Inside Track:
Hefty Returns at Five High-Tech Firms
Appear to Spur Officials' Hefty Sales
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By Danielle Sessa
Staff Reporter of The Wall Street Journal
What are executives at several technology companies doing as small investors barrel into their
stocks?
Pulling back.
It isn't surprising that the technology companies disclosing the highest dollar amounts of insider sales
were also the ones that posted impressive returns for 1998. But the recent insider sales could raise
short-term caution signs for investors.
Of course, executives at technology firms frequently sell shares of their companies; much of their pay
is in stock. But insiders at EMC Corp. unloaded a whopping $79 million in stock during December,
taking advantage of a tripling last year in shares of the computer-storage systems supplier.
Other hefty insider sales took place at Network Appliance Inc., Cisco Systems Inc., Oracle Corp.
and Jabil Circuit Inc. In each case, insider sales totaled at least $35 million in December, according to
Disclosure Inc., a Bethesda, Md., company that tracks insider activity.
"It didn't surprise me to see insiders taking profits in tech stocks that were approaching historically
vulnerable periods," said Craig Columbus, vice president of research for Disclosure. "I know this
sounds like absolute heresy, but we are coming up on what is traditionally a tough couple months for
all technology stocks."
Technology stocks frequently stumble in the spring and late summer, Mr. Columbus said. Looking at
the average monthly returns for the past five years, Cisco, EMC, Oracle and Jabil posted losses or
low returns during those periods, according to Disclosure. The combination of heavy insider selling
and the start of traditionally slower months for these companies could be a sign of caution to
investors.
Based on data from Disclosure, four insiders at EMC unloaded 1,045,000 shares in December.
Directors Maureen and Richard Egan sold 500,000 shares apiece at $77.50; Director John Egan
sold 25,000 shares at $80.25 apiece; and Vice President Paul Noble sold 20,000 shares at $79.94
to $82.94.
"EMC, given its size, does experience more seasonality with typical weaknesses in the March quarter
and summer quarter," said Philip Rueppel, a computer-systems analyst at BT Alex. Brown. But Mr.
Rueppel doesn't credit much significance to the heavy selling by executives. "There are often
restrictions on executives that preclude them from selling stock," he added. |
