More than a dozen Compaq insiders sold a portion of their holdings in the past two months, getting at least partially out of the stock before it tumbled to half its value following the computer giant's announcement that its first quarter earnings would fall far short of estimates.
The latest executive to issue plans to sell shares was Mike Winkler, senior vice president of the PC products groups. Winkler last month filed to sell 100,000 shares with a value of $4.35 million, according to filings with the Securities and Exchange Commission.
Other officers who sold a portion of their holdings in February include: William Strecker, Hans Gutsch, Michael Larson, Earl Mason, Enrico Pesatori, John Rose, Rod Schrock, Gregory Petsch, Thomas Siekman, and John Rando.
Directors Thomas Perkins and Kenneth Lay also sold a slice of their Compaq stock, according to SEC filings.
In February, 12 insiders sold more than 1 million shares at prices ranging from 41.11 to 47.50, close to Compaq's 52-week high of 51.25, which it hit in late January. The stock, however, has since seen its share price fall to the low 20s.
"The recent insider activity appears to mirror the lack of confidence as insiders sold after the stock began to pull back...it is intriguing that insiders did not begin to sell until after the stock began to fall," said Elizabeth Poisson, an insider trading research analyst with First Call/Thomson Financial.
Among the executives who sold a significant portion of their holdings are Mason--Compaq's chief financial officer who also resigned over the weekend to take another job--and Rando, vice president of Compaq's services division.
Rando dumped 75 percent of his common shares and exercisable options, selling 75,615 shares at 44. That sale yielded Rando $3.3 million.
Mason, who received $12.3 million from his sales that ranged from $46.25 to $46.4375 a share, sold over 60 percent of his common shares and exercisable options.
"These levels are almost unheard of for a company of this size," Poisson said. "Usually you may see a 20 to 30 percent reduction by an insider for a company like this--and that is considered a good size reduction."
Meanwhile, Rose, group general manager for enterprise computing, sold 30 percent of his holdings, selling 110,000 shares between 41.4375 to 47.4375. His sales generated $4.75 million.
The company has been battered by falling PC prices that have eroded profit margins, and was losing the confidence of Wall Street for missing analysts' expectations. Earlier this month, Compaq admitted on a Friday afternoon that earnings would approximately be half of expectations. Meanwhile, Compaq's chief executive, Eckhard Pfeiffer, was ousted over the weekend in a stunning coup by the board of directors.
Compaq will announce earnings for the first quarter on April 21 before the market opens.