Siebel States Its Preliminary Q2 Results; The Exec Lineup Shifts
Siebel on Thursday announced its preliminary second-quarter 2005 results, revealing an underperformance in license revenues, but showing signs of progress, according to CEO George Shaheen. Siebel expects Q2 total revenues to land within the approximately $312 million to $314 million range, up from first quarter 2005's reported $298.9 million, and its year-over-year revenues of $301.1 million. The figure, however, falls below the expected revenue from analysts surveyed by Thomson First Call, who projected Siebel's revenue to reach $319 million, according to published reports.
Maintenance revenues are anticipated to remain virtually unchanged from Q1 2005, with projected revenues at about $123 million, but higher than second quarter 2004 maintenance revenues of $114.4 million. Siebel expects services and other revenues for Q2 to be about $111 million to $113 million, while its Q1 results denoted $101 million, and its professional services and other revenues year-over-year were $91.8 million. The first quarter's largest hit to its financial results, license revenues of $75 million, are expected to jump slightly to about $78 million, down from Q2 2004 revenues from license fees of $94.8 million.
Due to a restructuring plan adopted on June 30, the company also expects a pretax charge of about $75 million, including $62 million for the consolidation of leased facilities and the sale and write-off of certain fixed assets, about $6 million for employee severance arrangements, and about $7 million for CEO transition costs. Including the charge, operating margin is expected to be about 24 to 25 percent of total revenues and operating income is expected to lie between $74 million and $77 million. Excluding the charge, however, operating margin and operating income are expected to roughly break even.
Shaheen noted in a conference call that Siebel's preliminary Q2 results "show some signs of progress," and that they "underscore clearly the areas of improvement. In a statement that day he said, "While we had sufficient license revenue pipeline to meet or exceed management guidance, some business in our pipeline, particularly in the public sector where sales cycles can be more challenging to manage, were delayed in the last few days of the quarter and did not close."
Siebel's CEO also makes note of the company's need to continue to improve. "Let me be clear: We are not satisfied with our progress to date and are committed to do better particularly in license revenue growth," he said. Janet White, research analyst at Info-Tech Research Group, says it takes time for a company to change. "Everyone had really great expectations that Shaheen was going to be able to change things right away, but the sort of changes that they are trying to make are going to take a while." White also notes that with its on-demand business (and the shortened sales cycle associated with it) it will represent "a lot of the revenue increase," from Q1 to Q2.
A new CMO and other executive appointments may help. Patty Azzarello, former CEO of Euclid, joins the company as senior vice president and CMO. Les Rechan, most recently senior vice president and general manager of manufacturing and distribution industries at Siebel, has been appointed senior vice president of Americas sales. David Schmaier, formerly Siebel's executive vice president, has been named executive vice president of corporate strategy.
White says, regarding Schmaier, "Having somebody come in that's going to deal with the strategy specifically is probably a really good thing, because they're going to be able to really focus on their different areas of expertise."
Bruce Cleveland's expanded role--he will continue to head Siebel CRM OnDemand, and serve as senior vice president of products--"looks like they're really trying to leverage their successes in on demand into their other product line," White says. "The fact that they've made some strides in on demand and now [that] they appointed Bruce Cleveland to look over all the products is probably very telling of their strategy going forward."
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