Siebel Hits Third Quarter Earnings Mark

CRM powerhouse Siebel Systems Wednesday announced earnings that met Wall Street estimates and said it expects revenues to stay on the incline through next quarter. For the third quarter of 2003, ended September 30, the software provider posted net income of $16.1 million, or 3 cents per share, excluding some heavy charges, up from $13 million for the same quarter of 2002. First Call consensus had pegged Siebel to earn 3 cents per share, and although Siebel met that number the company missed analysts' revenue target of $328.4 million. Revenue for the quarter was $321.4 million, down from $357.2 million for the same period a year ago. Steve Bonadio, an analyst with Meta Group, says that it is important for Siebel, as well as the entire CRM space, that the company performs well: "Siebel having a good quarter is important. The CRM space improving is contingent upon decent results. They are the bellweather for the CRM space. And the fact that deal flow was up means the pace is improving." He adds: "It is reassuring, to say the least, that Siebel met expectations, and that they are giving positive guidance for next quarter saying that they will have sales of $355 million in the fourth quarter and earn 5 to 6 cents per share. If they are preannouncing those figures then things are indeed picking up." Siebel also claims it is on track to achieve cost savings of $30 million per quarter in the fourth quarter of 2003, and $40 million per quarter in savings by the second half of 2004. Earlier this month Siebel held a preliminary conference call during which the San Mateo, CA-based company warned analysts that earnings were likely to decline by about 10 percent from the same quarter last year. The company also said it has completed its layoff of 490 workers, announced in July. At the time the company said it would cut 490 jobs by October, leaving the company with a 5,000-person staff. However, Siebel's work force now stands at 4,984 people, 900 fewer than at the start of the year. The company also reported license revenue of $110 million, down 14 percent from $126.8 million in the same quarter last year. Revenue from maintenance, consulting, and other services was $211.4 million. Executives said service revenue, including revenue from maintenance contracts, had declined, but that the size of the average software contract in terms of revenue had increased, excluding the very smallest contracts. Speaking on a conference call with press and analysts, Siebel CEO Tom Siebel focused on some of the quarter's highlights, including new engagements with more than 126 new customers and expanded engagements at more than 191 existing customers.