Siebel Flourishes, PeopleSoft Falters In First Quarter

Siebel Systems Inc., still unfazed by the troubles that haveripped through the enterprise application market in the pastyear, posted an 81% rise in revenue and a 119% rise inprofits for its 1999 first quarter. Revenue for the quarterwas $134.1 million, up from $74.2 million in the same quarterlast year. Profits were $21.3 million, up from $9.7 millionin the year-ago quarter. License revenue grew 67% to accountfor 70% of total revenue, while maintenance, consulting, andservices grew 124% year over year.

Siebel also announced yesterday a multiyear partnership withIBM that will see the front-office vendor bundle IBM's DB2database with its Siebel 99 sales, marketing, and customer-service applications. Customers who buy the bundled packagewill pay "substantially less" for the two products than ifthey buy them separately, and IBM also will provide serviceand support to those customers. While Siebel will continue tosupport other databases, including that from its front-officerival Oracle, DB2 will be integrated closely with Siebelapplications. The integrated package will be available in thethird quarter.

While Siebel is weathering the slowing applications market,PeopleSoft hasn't been as lucky. While revenue increasedslightly to $305.4 million, compared with last year's first-quarter revenue of $278 million, charges associated with thespin-off of Momentum Business Applications Inc. and its staffreduction approached $180 million, and put the company in thered. PeopleSoft saw a net loss of $171 million, or 73 centsper share, compared with a net income of $54 million, or 15cents per share, last year. Revenue from license fees droppedto $76 million, from $137 million last year. But servicesrevenue picked up the slack, generating $228 million, asopposed to last year's $141 million. The company says it ishoping to rebound by bringing its applications offerings tothe Internet market.