Intel richens on swap after earnings beat, job cuts; Alere drops outright, jumps on swap

By Rebecca Melvin

New York, April 20 – Intel Corp.’s convertible bonds traded actively and higher on an outright and dollar-neutral basis on Wednesday after the Santa Clara, Calif.-based semiconductor giant posted earnings and revenue that were better than expected and announced that it is cutting 12,000 jobs, or 11% of its workforce.

Both of the Intel convertible bonds traded better, but the Intel 3.25% convertible outperformed, a New York-based trader said.

“For all earnings thus far, the thinking is that estimates have come down far enough, so that companies are beating, and the market is shrugging off misses as one-time blips,” the trader said. “There are long-only buyers buying the dips.”

Alere Inc.’s convertible bonds traded down sharply on an outright basis but expanded on a dollar-neutral, or swap, basis as shares fell after Abbott Laboratories declined to confirm that it is committed to completing a proposed $5.8 billion acquisition of the Waltham, Mass.-based diagnostics and services company.

In February, Abbott said it would buy Alere for $56.00 per share in cash, or about $5.8 billion, representing a 51% premium over Alere’s share price at the time, and take on about $2.6 billion of Alere debt.

During a Wednesday earnings conference call, however, Abbott chief executive Miles White declined to commit to the purchase. The Alere bonds fell about 10 points on an outright basis but expanded 3 to 6 points on swap, a New York-based trader said.

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