Synaptics, Cray, Millennium up on earnings; Itron gutted; new issues open flat; Vanda doesn't open at all

By Evan Weinberger

New York, Nov. 2 - Synaptics Inc., Cray Inc. and Millennium Pharmaceuticals Inc. all saw strong gains Friday based on earnings. Itron Inc. convertibles saw a steep decline for the very same reason.

As markets tried to figure out which way was up, as well as what one analyst called "the usual Friday stuff," most trading was based on news. "It was very name specific," he said.

That doesn't mean trading was particularly light, as another analyst said he saw solid activity at his desk.

Stocks were shaky Friday a day after a headline-grabbing 360-point decline in the Dow Jones Industrial Average. The Nasdaq and Standard & Poor's 500 were also down well over 2% Thursday.

Even the Labor Department's report that 166,000 jobs were added in October - twice what analysts expected - couldn't drive stocks higher. Instead, with financials continuing to take a beating, the lines on all three indices were jagged.

In the end, the Dow added 27.23, or 0.20%, to close at 13,595.10.

The Nasdaq picked up 15.55 points, or 0.56%, for a 2,810.38 close. And the S&P picked up a scant 1.15, or 0.08%, to close at 1,509.65.

Friday saw the debut of three new issues, rather than the four that were scheduled. McMoRan Exploration Co. priced an upsized $225 million issue of mandatory convertible preferred stock due Nov. 15, 2010 to yield 6.75% with an initial conversion premium of 20%. The mandatories were originally announced at a principal amount of $150 million with yield talked at 6.75% to 7.25% and the initial conversion premium talked at 18% to 22%.

There is an upsized $33.75 million over-allotment option on the registered transaction, which had originally been announced at $22.5 million. The settlement date is Nov. 7.

The mandatories have an upper strike price of $14.88 and a conversion ratio of 6.7204. There are full dividend and change-of-control protections.

The mandatories priced at the same time as 16.25 million shares of common stock at $12.40, or a total of $201.5 million. That deal was also upsized from an initial offering of 11 million shares of common stock. There is a 2,437,500 share over-allotment option on the common stock offering, or $30.225 million.

McMoRan is a New Orleans-based oil and gas driller with operations in the Gulf of Mexico and on shore along the Gulf Coast. McMoRan intends to use the proceeds from the offerings to repay a portion of a bridge facility used in connection with the acquisition of the Gulf of Mexico shelf oil and gas properties of Newfield Exploration Co.

ProLogis priced an upsized $1 billion in 1.875% convertible senior notes due Nov. 15, 2037 with a 20% initial conversion premium Thursday night. The convertibles were offered at 98.25. The reoffer price was talked at 98.25 to 98.75. The deal was originally announced at $875 million.

There is a $150 million over-allotment option. The greenshoe was originally announced at $125 million. The settlement date is Nov. 8.

The conversion price is $82, and the conversion ratio is 12.1957.

The convertibles are callable Jan. 15, 2013, and there are puts on Nov. 15 in 2012, 2017, 2022, 2027 and 2032. There is a contingent conversion subject to a 130% hurdle.

The convertibles carry dividend protection and a change-of-control put.

ProLogis is a Denver-based real estate investment trust and the world's largest owner, manager and developer of industrial distribution centers. The company plans to use the proceeds to repay a portion of its outstanding debt under its global credit line and for general corporate purposes.

Bunge Ltd. priced $750 million in mandatory convertible preference shares due Dec. 1, 2010 with a 5.125% yield and an 18% initial conversion premium Thursday evening. The mandatories came in at the cheap end of talk, which was for a 4.875% to 5.125% dividend and an 18% to 22% initial conversion premium. The mandatories were offered at 99.

There is a $112.5 million over-allotment option. The closing date is Nov. 7.

The upper strike price is $121.67, and the conversion ratio is 8.2190.

The mandatories have call protection through maturity and standard dividend protection. There is a standard table for cash acquisition for takeover protection.

Bunge is a White Plains, N.Y.-based agriculture and food business. The company plans to use the proceeds to repay existing debt and for general corporate purposes.

Vanda Pharmaceuticals Inc. pulled back its planned $100 million in convertible senior notes due Nov. 15, 2014 on Friday morning due to market conditions despite what it called strong demand.

McMoRan, Bunge, ProLogis open flat

While none of the three new issues that priced heading into trading Friday excited investors, none got slammed on opening. Two of the three, Bunge and ProLogis, opened below par. Bunge opened at 99 and ProLogis at 98.25. McMoRan came in at par and effectively stayed there.

"[Bunge] was pretty active," one analyst said.

Another said he saw some interest in the ProLogis issue but not much in McMoRan.

