Techs, led by Yahoo!, Intel, gain; Molson Coors gains; Vornado slips; trading still stalled

By Evan Weinberger

New York, Sept. 4 - Technology and large cap names were among the movers - in particular Intel Corp., Advanced Micro Devices Inc. and Molson Coors Brewing Corp. - on what proved to be a light trading day Tuesday.

Yahoo! Inc. convertibles also posted gains Tuesday as the company received a glowing report from a Bear Stearns analyst on the strength of a new advertising platform and rumors of strategic partnership talks.

Convertibles issued by Vornado Realty Trust were also relatively active Tuesday.

Market players began to trickle in after a long holiday weekend, but the dam did not break Tuesday as traders reported another slow day.

"It takes a little bit longer," according to one sellside trader. "Anyone who has those expectations will be let down. Toward the end of September is when deals will start getting done again."

A second trader expressed hopes that activity would pick up as the week wears on but was unsurprised at the lack of activity he saw Tuesday and wasn't expecting much more Wednesday. "Teachers may have gone back to work today, but not Wall Street guys," he said.

One overseas company announced plans to introduce new convertibles into the market. Geo Corp., a media sales and rentals company based in Kasugai-shi, Japan, says it will price ¥15 billion in zero-coupon senior unsecured convertible bonds due Sept. 28, 2012 soon. The convertibles are expected to price at some point before trading opens Wednesday.

The convertibles are talked at a 20% to 30% initial conversion premium. The company plans to use the proceeds to buy some new DVDs to rent out and to reduce interest-bearing liabilities.

Equity markets opened September, a traditionally down month, with a strong push on relatively uninspiring economic news Tuesday. The Institute for Supply Management reported that growth in the manufacturing sector slowed in August compared to July. Also, the Commerce Department said construction activity fell by 0.4% in August.

Neither of the reports was unexpected nor were they signs that the economy was crumbling. At the same time, they didn't change the market's hunch that the Federal Reserve would have to lower interest rates later in the month to help rebuild markets battered by subprime mortgages and the credit crunch.

The Dow Jones Industrial Average picked up 91.12 points, or 0.68%, for a close of 13,448.86. The Standard & Poor's 500 added 15.43 points, or 1.05%, for a 1,489.42 close.

The Nasdaq was the big gainer on the day, however, as investors looked to tech stocks Tuesday on reports that they were undervalued. The tech-heavy index closed at 2,630.24, a lift of 33.88 points, or 1.30%.

Given the instability in the market, one sellside analyst said that it might be a good idea to curb some of the enthusiasm, saying that it was unclear what effect a rate cut would actually have.

"I think confidence is foolishness at this point," the analyst said. "It could be a good market. It's just that the dominant theme in the market so far has been uncertainty."

Yahoo for Yahoo!

Tuesday was a good day to be an investor in Yahoo!, the Sunnyvale, Calif.-based internet service provider. A Bear Stearns analyst said the company's stock was a "top pick" for the next 12 to 16 months.

The analyst, Robert Peck, said in his Tuesday report that the newly activated Panama ad-targeting system would help Yahoo! in its struggle against Google Inc. in the ultra-important advertising revenue arena. The report also cited talk of "strategic partnerships" surrounding Yahoo!. Most of that talk has centered on Microsoft Corp. developing projects with Yahoo!, buying a stake in the firm or taking it over outright.

The report came as an unexpected boon to Yahoo!, which had seen its stock hit a 52-week low last week.

When the Bear Stearns analyst sneezed, investors caught the Yahoo! fever. Yahoo! stock (Nasdaq: YHOO) surged $1.24, or 5.46%, Tuesday.

And the company's zero-coupon convertible senior notes due April 1, 2008 closed at 120.88 versus a closing stock price of $23.97 Tuesday. They had finished trading Friday at 115.875 versus a stock price of $22.73.

Other tech issues on the move

In other technology convertibles news, Intel saw its 2.95% junior subordinated convertible notes due Dec. 15, 2035 close at 104.25 versus a closing stock price of $26.18 Tuesday. They had finished trading Friday at 102.875 versus a stock price of $25.75.

Stock in the Santa Clara, Calif.-based semiconductor producer gained 43 cents, or 1.67%, as bargain hunters trolled the tech sector.

Along those lines, Sunnyvale, Calif.-based Advanced Micro Devices (AMD), another semiconductor producer, saw its 5.75% convertible senior notes due Aug. 15, 2012 close at 86.5 versus a closing stock price of $13.17. They had finished trading Friday at 85.625 versus a stock price of $13.

AMD's 6% convertible senior notes due May 1, 2015 closed Tuesday at 89.25 versus a $13.17 share price. They finished trading Friday at just over 88 versus a stock price of $13 on Friday.

AMD stock (NYSE: AMD) gained 13 cents, or 1.31%, Tuesday.

Large-cap convertibles active

Investors looking for a relatively safe bet kept their eyes on large cap companies Tuesday. An example of one such company was Montreal-based Molson Coors Brewing and its 2.5% convertible senior notes due July 30, 2013.

The convertibles closed Tuesday at 98.41 versus a closing stock price of $90.45. They had closed Friday at 98.382 versus a stock price of $89.46.

Molson Coors stock (NYSE: TAP) added 99 cents, or 1.11%, to its price Tuesday.

Also changing hands were New York-based real estate investment trust Vornado Realty convertibles. The company's 3.875% convertible exchangeable senior debentures due April 15, 2025 slipped to 86.25 versus a closing stock price of $108.03. They had closed Friday at 86.375 versus a stock price of $106.59.

Stock in Vornado (NYSE: VNO) gained a robust $1.44, or 1.35%, Tuesday.

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