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IDTI in the Spot Light
1/21/98 Inside Buying Picks Up At Some Technology Firms
By Bridget O'Brian
Staff Reporter of The Wall Street Journal
In the technology industry, traditionally rife with insider
selling and beaten down as it has been the past six months,
purchases stand out.
Particularly such as those at Integrated Device Technology
Inc., a maker of specialized memory chips and equipment used by
Internet and cellular-phone providers, where a raft of insiders
followed up one round of buying last summer with a second in
November. Or a huge options exercise by a director of Bay
Networks Inc., who incurred a tax liability but hasn't yet sold
the underlying shares. Or at Cypress Semiconductor Corp., where
the president, Thurman Rodgers, increased his stake by 27% last
month.
It's not possible, as yet, to gauge where the technology
sector may be headed based on the actions of these and several
other companies. Indeed, most of the firms are in starkly
different sectors and thus have little in common with each
other, except that they are in the same very broadly defined
category.
"It's really a mixed bag," said Bob Gabele, president of
CDA/Investnet, a database that tracks buying and selling
patterns. "It could be some of these companies have the worst
behind them. But as a sector trend, that doesn't exist yet. It
may show up down the road."
At Integrated Device, Carl Berg, a director, bought 360,000
shares at $9.19 to $9.56 a share from Dec. 5 to 11, according to
Federal Filings Business News, an insider database. Only a month
earlier, Mr. Berg had bought 375,900 shares at $10.38 to $11.31
each. In addition, Vice President William B. Cortelyou bought
2,500 shares at $10.50, and Vice President Robin Hodge bought
20,000 shares at $10.63 to $10.69 on Nov. 24.
"This is a textbook case of small-cap insider buying," said
Craig Columbus, vice president of research at Disclosure Inc.,
another insider database.
Last summer, insiders exercised options or bought shares
outright to the tune of 107,334 from June to August. Integrated
Device reported fiscal third-quarter results last week that beat
analysts' expectations.
This combination of factors may have had an effect on the
company's stock, which closed Tuesday at $12.1875, up 12.5
cents, in Nasdaq Stock Market trading. The stock price and
volume on the company's shares have been moving up steadily in
recent weeks.
At Bay Networks, a maker of computer-networking equipment,
director Andrew Ludwick on Oct. 28 exercised 619,876 options, at
$5.83 a share, and didn't sell them. The move increased the
holdings of Mr. Ludwick, a former president and chief executive
officer, by 48%, according to Baseline. In addition, three other
insiders purchased or exercised options for 177,810 shares in
November.
So far, though, those actions haven't been indicative of a
stock-price runup. Bay's shares closed at $31.375 on the day Mr.
Ludwick exercised his options and haven't moved much since,
closing Tuesday at $29.4375, up $1.3125 in New York Stock
Exchange composite trading. After the stock market closed,
however, Bay released sharply higher earnings results for the
quarter, in the process beating analysts' expectations.
There's a different scenario to be found at Cypress, where
Mr. Rodgers, the president, purchased 125,000 shares at $8.26 a
share on Dec. 16. Cypress shares had traded as high as $18 in
September but have dropped by half since, closing Tuesday at
$8.9375, down 18.75 cents on the Big Board. Its stock price
won't be helped by the fourth-quarter earnings results it
released Tuesday, which described a sharp revenue shortfall
because of lower orders from certain large customers and flat
chip revenue.
"This is a good example of why you shouldn't track just
chairmen and presidents," said CDA/Investnet's Mr. Gabele. "You
should look for more action than from just one person. ... This
is a good example of why you should look for a supporting cast
alongside the key person who may feel the need to make a
statement."
Copyright (c) 1998 Dow Jones & Company, Inc.
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