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, Oracleâ€™s stock price has stalled in the $27 to $30 range.
The large block sales are not exactly confidence-inspiring, and are definitely at odds with Mr. Ellisonâ€™s commentary in September that the company â€œcan dramatically improve margins and double the top lineâ€. Furthermore, since then, the news coming out of Oracle hasnâ€™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 Oracleâ€™s hardware platform in favour of salesforce.comâ€™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 Ellisonâ€™s trash-talking of Benioff seems like little more than wordplay given that Ellison has elected to put his money where his mouth isnâ€™t. Benioff, on the other hand, has chosen to keep things classy, and hasnâ€™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.