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Citigroup convertible analyst suggests several tech, telecom convertibles in "over-hedged" space
By Ronda Fears
Nashville, March 8 - There are several technology and telecom convertibles that are over-hedged, suggests Citigroup Global Markets Inc. convertible analyst Lynne Hambright.
Putting things in perspective, she came up with an idea list after screening convertible bonds in the tech and telecom sectors trading around an 80% delta. She also compared point premium, cash flow, risk and certain financial data.
The analyst suggested investors avoid the Finisar Corp. 2.5% convertible due 2010 and Lattice Semiconductor Corp. 0% convertible due 2010.
In a "not thrilling" category were the LSI Logic Corp. 4% due 2010, JDS Uniphase Corp. 0% due 2010, Flextronics International Ltd. 1% due 2010 and Vishay Intertechnology Inc. 3.625% due 2023.
Those warranting "a closer look," the analyst said, are the Skyworks Solutions Inc. 4.75% due 2007, MSC Software Corp. 2.5% due 2008, Powerwave Technologies Inc. 1.25% due 2008, Comverse Technology Inc. 0% due 2023, Quantum Corp. 4.375% due 2010, Magma Automation Design Inc. 0% due 2008, McData Corp. 2.25% due 2010 and Computer Associates International Inc. 1.625% due 2009.
"Looking worthy of consideration," the analyst said, are the Hutchinson Technology Inc. 2.25% due 2010, Equinix Inc. 2.5% due 2024 and Photronics Inc. 2.25% due 2008.
Hambright said she continues to like the Micron Technology Inc. 2.5% due 2010, Agere Systems Inc. 6.5% due 2009 and Electronics for Imaging Inc. 1.5% due 2023.
The analyst had no comments concerning the merger impact on the respective convertibles of Cable Design Technologies Corp. with a 4% due 2023, Credence Systems Corp. with a 105% due 2008 and ChipPAC Inc. with a 2.5% due 2008. The analysis for those companies was made using data as stand-alone companies.
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