Very thin trading session with many players out or gone early

By Ronda Fears

Nashville, Nov. 11- Trading was very thin on Veteran's Day as the broader markets declined on war worries.

Traders said it was difficult to determine any trends on such a slow day, but noted selling in some tech and telecom names while movements were mixed in the energy group.

"Mostly we were marking positions," said a dealer. "There was not much going on at all. It was very, very quiet today in converts."

Stocks were slow, as well, and bonds were closed.

"Now, obviously, with renewed war concerns, everything's lower," said Lehman Brothers convertible analyst Brendan Lynch.

"But there's nothing really to benchmark that against."

The Fed's rate cut and the U.N. Security Council's unanimous vote to support the U.S. resolution against Iraq continued to weigh on the markets.

Also negatively influencing the markets was Hewlett-Packard's announcement that Michael Capellas has resigned as president of the company to pursue other career opportunities.

Telecoms were also mostly weaker, notably Nextel Communications Inc.

Techs were mixed, with traders noting sellers of Emulex paper.

With the heightened prospects of war, traders said there were buyers for EDO Corp. while sellers took profits on Northrop Grumman Corp.

EDO Corp.'s 5.25% convertible due 2007 was quoted up 1.125 points to 96.25 bid, 97.75 asked with the stock up 52c to $17.76.

Northrop's 7.25% mandatory dropped 0.85 point to 107.59 on the NYSE as the stock fell $1.14 to $97.40.

"Of course, we're not talking about much in terms of volume but there were a few actual trades," a dealer said.

Hewlett-Packard's news launched the day into negative territory, although traders said the market's tone was really more of an overhang from last week's developments in interest rates and the Iraq situation.

The Hewlett-Packard 0% convertible due 2017 dropped 1.875 points to 40 bid, 42 asked while the stock lost $1.83 to close at $14.85.

Electronics names were feeling some of the impact as well, traders said, like storage networking firm Emulex.

The Emulex 1.75% convertible due 2007 was quoted down 2.25 points to 75.625 bid, 77.625 asked. The stock ended down $1.36 to $16.67.

Telecom names were weaker, one trader said, on more profit taking due to "a case of nerves that the optimism [for a rebound] has been over-rated, particularly in cellular names."

Nextel's 4.75% due 2007 fell 3 points to 81.75 bid, 83.75 asked. The 5.25% due 2010 slipped 0.75 point to 70 bid, 71 asked. And, the 6% due 2011 dropped 2 points to 83.25 bid, 84.25 asked.

Nextel shares closed down $1.027 to $10.973.

Motorola Inc. was also lower, traders said.

Corning Inc.'s 3.5% convertible due 2008 was quoted down 1.25 points to 58.5 bid, 60 asked as the stock ended off 24c to $2.16.

Techs in general were struggling.

Lucent Technology's convertible preferred were down about 11%, according to a market source, who put the 8% issue at 40.5 bid, 41.5 asked and the 7.75% issue at 32.75 bid. Lucent shares closed down 13c to $1.08.

Chip-related Photronics Inc. suffered after cuttings its revenue and earnings guidance for fiscal fourth quarter, saying that demand for its photomasks products remained under pressure.

Photronics said it expects to report a loss of $10.9 million to $11.7 million.

The company said, though, that it will show a net gain of about $1.7 million from the repurchase of a portion of its 6% convertible subordinated notes. Photronics said it bought $8 million in principal amount of the 6% notes, in addition to the $33.2 million of the issue in September.

Excluding extraordinary items, the company said the loss is seen between $2.6 million and $3.4 million.

The Photronics 4.75% due 2006 was quoted down 2.5 points to 76.125 bid, 77.125 asked. The 6% convertible was quoted at 85 bid, 86 asked.

Photronics shares closed down $1.02 to $10.70.

Energy and power issues were mostly lower as news surfaced that again put several of those names back in the spotlight regarding alleged wrong-doing in the California power crisis of 2000 and 2001.

Several energy and power issued were lower on a new round of federal sub poenas on the California electricity crisis of 2002 and 2001.

Mirant's 5.75% due 2007 were quoted down 5 points to 42.125 bid, 44.125 asked. The 2.5% due 2021 was quoted down 2 points to 37 bid, 39 asked. The stock lost 34c to $1.91.

Calpine Corp. also lost ground.

The Calpine 4% convertible due 2006 was quoted off 0.5 point to 44.125 bid, 45.125 asked as the shares slipped 18c to close at $3.19.

El Paso Corp.'s convertibles were said to be down by about 2%. The 0% was quoted at 30.375 bid, 31.375 asked. The common shares closed off 7c to $7.61.

Teco Energy Inc., though, regained a bit of ground on news that it had received written commitments for the renewal of the $300 million credit facility for its Teco Electric subsidiary. Teco added that it was making progress on plans for asset sales to increase liquidity and lower costs, as well as debt refinancings.

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