Countrywide, Fannie Mae, E*Trade down as financials tumble; SunPower, Suntech Power brighten dark day

By Evan Weinberger

New York, Nov. 26 - Countrywide Financial Corp., Fannie Mae and E*Trade Financial Corp. convertibles were again active, and again lower Monday as the subprime mortgage crisis continued to hang over the economy's head as investors returned from Thanksgiving.

EMC Corp. convertibles continued their downward trajectory, and Intel Corp. convertibles fell as well.

"The harder something's been hit, the harder it's getting hit," an analyst said, describing the one notable trend on the market's return Monday.

It wasn't all bad news on the day, as Best Buy Co. Inc. convertibles traded up following solid consumer turnout during Black Friday. But lower profit margins from one-day sales as well as lower per-shopper spending put a damper on the holiday spirit.

AtheroGenics Inc. and Cell Therapeutics Inc. traded up in the biotech sector, while SunPower Corp. led the way for solar energy convertibles. Suntech Power Holding Co. Ltd. also moved higher, while Evergreen Solar, Inc. convertibles bucked the bright news from solar and traded lower.

Convertibles activity remained lethargic Monday, which surprised many observers. One trader observed that Monday was among the quietest days he's seen so far this year. "It's really dead. I mean, there's not even news headlines coming across," another analyst said. "You've got four weeks to do business right now, and today's the first day of that. And you'd think, like the shoppers, we'd all be lined up at 5 a.m. to get some deals done."

No new issues priced Monday, and no new deals were announced as of this writing.

Stock markets followed a recent pattern of trading within a small range early before either shooting up or, more often, spiraling down Monday. Renewed credit concerns and word that the New York Federal Reserve would inject a further $8 billion into the economy to increase liquidity - a usual step this time of year but larger than years past - sent the major stock indices tumbling in late afternoon trading.

By the end of the day, the Dow Jones Industrial Average lost 237.44 points, or 1.83%, to close at 12,743.44. Monday's close put the Dow down 10.3% from its high in October, moving the recent downturn just past a correction.

The Nasdaq gave back 55.61 points, or 2.14%, to close at 2,540.99.

The Standard & Poor's 500 took the biggest thrashing, closing at 1,407.22, a loss of 33.48 points, or 2.32%, Monday.

Fannie Mae, Countrywide, E*Trade fall

With more dispiriting news coming out of the financial sector Monday - Citigroup announced that it will cut costs, which led to reports of "massive" layoffs in the media - Washington-based government supported mortgage giant Fannie Mae and Calabasas, Calif.-based mortgage lender Countrywide had another tough day.

Fannie Mae's 5.375% series 2004-1 convertible perpetual preferred stock traded up for much of the morning but was eventually pulled down by the weight of Fannie's stock losses. The preferreds (NYSE: FNM-PI) closed at $37.09, a loss of $1.11, or 2.91%, on the day.

Fannie Mae stock (NYSE: FNM) closed down $3.28, or 10.19%, at $28.92 on the day.

Countrywide's Libor minus 350 bps series A convertible senior debentures due April 15, 2037 closed Monday at 77.9205 versus a closing stock price of $8.64. They closed Friday at 78.7318 versus a stock price of $9.65.

Countrywide's Libor minus 225 bps series B convertible senior debentures due May 15, 2037 closed Monday at 72.9727 versus a stock price of $8.64 after a Friday close at 74.4188 versus a stock price of $9.65.

Countrywide stock (NYSE: CFC) lost $1.01, or 10.47%, on the day.

Renewed concerns over New York-based online financial institution E*Trade drove down the company's 6.125% common equity units due Nov. 18, 2008. The equity units (Nasdaq: ETFCP) lost $1, or 11.90%, Monday to close at $7.40.

E*Trade stock (Nasdaq: ETFC) fell even farther, to $4.60, a loss of 73 cents, or 13.70%, Monday.

EMC's slide continues

Hopkinton, Mass.-based data storage company EMC had another tough day Monday as it continues to fall from its highs from earlier in the year.

EMC's 1.75% convertible senior notes due Dec. 1, 2011 closed Monday at 130.346 versus a closing stock price of $17.37. They closed Friday at 134.093 versus a stock price of $18.45.

