Top Financial News (Re Dell)
Sat, 29 Jan 2000, 8:13pm EST
Dell Chairman, Other Insiders Sell Shares Ahead of Fourth-Quarter Warning
By Loren Steffy
Dell Computer Insiders Sell Shares Ahead of 4th-Quarter Warning
Round Rock, Texas, Jan. 29 (Bloomberg) -- Dell Computer Corp.
Chairman Michael Dell sold $210 million of the company's stock
about a month before the No. 1 direct-seller of personal computers
said profit would miss forecasts and sales growth would slow.
Michael Dell and other executives sold as Dell's shares
neared their highest point since February 1999. The stock has
fallen about 20 percent since Dec. 20, when Dell sold 4 million
shares. He sold an additional 401,000 the following week.
Dell Computer warned on Wednesday that fiscal fourth-quarter
profit was little changed and sales lagged forecasts because of
parts shortages and delays caused by the Year 2000 date rollover.
The company was the second-most active in terms of insider
selling last year behind Microsoft Corp. Michael Dell sold more
than $1.5 billion of the company's shares, second to Microsoft
Chairman Bill Gates, said David Coleman, editor of Vickers Weekly
Insider Report.
''Whenever there's an increase in insider selling, it's a
warning signal,'' Coleman said.
As a whole last year, Dell insiders sold $2.09 billion worth
of the company's shares, compared with $4.26 billion for Microsoft
insiders, according to the Washington Service, which tracks
insider buying and selling.
Dell shares rose 39 percent last year, their worst
performance since 1993. The company was the best-performing member
of the Standard & Poor's 500 Index from 1996 through 1998.
Michael's Sales
Michael Dell's sale of 4 million shares came three days
before the stock of the company he founded climbed to 52 11/16,
the highest since Feb. 3. Since this week's warning, the shares
have dropped 7.7 percent. They fell 5/16 to 37 1/4 yesterday.
Dell spokesman T.R. Reid said executives couldn't have known
when they sold stock in December that sales wouldn't rebound as
quickly as expected after the Year 2000 rollover.
''What we disclosed (Wednesday) are issues that we really
didn't have meaningful visibility to back when those trades were
made,'' he said.
After exercising options, Michael Dell sold 2 million shares
at $47.59 each, and another 2 million shares at $47.43, according
to documents filed with the U.S. Securities and Exchange
Commission. He sold 401,000 shares on Dec. 31 for $49.87 apiece.
He had exercised options to buy 1.92 million shares at $1.45
each, 1.54 million at $1.81 each and 1.54 million at 98 cents. He
exercised options for another 282,000 shares at an undisclosed
price. The options-related sales brought a profit of about $200
million.
''Michael has sold limited amounts for years,'' Reid said.
''Our executives are significantly limited in the window during
which they can trade.''
Investors often watch insider sales for clues on executives'
sentiments about a company's prospects. Though large, Michael
Dell's most recent sales fit a pattern and together constitute
about 1 percent of his holdings.
Dell, 34, controls about 14 percent of his company's 2.55
billion shares outstanding. He sold 8 million shares in both March
and June, 4 million in both August and September and 5.7 million
in November.
Warning
In its warning to investors this week, Dell blamed parts
shortages and reduced demand ahead of the Year 2000 date change
for the earnings shortfall in the quarter that ended yesterday.
The company said it will report profit of 15 cents a share,
short of the 21 cents most analysts expected. Sales rose 30
percent to $6.7 billion, about $400 million less than analysts
predicted.
Dell reduced investors' expectations further by saying it
expects sales to rise about 30 percent in future quarters, the
company's slowest growth rate in more than five years.
Other Dell executives also sold shares last month. Former
Vice Chairman Morton Topfer, who retired last month, sold 400,000
shares in options-related transactions on Dec. 23 for an average
price of $52.84, according to the SEC filings. The sales were
worth about $21.2 million.
Senior Vice President Rosendo Parra sold almost 159,000
shares at an average price of $53.06 on Dec. 23. He exercised
options to buy almost 76,000 shares at 98 cents, 64,000 at $1.45
each and 19,200 at $9.26 a share. The options-related sale brought
him a profit of about $8.1 million.
Dallas attorney Thomas Luce, a Dell director, sold 26,800
shares at $49.88 on Dec. 22, after exercising options to buy them
at $2.07, according to the SEC filings. He made a profit of about
$1.28 million.
On Dec. 17, Vice President Paul Bell sold 74,000 shares at
$47 after exercising options to buy them at $1.49, for a profit of
about $3.37 million.
|
