Morning Commentary: Earnings in focus; Cubist in line; Xilinx convertibles down sharply

By Rebecca Melvin

New York, July 23 – Convertibles players were focused on quarterly earnings reports early Wednesday including reports from such convert issuers as Xilinx Inc., Cubist Pharmaceuticals Inc., Jakks Pacific Inc. and Hawaiian Holdings Inc., a Connecticut-based sellsider said.

“They were all big movers on earnings,” the sellsider said.

A second source said Cubist stock was down on weak cubicin sales, but the bonds were in line on a dollar-neutral, or hedged, basis.

The Xilinx 2.625% convertibles due 2017 plunged 25 points on an outright basis to 141.629.

Shares of the San Jose, Calif.-based programmable chipmaker fell about 16% in the early going after the company beat earnings estimates by a penny but missed on revenue and guided lower for current quarter revenue.

The Xilinx report was followed by several analysts’ downgrades.

Xilinx reported earnings of $174 million, or 62 cents per share, which was up from $157 million, or 56 cents per share, in the same period a year earlier, and a penny better than estimates. Revenue rose 6% to $612.6 million from the year-earlier quarter but missed estimates. Also Xilinx said it expects current quarter revenue to be flat to down 4% and below estimates.

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