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January 5, 2004

Siebel expects to beat Q4 forecasts

Siebel Systems Inc expects to comfortably beat forecasts for its fourth quarter to December 31, raising hopes for the entire enterprise software sector in 2004.

By CBR Staff Writer

CEO Tom Siebel said he was circumspect about whether the improved figures indicated a long-term upturn, insisting that he would need three or four quarter’s figures before reaching a conclusion. However, the stock market had no such inhibitions and the Nasdaq index moved to a 52-week high yesterday, powered by growing confidence in all IT sectors.

Siebel told a conference call that the company saw an improved business climate for investing in information technology across the board.

In the fourth quarter, we saw a significantly improved environment in Asia, Europe and the United States, he said.

The increased willingness to spend money has enabled Siebel to forecast that revenue for the fourth quarter will be around $365m, with license revenue contributing approximately $150m. This compared with its earlier forecast in October that revenue would be in the range of $335m to $355m and license revenue would be in the $120m to $140m range.

With revenue up on expectations, Siebel is now looking for earnings per share about $0.08, compared with the previous forecast of $0.05 to $0.06. Though Siebel’s coffers were drained by the cash acquisitions of UpShot and Motiva in the quarter, it added $40m to its reserves and ended the year with cash and equivalents of $2.02bn.

There remains the possibility that Siebel’s figures are a blip, caused by a one-off seasonal improvement. However, the improvement has come across its entire product range and sectors badly hit by the downturn such as telecoms have been amongst its most enthusiastic customers.

A further insight into its thinking will come when Siebel releases the full figures later this month and reveals what it expects for the coming year. The stock was up 6.75% at $14.92 after its estimates were announced, suggesting that the market believes that a company that suffered in the downturn is now poised for a new era of growth.

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To put the figures into perspective, Siebel’s estimated fourth-quarter revenue is 8.2% down on the same period last year and 24.1% down on the $481.4m it achieved in the fourth quarter of 2001.

The CRM market leader has at least come to terms that those days are over and the substantial improvement in its bottom line is the result of a restructuring and substantially reduced headcount.

At one time Siebel’s entire future was in doubt, with rumors that Microsoft would acquire it. Now finally there are hopes that revenue may be moving upwards again, and with substantial reserves it can buy its way into new markets.

This article is based on material originally produced by ComputerWire.

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