Siebel's Q3 sales slow

By Stacy Cowley, IDG News Service |  Small Business

Siebel Systems Inc.'s software license revenue in its just-ended third quarter rose from the grim five-year low hit in Siebel's second quarter, but still fell short of revenue recorded during the same period last year, the company said Tuesday.

Siebel, based in San Mateo, California, reported license revenue of US$104.6 million in the quarter ended Sept. 30, a 5 percent decline from the $110 million it took in during last year's third quarter. Last quarter, Siebel had license revenue of $95 million, its lowest level since 1999.

Siebel's total revenue for the quarter was $317.1 million, in line with the forecast it released earlier this month when it previewed its expected results. At the time, the consensus estimate of analysts polled by Thomson First Call was for revenue of $306 million. Siebel had revenue of $321.4 million in last year's third quarter.

Net income for the quarter was $19.3 million, up from the $59.3 million loss Siebel posted last year. Per-share earnings were $0.04, in line with the consensus estimate Thomson First Call had earlier this month, before Siebel announced its higher-than-expected revenue forecast. Thomson First Call's estimate then rose to $0.05. Excluding one-time charges for restructuring, per-share earnings were $0.05, Siebel said.

While Siebel met expectations, the bar was set low, Chief Executive Officer Michael Lawrie acknowledged in a conference call with analysts. The new company leader said he sees Siebel at the beginning of transformation he dubbed "Siebel chapter two," aimed at improving the company's internal operations and better aligning its offerings with customer needs.

Lawrie is restructuring Siebel to address trouble spots and new market opportunities, he said. Siebel in the past quarter created a sales group focused specifically on small and medium-sized businesses, and is looking to revitalize its relationships with outside partners. A new executive, Reid Drucker, recently joined Siebel as general manager for the company's communications, media and energy business, replacing the former head of a unit that Lawrie said performed poorly during the quarter.

Lawrie is also reorganizing Siebel's Asia-Pacific business and expects to soon name a new top executive in that region. "We did not have a good quarter in Asia-Pacific, and I've made leadership changes there," Lawrie said. "This is not an issue of market conditions or opportunity. This is just purely an issue of execution."

Another struggling area was the company's UAN (Universal Application Network) integration framework, which fell short of expectations, Lawrie said.

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