Delta investors flee Allscripts, flock to Equinix; Molina, Amkor up; cost-cutting helps Advanced Medical Optics

By Evan Weinberger

New York, Feb. 14 - Allscripts Healthcare Solutions Inc. convertibles took a pounding on earnings Thursday.

Equinix Inc. convertibles had a happier Valentine's Day.

Molina Healthcare Inc. convertibles moved higher on the company's fourth-quarter performance, as did convertibles issued by Amkor Technology Inc.

Advanced Medical Optics Inc. had an altogether dreary earnings report and yet moved higher Thursday.

Intel Corp. convertibles sank after Goldman Sachs delisted the semiconductor maker's stock from its "conviction buy list."

Meanwhile, a fall in Intel stock helped sink stock markets.

So did word from Washington. Federal Reserve chairman Ben Bernanke brought downbeat tidings to Congress Thursday, saying that the outlook for the economy had "worsened in recent months."

That sent the markets tumbling, with all three major indices giving back almost all of their gains from Wednesday. The Standard & Poor's 500 gave it all back, actually.

The Dow Jones Industrial Average fell 175.26 points, or 1.40%, to close at 12,376.98.

The Nasdaq tumbled 41.39 points, or 1.74%, to 2,332.54.

And the S&P gave back the 18.35 points, or 1.34%, it added Wednesday to close at 1,348.86.

No new issues priced Thursday and none were announced after the close.

Allscripts pounded on earnings

Chicago-based medical software maker Allscripts Healthcare Solutions suffered a big blow in both its stock and convertibles Thursday following its fourth-quarter earnings announcement Wednesday after the close.

The company posted a net income of $5.9 million, or 10 cents per share, for the last three months of 2007 after showing profits of $4.5 million, or 8 cents per share, in the same period of 2006.

The 2007 fourth-quarter numbers missed Wall Street estimates by a significant margin. A Thomson Financial poll of analysts expected profits of 14 cents per share, according to the Associated Press.

Allscripts also provided 2008 guidance that worried investors.

The predictable ensued, but on a grand scale.

Allscripts Healthcare's 3.5% convertible senior notes due July 15, 2024 closed Thursday at 119.65 versus a closing stock price of $11.27. They closed Wednesday at 150.307 versus a closing stock price of $15.39.

Allscripts Healthcare stock (Nasdaq: MDRX) plummeted $4.12, or 26.77%, on the day.

Equinix moves other way

Meanwhile, Foster City, Calif.-based data center equipment maker Equinix posted a fourth-quarter loss, but an upbeat projection for 2008 led to a rise in the company's securities.

Equinix lost $6.1 million, or 17 cents per share, in the last three months of 2007 versus earnings of $9.1 million, or 28 cents per share, in the same period of 2006.

Analysts polled by Thomson Financial expected the company to lose 7 cents per share for the fourth quarter of 2007, according to the AP.

However, the company raised its earnings estimates for 2008 due to an increase in demand.

Equinix's 3% convertible subordinated notes due Oct. 15, 2014 closed Thursday at 102.718 versus a closing stock price of $77.15. They closed Wednesday at 100.26 versus a closing stock price of $72.75.

Equinix's 2.5% convertible subordinated notes due April 15, 2012 closed Thursday at 101.045 versus a closing stock price of $77.15 after finishing Wednesday at 97.9562 versus a closing stock price of $72.75.

Equinix stock (Nasdaq: EQIX) moved up $4.40, or 6.05%, on the day.

A trader who was watching Allscripts and Equinix said they were similar names that were linked in his mind. "Both names are interesting in the sense that both were very high delta - in the money options - names where the underlying common has cracked but not to the point of being busted," the trader said. "My interpretation is that people are still interested in 'delta' names and are still sitting on the sidelines with respect to 'credit' names."

Molina earnings spark rise

An analyst speculated Wednesday that Long Beach, Calif.-based health management organization Molina Healthcare's earnings would spark some trading.

They did that, along with a rise in the convertibles.

Molina said that a surge in new memberships led to a rise in its fourth-quarter 2007 profits to $17.9 million, or 63 cents per diluted share. The HMO saw fourth-quarter profits of $11.6 million, or 41 cents per diluted share, in 2006.

That beat the Thomson Financial poll, which pegged fourth-quarter earnings at 56 cents per share, according to the AP.

Molina's 3.75% convertible senior notes due Oct. 1, 2014 closed Thursday at 107.51 versus a closing stock price of $35.20. The convertibles closed Wednesday at 103.794 versus a stock price of $33.55.

Molina stock (NYSE: MOH) picked up $1.65, or 4.92%, on the day.

Amkor jumps on earnings

Chandler, Ariz.-based semiconductor testing company Amkor Technology posted a steep rise in earnings Wednesday after the close.

Its net income was up 58.6% for the last three months of 2007 over the same period in 2006. In 2007's fourth quarter, Amkor saw profits of $93.7 million, or 46 cents per share. In the same period the previous year, Amkor profits stood at $59 million, or 30 cents per share.

The Thomson Financial analysts' poll expected a profit of 28 cents per share for Amkor in the fourth quarter of 2007, according to the AP.

Amkor's 2.5% convertible senior subordinated notes due May 15, 2011 closed Thursday at 100.525 versus a closing stock price of $10.67. They closed Wednesday at 93.0542 versus a closing stock price of $9.40.

Amkor stock (Nasdaq: AMKR) jumped $1.27, or 13.51%, Thursday.

EYE sees gain

Santa Ana, Calif.-based eye care company Advanced Medical Optics lost $12.3 million, or 20 cents per share, in the fourth quarter of 2007. The company lost $7.6 million, or 13 cents per share, in the fourth quarter of 2006.

The loss was driven by a recall of its contact lens solution early in the quarter and some one-time charges.

A Thomson Financial survey expected a loss of 6 cents per share, the AP said.

Advanced Medical Optics announced a cost-cutting plan that included the layoffs of around 150 employees at the time of its earnings statement.

That cushioned the blow, and Advanced Medical Optics' 3.25% convertible senior subordinated notes due Aug. 1, 2026 closed Thursday at 75.5125 versus a closing stock price of $23.29. They closed Wednesday at 73.8185 versus a closing stock price of $21.26.

Advanced Medical Optics' senior subordinated convertible notes due July 1, 2025 closed Thursday at 83.035 versus a closing stock price of $23.29. They closed Wednesday at 81.637 versus a stock price of $21.26.

Advanced Medical Optics stock (NYSE: EYE) gained $2.03, or 9.55%, on the day.

Goldman says Intel vulnerable

Goldman Sachs said Santa Clara, Calif.-based chipmaker Intel was among the technology companies most vulnerable to an economic downturn, or recession.

So while the investment bank didn't downgrade the company, it did remove Intel from its "conviction buy list" Thursday.

That sent the stock tumbling, and the convertibles fell as well.

Intel's 2.95% junior subordinated convertible notes due Dec. 15, 2035 closed Thursday at 96.739 versus a closing stock price of $20.46. They closed Wednesday at 97.8075 versus a closing stock price of $21.21.

Intel (Nasdaq: INTC) fell 75 cents, or 3.54%, on Thursday.

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