Yahoo insiders run with market's bulls
As the Web portal's once stratospheric stock flirts with a new 52-week high, company executives and partners are cashing in on the trend.
Throughout April and May, a number of Yahoo officers sold options for millions of dollars in proceeds. The biggest benefactor, though, may be networking partner SBC Communications, which owns a small stake in the portal company.
The sales come as Yahoo's stock continues to rebound from the dot-com bust. In January 2000, the company traded for more than $200 a share, but in the last year, it dipped as low as $8.94. Now trading at $32 a share after four consecutive quarters of profits and new investor hope, Yahoo may be regaining some of its luster as a premium technology stock.
That doesn't mean that stockholders are holding all their shares in hopes of a continued runup. SBC, for instance, earlier this month sold a third of its Yahoo stake for $177 million, or about $64 million in pretax profit. A spokesman for the telecommunications giant, which has a co-branded digital subscriber line (DSL) service with Yahoo, attributed the sale to periodic tweaking of its investment portfolio and denied a change of heart toward its partner.
"From time to time, we reallocate our investment portfolio," said SBC spokesman Larry Solomon, who added that SBC's remaining 2 percent stake is currently valued at about $300 million.
SBC in January 2002 acquired about 17.5 million shares of Yahoo for $17.13 a share. It filed to sell 6.5 million shares on June 9 for about $27.23 a share.
A Yahoo spokesman reiterated SBC's commitment to the partnership.
Yahoo executives have also been quick to sell shares while the market is up. Officers who have sold since April include the company's chief operating officer, Daniel Rosensweig; its chief financial officer, Susan Decker; its chief technical officer, Farzad Nazem; executive vice president Gregory Coleman; secretary Jonathan Sobel; and senior vice presidents Jeffrey Weiner, Toby Coppel, Geoffrey Ralston, Steve Boom and James Brock.
Rosensweig, for instance, filed to sell 200,000 shares on April 25 for $5.09 million in gross proceeds. However, he ended up selling only 75,000 shares at a cost of $1.1 million and made $780,000 in profit. Decker on April 17 filed to sell 100,000 shares for $2.5 million in gross proceeds. After paying $924,000 for her options, Decker made $1.58 million in profit.
One notable exception was CEO Terry Semel. To date, Semel has not sold any stock, his primary form of compensation.
Although investors traditionally frown upon massive stock sales among executive teams, these recent maneuvers are viewed more as icing on the cake.
"This is an indication of people who've gone through the first bubble and are now taking precautions," said Youssef Squali, an analyst at First Albany.
Yahoo officers are restricted to certain windows of time in which they can sell their shares, according to company spokeswoman Joanna Stevens.
"It's a normal and prudent part of their estate tax planning and portfolio diversification process to trade shares during those designated times," Stevens said.