WIN SOME, LOSE SOME; XIRCOM INSIDERS MAY HAVE TO GIVE UP PROFITS.

Byline: Floyd Norris The New York Times

Insiders at Thousand Oaks-based Xircom Inc., a technology company whose stock soared then fell sharply earlier this year, showed brilliant timing in selling high and then buying low. The problem is they may be forced to give up some or all of their profits.

The sales and purchases of Xircom stock, reported to the Securities and Exchange Commission by the executives involved, show heavy selling in January and February, and even heavier buying in April, when the stock's price was far lower.

SEC regulations provide that corporate officers and directors who sell shares within six months of buying them must turn over any profits to the company, and it deems such profits to have been made even if some shares are sold before others are bought, as happened here. There are exceptions to that rule, but the reports filed by the Xircom insiders indicate that at least some of the transactions fall within the rule.

Xircom officials did not return repeated telephone calls Tuesday. A company spokeswoman, Catherine O'Rourke of Rourke & Co., said the company would have no comment on the sales.

The biggest transactions were reported by G. Kirk Mathews, a director and former chairman and chief executive. From April 17 to April 25, he bought 510,000 shares, paying from $8.57 to $11.12 a share.

On Jan. 21, just three months earlier, Mathews had also been active in the stock. Then, however, he was on the other side, selling 50,000 shares at $30.25 a share.

His timing could hardly have been better: Jan. 21 was the only day Xircom has ever traded over $30 a share. And on April 24, one of the days he was buying, the stock fell to its lowest level in nearly four years.

In addition, Randall Holliday, the company's general counsel, sold a total of 6,500 shares in January and February, at prices ranging from $25 to $25.25, and then bought 2,258 shares in April, at prices ranging from $7.86 to $9.19. And Robert W. Bass, the company's vice president for worldwide operations, sold 2,000 shares at $28.25 in February and bought 2,032 shares in April, at prices from $7.86 to $8.94.

Such trades are legal, but profits from them are supposed to be turned over to the company unless there is an exemption from the six-month rule. One such exemption is if the shares were bought under certain types of employee stock purchase plans. Holliday and Bass checked the box indicating some, but not all, of the purchases were through a plan, according to a summary of the filings by CDA/Investnet. Mathews' forms indicated all of his purchases were through a plan, but it is not clear what plan or whether that plan is exempt from the SEC rule.

An SEC official, speaking on condition he not be named, noted that the regulation, alone among securities regulations, could be enforced only by company directors or by private legal action by a shareholder, not by the SEC. Xircom has not reported any such move by directors, and O'Rourke said no shareholder suits had been filed. The regulation applies if a sale is made for more than a purchase price in any six-month period, whether or not the purchase comes first.

The six-month rule is separate from the ordinary prohibition against illegal insider trading, which is defined as trading with material nonpublic information. No information in the reports of trading suggests those rules were violated.

The insider moves have stirred some interest in the stock. After selling at under $8 in April, the shares have bounced back somewhat. Tuesday, they closed at $13-3/8, up 56 cents, on Nasdaq.

``It looks to me like Xircom is a good investment,'' said David Coleman, editor of a newsletter published by Vickers and focusing on insider trading. He said he based the opinion solely on the insider actions.

Xircom, a company that makes modem cards for portable personal computers, had been rising late last year and into this year as its results consistently surprised Wall Street. Then, on Jan. 16, the stock rose sharply as it was announced that Intel was buying a stake. It was a few days later that insiders began selling.

Since then, however, much of the news has been less positive. The acquisition of U.S. Robotics, a competitor, by 3Com, proposed in February, threatened a tougher competitive environment, said Chris Stix, an analyst at Cowen & Co. And more recently, he said, the company had been warning that profits might not meet earlier expectations because inventories held by wholesalers were on the increase.

Six other insiders, including Dirk Gates, the company's chairman and chief executive, sold shares from Jan. 21 through Feb. 14, but did not report any purchases in April, according to the reports they filed with the SEC. Any purchases made this month by insiders do not have to be reported until June 10.

If all of Mathews's purchases were deemed to be in violation of the rule, he would owe the company $439,300, based on the profits calculated using his lowest purchase price compared with his sales. Similarly, the maximum exposure for Holliday would appear to be $39,936, and that for Bass, $40,274. Were some of the purchases deemed to be through employee plans exempt from the regulation, those amounts would fall.

CAPTION(S):

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Chart: (Color) SELL HIGH, BUY LOW

Daily closing stock prices of Xircom