CNet gains 4 points; Collegiate Pacific higher; UnumProvident up; Wyeth rises, Schering drops

By Ronda Fears

Nashville, Jan.14 - Somewhat reversing worries over the internet business, several online advertising names like Yahoo! Inc., Ask Jeeves Inc. and CNet Networks Inc. were higher Friday ahead of earnings due in the next couple of weeks.

Virtually the entire market was higher heading into the three-day weekend but volume was very light, traders said, as the markets are closed Monday in observance of Martin Luther King's birthday. The bond market actually closed early Friday and many convertible seats were empty by early afternoon although converts continued to trade in regular hours along with stocks.

Even among those hanging around until the closing bell rang, many had "checked out mentally," with little business going on, a sellside market source remarked.

Advanced Micro Devices Inc. continued to rebound - at least the 4.75% converts added about a quarter-point on Friday - ahead of earnings when the market opens Tuesday after the holiday. AMD had sparked a slide in chip issues earlier in the week with a warning about upcoming results.

UnumProvident Corp. was nicely higher Friday, which a dealer attributed to recent credit widening.

Wyeth also got a nice boost with some hits on its floater, but other big pharmaceutical names like Schering-Plough Corp. were lower on a Banc of America Securities equity report highlighting the uncertainty for Big Pharma in 2005.

Airline paper got marked up significantly, but there was just not a lot of traffic in those converts, traders said. One sellside source noted, though, that FLYi Inc., formerly Atlantic Coast Airlines, has seen its 6% converts nearly double from the trough of 28 in October to around 47.5 now.

CNet rises ahead of results

Yahoo, Ask Jeeves and CNet shares led a sharp rise in internet stocks Friday, but convertible traders mentioned only the CNet paper as seeing any action as a result of the ebullient tone for online advertising companies ahead of earnings.

CNet's 0.75% convertible shot up 4 to 4.5 points to 98.25 bid, 99.25 offered while the stock climbed $1.15 on the day, or 11.87%, to close Friday at $10.84.

In part, CNet action was propelled by the line of thought that demand for online advertising continues to outpace supply and is sufficient for second-tier players like CNet to see a good chunk of new business, a dealer said.

The Internet Advertising Bureau estimates that internet advertising in 2004 topped $8 billion, a gain of 9.6 % from $7.3 billion generated in 2003.

Goldman Sachs upgraded CNet shares to in-line from underperform, with analyst Anthony Noto raising his 2005 earnings per share forecast to 23 cents from 20 cents, which encompasses growth in CNet's marketing services sales of 25% or roughly in line with his 26% growth forecast for the industry as a whole.

CNet is scheduled to report earnings after the market close Feb. 2.

Collegiate cheered on forecast

Collegiate Pacific Inc. roared higher Friday, with its convert gaining nearly 6 points, on a very cheerful projection from the company for results in fiscal second quarter.

For the quarter ended Dec. 31, the Dallas based uniform and sports equipment maker said it expects to report revenues of $23.5 million, which would be a huge gain from $4.2 million a year before and handily beat the estimate among analysts for $20.8 million.

The Collegiate Pacific 5.75% convertible shot up to 112 bid, 113 offered, which a sellside trader pointed out puts the terms at a 5.11% yield, up 21%. That was up from 106.125 bid, 107.125 offered on Thursday with a stock price of $12.31.

Collegiate Pacific shares Friday rose $1.26, or 10.24%, to end at $13.57.

The company "beat Street estimates in the slowest quarter of the year," the trader said, so the outlook seems very positive.

Collegiate Pacific anticipates releasing fiscal second-quarter earnings during the middle of February.

Wyeth up, Schering-Plough off

With a fuzzy new drug product picture for 2005, the Big Pharma group will be a mixed bag, analysts suggest. But on a buy rating for Wyeth stock, its convertible floater was finding buyers. Conversely, Schering-Plough got a sell rating and its convert was marked down, although traders noted little volume in the issue.

Banc of America Securities analyst C.J. Sylvester initiated coverage on the Big Pharma group, which has several other convertible names like Bristol-Myers Squibb Co. He put a buy rating on Wyeth, sell on Schering-Plough and a neutral rating on Bristol-Myers Squibb shares.

Sylvester also started Pfizer and Merck shares with a neutral rating, citing their controversial arthritis medications.

Merck's Vioxx was pulled for causing heart problems with prolonged use and Pfizer's Celebrex, still in circulation, is said to cause similar troubles - both causing extreme uncertainty about the outlook for drug products among the group. Bristol-Myers, in addition, has begun to seek buyers for its over-the-counter drug lines.

Wyeth's convertible floater added 0.375 point to 102.5 bid, 103 offered with a buyer when the stock was at $41.85 and the level was sustained through the afternoon, although the underlying stock went on to close up 43 cents, or 1.03%, at $42.28.

Schering-Plough's 6% mandatory due 2007 dropped 0.5 point to 55 while the tock lot 35 cents, or 1.69%, to end at $20.30.

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