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Technology Stocks : Siebel Systems (SEBL) - strong buy?
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To: Lee L. who wrote (2948)7/19/1999 6:55:00 PM
From: Trader Dave   of 6974
 
The mid market is a very tricky place to play.

IMO, the low end of the mid-market where GPSI plays, THE ONLY economically viable way to play is with a VAR channel. GPSI dynamics CS/+ product is appropriate for companies with $40 million to as much as $500 million in revenues.

It is hard to imagine how difficult and time consuming it is to build a VAR channel. IMO, it takes years and only some of them stick.

Selling to the mid market where GPSI plays on a direct basis is guaranteed way to lose money, probably in perpetuity. Hence my strong dislike of ONX's profitless prospects.

I think partnering with GPSI will provide SEBL with significant incremental revenue and will be very unlikely to at all overlap with the enterprise class business SEBL is currently pursuing. Great partnership with the best vendor that has the broadest footprint in the space.

JDEC is a different mid market play more in the with a target to sell to companies with $250 million to $5 billion in annual revenues.

This could be an interesting partnership, but here i'd worry more about potential conflict with SEBL's internal sales force. However with gross margins in software being what they are, there's probably room for a little dual commission structure.

Bottom line, i think it's an extremely intelligent strategy and will likely work out well for SEBL.

I do have some worries about JDEC, a company i've never been fond of. I HATE the rumors of SEBL buying them or any other erp company. I can't imagine it happening, but market research folks like AMR which are desperate to show "value" in the dying ERP back office, keep insisting sebl needs to do a deal here to survive. I think Tom is smart enough to know this is utter and complete B.S. but i worry anyhow.

TD
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