Xilinx slides as outlook disappoints; energy names continue to outperform; Chesapeake up

By Rebecca Melvin

New York, April 28 – Xilinx Inc.’s 2.625% convertibles dropped sharply in active trade on Thursday after the San Jose, Calif.-based chipmaker beat quarterly earnings estimates but disappointed investors with its revenue outlook.

The Xilinx convertibles fell 16 points on an outright basis to 146, according to Trace data. Shares fell $4.12, or 9%, to $43.23.

United Therapeutics Corp.’s shares fell $12.84, or 11%, to $104.84 after its earnings report, but the convertible bonds of the Silver Spring, Md.-based biotechnology company were not heard to have traded. The 1% convertibles, which mature in September, stand above double par and rarely trade, a New York-based sellsider said.

In addition to earnings reports, the energy sector remained a focus as those names mostly continued to gain ground despite lower stock markets.

Chesapeake Energy Corp.’s 2.25% convertibles due 2038 were definitely higher, trading at 66 in afternoon trading, compared to 54 to 62 on Wednesday. But shares of the Oklahoma City-based oil and gas company fell 5% to close at $6.78.

Whiting Petroleum Corp.’s convertibles were higher, showing resilience despite lower shares on the day for the Denver-based oil and gas company.

Stone Energy Corp.’s 1.75% convertibles due 2017 traded at 32 and later at 30, with both prices within the 6-point range in which those bonds have been bouncing around in recent days. Shares of the Lafayette, La.-based oil and gas company peeled back from a recent high mark on Wednesday, with selling accelerating in late afternoon into the close. The Stone Energy shares closed down 22 cents, or 17%, to $1.04, compared to the high mark of $1.26 on Wednesday.

The Stone Energy bonds have traded between 28 and 34 in recent days.

Elsewhere, Allergan plc’s mandatory convertible preferreds came off $4.01, or 0.5%, against shares that came down by a slightly greater 0.6% to $218.85. In the early going Thursday, the mandatories were a little better at $814.54, which was flat to better on the day against shares of the Dublin-based specialty pharmaceutical company also little changed at about $220.00.

After the market close, Knowles Corp.’s planned $125 million deal of 5.5-year convertible senior notes was expected to price. The new paper was talked with a 3% coupon and 30% premium at the midpoint of talk. Knowles shares were down 5.5% in the early going at $14.19.

Equities wavered for much of the session but turned decidedly lower in late afternoon. Economic data may have proved a drag on stocks. U.S. gross domestic product for the first quarter slowed to a 0.5% annual growth rate, which is the lowest it’s been for several years, according to the advance, or first, estimate provided by the U.S. Department of Commerce’s Bureau of Economic Analysis.

The lower growth rate for the first three months of 2016, compared to growth of 1.4%, 2% and 3.9% in the prior three quarters.

The deceleration in real GDP in the first quarter reflected a larger decrease in nonresidential fixed investment, a deceleration of personal consumption expenditure, a downturn in federal government spending, an upturn in imports and larger decreases in private inventory investment. These decreases were partly offset by greater state and local government spending and an acceleration in residential fixed investment.

The S&P 500 stock index lost 19.34 points, or 0.9%, to 2,075.81; the Dow Jones industrial average fell 210.79 points, 1.2%, to 17,830.76; and the Nasdaq stock market lost 57.85 points, or 1.2%, to 4,805.29.

Xilinx plunges

The Xilinx 2.625% convertible notes due 2017 fell 16 points on an outright basis to 146, according to Trace data. Shares fell $4.12, or 9%, to $43.23.

Xilinx fiscal fourth-quarter revenue and earnings topped expectations, but its current-quarter revenue forecast was weak. Xilinx expects revenues to be flat at $571 million, which is lower than consensus estimate of $575 million.

The company’s board of directors approved an increase to its quarterly dividend to 33 cents a share from 31 cents per share.

Mentioned in this article:

Allergan plc NYSE: AGN

Allergan plc mandatory NYSE: AGN-PA

Chesapeake Energy Corp. NYSE: CHK

Knowles Corp. NYSE: KN

Stone Energy Corp. NYSE: SGY

Whiting Petroleum Corp. NYSE: WLL

Xilinx Inc. Nasdaq: XLNX

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