In the end, Bunge's 5.125% mandatory convertible preference shares due Dec. 1, 2010 closed at par versus a closing stock price of $103.66.

Bunge stock (NYSE: BG) gained 55 cents, or 0.53%, on the day.

ProLogis was seen trading at 99 early in the day but closed at around par versus a stock price of $67.32.

ProLogis stock dipped $1.01, or 1.48%, on Friday.

McMoRan was trading at around 101 early and then closed at around 100.5 versus a stock price of $12.50.

McMoRan stock (NYSE: MMR) slipped 5 cents, or 0.40%, on Friday.

What happened to Vanda?

Heading into pricing, there was speculation that Vanda would not bring its $100 million in convertible senior notes due Nov. 15, 2014 to market. There was even talk of a stockholder revolt on a conference call announcing the deal Thursday morning.

In the end, the convertibles didn't hit the tape Friday morning.

"The decision not to pursue a convertible note offering at this time was due principally to prevailing market conditions resulting in note terms that were not acceptable to the company," a statement released by Vanda said.

One analyst said that was most likely a part of the story. The more than 25% drop in Vanda stock contributed as well. "The company was probably pissed off that their stock was down," he said, adding that Vanda didn't want to bring the convertibles out at that level.

The stock (Nasdaq: VNDA) slipped a bit more on Friday, losing 2 cents, or 0.18%, for an $11.13 close.

Vanda is a Rockville, Md.-based pharmaceuticals firm. The company planned to use the proceeds to market the schizophrenia treatment iloperidone, for the development of other treatments, for research and development and for working capital.

Synaptics surges on earnings

Santa Clara, Calif.-based touch-screen computer interface producer Synaptics announced its fiscal first-quarter earnings Thursday after the market close, and they matched Wall Street's expectations.

And what lofty expectations they were. Synaptics announced a jump of 173% in its first-quarter profits, with a net income of around 41 cents per share. That's a total $11.3 million profit for the quarter on $86.7 million total revenue.

The outlook is looking rosy as well, as Synaptics said sales were up in all of their sectors.

The company's 0.5% convertible senior subordinated notes due Dec. 1, 2014 didn't trade often, but it did trade big Friday. The convertibles closed the day at 132.812 versus a closing stock price of $60.07. They closed Thursday at 117.45 versus a stock price of $50.44.

Synaptics stock (Nasdaq: SYNA) climbed $9.63, or 19.09%, on the day.

Cray's earnings drive convertibles

Seattle-based supercomputer maker Cray posted a third-quarter profit in the face of Wall Street's expectation of a loss Thursday after the market closed. The company posted a 16 cent per share gain, for a total net income gain of $5.1 million.

Wall Street analysts expected a loss of 6 cents per share.

Cray said that it expects a loss for 2007, but that it should be profitable in 2008.

In response, Cray's 3% convertible senior subordinated notes due Dec. 1, 2024 closed at 91.755 versus a closing stock price of $6.46. The convertibles closed Friday at 88.2 versus a stock price of $5.77.

Stock in Cray (Nasdaq: CRAY) added 69 cents, or 11.96%, on the day.

Millennium up slow and steady

Cambridge, Mass.-based drug maker Millennium tightened its losses for the third quarter, the company announced Thursday morning. The company posted a penny-per-share loss for the third quarter when most analysts expected a gain of a penny. Last year's third quarter saw a loss of 4 cents per share.

Millennium brightened its outlook for the year, based on increased demand for one of its cancer drugs.

In a classic case of shorting the stock and longing the bonds, Millennium stock (Nasdaq: MLNM) dropped sharply Thursday while the convertibles rose.

The rise in convertibles continued Friday. Millennium's 2.25% convertible senior notes due Nov. 15, 2011 closed Friday at 105.236 versus a closing stock price of $12.80. They closed Thursday at 100.5 versus a stock price of $11.72.

The stock rebounded as well Friday, gaining $1.08, or 9.22%, on the day.

Itron slashed on earnings

It couldn't be all good news, right?

Liberty Lake, Wash.-based analytic software and meter reader maker Itron saw its convertibles and stock get hammered Friday on a disappointing earnings report Thursday night.

Itron reported a loss of 11 cents per share, or $3.4 million, Thursday after the close. Wall Street expected a profit of 77 cents per share. Itron had a 35-cent-per-share profit in the third quarter of 2006.

Itron also lowered its earnings forecast for 2007 as a whole.

The rush out was on early Friday.

In the end, Itron's 2.5% convertible senior subordinated notes due Aug. 1, 2026 closed Friday at 139.335 versus a closing stock price of $80.07. The convertibles closed Thursday at 169.525 versus a stock price of $101.05.

Itron stock was gutted for a $20.98, or 20.76%, loss Friday.

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