Siebel Matches Lowered Earnings Expectations

 
 
By Dennis Callaghan  |  Posted 2002-01-23 Print this article Print
 
 
 
 
 
 
 

Market-leading customer relationship management software vendor Siebel Systems Inc. endured its second straight quarter of falling revenues and income from the same period a year ago, but matched analysts' consensus earnings estimates.

Market-leading customer relationship management software vendor Siebel Systems Inc. endured its second straight quarter of falling revenues and income from the same period a year ago, but matched analysts consensus earnings estimates. The company reported revenues of $481.4 million, down from $581.6 million in the same period a year ago. License revenues fell even more precipitously, by $115 million, to $250.2 million. Net income likewise fell from $106 million in the same period a year ago, to $65.9 million.
Siebel Chairman and CEO Tom Siebel said he was glad to see the year end.
"These were the most adverse economic conditions any of us have seen in our professional careers," said Siebel, in San Mateo, Calif. Still he described the companys performance for the entire year as "solid," as Siebel recorded revenues for the year of more than $2 billion and net income of $254.6 million. "In a tough year, we improved and strengthened our balance sheet," said Siebel Systems Chief Financial Officer Ken Goldman. He noted that Siebel increased its cash on hand by more than 500 million dollars to nearly $1.7 billion over the course of the year, which he said would be a competitive advantage for the company this year and going forward against financially weaker competitors. Tom Siebel noted that many of those competitors are already going by the boards. "The E.piphanys, the eGains, the Kanas, the Silknets of the world … they may not have closed their doors yet, but we dont see them anymore," he said. Along with writing off weaker competitors, Siebel also blasted larger competitors, such as Oracle Corp., SAP AG and PeopleSoft Inc., accusing them of deep discounting and unfair accounting practices. Both diatribes are typically a staple of his earnings calls. He said Siebel has consistently sold its software for around $2,000 per user, while other companies were selling theirs for less than $50. "I would suggest to you that is not a viable CRM strategy," he said. The companys average deal in the quarter was worth $776 million, and 54 percent of its business was new customers. It reduced headcount by 420 during the quarter, giving it about 7,400 employees by the end of the year. Siebel said hes optimistic about 2002, noting that CRM is the "top IT priority" at most businesses. The company also began shipping its new Siebel 7 release in November, what Siebel called "the highest performing, most scalable, highest quality product weve ever shipped." He said business showed signs of picking up in November and December. "Were starting to see a significant change in buying behavior globally. What were seeing is a return to more normal, rational business buying." Despite two straight quarters of contraction from the same period a year ago, he lauded his companys performance for the year. "In all respects, the financial results were pretty remarkable," said Siebel. "It was a challenging year for all of us, but we rose to the challenge." One of the companies Siebel wrote off, Kana Software Inc., reported on Tuesday fourth-quarter revenue of $24.8 million and a net loss of $24.2 million. The company lost $2.4 billion on $44.2 million in revenue in the same period the previous year. Its year-end balance sheet saw it with $40.1 million cash on hand.
 
 
 
 
 
 
 
 
 
 
 

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