Siebel revenue plunges
Purses firmly shut
Financial analysts were split over whether Siebel Systems Inc would buck the trend and report first-quarter financial results that met or exceeded guidance. In the event it broadly met guidance, but earnings were still 16% down on the year-ago period.
Net income was $64.6m or 12 cents per share, down from $76.9m a year ago and slightly down from the $65.9m and 13 cents of the fourth quarter 2001. Total revenue was down 20%, with the San Mateo, California-based company reporting total revenue of $477.8m for the quarter against $598.8 for the first quarter 2001. Total revenue was also slightly down on the $487.6m achieved in the fourth quarter.
Within these figures, software license revenue was disappointing at $246m from $335.1m last year, a drop of 27%. Service revenue also took at hit but was only 12% down from $263.6m to $231.8m.
Chairman and CEO Tom Siebel attributed the downturn to the tough economic environment, which he said turned out to be much worse than anticipated and was probably the worst in the history of the industry. Buyers were hanging on to their cash he said, deferring their capital expenditure to later in the year.
The extent of the problem was revealed by the news that in excess of 50 sales of $1m or more that were forecast to close in the first quarter had been deferred to the summer. Despite its woes, it did manage to close 53 deals worth over $1m during the quarter and 12 that exceeded $5m.
The company believes the second half of the year will see an improvement in the worldwide economy, but although Tom Siebel cited improved consumer spending as an indicator that it could come about, this appears to be based on hope rather than hard evidence. In this his views are remarkably similar to those of SAP senior executives who in their first-quarter earnings conference call also said they were looking to the summer for improvements but were unable to identify a particular cause.
Although it was thought Siebel might be able to weather the economic storm better than some of its rivals because of its leading position in the CRM market and CRM's status as one of the top corporate buys, it has not provided complete insulation. It is doing better than Oracle Corp, which last month said new software revenue fell by nearly a third from the year-ago quarter however, but possibly worse than PeopleSoft Inc, which expects new software sales to be down by up to 19% for the first quarter.
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