Fluidigm down outright, expands on swap after earnings; Nvidia in line on swap; PHH active

By Rebecca Melvin

New York, May 8 – U.S. convertibles ended the week modestly firmer Friday after the April jobs report pushed Treasury bond rates lower and equities higher.

Fluidigm Corp.’s convertibles fell on an outright basis but were better on swap after the South San Francisco-based genomics and DNA research company reported disappointing earnings.

The bonds fell from just over par to about 89 outright, according to market sources. Shares fell 28% to $26.95.

Nvidia Corp.’s 1% convertibles due 2018 traded down on an outright basis, or 4 points to 118.65, but were seen holding in line on a swap basis after the Santa Clara, Calif.-based graphics processor company posted earnings that met expectations but forecasted current-quarter results below consensus.

Nvidia shares sank $1.31, or 6%, to $21.18 by late morning and settled down 7.4%.

PHH Corp.’s 6% convertibles due 2017 were the most actively traded issue in the space in early trading, and the paper added another couple of points to 219, a day after the Mt. Laurel, N.J.-based mortgage and fleet management services company launched an exchange offer for the $245 million issue.

“PHH flush is the most actively traded,” a New York-based trader said.

Gevo Inc. was getting a look from market players as the stock surged on news that the company has inked a contract with Alaska Air Group Inc. under which the carrier will purchase Gevo’s renewable jet fuel.

Gevo cancelled a warrant on Friday, and the $45 million deal of 7.5% convertibles traded on Thursday at 54.8, a New York-based trader said.

Shares of the Englewood, Colo., renewable chemicals and advanced biofuels company extended gains for most of Friday, adding 54 cents, or 10%, to $5.99 at late afternoon, after doubling on Thursday. But they sank into close, ending in negative territory at $5.30.

Overall the convertibles market was firm but quiet, sources said.

“They held up with the back-up on the 30-year. The mood still seems to be good even though there has been a lack of issuance,” a New York-based trader said.

A midweek sell-off in equities was replaced by a bounce higher starting on Thursday and continuing on Friday after a mixed jobs picture reassured equity investors that a Fed rate hike is likely to be later rather than sooner.

The Labor Department reported early Friday that U.S. payrolls rose 223,000 in April, which was in line with most expectations. March’s figure was revised lower to just 85,000 jobs, which was down from the previously reported 126,000, which was low to begin with. But the unemployment rate fell one tick to 5.4% from 5.5% in March.

Treasuries were well bid on the report, pushing prices up but rates lower. The Dow Jones industrial average gained 267.05 points, or 1.5%, to 18,191.11; the S&P 500 stock index gained 28.10 points, or 1.4%, to 2,116.10; and the Nasdaq stock market added 58.00 points, or 1.2% to 5,003.55.

Fluidigm expands on swap

Late in the session, Fluidigm’s 2.75% convertibles due 2034 were quoted at 90.5 bid, 91.5 offered versus an underlying share price of $27.50. The bonds had previously been around 101.

That was up 1.5 points to 2 points on swap, a New York-based trader said. A second trader thought that the bonds expanded by a smaller amount of only about a point.

Shares of the genomics and DNA research company fell $10.48, or 28%, to $26.95 on Friday.

The stocks and bonds traded very actively.

“It’s usually a quiet name, but earnings were not good,” a trader said.

The company beat estimates for the first-quarter results but missed revenue estimates and guided full-year revenue below consensus.

Fluidigm reported a loss of $15.9 million, or 56 cents per share, for the first quarter, which was just slightly more than a $15.4 million loss for the year-earlier quarter.

Excluding items, the loss came to $7.3 million, or 25 cents per share, which was wider than the year earlier and below estimates.

The company said first-quarter revenue did not meet its “internal expectations due to several factors, including timing of CyTOK orders and shipments, a shortfall of Biomark system revenues, and weak genomics analytical consumables sales. In addition, currency had a more negative impact than we assumed at the beginning of the year.”

Fluidigm president and chief executive Gajus Worthington said in a release that there are opportunities in the single-cell biology market, but due to greater uncertainty, the company is reducing its revenue guidance.

Looking ahead, Fluidigm is projecting total revenue of between $133 million to $143 million, which was down from previous guidance of $142 million to $149 million. Revenue projections incorporate an estimated negative currency related impact of about 4% to 5% at the midpoint of the range versus a prior estimate at about 3% to 4%.

Nvidia down in line

Nvidia’s 1% convertibles due 2018 fell on an outright basis but were in line on a dollar-neutral basis.

Nvidia’s convertibles ended at about 117.25 bid, 117.50 offered versus an underlying share price of $20.43.

Earlier the paper was seen at 118.65, which was down 4 points, when shares were around $21.25.

Nvidia said its net income fell to $134 million, or 24 cents per share, in the first quarter, which was little changed from $137 million, or 24 cents per share, in the year-earlier period, but the results missed the average analyst estimate of 26 cents.

Excluding items, Nvidia earned 33 cents per share, which was up from 29 cents per share in the year-earlier quarter.

Revenue was $1.15 billion, which was up 4%, but missed the average estimate of $1.16 billion.

Nvidia’s results were hurt by lower personal computer and OEM sales and therefore slack demand for its graphic processor units, the company said, also blaming the strong dollar.

Looking ahead, the company expects revenue of $1.01 billion, plus or minus 2%.

Nvidia said on Tuesday that it would wind down its Icera modem operations that it bought in 2011, exiting the mobile chip market.

Mentioned in this article:

Fluidigm Corp. Nasdaq: FLDM

Gevo Inc. Nasdaq: GEVO

Nvidia Inc. Nasdaq: NVDA

PHH Corp. NYSE: PHH

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