Advanced Micro bonds drop as earnings disappoint; Venoco debt beaten down; Avon trades active

By Stephanie N. Rotondo

Phoenix, April 17 – As the broader markets got smacked in Friday trading, the distressed debt market ended weaker in sympathy.

The broader markets were coming in on continued concerns surrounding Greece, as well as new trading regulations in China. Both of those issues combined to lead global stocks downward.

Advanced Micro Devices Inc. was walloped during the session, as investors reacted negatively to the company’s wider quarterly loss and forward-looking guidance.

The earnings – or lack thereof – were announced late Thursday.

In other earnings-related moves, Venoco Inc. paper dove down as much as 6 points on the day. The private oil and gas company put out its fourth-quarter and full-year results ahead of the market’s open on Thursday.

Another notable name was Avon Products Inc. Earlier in the week, it was reported that the company was exploring its options as it looks to stem three years of losses and declining sales.

AMD misses estimates

Advanced Micro Devices (AMD) reported a larger-than-expected loss for the first quarter as sales of PCs dwindle.

The quarterly results were released late Thursday and come Friday, investors were not responding well.

A trader said the 7½% notes due 2022 dropped over 4 points to 90¾, while the 6¾% notes due 2019 lost 2½ points, closing at 95.

Another market source pegged the 7½% paper at 93 bid, down nearly 4 points.

For the first quarter, the Sunnyvale, Calif.-based chip maker reported a loss of $180 million, or 23 cents per share. That compared to a loss of $20 million, or 3 cents per share, the year before.

On an adjusted basis, loss per share was 9 cents.

Analysts polled by Thomson Reuters were expecting a loss of 5 cents per share.

Revenue took a massive hit, falling over 26% to $1.03 billion. That figure also missed estimates of $1.05 billion.

For the second quarter, AMD speculated that revenues would stay flat or that they could fall as much as 3% year over year.

Venoco dives

Denver-based Venoco was also under pressure on Friday, as a trader saw the company’s bonds falling as much as 6 points.

The trader placed the 8 7/8% notes due 2019 at 41, a loss of 6 points on the day. The 12¼% notes due 2018 were meantime down 4¼ points from just over a week ago, closing at 10¾.

The company reported its fourth-quarter and full-year results on Thursday. For the year, net income was $120 million and revenue was $224 million.

By comparison, the company saw net income of $14.32 million and revenue of $317.5 million in all of 2013.

Adjusted earnings came to $19 million and adjusted EBITDA came to $119 million.

Earlier in the month, Venoco said that it had secured $250 million in new financings, including a $175 million private placement of 12% first-lien notes due 2019 and $75 million in cash secured senior term loans.

Part of the proceeds went to paying off – and subsequently terminating – a credit line that would have matured March 2016.

Additionally, the company exchanged $194 million of its 8 7/8% notes for new second-lien PIK notes.

Despite those transactions, Venoco said in its 10-K that it could face further refinancing risk, given the current state of commodity pricing and the company’s cash flow risk.

Avon active

Avon’s debt was unchanged to slightly weaker in Friday trading.

A trader said the 7.7% notes due 2043 slipped a touch to 87 3/8, while the 5¾% notes due 2023 held steady at 91.

On Wednesday, news outlets began reporting that the cosmetics company was looking to sell itself or perhaps just its North America unit.

However, that was not the only option the company was considering, the reports indicated.

On Monday, a May 13 investor meeting was put off until the fall. Avon said the delay was due to the recent hiring of James Scully as chief financial officer. As such, “we believe that moving the meeting back will allow us to have a much more robust discussion,” the company said in a letter to investors.

Avon has struggled with three years of losses and declining sales, particularly in North America.

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