Salesforce.com convertibles slip from intraday highs, still firm; ON Semiconductor ticks up

By Stephanie N. Rotondo

Seattle, Nov. 18 – Salesforce.com Inc.’s 0.25% convertible notes due 2018 were trading actively on Friday in an otherwise muted session.

The movement in the name came in the wake of the company’s earnings release on Thursday. The third-quarter results beat expectations, and the company also upped its full-year revenue guidance. In response, the convertibles, as well as the equity, traded upward, though they settled in lower than the day’s highs.

Elsewhere, ON Semiconductor Corp.’s 1% convertible notes due 2020 were called unchanged to slightly higher.

The 1% notes were pegged around 98.5 at mid-morning, closing in a 97.625 to 98.875 context.

While the 2.625% convertible notes due 2026 were not overly busy, they, too, were somewhat better.

The notes hit a 110 handle, which compared to a 108 handle in the last round-lot trades.

The equity meantime traded down 31 cents, or 2.7%, to $11.17.

The Phoenix-based chip maker said on Thursday that it was redeeming the 2.625% convertibles on Dec. 30. Holders have a right to convert their holdings until the close of business on Dec. 19.

The conversion rate is 95.2381 common shares per each $1,000 of notes.

As for the week’s only new domestic issue, PDL BioPharma Inc.’s 2.75% convertible senior notes due 2021 were seen around 99.125.

A trader remarked that there was very little volume in the new deal, even though new issue supply has been nil of late.

The convertibles did not trade well post-pricing on Thursday either.

The issue came at par with an initial conversion premium of 25%.

The paper is convertible at any time after March 31, 2017 if the stock price hits a 130% price hurdle. Additionally, the notes can be converted if the bonds trade at less than 98% of the stock price multiplied by the conversion rate for a period of five consecutive trading days.

The notes are also convertible upon certain corporate events. On or after June 1, 2021 through the second trading day immediately preceding maturity, holders can convert at any time.

The notes are convertible upon maturity at $3.81 per share, representing 262.2951 shares per each $1,000 of notes.

The convertibles are not redeemable prior to maturity.

RBC Capital Markets ran the books.

Salesforce.com bonds strong

Salesforce.com’s 0.25% convertible bonds were a little volatile on Friday in the wake of earnings that beat expectations.

A trader said the bonds were in a 125.625 to 125.875 range at mid-morning, though they had traded “close to 130” earlier in the day.

Another market source also saw the convertibles with a 125 handle, which was deemed up nearly 3 points on the day.

At the bell, the issue was seen holding in the 125.625 to 125.875 range.

The equity was following a similar up-and-down pattern. At mid-morning, the stock was at $77.90, a gain of $2.71, or 3.6%. However, the stock had traded as high as $80.35 in early dealings.

The shares finished at $77.77, a gain of $2.58, or 3.43%. Trading volume was over two times the average for the day.

Salesforce.com reported adjusted earnings per share of 24 cents on revenue of $2.14 billion for the third quarter. Analysts had expected EPS of 21 cents on revenue of $2.12 billion.

The year before, EPS was 21 cents on revenue of $1.71 billion.

In the earnings release, Marc Benioff, chief executive officer, called the results “exceptional.” As such, the company opted to raise revenue guidance to $10 billion for its next fiscal year.

The goal sets the company in a race with rival Oracle, which also recently said it was looking to hit the $10 billion revenue mark.

Salesforce.com is a San Francisco-based cloud computing company.

Mentioned in this article:

ON Semiconductor Corp. Nasdaq: ON

PDL BioPharma Inc. Nasdaq: PDLI

Salesforce.com Inc. NYSE: CRM

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.