SiliconBeat

Shantanu Narayen might be number two at Adobe Systems of San Jose, but for the week of July 13 he was the number one seller of stock among Silicon Valley insiders.

Narayen, president and chief operating officer, has been at Adobe since 1998. And the company credits him with spearheading – along with chief executive Bruce Chizen – the $3.4 billion acquisition of Macromedia in 2005.

On July 19, Narayen paid $6.5 million to exercise 250,000 shares at prices ranging from $21.78 to $32.16 per share. He sold 241,000 shares of that stock on the same day for $42.02 per share, giving him a net gain of $3.6 million on that day – keeping in mind he held on to 9,000 shares.

Since becoming an insider, Narayen has sold $123.5 million worth of Adobe stock.

Selling at Adobe this quarter has been moderate. According to Thomson Financial, since the beginning of June, Adobe insiders have sold $18.0 million worth of stock. The five-year average
for this quarter is $20.2 million.

Adobe’s stock is up 1.5 percent for the year as of Wednesday.

Here’s a goof you probably don’t want your company to make these days: Putting the wrong option grant date on the Form 4 disclosing the award of stock options. Especially when it’s your directors.

Apparently, Yahoo’s fact checkers missed that memo. On Wednesday the company filed eight amendments to a series of Form 4s filed in June disclosing options that were awarded to its board members following the company’s annual meeting.

The original filings listed the grant date as June 13 and the strike price as $27.38. But according to the amendments, the real grant date should have been June 12. A footnote in the forms said this was “due to an administrative error.”

Fortunately, every cloud has a silver lining. The change in grant dates meant the strike price was only $27.05, down 33 cents.

This one slipped by us on Monday. But there’s a little more intrigue at ESS Technology, the Fremont chip maker.

Last week, we blogged about the departure of Chairman and founder Fred Chan, who apparently left to pursue philanthropic callings. He didn’t exactly leave the company on a high note, however.

Now comes a 13-D filing on Monday from Riley Investment Management, a Los Angeles-based investment fund that owns 4.6 percent of ESS’ stock. Riley has nominated its own slate of four directors. ESS doesn’t list its board on its web site, but according to its most recent proxy filing, there were five directors, including Chan, who stand for re-election each year. The company has not set a date for its annual shareholder meeting this, but last year it was held on Dec. 18.

So what’s Riley’s beef? They didn’t say in the filing. But as we noted last week, ESS’ stock closed at $1.68 per share on Wednesday, the day Chan resigned. The company went public in late 1997, and its stock almost hit $40 per share early on. But more recently, the company has posted three consecutive annual losses.

Ultratech shareholders kinda, sorta rebelled against the company on Tuesday.

On one hand, they re-elected three directors to the company’s board. On the other hand, they rejected the board’s advice by passing a proposal advocating that all directors stand for election each year. That’s a shareholder friendly measure that potentially makes it easier to overhaul the board.

Currently Ultratech’s board has two classes of directors, with members of each elected to two-year terms in alternating years. The idea was proposed by the New York City Employee’s Retirement System, which owns 111,227 shares:

We believe that the ability to elect directors is the single most important use of the shareholder franchise. Accordingly, directors should be accountable to shareholders on an annual basis. The election of directors by classes, for two-year terms, in our opinion, minimizes accountability and precludes the full exercise of the rights of shareholders to approve or disapprove annually the performance of a director or directors.

In addition, since only one-half of the Board of Directors is elected annually (currently the Company has seven directors, four of whom are elected one year and three the next), we believe that classified boards could frustrate, to the detriment of long-term shareholder interest, the efforts of a bidder to acquire control or a challenger to engage successfully in a proxy contest.

The board urged shareholders to reject the measure, which it allowed to be heard even though the company said it was not properly submitted under Ultratech’s bylaws.

The classified Board structure provides the Board of Directors with greater leverage to evaluate the adequacy and fairness of any takeover proposal, to negotiate on behalf of all stockholders and to consider alternative methods of maximizing stockholder value. The Company’s classified board structure and the leverage it creates takes on additional importance in light of the recent expiration of the Company’s shareholder rights plan.

