Xbox Boss Sold Stock Before MS Came Clean on Red Ring Fiasco

Xbox Boss Sold Stock Before MS Came Clean on Red Ring Fiasco

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

^--- I'd like to know that myself.
I agree with the earlier statement, just what percentage of his stock did he unload?
Investigate it yes,but it dose not look like corruption, it looks to be more a normal trade.
I'd like to see a comparison with this and the guys' usual trading values before jumping to any conclusions. If this is an exceptionally big share-sell then it's worth looking at, but something tells me that 6.2M in a share transaction for this guy is nothing really out of the ordinary, whether buying or selling.
Hell, he probably figured that the announcement wouldn't affect the stock prices that much *I mean, wasn't it because T2 was denying everything that their stock went down, while MS was admitting and trying to remedy the problem?*
It depends, how much of his compensation is in MS stock?

I 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?
snooze- his transaction is hardly a scandal. but feel free to start robiebachtruth.org if you really want.
It is possible that he anticipated a drop in stock price after the announcement. After all he is a top guy in the game devision.

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.
@Dexee

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.
$6.2 million is a big chunk of cash. But Robbie probably didn't walk away with that much from the sale.

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.
Yes indeed. He might very well be heading to jail.
@Dexee - Your statement makes no sense... "The only way they can disprove that statement is to send this guy to jail if he really was doing inside trading." Have you proved that this was insider trading yet? Has there been a trial yet? No? Then sit down and stop mouthing off about how "corrupt" America is.

@~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. =)
Sounds like he's reinvesting the 6.2 mil. The fact that M$ stock hasn't budged, even after that announcement of the RRoD's, makes it look completely unrelated. Now, if M$ stock tanked right after he dumped it, I would be singing a different tune.
Oh Please. Take your conspiracy theories somewhere else.

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).
At $6.2M and about $30/share, that's roughly 206,000 shares sold...I think the more important question is what percentage of his total holdings does that number represent? Also, where does his remaining number of shares leave him in terms of his financial stake in Microsoft? The article stated that this wasn't a scheduled transaction.

@G-Dog:

At least you'd have $6.2M to keep you company.
So, because of what you think, that's how corrupt the US is? Nice try.
I think because he is in a large corporation, the courts won't send him to jail. Thats how corrupt America is with reguard to corporations. The only way they can disprove that statement is to send this guy to jail if he really was doing inside trading.
I'm sure if it were me, I'd be in jail by now.
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.

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