Medtronic recovers some; Intel down but not out; GM details batter Ford; LifePoint, Kodak down

By Evan Weinberger

New York, Oct. 16 - Medtronic Inc. convertibles rebounded some Tuesday after a tumble Monday due to a heart defibrillator recall.

Intel Corp. convertibles slid ahead of the semiconductor giant's earnings report, which beat Wall Street projections, after the close. Ford Motor Co. continued to give back its gains from last week, while LifePoint Hospitals, Inc. slid as well. Eastman Kodak Co. convertibles also had a tough day.

Volume was light in most issues, however, and one trader didn't have a good reason why. He did hazard a guess, however. "I'm not really sure why. We're into earnings season, but not really in the thrust of it," the trader said. That view was backed up by a trader on another desk.

Other suppositions included a continuing fear that the worst of the housing and mortgage crisis was not yet behind the economy. Treasury secretary Henry Paulson's public statements Tuesday calling the housing crisis a threat to economic growth only added to those concerns. "Oh, no question about it. Paulson was on TV today talking about how it could get worse," one analyst said.

The analyst cautioned that the economy had not moved into a repeat of the summer's credit crunch but said that banks and investors were showing a "reluctance to commit money until they know what's going to happen."

Stock markets had another bad day as oil prices were up (again) and Paulson and Federal Reserve chairman Ben Bernanke's spirits were down. Paulson was particularly downbeat, saying that the subprime mortgage crisis was a threat to economic growth and that the bottom had not yet been reached.

The Dow Jones Industrial Average was down 71.86 points, or 0.51%, for a 13,912.94 close. The close marked a rally from earlier depths of around 100 points.

The Nasdaq was down 16.14 points, or 0.58%, to close at 2,763.91. Yahoo! Inc. and Intel Corp. announced earnings that beat Wall Street expectations after the close.

The Standard & Poor's 500 lost 10.18 points, or 0.66%, to close at 1,538.53.

One final theory floated by a trader at still another desk was the room in the market for more convertibles. "We could definitely use some more issues," he said.

Even with concerns over the long-term health of the economy, biotech and tech companies with good credit would still be welcomed into the convertibles market. "This is one of the few open windows that's out there right now," he said.

Until then, save for the big news event like Medtronic, the trader expects to see a continuance of the trading around the edges with no big moves that he's seen recently. "This is a good delta trading market," he said.

Unfortunately, the New Issues Fairy didn't grant the trader's wishes Tuesday.

Medtronic recovers, slightly

On the day after, Medtronic recovered.

One day following Minneapolis-based Medtronic's recall of heart defibrillators led to a massive sell-off of the company's stocks and convertibles, both came back a little bit Tuesday.

Medtronic's 1.5% convertible senior notes due April 15, 2011 closed Tuesday at 104.43 versus a closing stock price of $50.30. They finished trading Monday at 103.367 versus a stock price of $50. The convertibles were trading at nearly 111 on Friday.

Medtronic's 1.625% convertible senior notes due April 15, 2013 closed Tuesday at 104.863 versus a stock price of $50.30. They closed Monday at 103.945 versus a stock price of $50.30. They closed Friday at nearly 112.

Medtronic stock (NYSE: MDT) gained 30 cents, or 0.60%, on Tuesday. The stock tumbled more than 11% on Monday.

Intel down but not out

Santa Clara, Calif.-based Intel's convertibles and stocks were down Tuesday before they announced earnings after the market close.

The leader in semiconductor production announced that its third-quarter earnings were up 43% late Tuesday. The company also announced that it plans to eliminate 2,000 jobs, so it will be interesting to see how investors react.

So far, so good, as the stock was up around 5% at 6:30 p.m. ET in after-hours trading.

Tuesday's close wasn't so good, as Intel's 2.95% junior subordinated convertible notes due Dec. 15, 2035 closed at 102.375 versus a stock price of $25.48. They closed Monday at 103.25 versus a stock price of $25.75.

Intel stock (Nasdaq: INTC) slid 27 cents, or 1.05%, on Tuesday.

Ford slides as GM details emerge

As details of General Motors Corp.'s deal with the United Auto Workers emerged Tuesday, Dearborn, Mich.-based Ford skidded. A Bear Stearns analyst said that the new GM-UAW deal will not have as big an effect on GM's cash flow in the near term as investors hoped.

Ford is set to begin its negotiations with the UAW soon.

In the meantime, Ford's 4.25% convertible senior notes due Dec. 15, 2036 closed Tuesday at 119.02 versus a closing stock price of $8.78. They closed Monday at 121.46 versus a stock price of $8.99.

Ford stock (NYSE: F) tumbled 21 cents, or 2.34%.

Kodak, LifePoint down

Brentwood, Tenn.-based private hospital operator LifePoint saw its 3.5% convertible senior subordinated notes due May 15, 2014 close Tuesday at 87.2812 versus a closing stock price of $28.44. The convertibles closed Monday at 88.1019 versus a stock price of $29.18.

LifePoint stock (Nasdaq: LPNT) fell 74 cents, or 2.54%, on Tuesday.

Rochester, N.Y.-based digital and film imaging company Eastman Kodak had another tough day on the street. Kodak's 3.375% convertible senior unsecured notes due Oct. 15, 2033 closed Tuesday at 108.124 versus a closing stock price of $28.16. They closed Monday at 110.275 versus a stock price of $28.95.

Kodak stock (NYSE: EK) sunk 79 cents, or 2.73%, on Tuesday.

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