Other Share Dumps Last Week

In recently criticizing Yahoo!'s insiders for dumping $233mm in stock over the last 2 years, when they've only bought $103k in shares, I would be remiss if I also didn't call out 2 other executives for big share dumps last week:

1. Craig Mundie, head of research and strategy for Microsoft (MSFT). Craig decided to sell stock worth $1.7mm recently. Craig has resided over Microsoft's R&D efforts for the last few years. This group eats up nearly $10 billion annually of Microsoft's free cash flow. It is the group Microsoft looks for to compete in mobile computing or other areas, rather than buying a leading company such as, say, Research In Motion (RIMM). The R&D group has eaten up about $60 billion of Microsoft's cash in the last 10 years with not much to show for it. This latest share dump is very disappointing to me as a MSFT shareholder, especially given his group's performance.
2. Jack Ma, head of Alibaba.com. When news broke last week about how much Yahoo! stock had been sold by insiders in the last 2 years, perhaps Jack Ma got inspired. The head of Alibaba.com -- whose parent company is 40% owned by Yahoo! -- sold stock worth $35mm last week. That's a Terry Semel-sized disgorgement of shares. His explanation for the share sale was the most original I've ever read for a share dump: "There are many things that I need to learn how to do ... all of which I would like to do while I am still young and will need to do now.... I need to start learning now how to deploy money to do proper things, to experience the real meaning and responsibilities of having wealth." Good luck, Jack. It is a heavy burden you carry, but I know you will do it with a solemn and determined focus.

[Disclosure: I hold a long MSFT position at the time of publication.]

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Find Law News: Investors of Yahoo Take Stock

Mr. Atanasov
Monday, September 14, 2009

Does Yahoo Inc.’s top lawyer know something about the company’s future that investors don’t? General counsel Michael Callahan has sold more than $2 million in company stock over the last two years, and investors are asking why.

Callahan isn’t the only top executive at Yahoo cashing in. Others, including CEO Carol Bartz, have sold more than $232 million in stock in the past two years as the Internet search engine struggled to compete against rivals Google and Microsoft Corp. Bartz alone has sold $2 million in stocks since becoming CEO nine months ago. Yahoo executives declined to comment, a company spokesperson said.

“It shows a lack of confidence,” says Eric Jackson of Naples, Fla.-based Ironfire Capital LLC, an outspoken former shareholder. “If you think the stock is about to go up, why would you sell shares?”

Jackson reviewed the company’s regulatory filings recently and posted a spreadsheet of executives’ stock sales online. He says he also sent his findings to other investors, who were disappointed to see so much cash leave the company, even though executives have the right to sell the options they’ve been given.

“For shareholders, it’s always a bad sign when you see insiders selling shares,” Jackson says. Jackson is quick to point out that Callahan started selling stocks on Feb. 1, 2008, the day after Microsoft offered $31 a share to buy Yahoo. These days, the company’s stock sells for around $14 a share.

The stock selloffs occurred as lawyers and other executives left the company. Associate general counsel Duane Valz joined the law firm Chadbourne & Park this month to help the firm open its first office in northern California. Yahoo’s former head of IP, Joseph Siino, left in late 2008, and the head of patent litigation, Lisa McFall, soon followed.

Before joining Yahoo, Callahan was with the law firm Skadden, Arps, Slate, Meagher & Flom LLP — then later worked for Electronics for Imaging, Inc. as corporate counsel. He joined Yahoo in 1999 and was named general counsel in 2003.

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