SHARES OF SEMICONDUCTOR-maker Micron Technology (ticker: MU) have hit a rough patch recently, with double-digit declines over the past week. Now, at least one prominent insider is adding to the bearish signals, selling $4.2 million in shares.
Steven R. Appleton, Micron's chairman and chief executive, sold 135,000 shares for $1.2 million, an average price of $8.73 each, on June 30. The next day, he sold an additional 359,490 shares for $3 million, or an average price of $8.49 each, to cover taxes incurred after restricted shares vested.
After the sales, Appleton held 2.2 million shares directly and indirectly and 2.8 million exercisable options. His stake continues to be worth less than 1% of the company's outstanding shares.
A Micron spokesman declined to comment on the sale.
Micron shares have fallen 19% over the past three months, compared to the 12% gain for the Dow Jones Semiconductor Index. The Standard & Poor's 500 index has fallen 14% over the period. Much of that decline has come in recent days; Micron shares have fallen 17% since it announced fiscal-third-quarter results on June 28.
Jonathan Moreland, director of research at InsiderInsights.com, says selling into weakness is a major red flag.
"It's disheartening to see not just Appleton, but other insiders selling when the stock is 15% off from where it was just a few weeks ago," he says. "These guys have been sellers forever, but you'd think that someone would say the stock is oversold and hold off."
Moreland notes that Appleton also had restricted shares vest recently, making him less reluctant to part with the ones he sold.
Appleton joined Micron in 1983 and was appointed CEO in 1994. He serves on the boards of directors for the Semiconductor Industry Association and National Semiconductor (NSM).
Micron makes semiconductors, including DRAM components, modules and NAND flash memory products that are used in computers, networkers, servers and other applications.
On June 28, the company reported fiscal-third-quarter earnings that swept past analyst expectations, but shares fell as investors worried about forecasts for flat shipments in the NAND business.
Betsy Van Hees, an analyst with Wedbush, rates Micron at Outperform with a $15 price target.
"While Micron doesn't provide guidance, management's commentary on memory indicates demand continues to outpace supply," she wrote in a research note. "While shares were under pressure in after hours, we view this as a buying opportunity as we believe Micron will continue to benefit from favorable supply/demand environment, upcoming product cycles and continued gross-margin expansion as aggressive memory cost-downs through calendar 2011 significantly outpace memory average-selling-price declines."
Here's a rundown of insider trading activity reported on July 6, 2010. An insider is any officer, director or owner of 10% or more of a class of the company's securities. The table shows purchases and sales which must be reported to the SEC and other regulators by the 10th of the month following the month of the trade, includes both open-market and private transactions involving direct and indirect holdings. Excludes stock valued at less that $2 per share, acquisitions through options and companies being acquired. Included are purchases, sales and stock registered for sale for individual officers, companies, and sectors.
SHARES OF SEMICONDUCTOR-maker Micron Technology (ticker: MU) have hit a rough patch recently, with double-digit declines over the past week.