LinkedIn improves; SINA unchanged after disappointing outlook; convertibles quiet

By Rebecca Melvin

New York, Nov. 14 – LinkedIn Corp.’s 0.5% convertibles improved in fairly active trade on Friday as shares of the Mountain View, Calif.-based business-oriented social networking service added 1.8%.

The LinkedIn bonds were seen at 105.125 bid, 105.625 offered with the underlying shares at $233.00, according to a New York-based trader.

Home Inns & Hotels Management Inc.’s 2% convertibles remained firm after strengthening in active trade earlier in the week. The Shanghai-based hotel chain disclosed in a regulatory filing that it bought back $10 million of convertibles last quarter at an average price of 98, a trader said.

SINA Corp.'s 1% convertibles due 2018 were unchanged, sources said, despite a drop in shares on the back of a disappointing earnings outlook from the Shanghai-based social media company.

Otherwise, U.S. convertibles were quiet on Friday as equities traded narrowly mixed, and the Dow Jones industrial average snapped a string of record highs.

The Dow ended down 18 points after closing at record highs for six of the last seven sessions. It closed at 17,634.74.

“It’s dead,” a New York-based trader said of Friday’s convertibles session.

A second New York-based trader said his desk was light on personnel and hadn’t traded many names actively.

LinkedIn improves

LinkedIn’s 0.5% convertibles due 2019 traded at 105.125 bid, 105.625 offered versus an underlying share price of $233.00.

That compares to 102.25 bid, 102.75 offered with a share price of $225.00 last week, when the bond debuted in the secondary market.

Shares of the company ended up $4.2, or 1.9%, at $233.89 on Friday.

“LinkedIn is active and better as it is viewed as a higher-quality tech credit,” a New York-based trader. He said that LinkedIn was expected to be rated investment grade, “so guys were getting ahead of it.”

The situation was opposite to the Twitter move this week after the company held its first analysts day and then Standard & Poor’s cut the company’s debt to junk status. Twitter’s convertibles were weaker on Thursday.

Yahoo! is also viewed as a better credit than Twitter, the trader said.

Pricing of the LinkedIn deal came at the cheap end of 0% to 0.5% coupon talk and at the cheap end of 35% to 40% talk for the premium. Premium talk was revised down during marketing from 40% to 45%.

SINA unchanged

SINA’s 1% convertibles were seen unchanged on the day, compared to Thursday when they were 91.75 bid, 92.25 offered, sources said.

SINA fell $2.05, or 4.9% to $39.80 on Friday.

After the market close on Thursday, the internet portal lowered its revenue outlook for the current quarter, disappointing investors and resulting in at least one ratings downgrade and share price target cuts.

SINA’s third-quarter earnings and revenue were in line or lower than estimates.

The company earned $133.6 million, or $1.91 per share, which was up from $25.4 million, or 37 cents a share, in the year-earlier period.

Excluding items, the company earned 19 cents per share, which was below estimates for 21 cents per share.

Third-quarter revenue rose 8% to $198.6 million, which was within the company’s guidance.

For the current quarter, the company estimates revenue of $204 million to $210 million, which was below estimates for $215 million.

Stifel cut its rating on SINA shares to “hold” from “buy,” and said the company is no longer a growth story. SINA shares have dropped 50% since the beginning of the year.

Mentioned in this article:

Home Inns & Hotels Management Inc. Nasdaq: HMIN

Linkedin Corp. Nasdaq: LNKD

Twitter Inc. NYSE: TWTR

SINA Corp. Nasdaq: SINA

Yahoo! Inc. Nasdaq: YHOO

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