Siebel Slide Leads to Layoffs

The CRM software firm will cut 9 percent of its workforce after its revenues fell year-to-year for the eighth straight quarter.

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Customer relationship management software firm Siebel Systems will cut 9 percent of its workforce after its revenues fell year-to-year for the eighth straight quarter, the company announced Tuesday.

The San Mateo, Calif., company reported total revenues of $333.3 million, down from $405.6 million in the same period a year ago. As in each of the last eight quarters, software license revenues were hardest hit, sliding to $109.9 million from $170.1 million year-to-year.

That dropped Siebels net income to $9.8 million from $29.8 million in last years second quarter.

To increase profitability, Siebel plans to cut nearly 500 jobs, or 9 percent of its current workforce, by the end of the third quarter. That, combined with facilities closures, migration of some operations offshore and retirement of some assets, will ultimately result in quarterly savings of up to $40 million, company officials said.

Tom Siebel, chairman and CEO of the company, said during the earnings call that the economy remains soft, holding down the companys performance.

"It does not appear the IT economy is picking up," Siebel said. "So were taking actions that will be complete by the end of the year so that even at our current revenue level we should see substantial increases in operating margins and profitability.

"We have bit the bullet, weve asked people to leave, were restructuring facs, were retiring some assets. But our focus is still on building the business," Siebel said.

Siebel said the current economic situation is "unlikely to last forever." He blamed for part of the revenue shortfall in the quarter, saying it had a "chilling effect."

"I dont think it was good news for anyone," he said. "I can think of a number of specific transactions that did get pushed out as a result of the ongoing [fight] between Oracle and PeopleSoft."

Changes seem to be in store at the company, with Siebel promising "consolidation of some products and product lines," though he declined to comment further.

He also declined to comment specifically on published reports that Siebel will launch a new hosted CRM service for the midmarket with the help of IBM Global Services.

"We remain in that [midmarket] space, and we find that market very interesting and plan to accelerate activity in that area," he said. "Were committed to that market."

At the same time he dismissed suggestions that the acknowledged market leader in hosted CRM services,, is taking customers away from Siebel.

"The only evidence we see of them in the market is by reading their advertisements," he said.

Siebel said another move the company will take to help gain efficiencies will be to increase coordination of sales activity over "various functional operations" of its business units, including sales, support, marketing and HR.

"I dont know if the economy is going into depression or when well see growth, but were just operating our business here," he said. "We hope to see the economy recovered. Thereve been many predictions, but we havent seen it yet."