EMC's 1.75% convertible senior notes due Dec. 1, 2013 closed Monday at 132.07 versus a stock price of $17.37 after finishing Friday at 135.46 versus a stock price of $18.45.

EMC stock lost $1.08, or 5.85%, on the day.

Intel down as demand slackens

Reports of slackening demand for computer chips Monday helped drag down the world's largest semiconductor producer, Santa Clara, Calif.-based Intel.

Intel's 2.95% junior subordinated convertible notes due Dec. 15, 2035 closed Monday at 102.581 versus a closing stock price of $24.37. They closed Friday at 103.524 versus a stock price of $25.07.

Intel stock (Nasdaq: INTC) lost 70 cents, or 2.79%, in trading Monday.

Black Friday lifts Best Buy

Black Friday marked the beginning of the holiday shopping season, and retail outlets across the country marked down prices to draw in shoppers. The deals worked, to a certain extent, with electronics retailers leading the way. Black Friday (and Saturday) sales were up around 8% over the same period last year, beating expectations. But in a sign that consumers may hold back some this year, per-shopper spending was down 3.5%, according to the National Retail Federation. And with the deep discounts, profit margins for retailers are unclear at this point, analysts told Prospect News.

That mixed news helped Minneapolis-based electronics retailer Best Buy's convertibles and stocks Monday. Best Buy's 2.25% convertible senior notes due Jan. 15, 2022 closed Monday at 113.291 versus a closing stock price of $48.25. They closed Friday at 112.56 versus a stock price of $48.02.

Best Buy stock (NYSE: BBY) moved up 23 cents, or 0.48%, on Monday.

AtheroGenics, Cell Therapeutics gain

Alpharetta, Ga.-based biotech AtheroGenics moved higher Monday. The company's 1.5% convertible senior unsecured notes due Feb. 1, 2012 closed Monday at 14.79 versus a closing stock price of 73 cents. They closed Friday at 14.1 versus a stock price of 67 cents.

AtheroGenics stock moved up 6 cents, or 8.96%, on Monday.

Seattle-based cancer treatment developer Cell Therapeutics also moved higher on the day. The biotech's 7.5% convertible senior notes due April 30, 2011 closed Monday at 67 versus a closing stock price of $2.65. They closed Friday at 66.13 versus a stock price of $2.50.

Cell Therapeutics' 6.75% convertible senior notes due Oct. 31, 2010 moved up to 66.7 versus a stock price of $2.65 from 65.95 versus a stock price of $2.50.

The firm's 4% convertible senior subordinated notes due June 15, 2010 closed Monday at 54.44 versus a stock price of $2.65 after finishing Friday at 53.78 versus a stock price of $2.50.

Cell Therapeutics stock (Nasdaq: CTIC) gained 15 cents, or 6%, in trading Monday.

SunPower, Suntech Power up

With Congress again talking about a new energy bill that would boost renewable resources, several solar power companies saw strong days Monday despite the general market downturn.

San Jose, Calif.-based solar power products maker SunPower saw its 0.75% convertible senior debentures due Aug. 1, 2027 close Monday at 144.616 versus a closing stock price of $108. They closed Friday at 141.464 versus a stock price of $105.97.

SunPower's 1.25% convertible senior notes due Feb. 15, 2027 closed Friday at 196.424 versus a stock price of $108 after finishing Friday at 190.943 versus a stock price of $105.97.

SunPower stock added $2.03, or 1.92%, in trading Monday.

Wuxi, China-based photovoltaic cell producer Suntech Power saw its 0.25% convertible senior notes due Feb. 15, 2012 close Monday at 154.89 versus a closing stock price of $67.48. They closed Friday at 154.365 versus a stock price of $68.05.

Suntech Power stock didn't see the gains that SunPower did. Suntech (NYSE: STP) lost 57 cents, 0.84%, on the day.

Evergreen Solar under a cloud

The sun didn't shine equally on solar energy components producers. Marlboro, Mass.-based photovoltaic cell producer Evergreen Solar saw its 4.375% convertible subordinated notes due July 1, 2012 close Monday at 201.84 versus a closing stock price of $12.41. They closed Friday at 203.788 versus a stock price of $12.59.

Evergreen Solar stock lost 18 cents, or 1.43%, on Monday.

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