FireEye beats expectations; Shutterfly convertibles falter on earnings; CSG Systems weakens

By Stephanie N. Rotondo

Seattle, Feb. 2 – Earnings news was driving the convertible bond market on Thursday.

FireEye Inc.’s convertible bonds were steady as the market waited for the company’s earnings.

The results came after the market closed. The figures beat expectations – mostly – though guidance was not as good as expected.

The company also said that its chief financial officer was exiting his post.

In other earnings news, Shutterfly Inc.’s 0.25% convertible notes due 2018 were down about 3 points in the wake of an earnings miss and a layoff announcement.

Also making the earnings rounds was CSG Systems International Inc. Like Shutterfly, the company’s earnings failed to impress and the convertibles reacted negatively.

The stock didn’t fare too well either.

FireEye flat ahead of results

FireEye’s convertible notes were unchanged in Thursday trading, ahead of the company’s earnings release.

The results came out after the market closed.

At the close, the 1% convertible notes due 2035 were seen at 92.875, little moved from the 92.5 level seen earlier in the day. The 1.625% convertible notes due 2035 were placed at 89.375, in line with the 89.25 to 89.5 trading range at mid-morning.

But the company’s shares slipped ahead of the numbers, trading off 18 cents, or 1.37%, to $12.97.

For the fourth quarter, the Milpitas, Calif.-based cybersecurity company posted a loss of 3 cents per share on revenue of $144.7 million.

Analysts had forecast a loss per share of 16 cents on revenue of $190.99 million.

For the current quarter, FireEye is projecting a loss of 26 cents to 28 cents on revenue of $160 million to $166 million.

Analysts are estimating a loss of 24 cents per share on revenue of $176.9 million.

In addition to the results, the company said CFO Mike Berry was leaving the position he has held since 2015 to pursue other opportunities. Frank Verdecanna, senior vice president and chief accounting officer, has been appointed the new CFO.

Shutterfly stutters

Shutterfly, a Redwood City, Calif.-based internet-based image publishing service, announced its fourth-quarter results late Wednesday.

Come Thursday, the convertibles declined 3 points in response to the announcement.

The 0.25% convertibles were at 98.625 bid, 99.125 offered at the close, according to one source. Another placed the issue at 99.25.

The paper was trading around the 99 level at mid-morning, according to a market source.

The stock was down $7.81, or 15.09%, at $43.96.

For the quarter, Shutterfly reported earnings per share of $2.63 on revenue of $561 million.

Analysts polled by Thomson Reuters had expected EPS of $2.84 on revenue of $584 million.

Looking ahead, the company said it expects to post a loss per share between 95 cents and $1 for the current quarter. Analysts had been predicting a loss of 84 cents per share.

Additionally, management announced that it was cutting its workforce by 13% and closing locations in Santa Clara, Calif., and New York.

CSG earnings miss

CSG Systems reported a $12.6 million fourth-quarter profit late Wednesday.

Earnings per share came to 38 cents. On an adjusted basis, EPS was 57 cents.

Analysts had estimated EPS of 64 cents.

Given the miss, the company’s 4.25% convertible notes due 2036 traded softer.

One source called the convertibles down 6.25 points, trading with a 104 handle. Another source placed the issue in a 103.5 to 104.5 context, down from levels around 110 previously.

The second source noted that the paper traded as high as 105.75 during Thursday’s session.

As for the underlying equity, it dove $9.04, or 18.74%, to $39.20.

The Englewood, Colo.-based support provider for the communications industry said revenue for its latest fiscal quarter was $195.2 million. That was better than analysts’ expectations of $193.21 million.

Though revenue did beat estimates, it was down 1.1% year over year.

Greenbrier steady

Wednesday’s new issue from the Greenbrier Cos. Inc. was not as actively traded in early Thursday dealings, though the paper was holding its ground.

The $250 million of 2.875% convertible senior notes due 2024 were seen at 101.875 bid, 102 offered at the close.

The convertibles were pegged around 102.5 at mid-morning, which was in line with the previous day’s trades.

The underlying equity, however, was coming off of its midweek highs, falling 50 cents, or 1.12%, to $44.30.

The deal came upsized from $175 million and with an initial conversion premium of 37.5%. The yield priced richer than the 3.25% to 3.75% talk. The conversion premium also came richer than the 30% to 35% talk.

Goldman Sachs & Co. and BofA Merrill Lynch ran the books.

Mentioned in this article:

CSG Systems International Inc. Nasdaq: CSCG

FireEye Inc. Nasdaq: FEYE

The Greenbrier Cos. Inc. NYSE: GBX

Shutterfly Inc. Nasdaq: SFLY

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