Don’t hold your breath, though. The “non-binding” proposal would require an amendment to the company’s certificate of incorporation that would need to be presented “at a subsequent meeting of stockholders for approval.”

Ultratech’s sales last quarter dropped 22 percent from the year-before quarter to $27.4 million while its profit slipped to a loss.

Today’s featured guest: Silicon Storage Technology of Sunnyvale. In an 8-K filed Tuesday, the company said it would be restating its results for the period between 1997 and September 2006. That only covers just about every earnings related filing the company has made since it went public in 1995.

Why the restatements? Survey says: Possible options backdating problem.

The company, which makes memory chips, announced the review back in March, thus joining one of the least exclusive clubs around. The company hasn’t finished the review, so it can’t say how much it’ll shave off earnings. Or when it’ll complete the review. Or when it’ll file earnings statements again.

Can two wrongs make a right?

Someone apparently thinks they can at Terabeam, the San Jose provider of high-speed wireless equipment. Terabeam operates two divisions created from some notable Valley, flameouts. One was Proxim, a Sunnyvale maker of wireless-networking equipment that filed for bankruptcy in June 2005 and later sold its assets to Terabeam for about $28 million. The other, Ricochet, a wireless service first developed by Metricom, a San Jose company that burned through more than a billion dollars before filing for bankruptcy in July 2001.

Now Terabeam is facing its own cash crunch. On Tuesday, Terabeam dislcosed in an 8-K that it sold 4.3 million shares of itself to private investors for $7.5 million. That worked out to $1.75 per share, a 17 percent premium to where Terabeam shares closed Monday prior to the announcement, 19 percent lower than the stock’s average price of $2.16 over the last year, and 42 percent below it’s 52-week high of $3.

Showing the most enthusiasm is current investor Lloyd Miller, who bought 925,000 of the shares, increasing his stake in the company to nearly 2.9 million shares and making him Terabeam’s largest shareholder. Funds affiliated with Dallas-based SRB Management purchased 1.85 million, or 43 percent of the shares, vaulting it to among Terabeam’s five largest shareholders.

Is this show of faith warranted? Terabeam’s sales in 2006 hit $75.4 million, up 28 percent from the year before, but its net loss more than doubled to $23.2 million. The company’s last profitable period was the fourth quarter of 2005.

Those losses have been eating into the balance sheet. Terabeam ended its last quarter with $8.1 million in cash and investments available for sale, after using up $2 million to continue operating.

It raised some cash by selling two patents for $2.5 million. And it’s trying to pinch pennies by implementing

cost savings initiatives that it anticipates will result in future reductions in operating expenses and costs of goods sold. As part of these initiatives, the company has also restructured its engineering operations, shifting additional research and development activities to its Hyderabad, India, facility.

Time to say goodbye to a two more public companies in the Valley.

FoxHollow Technologies, a medical-device maker in Redwood City, said it accepted a deal worth $780 million in cash and stock to be acquired by ev3 of Plymouth, Minn. Check out our brief story here.

According to a 425 filing in connection with the merger, CEO John Simpson and Merck & Co., the big pharmaceutical and FoxHollow investor, together own 31.7 percent of the copmany’s stock. That puts their share of the take at $247 million.

Interestingly, shareholders have a choice. They can either receive 1.45 shares of ev3 common stock and $2.75 in cash; or they can opt to take all cash at $25.92 per share, or all stock with 1.62 shares of ev3 common stock.

Wonder which one Simpson is taking?

Update: Mike Ennen, a FoxHollow spokesmen, wrote back to say that Simpson holds 25 percent of the shares, worth about $195 million. Also, Ennen wrote in an e-mail:

He has told the company that he is likely to elect all stock as an indication of his belief in our prospects as a combined company.

Meanwhile, Hewlett Packard said it’s buying Opsware, the Sunnyvale company for $1.6 billion. Nice score for the man who started the company, Marc Andreessen. Actually, that may be a better exit thatn his last start-up: Netscape. Read the Merc’s story here.

