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Technology Stocks : ADI: The SHARCs are circling! -- Ignore unavailable to you. Want to Upgrade?

To: BostonView who wrote (2223)	9/27/2000 12:33:34 PM
From: Jim Oravetz	Read Replies (1) \| Respond to of 2882

Thanks for the input, BV. The CDMA reference also sounds great as it seems to be the winning the race as the technology "standard" for 3G networks. GSM still has plenty of legs left and should produce some nice profits for ADI. Here is the Reuters link on the ADI conv. Analog Devices Sells $1 Billion In Notes By Reuters Sep 26, 2000 (10:38 AM) URL: techweb.com NEW YORK -- Chip maker Analog Devices Inc., benefiting from a dearth of new high-quality convertible bonds, said Tuesday it privately sold $1 billion of convertible notes to help fund growth. Analog (stock: ADI), Norwood, Mass., took advantage of investors' desire for bonds with normal structures from well-known companies as it completed the biggest U.S. convertible bond sale in nearly five months. "It's a known name in the convertible market, and it always helps if investors are familiar with their story," said Jeff Seidel, director of global convertible research at Credit Suisse First Boston. "It was priced relatively inexpensively, given that it is a strong investment-grade credit." Analog's five-year subordinated notes, which it cannot call away for three years, priced at par. The notes carry a coupon of 4.75 percent, at the high end of the 4.25 to 4.75 percent range expected. They are convertible into Analog common stock at $129.78 a share, a 45 percent premium over the stock's Monday closing price on the New York Stock Exchange of $89 1/2. A 45 to 50 percent conversion premium was expected. Analog's sale was the largest in the convertible bond market since electronics manufacturing service provider Solectron Corp. (stock: SLR), Milpitas, Calif., sold $2 billion on May 3. Salomon Smith Barney arranged Analog's sale, sources said. A convertible bond is a hybrid security that usually offers current income and can be converted into company stock. Its fortune is closely tied to the underlying stock price. Analog Devices said in a statement it plans to use proceeds to acquire complementary businesses, products or technologies, and for capital expenses and working capital. "The company is currently engaged in acquisition discussions with several companies which, if acquired by the company, could require the use of a substantial portion or all of the net proceeds," it said. Credit rating agency Moody's Investors Service rates Analog's convertible debt "A3," its seventh highest investment grade. Another agency, Standard & Poor's, rates it "BBB-plus," roughly one notch lower. Such ratings set Analog's bonds apart from most convertible bonds sold this year by technology-related companies. Most of these have non-investment grade, or junk, ratings. Also, Analog's bonds are among the few new higher-quality convertible bonds not to carry a 20-year maturity and zero-coupon structure. These, investors have said, often appear costly, and are best suited for hedge funds. "There have been a lot of high-premium zeroes in the investment-grade sector, and [Analog] will give investors some income in what remains a popular sector," said Seidel. The 45 percent conversion premium, while higher than the 25 to 30 percent typical for convertible bonds, "does sound high," he said. "But if you're willing to assume volatility will remain high in the equity market, it's not out of the realm of possibility" to believe Analog's stock may advance that much, Seidel added. Analog's 52-week closing high is $101 3/8, set on Sept. 1. Its 52-week closing low is $23 9/16, set last Oct. 27. The stock fell $4 1/16 Tuesday morning, or 4.5 percent, to $85 7/16. Jim