NEWS AND COMMENTARY September 6, 2000 Insiders at MetaSolv Software, S1 Sell Shares, File to Sell Near Lows By Cassell Bryan-Low, The Wall Street Journal Tech Insiders Bail Out as Stocks Fall to Earth ... Weiss comments NEW YORK - Don't bet on battered shares of some technology companies rebounding anytime soon. That at least seems to be the message from corporate insiders at a handful of tech firms, which are selling their companies' shares -- in some cases at ever-lower prices -- though the shares are well off year highs. The activity could be a signal for bargain hunters that stock-price uncertainty remains ahead. Insider selling near lows indicates "there may be more downside left before the bargain tag can appropriately be applied to that issue," says Bob Gabele, director of research at First Call/Thomson Financial, which tracks insider transactions. "Many investors are looking for the fallen angels, but not all of these angels sprout wings again. Sometimes insiders can help us see where those wings are slow to regenerate," he says, or, "more commonly put, sort out the good from the bad." Picture Is Mixed Overall, the picture for the technology sector is mixed, according to indicators of insider sentiment. Though there are various methods used to assess such sentiment, the most reliable is weighing the dollar value of shares sold against the dollar value of shares purchased, says analyst Lon Gerber at InsiderScores.com, a Web site that tracks insider activity. Having been very bearish in June, insider sentiment "appears to be reversing back to neutral," he says. In June, the dollar value of the sell-to-buy ratio was 65 to 1, up from 22 to 1 in January. In July it was 33 to 1. "I still wouldn't say the insiders are bullish," in the technology sector, says Mr. Gerber. Analysts note, however, that sales by insiders among technology stocks tend in general to outweigh the buys because executives tend to be heavily compensated by stock options rather than cash. What is noteworthy, however, is when insiders sell those shares when stock prices are depressed -- and , in particular, when there is a continued pattern of sales as the shares decline. Executives at two software companies, MetaSolv Software Inc. and S1 Corp., have recently sold or filed to sell shares, despite the fact that both stocks are trading about 70% below year highs. The phrase "buy on the dips" doesn't apply to these doomed dot-coms, as their executives seem to be abandoning all hopes the stocks will ever go higher. These insiders are desperate to unload their shares before the stocks sink even further. And from what we've seen, this is just the tip of the iceberg. Even the heads of big-name tech companies are getting rid of their shares at fire-sale prices. Bill Gates and Paul Allan of Microsoft, Jeff Bezos of Amazon and Steve Case of AOL have together unloaded billions of dollars worth of stock. At Dell computers, founder Michael Dell and other executives sold more than $2.09 billion in stock last year, more than any other American corporation except Microsoft where insiders got rid of $4.26 billion. And the fire sale is getting hotter. Why? Maybe it's because they know that tech stocks as a whole and their companies in particular will never reach the levels they were at during the heyday of the tech stock bubble. In fact, by selling now, they are telling investors that tech stocks are about to drop like a rock. The Nasdaq's 90-point tumble yesterday is just the beginning. Today, it is already down another 68 points. Right now, these tech insiders are probably hoping that their sell orders get filled before other investors play "follow the leader."

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