Software stalwart Siebel Systems could not avoid the impact of the current market turmoil, suffering a worse-than-expected plunge in its third-quarter net income.
San Mateo, Calif.-based Siebel said on Wednesday, Oct. 17, that revenue from software license fees plummeted 38 percent in the quarter, as companies delayed or cancelled spending on customer relationship management projects. Revenue fell 14 percent to $428.5 million, down from $496.5 million a year earlier, and net income dropped 47 percent to $35.2 million – 7 cents per share – down from $67.5 million -13 cents per share – a year earlier. Analysts surveyed by Thomson Financial/First Call predicted that Siebel would earn 9 cents per share.
Despite the near miss, Siebel CEO Thomas Siebel said he was satisfied with the companys results. ” In the light of numbing market turbulence, we continued to operate a profitable business,” Siebel said in an earnings call, following the close of markets.
Investors were disappointed by the news, sending the companys shares lower in after-hours trading. Siebels shares closed at $17.38, down $4.16 on the day, but continued to fall to $16.35 in after-hours trading.
Analysts questioned whether Siebels sales were suffering as a result of competition from Enterprise Resource Planning vendors Oracle, PeopleSoft and SAP, which have introduced customer relationship management (CRM) products. Thomas Siebel, however, maintained that the company continued to increase its market share “in all of the markets [in which] it competes.”
Thomas Siebel blamed the drop in license revenue on companies reluctance to invest in new deployments at this time, and remained confident the market will rebound. “The demand is there [for CRM applications]: The CIO [chief information officer] wants to do it. The CEO wants to do it. And when this thing turns, Im certain its one of the first things people will want to do in the information technology market,” he said.
Siebels revenue from license fees for the third quarter fell to $193.5 million, down from $308.8 million a year earlier, while revenue from maintenance, consulting and other services rose 25 percent, from $187.7 million to $235 million. The company said it had cash, cash equivalents and short-term investments of $1.5 billion at Sept. 30, compared with $57.2 million a year ago.
Thomas Siebel added that the company has no further plans for layoffs, after making deep cuts earlier in the year. “Were doing everything we can to avoid unnecessary reductions, because when this thing turns, we want to be able to take advantage of it,” he said.