Morning commentary: SanDisk bonds trade mixed after disappointing outlook

By Rebecca Melvin

New York, July 17 – SanDisk Corp.'s convertible bonds were trading lower on an outright basis along with a 9% slide in the bonds’ underlying shares, but mixed on a dollar-neutral, or hedged, basis after the Milpitas, Calif.-based data storage company released lower guidance for the current quarter.

The SanDisk 1.5% convertibles due 2017, which were atop the Trace data volume chart, changed hands at 189ish, which was down nearly 10 points on the day. With the shares at $95.00, the in-the-money convertibles were seen unchanged on a dollar-neutral basis, a New York-based trader said.

The SanDisk 0.5% convertibles due 2020 were quoted at 119.25 bid, 119.75 offered with the underlying shares at $95.00. That was higher by 0.5 point on a hedged basis, the trader said.

SanDisk’s report for the period just completed was better than expected. For the second quarter, SanDisk reported earnings of $1.41 per share, which was better than the $1.39 per share that analysts were expecting. Revenue was up 10% at $1.63 billion for the quarter.

But for the current quarter, SanDisk said it expects revenue of $1.675 billion to $1.725 billion, which was below expectations for $1.74 billion in revenue.

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