Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : EMC How high can it go? -- Ignore unavailable to you. Want to Upgrade?

To: John Carragher who wrote (4168)	2/3/1999 8:42:00 AM
From: John Carragher	Read Replies (1) \| Respond to of 17183

Inside Track: Hefty Returns at Five High-Tech Firms Appear to Spur Officials' Hefty Sales ---- 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.

To: John Carragher who wrote (4168)	2/3/1999 10:35:00 AM
From: William F. Wager, Jr.	Respond to of 17183

<<wsj has an article (negative)>>John--forgive me, but if you are going to quote from an article, why didn't you also note the positive points about stock splits contained in the same piece which I have done: Academic studies have shown that split stocks do well over one-year to three-year periods. Rice's Mr. Ikenberry found that from 1975 through 1990, stocks got an initial 3.5% pop from a split announcement -- and then went on to gain an additional eight percentage points on average more than comparable stocks in the following 12 months. Mr. Ikenberry says the splits didn't cause the improved performance he found. But he believes the splits were a signal from management that it expected good business prospects ahead. If management expected bad news, it wouldn't split the stock, he reasoned, because stocks that fall too low in price start to lose investors who shy away from stocks priced below $10 a share, and especially from "penny stocks." I favor full disclosure, don't you? Read the full article yourself in today's "Heard on the Street." Bill

To: John Carragher who wrote (4168)	2/3/1999 12:32:00 PM
From: Khris Vogel	Read Replies (1) \| Respond to of 17183

They want the institutions to buy their stocks ie pension funds etc. These companies don't care about the small guy. John, do you have any first hand experience on the part of EMC looking at its individual shareholders in this manner? For my part, they have bent over backwards to keep me informed and have been very good to work w/. Investors have to pay commissions on twice as many shares after a 2-for-1 split. I would suggest then that such investors change their broker. Most discount brokers charge the same commissions whether the transaction involves 100 shares, 500 shares, or 1000. Obviously, the commission charge is the commission charge, but the more shares one buys, the smaller the allocation of the commission to each share. Besides, Mr. Rollins feels the stock price tends to zigzag more after a split as well. Maybe somebody should explain to Mr. Rollins that all share prices zigzag, that nothing moves in a straight line. And despite Rollins' view to the contrary, there have been many academic studies of stocks that have split vs. those that have not, w/ the results showing that the stocks that split tend to outperform the others in the 12 mos. following the split. John, I totally understand that split vs. no split, I still own the same portion of the co., and a split does not increase the value of my equity in the co. I also agree that there are costs associated w/ administering splits. But when the share price has appreciated to the level EMC's has (compared to past share prices), I don't think that it would be wasteful for the co. to declare a split. And I am highly confident they will, but just not right now, for the obvious reason.