Siebel Revenue, Profits Fall in Second Quarter - Page 2

The company plans to reduce discretionary spending, mainly by cutting back employee travel, consolidating facilities, limiting internal IT spending and using more outsourcing and offshoring.

While headcount is expected to increase next quarter, the company hopes to reduce expenditures in these areas by $15 million to fund investments in other areas, officials said.

/zimages/3/28571.gifClick here to read about Siebels plans to build up its on-demand CRM service.

Siebel claimed that its Siebel CRM OnDemand business saw 33 percent revenue growth from the first quarter to the second quarter, though it did not release exact numbers. The hosted service is key to Siebels SMB strategy, according to Lawrie.

"Historically, Siebel has not gotten much revenue from the SMB market," Lawrie said, adding that just 20 percent of SMB companies have deployed CRM.

"The SMB market is underpenetrated because the cost associated with enterprise software is prohibitive. Thats why the on-demand model is appealing to the SMBs," he said.

"Its an underpenetrated [market] that has to be fulfilled," Lawrie continued. "Its the right opportunity. Were focused on developing the right offering."

Not all is rosy in the hosted CRM space, either. Inc. saw its stock tumble by more than $4 a share, or more than a quarter of its value, after the company warned during its first-ever analyst day Wednesday that it would not meet analysts consensus estimates for its 2005 fiscal year.

The company announced it expected earnings to break even to 3 cents a share on revenues of $165 million to $170 million. Analysts who track the firm had expected earnings of 6 cents a share on revenues of nearly $175 million.

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