Siebel Systems Shows Some Muscle

CRM vendor posts profit along with healthy increase in licensing deals.
Three months after posting disappointing second-quarter earnings, Siebel Systems Inc. provided evidence Wednesday that it's rebounding under the leadership of new CEO Mike Lawrie. A strong third-quarter performance should silence market speculation that the customer-relationship-management software vendor's best days are behind it and that it was a likely candidate to be acquired.

During a conference call with analysts, Lawrie, who took over in May when founder Tom Siebel stepped down from the CEO post, expressed a realistic view of the company's quarterly performance. He said the numbers appeared stronger because they were being measured against lowered expectations, but that the quarter represented a step in the right direction. "This is the start of more predictable and consistent earnings growth," he said.

For the quarter ended Sept. 30, Siebel posted a profit of $19.4 million, or 4 cents a share, on revenue of $317.1 million, compared with a loss of $59.3 million, 12 cents, on revenue of $321.4 million a year earlier. A big factor in the swing toward profit-making was Siebel's cost-cutting efforts, which resulted in a nearly $107 million reduction in expenses, to $179.5 million from $286.3 million last year. In the previous quarter, ended June 30, Siebel posted a profit of $8.2 million on revenue of $301.1 million, with expenses of $186.5 million. In that quarter, revenue fell $50 million short of projections and license revenue hit a five-year low.

Perhaps most encouraging was a spike in license revenue during the third quarter, a traditionally slow period for software sales. After seeing its license revenue bottom out at $94.8 million during the previous quarter, Siebel reported license revenue of $104.6 million for the most recent quarter, a 10% increase.

During the recent quarter, Siebel cut deals with the Department of Homeland Security, pharmaceutical company Boehringer Ingelheim, and diverse manufacturer Ingersoll-Rand. It said at its user conference earlier this month that it would begin working more closely with customers to ensure successful CRM deployments, and it introduced a suite of standalone business-intelligence products. The company also created a sales division focused entirely on the small- and medium-sized business market, a move that likely helped its software-as-a-service offering, Siebel CRM OnDemand, post a 32% increase in total contract value during the recent quarter.

Editor's Choice
Samuel Greengard, Contributing Reporter
Cynthia Harvey, Freelance Journalist, InformationWeek
Carrie Pallardy, Contributing Reporter
John Edwards, Technology Journalist & Author
Astrid Gobardhan, Data Privacy Officer, VFS Global
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing