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Technology Stocks : Kulicke and Soffa -- Ignore unavailable to you. Want to Upgrade?

To: scott_jiminez who wrote (3807)	5/26/2000 1:19:00 PM
From: Red Dragon	Read Replies (1) \| Respond to of 5482

It's not a very helpful post, and I suspect the poster is not authentic. First of all, the information presented holds true for ALL publicly traded companies. All employees that hold stock in a company, from the CEO down to the stockroom boys, are typically restricted from selling their shares until several days after an earnings announcement is made. The window opens for a few weeks, then closes about 6-8 weeks before the next earnings announcement. Thus, just a few weeks are open for all employees of all companies, certainly not just KLIC. You always see insider sells clustered together for any company. Second, the post implies that options are the main source of compensation for KLIC management. Not so, they are compensated very handsomely with base salaries. Check out their salaries on this Yahoo profile page, and compare their salaries with salaries from Yahoo's top management. Yahoo is valued at more than 60X KLIC, yet Yahoo's management salaries are half of KLIC. biz.yahoo.com biz.yahoo.com Third, there are all sorts of errors in the post, which makes me suspect the poster is not authentic. Among them: 1) The SEC requires insiders to file a Form 4 detailing their trades within 41 days, not 45 2) "(The CEO) absolutely approves insider sales" Impossible. Ridiculous. No CEO controls or approves insider sales. Employees can do whatever they please with their stock, as long as they stay within the window. 3)"The CEO allows selling during a short window...he controls when (sales) can occur" Another foolish and ridiculous statement. The open period for selling is set in the initial S1 Form filed with the SEC prior to being publicly traded, then is governed by the Board of Directors. Most of the (naive) public believes that the CEO is omnipotent with ultimate power. The poster seems to fall in this category, believing the CEO controls everything, from approving insider sales to approving the time window for sales. In reality, the Board of Directors, representing the shareholders, hold ultimate power. The CEO is just another employee and can be fired by the Board of Directors at their whim. All major decisions go through the Board of Directors. Finally, it is most definitely true that insiders accumulate options throughout their career. They acquire some during initial employment, then typically get awarded more once a year or so for incentives, etc, as the poster pointed out. What you must still answer, though, is why did so many insiders, who have held options for years, all of a sudden decide to exercise and cash out NOW. They have 4 windows open a year, corresponding to the 4 quarters. They have been quiet...holding...then BOOM everyone sells 90-100% of their shares. **Check out this profile of one of the directors: biz.yahoo.com Notice there are at least 6 different exercise prices, which means these options have been granted on 6 different occasions - in other words, over many years. Some of the exercise prices are as low as $3-$5, implying the options were granted long ago, and she has held on to them all these years. 4 times a year, she get a window to sell. She declines quarter after quarter, then BOOM...she sells off everything. Similar patterns are seen with the other insiders. In summary, I agree that insider selling is usually not as predictive as insider buying. I agreed with that in my previous postings as well. The one exception** is when many insiders sell off most of their shares. In this case, it often is very significant. So Scott, here is the crucial question you (and others who are still holding) must ask. The insiders have been very quiet...then BOOM they sell off 90-100% of vested shares. Why? They make generous base salaries, they have held on to their stock for a long time, then...BOOM... sell it all. If the insiders think the price is going higher, why wouldn't they just wait another quarter or two to get an even better price? A reasonable observer would say the most logical explanation is that they don't think they can get a better price in the near future. For now, they look to be correct.