Nokia knocked around on numbers; Sprint Nextel strengthens; Peabody Energy, Arch Coal cope

By Paul Deckelman

New York, April 18 - Traders saw Nokia Corp.'s two series of bonds pushed lower on Thursday after the Finnish maker of wireless handsets reported weaker-than-expected quarterly numbers, hurt by slower sales of some of its less-expensive basic phones even though its more expensive Lumia phones were seen doing well.

Sprint Nextel Corp.'s bonds remained among the most active issues for about the fourth consecutive session. The No. 3 U.S. wireless carrier's paper continued to firm off the lows to which its notes and bonds fell on Monday on the news that satellite TV broadcaster DISH DBS Corp. had offered to buy Sprint - but those bonds still remain well below the levels they held before DISH's initial announcement.

Bonds of coal producers such as Peabody Energy Corp. and Arch Coal Inc. were seen to have fairly held their own - even though Peabody reported a sharp decline in revenues from a year ago and slid into the red.

Also in the energy arena, the deeply distressed bonds of the Texas utility operator formerly known as TXU Corp. were seen to have traded up a little on Thursday as investors tried to make up some of the ground lost earlier in the week on the news that restructuring talks with the company's creditors were proving to be difficult.

Nokia knocked lower

A trader said that Nokia's 5 3/8% notes due 2019 were "maybe down a point" on disappointing first-quarter numbers.

He said that those bonds, which on Wednesday had traded between 95 and 96 bid, fell to a 941/2-95½ context on Thursday.

At another shop, a market source pronounced Nokia's 6 5/8% bonds due 2039 down as much as 2¾ points on the day, ending at 88 bid.

"There wasn't a ton trading," yet another market source said, "but they were lower" after the results.

He saw the 2019 bonds at 94½ bid, down 1½ points, while the 2039s were "a couple of points lower" at 88½ bid.

Nokia's New York Stock Exchange-traded shares meantime tumbled by 41 cents, or 11.45%, to end at $3.17. Volume of 135 million shares was triple the norm.

While sales of its new high-end Lumia phones improved solidly - Lumia competes with Apple's popular iPhones - Nokia lost market share in the cheaper phones category, hurt by a proliferation of lower-end phones using Google's Android operating system. As a result, its overall revenue numbers for the quarter fell to $7.64 billion, well under the $8.65 billion that analysts on average were expecting.

Nokia cut its quarterly net loss to 7 cents per share, but that was still larger than the roughly 5 cents per share of red ink Wall Streeters had predicted.

Sprint firming continues

Also in that telecom sector, a trader said that Sprint's bonds remained among the most active issues, with the company's Sprint Capital Corp. 6 7/8% notes due 2028 knocking down more than $21 million of big-block trades during the day, putting it high up on everyone's most-actives list.

He saw those bonds trading around 1001/2-to-100¾ bid.

He meantime saw Sprint Capital's 8¾% bonds due 2032 start easier, around 115 bid, but then they "crept up all day" to go out around 116 bid, up a point on the day, on volume of $17 million.

Sprint's bonds got clobbered early in the week as investors reacted badly to the news that satellite TV broadcaster DISH DBS offered to buy the Overland Park, Kan.-based No. 3 U.S. wireless carrier in a $25 billion cash-and-stock deal, with about $9 billion of that to be paid for by new debt.

The bonds began bouncing back on Tuesday and Wednesday and continued firming on Thursday, but they remained well below the levels they held before all of the takeover talk began; the 2032 bonds, for instance, had been trading around 123 bid, while the 2028s had topped the 102 bid mark back then.

Coal sector holds up

A trader said, "I don't think coals were much lower, maybe a little."

He said that "I thought those coals would be getting beat up," especially after Peabody Energy posted first-quarter results that were sharply worse than year-ago data.

But a market source at another desk saw the St. Louis-based coal producer's 6% notes due 2018 gaining 3/8 point to finish at 106¼ bid, on volume of $14 million, making it one of the busiest junk issues of the day.

Peabody's 6½% notes due 2020 gained 1 point on the day to end at 107½ bid. Cross-town rival Arch Coal's 7% notes due 2019 were likewise up by 1 point, ending at 89½ bid.

The gains in the coal bonds came even though Peabody reported that due to what its executives termed "challenging" conditions in the coal industry, revenues in the quarter ended March 31 tumbled to $1.75 billion from $2.02 billion a year ago. The latest quarterly figure was a little below the $1.78 billion that Wall Street was expecting.

On the earnings front, the company slid into the red, with a net loss of $19.4 million, or 9 cents per diluted share, versus a year-earlier profit of $178.3 million, or 63 cents per share, although the latest quarter's loss was actually less than the roughly 15 cents per share of red-ink that analysts on average were expecting. Adjusted EBITDA fell to $280.1 million from $511.5 million a year ago.

Despite its lackluster earnings and revenue performance, Peabody also reported progress in its debt-cutting efforts, with $100 million of debt repayments during the quarter and another $100 million anticipated by the end of May. The latter repayments would bring to $600 million the amount of debt that the company will have repaid over the past year.

TXU bonds better

A trader saw Texas Competitive Electric Holdings Co. LLC's 11½% notes due 2020 trading in a 77-to-78 bid context, which he called up ¼ point, while the legacy TXU Corp. 6½% notes due 2024 were trading around 73-74, which he said was up ¼ to ½ point.

"The real distressed ones," he said - Texas Competitive Electric's 15% notes due 2021 - traded up to about 25 bid from 24½ on Wednesday.

"So maybe all of them were a little better across the board, slightly," he said.

A second trader said that the TXU complex was "really not that active." He pegged the 15% notes as "straddling 25, pretty much unchanged."

But at another desk, a trader said that at least $13 million of Texas Competitive's 10¼% notes due 2015 had changed hands on the day anchored around 10 bid.

The TXU bonds were trying to battle their way back after the bonds took a hit earlier in the week as the Houston-based utility operator and its parent said restructuring negotiations failed to result in any agreements.

In a regulatory filing on Monday, corporate parent Energy Future Holding Corp. and several subsidiaries - including Texas Competitive - said that they had proposed a restructuring of the companies' capital structure to certain creditors. However, the parties were not able to reach an agreement and, according to the filing, talks were halted.

The companies - formerly officially and now more familiarly known as TXU - asserted that they would continue to explore options, either with their current proposal or via other avenues.

Sears slips back

Elsewhere, a trader said that underachieving department-store retailer Sears Holdings Corp.'s 6 5/8% notes due 2018 "traded down a couple of points" to the 98 bid level, although he himself had not traded any.

He said that volume in the Hoffman Estates, Ill.-based company was fairly light, with only $3 million having traded. He did not know why the bonds were off.

At another desk, a trader saw those bonds gyrating around between a low of 97 and a high of 101 before finally ending at 98¼ bid, but he said that throwing out the smallish odd-lot pieces and figuring in only round-lot trades, the bonds were actually only off by about a quarter-point.

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