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Floating the company does, in itself, constitute at least a partial
sale. Now they're realising some of their gains personally.
Interestingly, it sometimes happens that insiders sell blocks of shares
in order for the price to rise. This may seem rather contradictory,
right? After all, wouldn't that contradicit the law of supply and
demand? The answer is: not necessarily, because in order for the price
to rise, there has to be blocks of shares for the public to buy.
I'm not saying that that's what we're seeing here. But suffice it to say
that the insiders are not stupid, and are unlikely to be making a
mistake. Even "Do no evil" spaz-boy wont miss out on those kinda tricks.
One practise I've heard about is directors selling blocks of shares,
with options created to buy them back at the price they sold them for.
This is perfect for the directors, because they really can't loose out
of it. If the share price drops, then they would have cashed out at a
higher price. If the share price rises, then they get to participate in
the rises. Perfect. For them. The article doesn't mention if the
directors of Google are entering into the transaction under a similar
arrangement.
It's also fun to hear about the logic the directors and their financial
backers present to the public as to the reason for their actions. Here
in Britain, some while ago now, an internet company called Lastminute
had a rights issue to buy up more internet companies. The directors
explained that they "just" preferred to do it that way than to buy the
other companies for cash. I liked the way they brushed the issue aside
as it being a mere preference. Shall I wear my brown shoes today, or my
black ones? I know, I'll just wear my black ones.
However, I suspect that there was a lot more to it than "just"
preferring a rights issue. Here's my guess, let's run it up the flag
pole and see what salutes it: the company probably didn't want to weaken
its cash position, people were clamouring for their shares, which were
absurdly overvalued anyway. So, hmm, let's see, I can either buy a
company with cold hard cash, which I'd rather preserve anyway, or, I
could buy out another company with pieces of paper that aren't worth
nearly as what any sane business man would pay for them. So, in the
words of British comedian Harry Hill: "will you the lamb, or will you
the pork?".
Truth to tell, their target companies were probably vastly overpriced
anyway. But in the late stages of a bubble market, normal business
common sense normally goes out the window. After all, what's the problem
in buying a vastly overpriced company when the value of what you're
offering is also vastly overpriced.
I'm not making this stuff up, you know. This shit really happens.
I. for one, tend to miss things the first few times around,