Countrywide insiders get heat for sales prior to earnings shift.

IT never looks good when company executives sell off large chunks of stock just before lowering earnings guidance.

But that's what happened at Countrywide Financial Corp., the Calabasas-based mortgage giant whose executives have insisted for years that diversification efforts, along with its huge servicing

Since early December, President and Chief Operating Officer Stanford Kurland has sold more than 52,000 Countrywide shares, grossing just under $4 million. Meanwhile, David Sambol, executive managing director of mortgage banking and capital markets, has sold about half that amount.

Insider stock sales totaled nearly $7 million in December and nearly $2 million through Jan. 13, according to Thomson Financial.

Nearly all the sales came prior to a Jan. 12 press release announcing that earnings for 2003 will fall near the bottom end of its previous guidance of between $12 and $13.50 a share.

The company "tightened" its earnings range to between $12.30 and $12.45 a share, citing interest rate levels that limited the fourth quarter "recovery" of previous impairment charges assessed to its $600 billion mortgage-servicing rights portfolio.

After the statement, analysts tracked by Zacks Investment Research Inc. lowered their 2003 earnings estimates to $12.33 a share from $13.05.

"We are diligently executing our post-refinance boom preparedness strategy," Kurland said in the release. "Successful management of the macro-hedge has delivered extraordinary operational and financial results for the company."

Tara Rios, a spokeswoman for Countrywide, said the executives had to lock in their option sales in advance. She also noted that Countrywide's stock was falling at the time the company filed its statements with the Securities and Exchange Commission.

The stock reached what was then a 52-week high of $81.22 on Dec. 8, right around the time the stock sales began. It then began drifting downward, bottoming at $69.02 on Jan. 12, the day the company issued its guidance.

Since then, the stock has roared back on news of falling interest rates. It hit a new 52week high of $84.43 on Jan. 21.

The company plans to announce fourth quarter earnings on Jan. 27.