Their stocks are hovering near all-time lows, but insiders at several cable and technology companies — such as Liberate Technologies Inc. and Terayon Communications Inc. — continue to sell shares.
Last year, when Liberate stock traded at more than $100 per share, several company insiders made millions by selling. And that selling continues — despite the stock's drop to below $10 per share in recent weeks.
Liberate CEO Mitchell Kertzman sold 340,000 shares at prices ranging from $8.04 to $14.16 between January and late March, netting $1.5 million.
Chairman David Roux sold $105,000 shares in December and January, netting $1.2 million. He also registered to sell $150,000 shares in April, which would net an additional $1.1 million.
Interactive-TV software vendor Liberate said Kertzman doesn't comment on his stock trades, but in a prepared statement senior vice president of investor relations Kevin McCarty said Kertzman sells the same amount of shares at the same time each quarter "to be regular and predictable."
"Since so much of his net worth is concentrated in Liberate shares, he has, with the advice of financial planners, committed to a program of modest diversification of his holdings on a planned and regular basis," McCarty said.
Two months after cable- modem vendor Terayon was dealt several class-action suits, which included charges that company insiders sold $439 million in stock at artificially inflated prices, CEO Zaki Rakib and his brother Selim, the president, went on another selling spree in June. The Rakibs both sold 50,000 shares at prices ranging from $68.96 to $70.35 per share, netting $3.5 million each.
Terayon shares fell steadily since July and dropped like a rock in December, when the company warned it would miss fourth-quarter revenue estimates because of order cancellations. It hit a low of $2.36 on April 9 and recovered to $5.45 last Tuesday.
No Terayon insiders are buying the stock at low levels, but director Lewis Solomon exercised 40,000 five-cent options on Feb. 6, for a paper gain of $215,000.
Zaki Rakib said he instructs his broker to sell a set amount of shares each quarter, but that he doesn't tell the broker exactly when to place a sell order.
Asked why he isn't buying Terayon shares at low prices on the open market, Rakib noted that 80 percent of his holdings are tied up in Terayon stock.
"It's a matter of diversifying my own portfolio," he added.
In February, James McDonald, CEO of set-top vendor Scientific-Atlanta Inc., sold 206,000 shares at prices ranging from $50.70 to $57.27 per share, netting $10.8 million. S-A shares hit a low this year of $36.10 on April 4, but have since recovered, closing at $59.85.
At video-on-demand and ad insertion vendor SeaChange International Inc., vice president of marketing Edward Delaney sold 70,000 shares between December and late March, netting $1.3 million. CEO William Styslinger sold 50,000 shares in March, at $14.63 and $14 per share, netting $715,750.
After dropping to $10 earlier this month, shares in SeaChange shares have surged, closing Tuesday at $16.10.
BUYING ON THE DIP
On the other hand, insiders at some firms — including CommScope Inc., RCN Corp. and Concurrent Computer Corp. — are buying their own companies' stock at bargain-basement prices.
At CommScope, CEO Frank Drendel shelled out $103,840 to buy 5,000 shares at $20.80 each on Feb. 22. That contrasted with executive vice president of development Larry Nelson, who dumped 65,098 shares in the transmission-equipment vendor in several trades in February, netting $1.4 million.
Insiders at cable overbuilder RCN — which has traded far off its February 2000 high of $72 per share — have been on a buying spree over the last several months.
Director Scott Walter spent about $7.1 million to buy about 1 million RCN shares at prices ranging from $6.93 to $7.35 per share in December and January. But he's taken a big loss on the buy, as RCN closed at $4.32 last Tuesday.
CEO David McCourt has also taken heavy losses. He spent $4.5 million to buy 553,000 RCN shares between October and December, at prices ranging from $7.06 to $15.31 per share.
With video-on-demand vendor Concurrent far off the high of $24.06 it hit in January 2000, CEO Jack Bryant is one of the few insiders buying shares at much lower prices. He spent $189,634 to buy 35,000 shares in January and March at prices ranging from $4.50 to $6 apiece, according to First Call/Thomson Financial data.
After reporting its earnings on April 26 and cutting previous VOD-revenue projections, Concurrent's share price plunged more than 40 percent the following day, and hasn't recovered since. Shares in Concurrent closed at $5.38 last Tuesday.
"I feel real good about the VOD market potential going forward. I personally don't invest money in companies that I don't think have a bright future," Bryant said.