Hi Dick,
now we all know insiders are not ALWAYS right! ;-)
Best Buy, Circuit City Executives Sell Stock: Insider Focus
Washington, Sept. 25 (Bloomberg) -- Best Buy Co. and Circuit City Group executives sold more than $90 million of stock in June and July while shares of the two biggest U.S. consumer- electronics retailers soared on increasing sales and earnings.
The companies' shares have since declined on concern that sales and profit growth are slowing.
At No. 1 consumer-electronics seller Best Buy, 11 executives and directors sold $61.7 million, or 944,750 shares, at prices ranging from $58.88 to $78.57 during the two-month period, according to the Washington Service, which tracks executive buying and selling. The stock hit a 52-week high of 79 on July 7.
At rival Circuit City, 13 officers and directors sold $32 million, or 376,090 shares, at prices ranging from $87 to $101.94, according to the Washington Service. Circuit City split its stock 2 for 1 on July 15.
Low inflation and rising wages in the U.S. have fueled consumer spending on computers and other electronics. That has helped Best Buy to report nine straight quarters of higher sales and profit, and Circuit City's sales to climb for eight quarters. Their stock prices have been lifted by the same tide: in the 12 months to June 1, Best Buy almost tripled, while Circuit City rose about 69 percent.
``The stock moving up that sharply sometimes precipitates sales,' said Dean Ramos, a George K. Baum & Co. analyst. ``You had some pretty major run-ups ... over the summer.' He has ``buy' recommendations for both companies.
CEO Sells at Best Buy
Best Buy Chairman and Chief Executive Richard Schulze was the largest seller of the Eden Prairie, Minnesota-based company. He sold 461,000 shares for $30.5 million.
At Circuit City, sales were led by Richard Birnbaum, executive vice president of operations. He sold 80,000 shares for $7.1 million.
In addition, a charitable trust headed by Circuit City Chairman and Chief Executive Richard Sharp sold $46.9 million, or 533,500 shares, during June.
Both companies said the sales occurred when options come up for expiration and before the start of restricted trading periods when the announcement of financial results is pending.
``The window of opportunity for our executives to trade in our stock is extremely limited,' said Dandy Barrett, Circuit City director of investor relations. She said the executives sold for various reasons, including estate planning, raising money to pay taxes and to cover costs of exercising the options.
At Best Buy, directors, including Schulze and Bradbury Anderson, president and chief operating officer, had to exercise options or lose them, said Susan Hoff, Best Buy vice president of corporate communications and investor relations.
Best Buy's shares began surging in early June when the company announced its fiscal-first quarter earnings would be more than double what was forecast at the time.
The S&P 500 Effect
The shares were helped by Best Buy's inclusion in June in the Standard & Poor's 500 Index, a broad market measure used by many money managers who try to mimic the index's returns by buying its member companies. Best Buy split its stock earlier in the year.
Circuit City, based in Richmond, Virginia, on June 16 reported better-than-expected fiscal first-quarter profit and announced plans for the July stock split. Most of the insider sales took place between June 21 and 30.
At the same time, Circuit City rid itself of the money- draining Digital Video Express, or Divx, a digital video-disk venture. The company had invested $200 million in the business.
Second-Half Growth
Both companies now are facing slower growth in same-store sales, those sales at stores opened at least one year. Best Buy's shares tumbled Sept. 2 after the company said its same-store sales wouldn't rise at the double-digit percentage rates that investors had come to expect.
Same-store sales are a key indicator of a retailer's performance because it includes only sales from stores open at least a year and excludes new and closed stores.
Circuit City expects similar sales increases. Like Best Buy, it faces tougher comparisons because year-earlier growth was so strong. Investors are concerned about the U.S. economy's stamina and how consumer spending would be affected if interest rates are raised again.
Most analysts remain optimistic about the retailers, given consumer spending so far and a host of new products with digital technology that produces sharper pictures and better audio. In recent months the retailers have reported sales gains in digital cameras, satellite television systems and wireless digital phones.
``The second half of the year is going to remain robust for consumer-electronics companies,' Ramos said. Both companies' third- and fourth-quarter per-share earnings are expected to rise anywhere from 25 percent to 46 percent, based on analyst's average estimates.
Other Sellers
Other Circuit City executives and directors selling more than $3 million worth of stock included:
--W. Stephen Cannon, senior vice president and general counsel, sold 43,651 shares on June 21 and 10,099 shares on June 22 for a total of $4.77 million.
--Michael Chalifoux, executive vice president and chief financial officer, sold 35,474 shares on June 21 and 4,526 shares on June 22 for $3.55 million.
--W. Alan McCollough, president and chief operating officer, sold 36,000 shares on June 21 for $3.16 million.
Other Best Buy executives and directors selling more than $3 million of stock included:
--Allen Lenzmeier, executive vice president and chief financial officer, sold 50,000 shares on June 18 and 50,000 shares on July 2 for a total of $6.59 million.
--Bradbury Anderson, president and chief operating officer, sold 25,000 shares on June 29, 35,000 shares on July 2 and 10,000 shares on July 6 for a total of $4.88 million.
--Robert Fox, senior vice president of finance, sold 42,500 shares on June 18 and 37,500 shares on July 2 for a total of $5.24 million.
--Kevin Freeland, senior vice president of inventory management, sold 62,500 shares on July 12 for a total of $4.72 million.
Sep/25/1999 11:24 |
