Questionable Sale? Xbox Marks the Spot

When the Xbox has hardware problems, it flashes red lights. When a corporate insider sells shares just ahead of bad news, that often triggers warning signs as well.

It appears that the Microsoft executive in charge of Xbox sold company stock worth millions in the time leading up to last Thursday's Xbox defect announcement. Coincidence?

MarketWatch sifted through Securities and Exchange Commission filings to report that Robbie Bach, president of the entertainment and devices unit that includes the Xbox, sold stock at an auspicious time.

After an eight-month period of not selling any company shares, Bach sold off $6.2 million in stock in the period between May 2 and July 5.

It was on that date in July that Microsoft announced an Xbox hardware defect that has come to be known as the "red ring of death" -- because of the three flashing lights on the console-- and said it would take a charge of as much as $1.15 billion to its fourth-quarter earnings to issue extended warranties and reimbursements related to repairs.

During that two-month period, Bach was the third-biggest seller of shares among Microsoft insiders.

"Robbie Bach's past trading is completely unrelated to last week's announcement," Microsoft spokesman Eric Hollreiser said, according to MarketWatch. "[He] continues to hold a significant stake in Microsoft and remains confident in the long-term success of the company."

Many top executives have scheduled selling plans to protect themselves from any whiff impropriety. In Bach's case, the spring selloff didn't seem to be part of any preconceived plan.

In the end, Microsoft shares didn't move much after the Xbox announcement, and a week afterward are hovering around $29.64. Of course, one could not know for certain what the financial impact of the news would be ahead of time.

Liz Gunnsion