- The Washington Times - Saturday, June 29, 2002

SAN JOSE, Calif. (AP) Twice within the past two years, Apple Computer Inc. executives sold company stock worth millions of dollars just weeks before Apple warned of disappointing financial results. Each earnings warning sent shares tumbling.
While the sales could have an innocent explanation, analysts consider them unusual because at no other point during the period did any other clusters of large sell-offs by Apple executives occur.
Big stock sales among executives are common, especially in the high-tech sector, where stock options are often a major part of compensation.
But insider-trading analysts consider the Apple executives' sales unusual because the people involved, though they were mostly exercising stock options, tend to be less-active stock sellers.
"These sells seem to be well-timed," said Lon Gerber, director of insider research at Thomson Financial, coming as they did on the eve of two of three Apple earnings warnings over a period that began in August 2000.
"It's always a bit suspicious" when executives sell before a warning, said Martin Friedman, director of research at Friedman, Billings, Ramsey & Co. Inc.
The Cupertino-based computer maker defended the sales, which were questioned in a column last week on a Web site for Mac enthusiasts called Resexcellence.com.
Apple denied any notion of impropriety.
"I can assure you that no executive would have exercised options had they believed we would not meet our original guidance for the quarter," Fred Anderson, Apple's chief financial officer, said in a written statement.
Mr. Anderson, one of the executives who sold stock before the warnings, refused further comment. So did all the others after attempts by the Associated Press to reach each individually.
The biggest flurry of sales 1.9 million shares worth more than $49 million occurred between April 22 and May 31, according to Securities and Exchange Commission filings, and were executed by Mr. Anderson and five other executives: Senior Vice President of Applications Sina Tamaddon; Senior Vice President and General Counsel Nancy Heinen; Senior Vice President of Software Engineering Avie Tevanian; Senior Vice President of Finance Peter Oppenheimer; and Executive Vice President Timothy Cook.
During that period, Apple's stock was hovering around $24 on the Nasdaq Stock Market. On June 18, Apple warned that revenue for the quarter that began April 1 would be lower than expected. Shares are now trading around $17.
Back in August 2000, three of the same executives Sina Tamaddon, Miss Heinen and Avie Tevanian and a fourth, Senior Vice President of Hardware Engineering Jon Rubinstein, sold more than 370,000 shares worth more than $21 million.
One month later, on Sept. 28, Apple issued an earnings warning for the quarter that was to end in two days, saying the company would fall 10 percent short of expectations because of a slowdown in personal computer sales.
Stunned investors lopped the value of the company's shares in half; and the stock price plummeted from $53.50 to $25.75 the next day. Shareholders who accused Apple and its executives of misleading the public about the company's financial prospects during a July 2000 presentation filed a still-pending class-action lawsuit in September 2001 that mentions the pre-stock-plunge sales by the four executives.
No such clusters of sales occurred near a Dec. 5, 2000, earnings warning, and during 2001 there was little trading activity among Apple executives or directors. Four of them, including Mr. Cook and Sina Tamaddon, sold stocks months apart worth about $12.5 million last year.


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