At last count, Andreessen held 9,691,680 shares. At $14.25 per share, that works out to $138,106,440.

I’ll dig through the filings for more info, but for now, you can also get the details from Marc Andreessen’s blog.

Also, let’s no forget that Hollywood big shot Michael Ovitz, once one of the biggest agents in movietown and former number 2 at Disney, was a board member and investor. He held 1.17 million shares as of late May, now worth a nice $16.67 million. No doubt, he needed the money.

Future Electronics…The company is one of the largest distributors of electronics around the globe. And it also happens to be one of Sipex’s largest stockholders and a major distributor for both Exar, of Fremont, and Sipex, of Milpitas.

The companies announced a merger back in May. But in a filing on Friday, they provided details of the merger talks that stretched over a year.

Exar’s board was concerned that it couldn’t get Future Electronics, which will hold 14 percent of Exar after the merger, to refrain from selling any stock after the deal is completed. One Exar board member even abstained from voting over the issue: :

Future Electronics…will be permitted to sell up to 2,000,000 shares (500,000 shares per quarter) of Exar common stock during the one-year period immediately following closing (as opposed to a more restrictive lock-up).

Making the deal even more curious: At one poing the board of Sipex, where Future holds almost half the stock, asked director Pierre Guilbault to meet with Exar to discuss a possible merger. Guibault’s day job? He’s executive vice president and chief financial officer of Future Electronics.

What the heck is going on at Ampex?

“Who?’ you ask.

Why, Ampex, the 62-year old company based in Redwood City that was once one of the leading technology companies in Silicon Valley. Today, the company mainly exists as a kind of holding company. What it holds is 450 patents, many of which it turns out are used in digital image processing and recording for things digital cameras. Ampex began enforcing these patents and licensing them a few years ago, and for ahile, it became a booming business that sent its sparsely traded stock soaring. 

Fine. But it’s other main business is making sure it can make the pension payments for the folks who worked there over the years, back when it was a more substantial company. According to the most recent 10-K, that pension fund is underfunded, the tune of about $65 million. In 1994, Ampex worked out an arrangement with a group called Hillside Capital Incorporated, which essentially puts up the money to pay the pension in exchange for some regular repayments with interest from Ampex.

But with an important patent expiring last year, Ampex’s licensing revenue has fallen steeply. So this past week, Hillside informed Ampex the company was in default because revenues had dipped below an acceptable level, according to an 8-K filed Thursday. Ampex denies this.

But in a 13-D/A filing Friday, a group called ValueVest Management Company of San Francisco, which owns 13.7 percent of Ampex, said it agreed to pay $7 million to “acquire substantially all of the intellectual property” of Ampex, use it to start a new company called Athena, and then invest another $7 million in that new company?

So where exactly does that leave Ampex? And more importantly, where does that leave the undisclosed number of folks hoping they’ll still be getting those pension checks?

Stay tuned…  

Maybe Oracle chief executive Larry Ellison should spend more time on his dingy.

While the software chieftain was busy not winning the America’s Cup race for much of the spring, his little software start-up in Redwood Shores has been setting a blistering pace in 2007. On June 26, Oracle reported that revenue for the fiscal year 2007 that ended in May rose 25 percent over 2006. That’s in part been driven by a frantic pace of acquisition, which continued on Wednesday when the company announced the purchase of Santa Clara-based Bharosa on Wednesday for an undisclosed sum. The company’s stock has risen 20.2 percent this year, to close at $20.60 per share on Thursday.

In Silicon Valley, there’s only one way to celebrate that kind of winning streak: Sell your stock.

So far in 2007, Oracle insiders have sold $168.4 million worth of stock, a figure that includes a $61.9 million sale made by Ellison back in January.

But this week, executive chairman Jeff Henley tops our sales list. On June 28, Henley paid $5.8 million to exercise 1 million shares at prices ranging from $4.18 to $6.88 per share. Henley sold all that stock the same day for $20 per share, for a net gain of $14.2 million.

During more than 15 years as an Oracle insider, Henley has now sold a total of $429 million worth of Oracle stock.