Xbox 360 exec sold shares before console woes disclosed

Weeks before he announced an "unacceptable number of repairs" to the Xbox 360, the Microsoft executive in charge of the video game console sold US$6.15 million worth of company stock, or about 20 percent of his holdings.

According to regulatory filings with the U.S. Securities and Exchange Commission (SEC), Robbie Bach, president of Microsoft's entertainment and devices division, sold 200,000 shares in four transactions between May 3 and May 30. The total take: more than $6.1 million.

On July 5, Bach was one of two Microsoft executives who spelled out the problems with the Xbox 360 to financial analysts and reporters. The game machine's design, Bach said, was defective. "Over the past couple of months, the number of repairs for the Xbox 360 console have been unacceptable to us," he said during a telephone conference call.

To handle the influx of customer complaints, Microsoft said it was immediately extending the Xbox 360's warranty from one to three years for any problem diagnosed with the three flashing lights error message, dubbed the "red ring of death" by users. To pay for the anticipated repairs, and to evaluate and fix systems still in inventory, Microsoft will take a charge of more than $1 billion against earnings for the quarter that ended June 30.

Also during the conference call, Bach said that Microsoft had been aware of the Xbox 360 problems for several months. "This set of issues wasn't visible at all for the first year and more," he said. "[But] the past couple of months, we've seen a significant increase in call volume, repair volume and attention from people."

Before his May moves, Bach last sold shares Aug. 31, 2006, when he disposed of 40,710 shares worth just over $1 million. But although top-tier executives often file scheduled sell plans -- dubbed "trading plans" in the vernacular -- to protect themselves from accusations of insider trading, Bach's May sales were not under such a plan.

Still, Bach should be given the benefit of the doubt, said Ben Silverman, director of research at InsiderScore, an insider trading intelligence service. "There's so much scrutiny of Microsoft that it would be very surprising if there was some kind of questionable insider activity," said Silverman.

Another type of trading plan, noted Silverman, doesn't require a public filing. These plans, which fall under the SEC's Rule 10b5-1, let companies set a trade window during which executives can sell (and buy, though that's rare) shares without restrictions. "It appears that there was a trading window open in May at Microsoft," Silverman added, citing sales by several other executives, including Chairman Bill Gates, General Counsel Brad Smith and the head of the Windows division, Kevin Johnson. "There were no insider sales in April and March," he said, intimating that the timing may not have been up to Bach.

Microsoft's share price was little affected by the news of the Xbox 360's failure rate and the associated $1 billion charge. The day after the announcement, the price closed down just 2 cents. As of Thursday, it had recovered to $30.07, up 8 cents since the July 5 warranty change. Bach sold his shares in May at an average price of $30.73.

Microsoft did not respond to a request for comment.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Gregg Keizer

Computerworld
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?