Dickmilde...SCKT... The CEO, Kevin Mills, did it for the first time with 5K shares in July. The stock price was around where it is now and then they announced the hand barcode scanner that was going to be "Apple Certified" (them and one other company are the only ones) and the intraday stock price shot up like a rocket(!!) and took out his shares. Not sure why he did it, but 5K shares out of how many he owns is not a big deal. (His timing was perfect).
The oddity is Michael Gifford. He pretty much gets his options and then turns around and automatically sells them at preset prices. When I first bought into the company this concerned me. But you have to understand, it wasn't long ago that SCKT was a "going concern" as far as accounting goes. They had readied their SOMO computer to focus on the healthcare industry and to replace the HP Ipaq. HP was expected already to abandon that market in 2009 and extended it out. As such, SCKT didn't get the burst of growth they were expecting and continued their long history of losses (it's a LONG history). They eventually lost their bank line of credit and it's why they had to do the debt conversion last November to stay alive. (The contrast now is that they eliminated the conversion this summer already and turned around and got a new line of credit from the SAME bank).
HP left the Ipaq market in Japan in January or so. They didn't leave the US until mid-summer and their product has only just disappeared out of the pipeline. Only from September on has SCKT really started to taste what the potential could even be (and that's without even reaching out to customers really) since they only were able to rectify their LCD shortage problem in mid-August.
The sales by Michael Gifford are what they are. If they happened now or in the future (vs even last July) it would concern me a bit more. Insiders own a lot of shares here so the few he sells aren't that telling, but it is something to keep an eye on.
On options: I personally think the company has given them out a bit too much--they aren't excessive, but not necessarily as a result of performance either (they say they did it because they reduced salaries during lean times). They have less than 90K available to give out under the last employee plan approved so, barring some gift from the Directors, the next plan won't be approved till the next shareholders meeting.
A couple years ago they stock did a 1:10 reverse split. In June 2010 the company repriced options for employees (yeah, nice gift. Welcome to U.S. corporations!) The strike price for most of it is around $2.80 and they vest a certain % each month. If you added up ALL options out there (including those out of the money), it comes to 1.45M. With the debt conversion done there are approx 5 M shares outstanding + 500K warrants left from the conversion (exercisable at $2.44 or so) + ALL options (exercisable and not) of 1.45M = 7M shares fully diluted (when the stock price breaks and stays above $2.80 for good).
I'm counting on less than 200K new options to employees per year going forward (since in another quarter they can bump salaries up 5%---something the CEO has mentioned) and them being cash flow/net income positive enough that they don't need to dilute/sell share shares for capital. I may be wrong in my hopes here. Obviously history is against me. Time will tell.
I think of SCKT more like a "biotechnology investment" right now than anything. They are tiny, have some issues still (but they are getting to be fewer and fewer), have TWO great products (the SOMO computer and their highly rated barcode scanners) that have a large marketplace just ripe for expanding into......the question becomes can they do it?? Is this the right management to do it?? If they can, then it can be crazily profitable. A 43% profit margin that can expand upwards can allow a LOT of money to hit the bottom line on sales that double or triple. 7M shares outstanding allows net income/share to be nice and FAT!
If they can't then maybe selling shares in a 10b5-1 plan is the wise thing to do :0)
