TechWeb

Customer Wins Or Not, Siebel Is Getting Hurt

Apr 23, 2003 (02:04 PM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=8800597


Siebel Systems Inc. posted disappointing first-quarter earnings Wednesday that nonetheless were in line with a revised earnings outlook the company released earlier this month.

The CRM vendor, which once seemed undefeatable in the competitive enterprise-application market, saw revenue decline from $447.8 million a year ago to $332.8 million this period. Profit was $4.6 million, or 1 cent per share, a huge decline from last year's $64.6 million, or 12 cents per share.

Although the company claims it signed licenses with more than 160 new customers in the quarter, license revenue was a pain point--it brought in only $112.1 million in the three months ended March 31, compared with $246 million for the same period last year. CEO Tom Siebel warned investors earlier in the month that "economic and geopolitical uncertainty" had prevented the closing of a few key deals. Maintenance, consulting, and services contributed $220.7 million to the company's revenue, down slightly from last year's $231.8 million.

Long the CRM powerhouse, Siebel hasn't been immune to stalled enterprise-software spending and increased competition from full-scale apps vendors such as SAP and Oracle. Meanwhile, newcomers such as Salesforce.com Inc., which offers hosted CRM services, are also digging at Siebel's market share. The company has worked hard to quell rumors of dissatisfied customers and is looking to provide less-costly versions of its software, which could include a hosted service.

Last week, the company released a new version of its Universal Application Network, a Web-services-based app that integrates its customer-relationship management software into other apps. It also plans to go after a largely untapped market for replacing aging homegrown CRM software.