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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (34523)	5/30/2003 1:41:16 AM
From: smolejv@gmx.net	Read Replies (1) \| Respond to of 74559

OT - Poland voting on the EU entry this week textnart.de

To: TobagoJack who wrote (34523)	5/30/2003 1:58:29 AM
From: elmatador	Read Replies (2) \| Respond to of 74559

Cash abounds and is self-service time, Jay! Convertible bond offerings keeps cash flowing into tech Thu May 29, 2003 05:19 PM ET By Franklin Paul reuters.com NEW YORK, May 29 (Reuters) - Billions of dollars of convertible bond offerings are sustaining struggling technology companies in need of capital, yet experts worry issuances might eventually stifle any recover in the industry. According to some analysts, this rash of new debt might be creating fiscal crutches for smaller companies in need of jump starting weak financial positions and weigh on any rebound, particularly in the hard hit semiconductor sector. "The global financial markets continue to pump more money into the industry -- even the weak players continue to win funding," said Mark FitzGerald, an analyst for Banc of America Securities LLC, in a research note to clients. "Recent convertible bond deals have sustained ChipPAC CHPC.O , Photronics PLAB.O , Credence Systems CMOS.O , and Micron MU.N ." He added that marginally performing semiconductor and chip equipment suppliers will need to exit the business or consolidate before the sector can see a healthy profit recovery. Convertibles are securities, typically bonds or preferred shares, that investors may convert into common shares at a preset price. May has been the second busiest month this year for U.S. convertible issuance, Thomson Financial said, with 37 companies through Tuesday selling $10.3 billion of convertibles. Earlier on Thursday, communications equipment maker ADC Telecommunications Inc. ADCT.O said it plans to sell up to $350 million in convertible subordinated notes, while Cypress Semiconductor Inc. CY.N sold $500 million. On Wednesday, Lucent Technologies Inc. LU.N set plans to sell about $1.3 billion of convertible senior bonds. Other recent tech offerings include $100 million from Ask Jeeves Inc. ASKJ.O ; $350 million from Juniper Networks JNPR.O ; $300 million from Quanta Computer Inc. 2382.TW ; $2.93 billion for Siemens SIEGn.DE ; and $125 million for ChipPAC Inc. CHPC.O . GROWING INVESTOR OPTIMISM Experts say the time is right for these bond offerings amid some growing investor optimism about some tech companies that struggled in the three-year stock bear market, including several Internet companies. Many companies have been taking advantage of historically low interest rates to raise money through bond offerings. Their hybrid nature makes them an attractive option to companies whose balance sheets are already stuffed with debt and whose stock price is too low to pull off a successful stock offering. Also, the relative health of a particular company does not matter to many convertible investors, according to Ravi Arcot, a director at KYNEX LLC, a Fair Lawn, New Jersey-based independent convertible research group. He said more hedge funds, which comprise a majority of convertible investors, are engaging in convertible arbitrage, where they buy the convertibles and sell "short" the underlying stock. "As long as the company doesn't go bankrupt, they will generate a decent return on their investment," Arcot said. "As long as they tread water, the arbitragers will make money." It is not just tech companies treading water financially that are selling convertibles. Yahoo Inc. YHOO.O , for example, in April sold $750 million of 20-year bonds paying no interest. "We used usually attractive market conditions and our recent company performance to create shareholder value," Yahoo Chief Financial officer Sue Decker said in April. Richard Russell, President of Ariston Capital Management Corp. of Bellevue, Washington, said it makes sense for many tech companies to sell convertibles now. "It's true, some of these issuers need the financing to stay in business," he said. "But Yahoo doesn't need any financing. And when you can issue bonds with those kinds of terms, if I was the finance guy at Yahoo, I'd do the same thing."