Chips mixed in rebound debate; market choppy in seesaw session

By Ronda Fears

Nashville, Tenn., June 24 - Trading was choppy in a session that reversed a negative course around midday to end in positive territory. But traders were skeptical of any strength in the rally, attributing much of it to short covering.

There was modest flow, traders said, but no solid direction. Most traders described the market as lower.

Some strong gains were seen in the tech and health-related sectors, but energy and power names as well as cable and telecom were sharply lower.

With still no bankruptcy filing on Adelphia, the convertible bonds were all over the place, quoted anywhere from 8.75 bid to 13 bid while the shares dropped 2c to 13c in over-the-counter trading..

"Trading seemed fairly busy today," said Jeff Siedel, head of convertible research at Credit Suisse First Boston.

"I didn't really hear any one particular name a lot, though."

Chips were markedly mixed, as investors are torn between the positions of analysts downgrading the stocks and those upgrading them on recovery prospects.

"Whether you're a buyer or a seller in chips, you can find some supporting evidence. It looks like some of the trading going on is based on gut, intuition," said a trader at a major investment bank.

"But some of it obviously is the result of looking at the fundamentals. There's not really a lot of that done in tech areas. Most of the tech converts trade right alongside the common, with no one really doing any credit work. More people are paying attention to that these days."

Agere's new 6.5% due 2009 was quoted down 3.5 points to 85 bid, 85.5 asked with the stock off 13c to $1.89.

Amkor's two convertibles were sharply lower, too, as the stock dropped 51c to $5.61.

But ATMI's 5.25% due 2006 was quoted higher by 3.875 points to 120.75 bid, 121.75 asked as the common rose 94c to $21.46.

Telecoms were still struggling, however.

Lucent and Nortel continued to slide precipitously, and Nextel was still seeing market reaction to the Moody's action last Friday to reduce its outlook for the wireless sector.

"Nextel's were down a little on the credit downgrade, they are still adjusting to that," said a trader.

The Nextel 4.75% due 2007 was qutoed at 53.5 bid, the 5.25% due 2010 at 49.625 bid and the 6% due 2011 at 52.625 bid.

Nextel shares closed up 33c to $3.49.

Adelphia's situation continued to pressure the cable group, but no bankrupcty was filed Monday.

Reports said the compnay had procurred a $1.5 billion of debtor-in-possession financing, and the filing is anticipated later this week.

"There could be a new wave of trading in the [Adelphia] converts on the day of the filing, or the day after, depending on what is disclosed there in terms of assets and liabilities," said a convertible trader at a hedge fund in New Jersey.

"As it is now, though, they aren't moving."

Charter Communications is still feeling negative impact from the Adelphia events, however.

The Charter 5.75% due 2005 was down 2.5 points to 58.25 bid and the 4.75% due 2006 lost 2.75 point to 52 bid as the stock dropped 43c to $4.19.

Comcast, however, was unchanged to slightly higher with the stock gaining 53c to $24.82.

In the primary market, sources were anxious for details on the Mirant Corp. deal mentioned in the company's conference call.

"We've not heard anything definite on it, yet. They [Mirant] may still be shopping for a banker for the deal," said a convertible fund manager in Boston.

"It feels like a holiday week, but that's not until next week. That's going to be dreadful."

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