Siebel: Turnaround or Last Hurrah?

Siebel Systems has pre-announced sales that vastly surpassed its own and Wall Street’s expectations: It said it expects to report fourth quarter revenue of US$469 million — a 30 percent to 38 percent increase from its last forecast, and a 20 percent rise from the same quarter a year ago.

License revenue for the period is expected climb 33 percent to $214 million, compared to $161 million realized the same quarter in 2004.

In late October, Siebel estimated that revenue for Q4 would reach $340 million to $360 million. Wall Street expected revenue to be slightly more than Siebel’s estimates, reaching $365 million, according to a Thomson First Call survey.

Bittersweet News

For some — Siebel employees poised to lose their jobs, for instance — the new projections are a bittersweet development. The company has struggled for the last few years to bring its revenues up, but to little avail.

There are a number of explanations for the growth, said CEO George T. Shaheen, including market opportunity in CRM and analytics, improvements the company has recently made, and customer confidence in the proposed Oracle acquisition.

Still, the announcement triggered plenty of speculation as to what else could have fueled sales. Theories have ranged from Siebel’s sales staff pushing the envelope in order to land a plum job at Oracle once the acquisition is complete to Oracle promoting Siebel products over PeopleSoft’s CRM apps before the deal is even closed.

At a Siebel user group meeting held in Boston last October, “everyone was upbeat, with people saying they wanted to go out a winner,” recalled Denis Pombriant, principal of Beagle Research.

“At that point, many people didn’t know if they were going to stay or take a package and leave,” he told CRM Buyer.

Even sales reps who knew they were leaving wanted to wring the last possible deal out of the pipeline in order to maximize their compensation, Pombriant observed.

513 New Agreements

The revenue figures do have some interesting implications for the industry, according to Pombriant.

“The economy had 4 percent growth in 2005, so there were a lot of companies cash-flow positive. As is natural at this point in the cycle, [they] decided to invest in plants and equipment,” he explained, “so Siebel benefited from some of that as well.”

Siebel closed 513 new software-licensing agreements with new and existing customers in the fourth quarter, including Airbus France, Alaska Airlines, Amgen, Bank of Montreal, Barclays Bank, Blue Cross & Blue Shield of Florida, the Boeing Company, Genzyme Corporation, ITT Flygt, Level 3 Communications, Lloyds TSB Bank, Maersk Sealand, Massachusetts Mutual Life Insurance, Medtronic, Motorola, the New York Times, Neopost, Nissan North America, Norwich Union Healthcare, Novartis Pharmaceuticals, Rabobank Nederland, Royal Mail Group, Die Schweizerische Post, Societe Generale, Telecom Italia, Telstra, Trend Micro and Warner Brothers Entertainment.

Shareholders are set to vote on Oracle’s $5.85 billion acquisition of Siebel on Jan. 31. Siebel expects to release its full results for the period during the week of Jan. 23.