An American friend told me that the word "news" is an acronym compiled
from "North, East, West, South".

I worked in the newspaper business for 49 years before my retirement
in 1997 and had never heard of such an explanation. Can you confirm
it?

Hello.

Your American friend is wrong.

This is what is called an "urban legend."
See: Snopes' Urban Legends Reference Page: News
http://www.snopes.com/language/acronyms/news.htm

Also, see this explanation in a newsgroup post, hosted by Google
Groups:
http://groups.google.com/groups?hl=en&lr=&ie=UTF-8&client=googlet&selm=36C49FE6.C4888E38%40mclink.it

In truth, the word "news" comes from the Middle English "newes"
(meaning "new" things).
Source:  American Heritage Dictionary of the English Language: "news"
http://www.bartleby.com/61/48/N0084800.html

"New" is actually a very old word. 
Cognate words existed in Old Norse, Greek and Latin (and undoubtedly
in Indo-European languages that predated those languages, as well)
See: Bartleby: American HeritageŽ Dictionary of the English Language:
Indo-European roots: "newo-"
http://www.bartleby.com/61/roots/IE350.html

search strategy: 
"news is an acronym"
news, "north east west", acronym

I hope this help.

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Clarification of Answer by juggler-ga on 18 Apr 2003 02:33 PDT

That should have read:
"I hope this helps."