Alliant Techsystems gains; Beckman Coulter active, steady; Ciena quiet after earnings news

By Rebecca Melvin

New York, Sept. 8 - Alliant Techsystems Inc.'s convertibles were trading Wednesday after the aerospace and defense company announced plans to use funds from a corporate offering to redeem its 2.75% convertibles due 2024.

The Alliant 2.75% convertibles due 2011 moved up about a point to par, a New York-based sellside trader said.

Beckman Coulter Inc.'s convertibles continued to be among the convertible market's most active names after the medical-test maker announced the sudden resignation of its chairman and chief executive, Scott Garrett, early Tuesday.

Garrett's resignation comes after the company cut guidance twice this year and throws into question the current direction of the company.

Ciena Corp.'s convertibles were mostly quiet as their underlying shares moved higher after the communications networking equipment company reported a wider third-quarter loss on higher revenue.

Trading was fairly quiet ahead of the Jewish New Year holiday Thursday, but equities were higher, and "the feeling here is that converts improved on a dollar-neutral basis," a New York-based sellside trader said.

In economic news, the Fed beige book was released which cited continued economic growth but at a decelerated pace.

Alliant Techsystems active

Alliant's 2.75% convertibles due September 2011 traded up to 100, which was up about 0.8 point on the day.

The company said that it planned to redeem its 2.75% convertibles due 2024 with proceeds from a $350 million issue of 10-year senior subordinated notes that priced Wednesday at par to yield 6 7/8%.

The redemption will account for about $280 million of proceeds.

The news spurred short covering of the company's common shares.

"Guys are buying back their shorts," a sellsider said.

Shares of the Minneapolis-based defense contractor gained $2.84, or 4%, to $73.00 in heavier-than-average volume.

Beckman Coulter active, steady

Beckman Coulter's 2.5% convertibles due 2036 traded last at 101, which was unchanged on the day, after trading earlier at as low as 99.5 in early activity.

Beckman Coulter chairman and chief executive Garrett resigned effective Monday, the company announced Tuesday, and J. Robert Hurley, who has served as senior vice president of human resources and chairman of the company's Japan operations, was named interim president and CEO as the search for a successor begins.

Beckman Coulter has been very active, a sellsider said. "But half the volume has been between dealers today."

Shares of the company settled higher by 61 cents, or 1.4%, at $45.19.

But the company's prospects have been cast in doubt in recent months, and the common stock has declined 31% this year, including a slide early Tuesday. Earlier in the year, the company recalled a test for measuring a protein that signals heart problems due to faulty resets.

In July, the company cut its full-year guidance for a second time in 2010, citing the recall and resulting corrective actions. In addition, the company said its business wasn't rebounding from last year's weak conditions and that product delays also were taking a toll.

Ciena mostly quiet

Ciena's convertibles were mostly quiet Wednesday, traders said. But the Ciena 0.25% convertibles due 2013 traded at 87.375, with the shares on the rise. The Linthicum, Md.-based telecommunications technology company's stock gained 69 cents, or 5%, to $14.12 Wednesday.

Ciena's newest convertibles, the 4% bonds due 2015, traded Aug. 30 at 98 versus a share price of $13.00, which was down from levels well above par previously.

The company said that its revenue doubled from the same period last year, but costs grew faster. Operating expenses for the quarter ended July 31 were $243.6 million in 2010 from $97.6 million in 2009.

Losses grew from $26.5 million in the third-quarter of 2009, or 29 cents per share, to $1.18 per share. And revenue grew from $139.9 million in third-quarter 2009 to $312.4 million in third-quarter 2010.

Analysts had been expecting a loss of 33 cents per share and revenue of $387 million.

Ciena chief executive Gary Smith said the company still faces economic hurdles, although sales are growing.

"We see increasing levels of customer activity and continued strength in the fundamental demand drivers of our business; however, we remain cautious in the face of continuing macroeconomic uncertainties," Smith said in a statement.

Much of the revenue growth came from the recently acquired unit of Nortel Networks that Ciena won in a bankruptcy auction earlier this year. The quarter included $17 million in acquisition and integration-related costs and $2.2 million in restructuring costs. The integration of the Nortel business is more than doubling the size of Ciena.

Mentioned in this article:

Alliant Techsystems Inc. NYSE: ATK

Beckman Coulter Inc. NYSE: BEC

Ciena Corp. Nasdaq: CIEN

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