The firm's higher-than-expected Q4 revenues likely will have little impact on the proposed Oracle acquisition.
Posted Jan 12, 2006
Siebel Systems today announced that Q4 revenues will exceed its own forecasts, as well as Wall Street's expectations. Preliminary financial results show Siebel expects approximately $469 million in revenues for the quarter, a 20 percent increase from a year ago, and above its late-October forecast of $340 million to $360 million, and a mean estimate of $364.9 million from analysts surveyed by Thomson Financial, according to the company. These results were driven by a 33 percent increase in license revenue to about $214 million, approximately $100 million above the company's initial projections. Siebel expects to post an operating margin of 23 to 24 percent, compared with the company's target of 13 to 16 percent.
"This quarter represents our best revenue, profit, and cash-generation performance since the first quarter of 2002," said CEO George Shaheen in a written statement. "Our performance in the fourth quarter of 2005 represents a strong affirmation of the market opportunity in CRM and analytics, the improvements we've made to address the market, and customer confidence in the future of Siebel CRM, and analytics following the proposed Oracle transaction."
The Siebel announcement follows Oracle's statement last month that its earnings dropped 2 percent for Q2 2005, ended November 30, 2005, but still met analyst expectations. After disappointing Wall Street in the first quarter, investors and industry analysts were looking for Oracle to show renewed strength in its core database business, which has slowed recently. Some analysts attributed Oracle's slow database growth to the fact that the company had been focusing on expanding Oracle's business application offerings.
A big part of expanding those offerings now resides with the acquisition of Siebel, whose shareholders are expected to vote on the deal on January 31. Dennis Pombriant, managing principal of Beagle Research Group, says Siebel's financial progress may make the company worth more and says he would like to be "a fly on the wall in the Oracle boardroom. It would be interesting to hear their reaction to this announcement."
Though he acknowledges this is good news for Siebel, Pombriant doubts it will have any material effect on the deal. "I think for the Siebel shareholders, the question now becomes, 'Are we getting the best value for the company."
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