Earnings help Citrix, VeriSign; Spectranetics drives higher; Nortel improves on settlement

By Stephanie N. Rotondo

Phoenix, July 25 – Earnings were in focus on Friday, driving some convertible bonds higher.

Citrix Systems Inc. posted earnings on Wednesday, but investors waited until Friday to push the company’s convertible debt upward.

The results beat estimates.

VeriSign Inc. meantime put out earnings late Thursday. Those figures also beat analysts’ expectations, and the convertible notes were inching higher come Friday.

Away from earnings news, the Sprectranetics Corp. announced Thursday that two of its medical devices had won the approval of the Food and Drug Administration. The news caused a 10.7% jump in the underlying shares on Thursday, though on Friday the stock was giving back a little.

Nortel Networks Corp. was also making headlines. After the market closed Thursday, the defunct Canadian company said its U.S. unit had reached a deal with bondholders, capping the interest payouts. In after-market dealings, the convertibles ran higher and ticked up slightly more in Friday trading.

Citrix on the rise

Better-than-expected earnings were cited as the cause for gains in Citrix Systems’ convertible bonds Friday – even though the numbers came out late Wednesday.

A market source pegged the 0.5% convertible notes due 2019 at 108.5 versus a share price of $67.53. As for the bonds, that was up half a point from previous trades.

The stock ended the day at $67.37, up 55 cents.

For the second quarter, Citrix posted earnings excluding certain items of 83 cents per share, a 26% gain year over year and 22 cents higher than what analysts polled by Thomson Reuters were expecting.

Revenue increased 7% to $782 million.

VeriSign tops views

Earnings were also helping VeriSign’s 3.25% convertible notes due 2037 gain ground.

A source saw the issue at 169.625 versus a stock price of $55.66.

The stock finished at $55.59, up $5.76, or 11.56%.

VeriSign reported second-quarter net income of $100.18 million, or 71 cents per share. That compared to income of $86.89 million, or 55 cents per share, the year before.

Adjusted net income was $95.97 million, or 68 cents per share.

Revenue came to $250.38 million, compared to $239.33 million for the same quarter of 2013.

Analysts polled by Thomson Reuters had forecast adjusted profit of 64 cents per share on revenue of $251.69 million.

Spectranetics gains

Spectranetics’ 2.625% convertible bonds due 2034 gained nearly 2 points during the session, as investors continued to react positively to news out on Thursday.

The news was in regards to the FDA approving two of the company’s medical devices.

The notes were seen trading with a 115 handle on Friday against a stock price of $26.62.

The stock finished the day at $26.65, down 4 cents from the previous session and down from the day’s high of $27.59.

After the news came out on Thursday, the stock had jumped 10.7%.

The company’s Turbo Tandem and Turbo Elite devices – two products used for in-stent restenosis – received FDA approval, according to the company. Based on clinical trials, the devices boast a 94% success rate among patients suffering from narrowing blood vessels.

Nortel notches up

A trader said Nortel Networks’ debt “popped yesterday” after the market closed as the company said it had reached a deal with bondholders regarding its interest payouts.

Though he noted that most of the gains were seen in those dealings, the paper remained “somewhat active” on Friday as well.

“I saw a bunch of bids for all of them this morning,” another trader said. He deemed all of the issues – the straight bonds and the convertible debt – “up maybe half point across the board.”

He pegged the 2.125% convertible notes that were to have matured in April at 103.5 bid, 104.5 offered. The 1.75% convertible notes that came due in 2012 were seen at 103 bid, 104 offered.

“The move happened last night, like 4:30 p.m. [ET],” another trader remarked. “They were able to get a deal done on interest allocations. The bonds were up 4 points on that news.”

The trader added that the debt was up another half-point in Friday trading and “pretty active as well.”

Nortel said late Thursday that its U.S. unit, Nortel Networks Inc., had agreed to pay just over $1 billion in interest owed to bondholders owning about $3.9 billion of debt. If approved by the U.S. bankruptcy court overseeing the case, the deal could irk retirees in Canada and the United Kingdom, who claim that U.S. holders should get no more than $90 million in accrued interest, or none at all.

Under the terms of the deal, the bondholders will receive $876 million of accrued interest. That amount could increase to $1.01 billion if Nortel has not made the payout by June 30.

Mentioned in this article:

Citrix Systems Inc. Nasdaq: CTXS

Nortel Networks Corp. OTC: NRTLQ

The Spectranetics Corp. Nasdaq: SPNC

VeriSign Inc. Nasdaq: VRSN

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