Yahoo! insiders sell
This article appeared in today's Wall Street Journal.
Yahoo! Executives Exercise
Their Rights to Hefty Profits
By LAURA SAUNDERS EGODIGWE
Staff Reporter of THE WALL STREET JOURNAL
Yahoo! Inc.'s extraordinary run has given the Internet directory company's executives something to cheer about.
Since May 1997, Yahoo shares rocketed more than 400% before sinking 5.4%, or, $6.125, to $108.25 Tuesday in Nasdaq Stock Market trading. Company executives lately have been enjoying the ride, exercising some of their low-cost options and selling the underlying shares.
See more-detailed information on insider transactions.
From Feb. 2 to May 5, seven Yahoo insiders exercised options for 320,326 shares at prices ranging from one cent to $12.83 apiece, and they sold 320,863 shares at prices ranging from $61.25 to $127.03 a share. The sales totaled $29.2 million. The company has 45.8 million shares outstanding, according to Baseline, a New York financial-data concern.
"It's certainly valid to argue normal profit-taking when analyzing insider sales at a company whose shares have shown the phenomenal performance that Yahoo has," said Bob Gabele, president of CDA/Investnet, Rockville, Md., which tracks insider buying and selling. "When the position reductions of insiders reach the levels that we are currently seeing from some of the Yahoo sellers, however, the selling takes on a much more significant air," he added.
"We must assume that the insiders involved were more comfortable holding more cash and fewer Yahoo shares as the price moved higher this year." Mr. Gabele cited the fact that the options weren't due to expire until 2005, leaving "a lot of profit margin" for the insiders to realize if the rise were to continue.
"We compensate heavily in the form of stock options, and our executives will make regular dispositions of stock options for financial and estate-planning purposes," said Yahoo spokeswoman Diane Hunt.
From Feb. 2 to April 16, Chief Operating Officer Jeffrey A. Mallett sold 160,000 shares at prices ranging from $65 to $127.03 apiece, after exercising options to buy the shares at one cent each. The sales reduce his holdings of common stock and exercisable options by nearly 50%, CDA/Investnet said. Mr. Mallett now holds options to buy 500,000 shares, Ms. Hunt said.
Vice President Anil Singh sold 16,872 shares from Feb. 27 to April 14 at prices between $71 and $114.13 apiece, reducing his position by 50%. Senior Vice President Gary Valenzuela sold 40,227 shares at prices ranging from $111.87 to $126.56 apiece, cutting his position by 50%, according to CDA/Investnet.
Mr. Valenzuela now holds options to buy 370,000 shares, Yahoo said.
On Feb. 25, President Timothy Koogle exercised options to buy 30,000 shares at one cent apiece and sold the underlying stock at $61.25 a share. He holds options to buy 1.2 million shares, the company said.
The insider selling is troubling because it comes as the company is moving into new arenas, said Michael Murphy, editor of California Technology Stock Letter, Half Moon Bay, Calif. "They're going from being the leading search engine company ... to being a distant competitor in the Web-portal business against" America Online Inc., Mr. Murphy said. "I just don't understand why people think that's a good idea," he said.
The company disputes that, saying it always has been an Internet-directory company and is implementing a long-held plan. "We've never changed our strategy," Ms. Hunt said. "We're still executing on the same business model that we created in 1995."
Yahoo went public in April 1996. Although there was a lockup period of six months after the IPO when insiders couldn't buy or sell stock, that hasn't been a factor in the current selling.
Wall Street remains bullish on the stock despite Tuesday's pummeling, which came amid a marketwide decline. "Yahoo! has managed to be almost a proxy for Internet growth, as it's a brand that you think of when you first get on the Internet, and you keep using it," said BancAmerica Robertson Stephens Internet analyst Keith Benjamin. |
