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Siebel meets reduced expectations

Siebel meets reduced expectations

Siebel Systems has released quarterly results in line with the reduced guidance it issued earlier this month, when it warned that weak end-of-quarter sales would result in less revenue than it had earlier forecast.

Siebel Systems has released quarterly results in line with the reduced guidance it issued earlier this month, when it warned that weak end-of-quarter sales would result in less revenue than it had earlier forecast. Siebel posted US$301.1 million in revenue, down 10 percent from last year. Revenue from license sales was $94.8 million, Siebel's lowest license sales total in several years.

Net income was $8.2 million, down 16 percent, and per-share earnings were $0.02, in line with the reduced consensus estimate of analysts polled by Thomson First Call. Before Siebel's warning, analysts expected the company to report revenue of $353 million for the quarter, which ended June 30.

"We're disappointed with the financial results," Chief Executive Officer Mike Lawrie said in a conference call with analysts. "We did not perform very well for our shareholders."

Lawrie assumed the CEO position in May, replacing company founder Tom Siebel, who remains chairman at the San Mateo, California-based company. In addressing internal weaknesses that exacerbated this quarter's problems, Lawrie said he will prioritize three areas: increasing revenue generation, overhauling Siebel's financial structure and adjusting the company's leadership.

Siebel expects to save money next quarter by reducing discretionary spending in areas such as travel and entertainment, closing another four or five facilities, eliminating extraneous management positions, consolidating IT spending and expanding some of its outsourcing activities. Those changes will generate enough cash to fund increased investments in other areas, executives said.

One area in which Siebel intends to add resources is its newly created OnDemand/SMB (small and medium business) unit, which will be headed by new hire Bruce Cleveland. Cleveland, who reports directly to Lawrie, is a returning employee; he previously led Siebel's marketing, alliances and government affairs groups.

Another new hire is Eileen McPartland, who will run Siebel's global services organization. McPartland, a former Accenture Ltd. partner, most recently worked as Ariba Inc.'s executive vice president of solutions development. Siebel's former services head, Herb Hunt, is now its senior vice president of strategy.

Siebel sees the SMB market as a critical growth area for the company and expects its Siebel CRM OnDemand hosted service to become the leader in that market. It has a ways to go to meet the goal: Siebel declined to break out its OnDemand revenue for the quarter but said it did not materially contribute. The company said it added 132 new customers during the quarter, but it has never officially disclosed its total OnDemand customer base. After a presentation at CeBIT's New York show in June, Executive Vice President David Schmaier said in an interview that the company had 1,400 hosted CRM (customer relationship management) customers.

Siebel's closest hosted CRM rival, Salesforce.com Inc., said Wednesday it had 10,700 customers, after adding 1,157 in its most recent quarter, which ended in April.

Vertical markets, particularly retail banking, will also be a growth area for Siebel, Lawrie said during the analyst call. Siebel spent $70 million in April to buy Eontec Ltd., a software developer that specialized in that market.

Siebel's new CEO expressed confidence that the second quarter's difficulties were more about a challenging market than about slowing interest in Siebel's technology.

"We really believe the demand for Siebel products and services is there," Lawrie said. "Customers are clearly watching their capital expenditures very carefully, as are we." -- IDG News Service

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