of the Pennsylvania legislature, have effectively stacked the deck against an economically superior Norfolk Southern offer for Conrail," contends Donaldson, Lufkin & Jenrette analyst James M. Higgins. The contestants are headed for court.

CRUNCH TIME FOR CD-ROM MAKERS

The CD-ROM industry's gold Rush days are fading fast. Two years ago, anybody with an idea and a PC could create and sell his product. But a glut of titles is taking its toll on smaller firms.

The problem is shelf space. With nearly 9,000 titles out there, developers not only must compete for consumers' attention but they also have to pay retailers to stock their wares. That might cost $50,000 this Christmas season for a promotion at a regional chain. The casualties last week included the edu-tainment company Knowledge Adventure, being sold to CUC International (1995 sales: $1.9 billion), and Edmark, sold to IBM for $80 million. Last summer Humongous Entertainment, which makes the popular Freddi Fish series, merged with powerhouse GT Interactive. "I think it would have been very difficult to retain our market share through the Christmas season without GTI's help," says president Shelley Day.

WESTINGHOUSE BREAKS UP--IS AN EYE IN THE FUTURE?

Westinghouse Electric may have pioneered everything from the electric iron to radio to nuclear reactors for submarines, but in recent years the conglomerate has been a dim bulb on Wall Street. To create more juice, Westinghouse CEO Michael Jordan last week unveiled plans to emphasize the company's CBS television network and radio and TV stations and spin off the old-line industrial businesses--some of which date back to founder George Westinghouse--into a separate company. The $4.6 billion divestiture, which will keep the famous name and get its own CEO next year, will consist mainly of Westinghouse's power-generating systems and refrigerated transport business. Last year Westinghouse had sales of $6.3 billion and earnings of $15 million.

For Jordan, a former PepsiCo executive who joined Westinghouse in 1993, the breakup follows the $5.4 billion acquisition of CBS last year. By separating the broadcasting and industrial units, Jordan hopes to highlight the turnaround at CBS, which has passed abc in the ratings to become the No. 2 network, behind nbc. Once this spin-off is complete, Jordan's next task will be to find a new name for Westinghouse's broadcasting empire. Hey--how about CBS?