Is massive insider selling at ORCL a harbinger of bad things to come?
Oracle Corp. (NASDAQ: ORCL) delivered better-than-expected earnings back in September, and its stock enjoyed a nice ride from a low of $22 on August 31 to $29.50 by November 2. However, in the past 3 months, insiders at Oracle have disposed of almost $1.4 billion worth of ORCL shares. Founder and CEO Larry Ellison liquidated $1.24 billion of his own holdings. Since the wave of insider selling started in late September, Oracle’s stock price has stalled in the $27 to $30 range.
ORCL insider trading charts for Oracle and Larry Ellison
The large block sales are not exactly confidence-inspiring, and are definitely at odds with Mr. Ellison’s commentary in September that the company “can dramatically improve margins and double the top lineâ€. Furthermore, since then, the news coming out of Oracle hasn’t been great. ORCL dropped its three-year old patent litigation suit against NetApp, and, to boot, salesforce.com (NYSE: CRM) CEO Marc Benioff announced on its Q3 earnings call, held November 18, that NetApp had abandoned Oracle’s hardware platform in favour of salesforce.com’s Cloud Computing platforms. This is a particularly interesting development because there had been, until recently, rumours that Oracle was looking to take over NetApp. Oracle was awarded a record $1.3 billion in damages in a succesful copyright infringement suit against software giant SAP. The amount, while impressive, is substantially less than the over $2 billion Oracle was seeking, and SAP have already indicated that they will appeal the decision.
Battles among larger-than-life personalities is nothing new in the tech sector, although Ellison’s trash-talking of Benioff seems like little more than wordplay given that Ellison has elected to put his money where his mouth isn’t. Benioff, on the other hand, has chosen to keep things classy, and hasn’t sold any unusually large blocks of shares in the past 6 months.
All will be revealed when Oracle reports its earnings in December, but from the looks of things now, recent events don’t portend good things for ORCL.