Tech execs sell shares, investors cautious

NEW YORK: Executives from Microsoft Corp., Dell Computer Corp. and Electronic Arts Inc. have all sold shares in their companies during recent weeks, but investors say that is no reason to follow suit.

The recent bout of stock sales has more to do with diversifying assets than trying to get out of individual stocks after gains in the technology market during recent months, investors say.

"I certainly would rather see them buying stock than selling. Obviously there is no greater sign of confidence than when they are buying," said Victory Capital analyst Marty Shagrin.

"But I don't think the small incremental sales relative to their existing positions are necessarily predictive of how they view the outlook for their companies," Shagrin said. Victory Capital owns stock in Microsoft and Dell.

Shares in the world's largest software maker Microsoft have fallen 3 percent since the beginning of the year.

The rest of the market has fared better, with the Nasdaq Composite Index up more than 19 percent. No. 1 personal computer maker Dell has gained 17 percent, while video game publisher Electronic Arts has picked up 37 percent.

Microsoft said on Friday in regulatory filings that Chief Executive Steven Ballmer earlier in the week sold nearly $150 million worth of Microsoft stock, adding to the $1.2 billion in stock he sold between May 21 to May 23. He still owns more than 415 million shares worth above $10 billion.

Also selling from Microsoft's ranks was Jeffrey Raikes, who sold 400,000 shares on Thursday, raising about $9.8 million. Raikes, who heads up the Microsoft segment that includes the Office suite of products, still owns more than 10 million shares in the company.

Dell's chief executive, chief operating officer and chief financial officer have all sold shares in the past two weeks. Chief Executive Officer Michael Dell sold $274 million worth of stock, or about 10 million shares, between May 22 and May 27, but still has nearly 278 million shares.

Chief Operating Officer Kevin Rollins exercised 250,000 stock options for a profit of about $7.4 million while chief Financial Officer James Schneider exercised 250,000 stock options for a profit of $7.1 million.

Electronic Arts Chief Executive Larry Probst also exercised options during the past two weeks, for a profit of about $6 million. In addition, the company's general counsel Ruth Kennedy sold shares for a profit of $312,770 and executive vice president Nancy Smith exercised options for more than $2 million in profits this week.

Stock sales like these are typically part of diversifying assets and might be due to something like buying a new house, said Stein Roe Investment Counsel technology analyst Chuck Jones. Stein Roe may hold Microsoft, Dell and Electronics Arts shares in individual accounts, he said.

And sometimes the sales end up happening within windows of only a few weeks because executives generally are forbidden from selling stock if they have material information, such as knowledge about an upcoming earnings announcement.

"Executives typically have so much of their net worth tied up in the company stock, selling and diversifying overall makes a lot of sense," Jones said.

© Reuters