This trend was reflected in the headline on the press release announcing its September quarterly report: "Company reaches gross margin profitability. This means its finally not selling its services at a loss. But factoring in total costs -- including such incidentals as $22 million in stock compensation -- the company lost $33 million during the quarter.
Although StorageNetworks has $293 million cash, that may not last long. In a recent filing with the U.S. Securities and Exchange Commission, the company notes that money will be sufficient for working capital and capital expenditures for at least the next 18 months. Then what? We believe that we will continue to incur losses on a quarterly and annual basis for the foreseeable future, the filing states.
Not surprisingly, Bell isnt the only StorageNetworks insider selling shares. Chief technical officer William Miller, also using a blind trust, sells 25,000 shares a month. During the period in early September when Bell sold his stock, Miller made several sales, ranging from $3.88 to $5.00 a share.
Other sellers include chief financial officer Paul Flanagan, who sold 68,750 shares in May and June for $1.2 million, and John Clavin, executive vice president of marketing, who sold 50,000 shares in June for $929,600. The parade of sellers doesnt appear to be slowing. Harry Dixon, who resigned from StorageNetworks board of directors in September, filed plans in September and October to sell 3.75 million shares for $16 million.
Executives who want to inspire faith in their companies often buy shares when prices are down. But thats not happening at StorageNetworks. A year ago, Miller was the last executive to buy the stock, when he purchased 4,000 shares, averaging $44.75 each, for $179,000. Meanwhile, insider sales at the company over the last year totaled a stunning $190 million.