Uh Oh -- Insiders Are Selling at Apple

Given runaway sales of its iPod digital music player, it seems Apple (AAPL) could hardly be doing any better these days. But is that what some of Apple's own executives have decided, as well?

From Apr. 1 through Apr. 27, several top execs sold nearly 3 million shares worth at least $47.8 million, according to government filings. After exercising options, operations and sales chief Tim Cook took home $14.8 million. Chief Financial Officer Fred Anderson tallied $10.9 million, followed by hardware maven Jon Rubinstein at $8.1 million. Other sellers include applications boss Sina Tamaddon, Marketing VP Phil Schiller, and Corporate Counsel Nancy Heinen.

Few investors are likely to begrudge these sweet paydays. The shares have risen from $12 to $27 since Apple unveiled its iTunes Music Store service a year ago. With its PC market share slipping below 2%, the executives have essentially created a new future for the company with its innovative music products. "At Apple, they bet -- and they bet big," says Michelle Lin Gutierrez, an analyst at Schwab Soundview. "For them to take money off the table is not only to be expected. It would be dumb for them not to."

"WE CAN ONLY GUESS." But does the cashing in mean these execs believe Apple's stock has peaked? A look at past insider selling gives cause for concern. The last time Apple execs sold shares in big numbers was in April and May of 2002, when nine officials sold 3.7 million shares. Over the eight months that followed, the stock tumbled from the mid-$20s to $14. "We can only guess why [the execs] are selling now and whether they know something we don't," says Kevin Conway, an analyst with Thomson Financial.

Apple declined to make any of the executives available to comment for this story, nor did it provide information on stock-selling policies that might explain the sudden sell-off. But many analysts wonder if Apple's shares may have gotten about as much of a lift as they're likely to get from the music biz. Competitors from CNET (CNET) to Sony (SNE) continue to announce new music services, and Bear Stearns analyst Andy Neff notes that supply of iPods has finally caught up with demand. Once the same thing happens for the newer iPod Mini, the likelihood for top-line surprises falls.

"The question is, what comes after the iPod Mini?" asks Neff. "It's the same problem facing Pixar [Apple CEO Steve Jobs's other company]. What's after Finding Nemo?"

Speaking of Jobs, he hasn't sold any of his 5 million shares. He declined to comment for this story, but an Apple spokesperson says: "It's great to see some members of our management team get rewarded for their incredibly hard work by selling some of their stock." Investors can only hope that Apple shares will continue to reward them, too. By Peter Burrows in San Mateo, Calif.

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