Filed under “timing is everything in life”

Dec 22nd $ORCL came out with results that disappointed investors and in November net storage provider NetApp said major customers were “taking a pause” given macro fears. That caused stocks in most enterprise/software/cloud providers to fall. $CRM, which had disappointed everyone with their previously released earnings, causing shares to slide from over $130 to $105 as Thanksgiving approached was hit with the others. The price rallied after Thanksgiving back to the $120?s. Insiders could not exercise options and sell virtually every share fast enough. The majority of these options were being exercised years ahead of expiration, years ahead. From Nov 22nd to mid December 15th ~$10M of stock was sold, It should be noted here than once shares fell below $105 in early/mid December, the selling magically stopped, cold. We should also noted that virtually all of these were 10b5-1 or “planned sales”. Now, $CRM insiders selling shares is not a “new” phenomena, but since I was now following them, I was struck by the timing of it all.

As the price broke the $100 barrier in late December, Wall St, still overwhelmingly sitting on “buy” and “overperform” ratings came to the rescue:

Dec 27th 12:21 (Dow Jones)’s (CRM) recent stock swoon is overdone, says JMP as its F4Q checks suggest the business-software maker is “trending very well” while the potential for “possible megadeals exists.” That follows the closing of a deal just before Christmas that sees CRM replacing Oracle (ORCL) in providing software for “tens of thousands of users at a Fortune 50 company,” JMP notes. Overall, it sees potential upside to its 4Q billings estimate of 32% year-on-year growth at CRM and says the pre-Christmas deal suggests spending on the company’s software should continue to be strong into 2012. CRM is up 2.7% at $100.63, but remains down 15% this month amid ORCL’s downcast news last week. ([email protected])

That little positive tidbit boosted shares over the partial Holiday shortened trading week to allow Director Conway to sell $78K worth of stock over $4/share higher, north of $104.

Jan 9th 1:48pm The chance Oracle ($ORCL) will miss its seasonally strong F3Q guidance because of flat enterprise-software demand helps lead BMO to downgrade ORCL to market perform as it does the same for enterprise software as a whole. ORCL reported last month the sales cycle lengthened in fall, and BMO says it’s unclear whether it is returning to the pace of last summer. The investment bank maintains its outperform rating on ORCL competitor ($CRM) “given stronger field checks” for buyers of cloud-based software. Shares of ORCL, which will launch its own suite of cloud services later this year, and CRM are off fractionally today. BMO lowered its price target on ORCL to $30 from $32. ([email protected])

The next week, after a 5% rise in the stock, CFO Smith cashed in a promptly dumped $1.2M worth of stock near two years before expiration at $105.

Jan 18th 11:32pm (Dow Jones) With Convio ($CNVO) being the 4th software-as-a-service company agree to get bought out within the past 90 days, the parlor game of who’s next continues. William Blair raises the specter of potentially finding itself as cheap enough for the world’s biggest software companies to potentially swallow CRM. While admitting the odds are “relatively low at this point” looking out the next 3 years, “if the stock remains under pressure, it could be an interesting target” for Oracle ($ORCL), SAP, Cisco ($CSCO) “or even Google ($GOOG).” CRM shares have slumped 35% the past 6 months, pushing the company’s market cap down to $14B. ([email protected])

The “$ORCL buying $CRM” rumors have been out there since 2008 and again in 2011.  In 2010, $GOOG was supposed to be going to buy them. Now, lets just put side $CNVO was bought for the Princely sum of $312M … that’s “M” for million and a deal for $CRM would most likely start in the $17-$20B range (that is “B” for billion). Saying a $312M deal is a precursor for a $20B one is just bizarre…..and more than a little irresponsible. It seems to have the intended effect though as shares rallied over 6% today giving CFO Smith a much better price to cash in some more options a year early and then immediately dump them for a quick $112k at $112/share.

This sale is weird. The Form 4 says a 10b5-1 sales was indicated. But, why cash in $1.2M of options on the 17th, only to then cash in $112k the next day? Both sets of options had already vested and both were being exercise well ahead of expiration. The only difference I guess would be the $7/share more he got on the 18th sale vs the 17th. Man, that is some pre-planned sale… Nostradamus ain’t that good. It is also amazing that the rush to sell shares in $CRM from insiders was pre-planned to stop the last two weeks of December when the price dropped to $96/share and then magically resumed when favorable, insane “buyout” articles pushed the price back safely over $100

Finally, this would also be the time to point out that over the last three years, insiders have sold $440 million in stock and bought…..let me see…..oh, there it is, NONE. Shareholders (those of you have bought shares), that is a $440M gift you have given to insiders who are cashing in options/grants….. I hope you got a Christmas card.