Semiconductor-Equipment Executives Are Selling Stock While Prices Are High
[... as opposed to when the stocks are at 52 week lows .... another penetrating article from the journalism interns over at the WSJ ... --Duker]
----
By Danielle Sessa
Staff Reporter of The Wall Street Journal
Executives at several semiconductor-equipment makers are taking advantage of inflated stock prices by selling shares.
Shares of some semiconductor-equipment makers nearly tripled from the lows of October to highs reached in February. And as the stocks started to recover, some corporate insiders began cashing in and reducing their stakes.
"Insiders who see a lot of their compensation in stock and options were held back from the market because the industry was in a downturn for so long," said Robert Maire, an analyst at Donaldson, Lufkin & Jenrette Securities Corp. "Insiders are not going to sell when they are at historically low levels."
Consider Applied Material Inc. The Santa Clara, Calif., concern hit a low of $21.563 in October. As equipment orders from semiconductor manufacturers picked up and so-called DRAM (dynamic random-access memory) prices rose, the stock started to come back. Applied Material's stock price had almost tripled by March. Executives responded to the higher price by selling Applied Material stock valued at 60 million.
Insiders at KLA-Tencor Corp. and Veeco Instruments Inc. also began selling shares just as their stocks were peaking in January and February. But soon after insiders began selling, the upswing in the sector started to lose some steam. Applied Materials and KLA-Tencor are down 20% from their peaks; Veeco is off nearly 50%.
"DRAM prices have dropped 40% since March; that's what has caused a lot of the stocks to drop off recently," Mr. Maire said. He added that DRAMs make up about 40% of the market for semiconductor equipment makers.
Ten insiders at Applied Materials sold more than 900,000 shares between Feb. 19 and April 9, according to First Call/Thomson Financial. Most of the sales followed the exercise of options to buy stock.
The largest seller was Chairman James Morgan, who disposed of 288,000 shares at $65.19 a share. Chief Financial Officer Joseph Bronson sold 45,000 shares at $65.91, reducing his holdings by 30%. Director Philip Gerdine sold 49,600 shares at $67.35, also slicing his position by 25%.
"The window in which Applied Materials executives are able to trade their stock is very narrow, and many of their options were expiring soon," a company spokesman said.
Applied Materials fell 94 cents to $55.31 on the Nasdaq Stock Market.
Eight insiders at KLA-Tencor, San Jose, Calif., exercised options and sold nearly 220,000 shares totaling about $12 million, according to First Call/Thomson Financial. Chief Executive Officer Robert Boehlke reduced his holdings by 25% by selling 40,000 shares at $58 to $64.76 a share. Chairman Jon Tompkins cut his stake by 20% by disposing of 40,000 shares at $55.06 to $62 a share. Chief Executive Officer Kenneth Levy sold 40,000 shares at $22.27 to $55.41 a share. Most of the sales followed the exercise of options.
KLA-Tencor could not be reached for comment.
The insider selling at Veeco Instruments, Plainview, N.Y., coincided with a 3.5 million secondary stock offering in February. Nine executives elected to sell a total of 1,465,000 shares at $49.66 a share.
"The only time we will pay attention to a secondary is when we see significant holdings reductions," says Paul Elliott, research analyst at First Call/Thomson Financial.
Directors John Gurley and Virgil Elings each sold 370,000 shares, slicing their actionable position -- common stock plus exercisable options -- by 25% each. Messrs. Gurley and Elings's stock sales consisted of shares they received when Veeco acquired their companies, Deborah Wasser, a Veeco spokeswoman, said.
Other Veeco executives who sold stock included: Vice President Francis Steenbeke, who disposed of 36,000 shares, trimming his stake by 40%; Vice President John Rein, who reduced his actionable position by 35% by selling 15,000 shares; and Vice President John Kiernan, who cut his actionable position by 75% by selling 5,000 shares.
Veeco executives receive a chunk of their pay through stock and stock options, and the insiders who sold shares "still own a significant amount of stock," Ms. Wasser said.
Journal Link: For additional information about insider trading statistics, see The Wall Street Journal Interactive Edition at wsj.com
|
