Siebel Sees Sales, Earning Drop Amid Restructuring

Following heavy restructuring charges in the second half of the year, Siebel Systems Inc. this week reported a loss of $38 million in the fourth quarter of fiscal 2002, ended December 31, 2002. Apart from the restructuring charge of nearly $96 million in the fourth quarter, revenue also dropped 19 percent, to $394 million. The company says that discounting the charge, net income would have been $23.4 million, still a sharp drop from last year's fourth quarter income of $65 million. Revenue was down 22 percent for the year to $1.64 billion. Net loss for the year was $35.7 million, compared to income of $254.6 million in 2001. Though the sales and earnings drops seem significant on paper, analysts say that these seemingly dismal numbers are quite misleading, given the state of the economy and the overall drop in CRM investment in 2002. Michael Maoz, vice president of CRM strategies at Gartner Inc., says, "Even though they are down from last year, they are still the biggest company by far when it comes to CRM." He also notes that other large companies like SAP AG and Oracle Corp. have other product lines to buoy up their sales. "The bottom line is, Siebel is doing very well in a very tough business environment." Kevin Scott, senior analyst with AMR Research, agrees with Maoz, saying, "It's not fair to compare Siebel's numbers year over year--everyone's numbers are down across the board. And what's important to note is that Siebel still beat Wall Street estimates, which is more indicative the company's performance in light of the current state of the economy." In other Siebel news, the company also reported that Paul Wahl, president and COO, will retire at the end of the first quarter of 2003. All employees reporting to Wahl will now report to CEO Tom Siebel, the company says. And on Wednesday Tom Siebel voluntarily canceled all the stock options he received since 1998, accounting for 25.95 million Siebel shares. The move lowers his stake in the company to 10.7 percent from 13.5 percent.