July 13, 2007
We've written much about the Xbox 360's disgraceful hardware failures of late.But a story getting even more press right now concerns Microsoft exec Robbie Bach and his sale of $6.2 million worth of MS stock prior to company revelations about the extent of the so-called "red ring of death."
As reported by MarketWatch, SEC records show that the stock was sold between May 2nd and last week's announcement that MS was extending the 360 warranty to three years for the red rings failure. The news had little impact on the company's share price.
A Microsoft spokesman said:
Robbie Bach's past trading is completely unrelated to last week's announcement. ... [He] continues to hold a significant stake in Microsoft and remains confident in the long-term success of the company.
MarketWatch quotes Ben Silverman of Indie Research, a firm that tracks insider sales:
"It doesn't necessarily mean [insiders] think that there will be a bad event; it could just be financial planning. But sometimes it just looks bad that an insider has sold stock. I'd give [Bach] the benefit of the doubt here, especially because the stock didn't move very much."
Comments
Re: Xbox Boss Sold Stock Before MS Came Clean on Red Ring Fiasco
The popularity of the Xbox, as well as its relatively short 90 day warranty, inspired efforts to circumvent the built-in hardware and software security mechanisms, a practice informally known as modding.
water softener systemsI am also guessing he has a fairly diversified portfolio.
I'm also guessing that the xbox division is such a tiny part of MS that the stock price isn't a concern.
As mentioned above, great so correlation = causation when we want it to?
But it is also possible that he saw a nice profit in his investment at that time and made the sale. Then later made the announcement.
It just requires an investigation and if he is guilty he will go to jail. If not he will be slapped on the wrist and sent away.
So now it's okay to use correlation=causation logic and coporate conspiracy theories in the absense of hard evidence when it suits your arguments, huh? Good to know all the crap we take from anti-gamers who use the same rhetorical traps hasn't gone unoticed. Kudos to you for taking the logical high road.
It depends on how he got those shares as to how much he walked away with from the transaction. MS awards stock as incentives to employees. Those could have been "options" given as a hiring incentive, meaning that the Robbie had to pay for the stock at the award price and then take only the difference as profit (and wait as much as five years for his ownership in the stock to vest). They could have been accumulated through an employee purchase program where he was paying a reduced price for the stock all along. Or they could have been incentive awards, which means he was given the stock as a bonus reward for service to the company. And the way all those stock incentives and employye stock sales work ... you can bet on it that he paid his tax on them all the appropriate times (award or sale), so it's not like he was scamming anyone in that regard.
http://en.wikipedia.org/wiki/Martha_Stewart_Insider_Trading_Charges
@~the1jeffy - Excellent point... Usually you dump your stock because something really *bad* is going to happen. Nothing really bad happened, so it's very possible they were unrelated. However, that doesn't mean we shouldn't investigate...but hey, maybe we'll find out that he needed the cash for a down payment on one of those Russian space trips. =)
http://en.wikipedia.org/wiki/Enron_Scandal
Despite games being our big issue here, it's a relatively small group in terms of people and income for Microsoft.
MS stock was the highest it's been in quite some time during that time period. Company officers and employees at all levels and in all groups were selling large chunks of stock to cash in on vested stock awared shares that were finally far enough above their strike prices to be worth selling. The stock peaked briefly then went down again and has been see sawing up and down about a buck and a half a share.
Even if he sold right now AFTER the announcement, Robbie would still make close to what he made selling his stock before the announcement. MS stock did not go in the toilet over some negative press (as was the case with Take Two a while back).
@G-Dog:
At least you'd have $6.2M to keep you company.