Market volatility creates trading opportunities; selling continues in telecom, spreads to media

By Ronda Fears

Nashville, Tenn., June 27 - The sell-off continued in telecom names Thursday and spread into the media sector. But there were lots of buyers and the market overall ended on a higher note.

"It was a very busy day," said a dealer.

"We ran the gamut today, from a lot of selling to a lot of buying."

The exodus in telecom names, traders said, continued, particularly in Lucent and Nortel.

"It's a treacherous period in which a lot of companies are over-stretched and fooled an enchanted market," said Barry Nelson, a co-manager at Advent Capital Management.

"It's essential to know the credits, or you can get crushed."

Buyers were picking up AT&T and Sprint PCS linked converts.

Investors are still choosing to exit any and all names with accounting and/or liquidity issues, however.

"People are looking for the next big scandal," said Brendan Lynch, convertible analyst at Lehman Brothers.

"It's a fishing expedition for the next short."

Advertising names were hit hard with a selling spree Thursday, with Omnicom and WPP Group at the top of the sell list.

Omnicom's 0% due 2031 was quoted down 1.875 points to 93.25 bid at one shop, but was quoted at 92.25 bid at another. The 0% due 2032 was quoted down 2.5 points to 87.25 bid, 88.25 asked.

Omnicom shares fell $4.51 to $44.30.

The WPP Group 3% due 2005, the old Young & Rubicam convert, was quoted down 1.25 points to 90.625 bid with the stock closing off by 75c to $42.80.

Media names like Clear Channel and EchoStar were also getting crushed early in the session.

"With DISH, the thinking was that maybe there were some inflated subscriber figures, like with Adelphia, given its proximity with cable," said a dealer.

EchoStar recovered during the second half of the session, however, after Lehman defended the story.

At one point in the session, there was buzz that EchoStar would be trying to tap the convertible market, but that seemed to fizzle with little conviction.

EchoStar's 4.875% due 2007 and 5.75% due 2008 were quoted at 72 bid by one shop. But the 4.875s were quoted up 0.125 point to 78.375 bid and the 5.75s up 0.25 point to 75.625 bid at another.

EchoStar shares closed up 27c to $17.26.

Clear Channel Communications, the radio chain and a long-standing staple in the media group, was slaughtered, however, even after the company stressed in a statement that it has no accounting issues.

"There is not a SEC investigation of Clear Channel and there are no accounting issues or irregularities," president Mark Mays said in a written statement.

"Clear Channel has a long history of very conservative business practices that are well documented in 30 years worth of financial statements."

Clear Channel has been the subject of scrutiny from regulators and lawmakers regarding allegations that the radio station chain and other large players shut out competitors, punish artists who do not use their promotion services and exceed ownership limits behind shell corporations.

That appeared to fuel buzz about investigations, which lead some to assume it was a scandal, and that started a slide from which the company did not recover.

Radio One Inc. also was punished.

General Motors was another sufferer.

"There is grueling, unbending scrutiny going on that doesn't stop for a big name like GM," said a convertible trader at a hedge fund in New York.

WorldCom's scandal and its magnitude continued to rock investors.

"WorldCom was a shocker, given that this is not a dot.com. This company is big and it's been around a long time," said Nelson.

"Adelphia always had its doubters. Nothing like what was going on was really suspected, but there were always doubters."

Thus, most investors are shying away from any situations that might be questionable.

Nvidia Corp. saw investors continue to bail out. The 4.75% due 2007 was quoted down 4.125 points to 81.875 bid with the stock ending $2.99 lower at $17.08.

But there were buyers in several other beaten-down tech names, including Agere.

Biotechs were also finding buyers. Human Genome and Inhale Therapeutics were both sharply higher.

Xerox gained some interest, as well. The 7.5% due 2021 added 2points to 56 bid, 56.5 asked. The stock gained 40c to $8.

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