Microsoft Execs Are Selling Stock
Many of the top executives of Microsoft Corp. seem to be eager to sell shares of the software giant as the introduction of the company’s Windows 95 operating system nears.
Also, figures released Monday by the company showed that during the three months that ended June 30 it spent just $34 million on share repurchases. That was down from $104 million in the prior quarter and from a record $318 million in the last three months of 1994.
A company’s apparent disinterest in its own stock often sends up red flags to investors, but analysts say understandable circumstances surround the Microsoft moves.
Microsoft’s share price has surged this year, ending June at $90.375, up 48 percent since the end of 1994. That makes it lucrative for employees to cash in stock options.
In just seven business days at the end of May, filings with the Securities and Exchange Commission show, 10 Microsoft officers sold 253,645 shares for a total of $22.3 million, getting an average price of $88.11 a share. Most of the shares were sold by officers cashing in stock options that were granted years ago at prices ranging from $10.11 to $37 a share.
But that doesn’t necessarily mean that Microsoft insiders have turned bearish on their company. The timing of the sales and repurchases appears to have been heavily influenced by the company’s effort to acquire Intuit.
That deal, which was opposed by the Justice Department on antitrust grounds, was abandoned on May 20, a move that freed Microsoft and its executives to resume trading in the company’s shares.
The merger was related to the stock transactions because of accounting rules. Microsoft had hoped to merge with Intuit by using pooling of interests.
But pooling accounting is not allowed if there is excessive trading by either the company or its executives in the period directly before or after a merger, and Microsoft had apparently asked its executives to refrain from trading while the deal was pending.
The dropping of the deal freed executives from that rule.