Lam Research tanks, chipmakers falter on semiconductor report; Workday weakens

By Abigail W. Adams

Portland, Me., Nov. 29 – Lam Research Corp.’s 2.65% convertible notes due 2041 and 1.25% convertible notes due 2018 nosedived during Wednesday’s session. The 1.25% convertible notes dropped about 32 points and the 2.65% convertible notes about 52 points by late afternoon, according to a market source.

Last-minute trades attempted to adjust the convertible notes to their previous closing levels with the 2.65% convertible notes ending the day with a 2-point gain at 634.375, despite previous trading of 578.073, according to Trace data.

The company’s 1.25% convertible notes saw a last-minute trade of 352.9, but ended the day at 320.75, according to Trace data.

Lam Research convertible notes appeared the hardest hit by a recent Morgan Stanley report, which downgraded several memory chip companies after forecasting a NAND glut that would result in falling NAND prices.

Micron Technology Inc. and Microchip Technology Inc. convertible notes also tumbled during the trading session, as their underlying equity fell.

Workday Inc.’s 0.25% convertible notes due 2022 continued to experience heavy trading activity with more than double the trades of any other convertible note by late afternoon, according to a market source.

The notes dropped about 3 points during the trading session, ending the day just above par after rising over the past week as company stock reached new heights.

Semiconductors fall

Lam Research’s convertible notes appeared to be the hardest hit by a recent Morgan Stanley report that forecast falling stock prices for semiconductor companies that have surged over the past year.

In a note to investors, Morgan Stanley analyst Shawn Kim warned that NAND flash memory chip prices have reached their peak after being spurred on by a shortage of supply, which will no longer exist in coming months.

With falling NAND prices, Kim forecast chipmakers will see no material earnings growth in 2018.

Lam Research, a developer, manufacturer and marketer of semiconductor processing equipment, saw a significant drop in its 2.65% convertible notes due 2041 and 1.25% convertible notes due 2018 throughout the trading session.

While the last trade of the day adjusted the 2.65% convertible note to 634.375, a 2-point increase from Tuesday’s close, it had been down 52 points in the run up to the final trade.

The note traded in the 598.64 to 573.82 range throughout Wednesday’s session, according to Trace data.

After trading in the 317.47 to 321.25 range throughout the session, a last-minute trade of 352.9 also attempted to adjust the company’s 1.25% convertible notes to its level at Tuesday’s close, according to Trace data.

The notes, however, closed the day at 320.75, a 32-point drop, according to Trace data. Lam stock also dropped 8.69%, closing the day at $194.62.

Microchip Technology also saw active trading and falling prices for its 1.625% convertible notes due 2025. The notes waivered between 172.403 and 166.618 before closing the day at 168.497, according to Trace data.

The convertible notes for the manufacturer of microcontroller, memory and analog semiconductors dropped more than 7 points from Tuesday’s final trade. Company stock also dropped 4.42%, closing Wednesday at $86.58.

Micron Technology’s 3% convertible notes due 2043 also saw significant fluctuations in trades and an almost 14-point drop from Tuesday’s close. The convertible note traded between 164.92 and 153.25 before ending the day at 153.25, according to Trace data.

The semiconductor device producer’s stock also decreased 8.74%, closing the day Wednesday at $43.74.

Workday drops

Workday’s 0.25% convertible notes due 2022 were the most actively traded of Wednesday’s session. With 25 trades by late afternoon, Workday outpaced trades of other convertible notes by more than 2 to 1, according to a market source.

The notes, however, dropped nearly 3 points during the trading session, ending the day just above par at 100.15, according to Trace data.

The company’s stock also dropped throughout the session, closing the day at $106.52, a decrease of 7.18%.

The company’s convertibles saw high-volume trading in the past two weeks as the stock crept steadily upwards, beating its 52-week high on Black Friday. The 0.25% convertible notes were trading below par prior to the rise in company stock.

Workday’s 0.75% convertible notes due 2018 experienced high-volume trading alongside the 0.25% convertible notes last week but trading activity in the 0.75% notes has since tempered.

“They were trading in between them because one is cheaper than the other and they wanted to stay in the name,” a market source said of the trading activity.

The 0.75% convertible notes saw little activity on Wednesday as focus turned toward the 0.25% convertible notes. The 0.75% notes, however, dropped 6 points to 132.1 in the single trade of the day, according to Trace data.

The human resource and finance cloud computing software application company’s 1.5% convertible notes due 2020 also experienced little activity but dropped 4 points to trade at 146, according to Trace data.

Mentioned in this article:

Lam Research Nasdaq: LRCX

Microchip Technology Inc. Nasdaq: MCHP

Micron Technology Nasdaq: MU

Workday Inc. Nasdaq: WDAY

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