Shares of videogame publisher Activision Inc. fell as much as 16 percent on heavy volume after insiders sold 7.1 million shares.

After the market close Wednesday, a number of Activision directors, executives and employees sold the shares in a block transaction to Citigroup Global Markets Inc., Santa Monica-based Activision said in a filing with the Securities and Exchange Commission.

Chief Executive Bobby Kotick sold 2.6 million shares, Co-Chairman Brian Kelly sold 2.5 million shares and President Ron Doornink sold 1.1 million shares. Others filings included the president of publishing, the chief financial officer and several members of the board.

None of the shareholders sold more than one-third of their holdings of common stock and options. It was the first sale of common shares by Kotick or Kelly since May 2002, the company said.

The sales left many investors puzzled. “The timing of this share sale is questionable in our opinion,” said Gary Cooper, an analyst at Banc of America Securities, in a research note. “Perhaps a more accurate adjective describes our state of mind: bewildered.”

Cooper pointed out that in 2002, company insiders sold a major block of shares on the heels of a strong “Spider-Man” movie and video game release. From a peak at the time of the insider sales, Activision shares then declined 50 percent over the next six to eight months, he said. Management repurchased a number of shares at lower prices in late 2003 and early 2004, he said. “We think investors are likely to now wonder if this stock sale marks the top [price],” said Cooper.

Activision shares fell by $3.37, or 14.1 percent, to $20.79 in afternoon trading, after earlier falling as low as $20.13. Volume was 23.4 million, nearly 10 times the average daily volume of 2.4 million.

The sales were made to take advantage of a brief trading window and “do not reflect any individual or collective judgment about the company’s prospects,” Activision said in the SEC filing. The transaction also allowed senior management to diversity their personal holdings, it said.

Earlier this week, the company reported a surge in profit on third-quarter net income of $97.3 million (63 cents per diluted share), compared to $77.0 million (53 cents) in the like year-ago period.

Revenues rose to $680.1 million from $508.5 million, and the company said it expects net revenues of $215 million for the first quarter of fiscal year 2006.