Siebel Cuts Jobs and Offices - InformationWeek

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7/25/2003
03:53 PM
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Siebel Cuts Jobs and Offices

Siebel Systems Inc. last week revealed restructuring plans aimed at cutting overhead by $30 million to $40 million a quarter to cope with weak business conditions in the enterprise apps market.

TOM SIEBEL PHOTO

Siebel says his company "bit the bullet" after a long dry spell.
"The enterprise application software market remains quite soft," Siebel CEO Tom Siebel said at the company's earnings conference. "It doesn't appear that the IT economy is picking up, and, as a result, we are restructuring to reflect current business levels. We have bit the bullet after going through a long dry spell."

Siebel Systems says it's eliminating 490 jobs, of which 350 workers have already left the company. That's 9% of its 5,500-member workforce, down 2,400 workers since the end of 2001. The company also says it will some close offices and shift some operations outside the United States. Siebel estimates that these changes will produce quarterly savings of about $30 million by year's end and $40 million by the second half of next year.

Keith Raffel, chairman and founder of hosted CRM services provider UpShot Corp., says Siebel's results reflect a shakeout in the CRM sector as many potential customers realign their demands. "Larger companies aren't buying the way they used to," he says. "They learned that big megaprojects aren't the way to go and now believe the way to do CRM and software in general is in bite-sized pieces."

A spokeswoman for Salesforce.com Inc., also a hosted CRM apps provider, says Salesforce has grown recently as businesses look for "on-demand CRM services that don't require a heavy up-front investment." Privately held Salesforce reported its first profit for the quarter ended April 30. It had a profit of $188,000 on an unaudited basis on revenue of $19.1 million, a 22% sequential increase from its fourth quarter 2002 and nearly double its first-quarter 2002 revenue.

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