Morning Commentary: Yahoo! slips on swap after earnings; Proofpoint lower outright, adds on swap

By Rebecca Melvin

New York, April 22 – Earnings news was the main driver of convertibles trading in the early going on Wednesday.

Yahoo! Inc.’s convertibles traded steady on an outright basis but were lower by about 0.5 point on a dollar-neutral, or hedged, basis after the Sunnyvale, Calif.-based internet company reported first-quarter results that missed estimates.

Yahoo!’s 0% convertibles traded around 108 with the underlying shares at $44.00. The bonds trade on a delta in the low to mid 50% range.

“I think people were expecting more news in the breakout, a little more volatility. But the story seems to be just more of the same,” a New York-based trader said.

The company posted adjusted earnings of 15 cents a shares, which was below estimates on sales of $1.04 billion, which was also below estimates.

Proofpoint Inc.’s convertibles were down about 6 points on an outright basis but better by about 0.5 point on swap after the Sunnyvale, Calif.-based security-services vendor reported earnings that missed estimates and lowered its full-year earnings estimate below consensus. The company, however, reported stronger current and future revenue.

The Proofpoint 1.25% convertibles were seen at 153.125 versus an underlying share price of $56.00, a New York-based trader said. That was up 0.5 point on a delta of about 85%.

“They’ve had a great run in the numbers,” the trader said.

Proofpoint shares were down $3.37, or 6%, at $55.48.

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