I've had a chance to look at the Siebel Systems earnings report that prompts a few observations.
Balance Sheet:
Cash and short-term investements increased $5 million to more than $156 million. Not having access to the cash flow statement until the SEC filing appears, I don't know what cash flow from operations looks like.
Now that USinternetworking, an ASP that offers Siebel 99, is a publicly held company, Siebel is showing the value of that investment at an additional $62 million.
Accounts receivable has come down as a percentage of revenue. That's good and has been a point that apparently some analysts might have been concerned about.
Working capital is about $373 million and the current ratio is about 3.0. No problem there.
Retained earnings and stockholders equity continues to grow dramatically.
Income Statement
Okay, now the stuff that gorilla-gamers like to peruse.
Trailing revenue is nearly 50% greater than Vantive's and Clarify's combined. Licensing revenue for Q2 is 115% greater than Vantive's and Clarify's combined.
However, Q2 licensing revenue decreased from 75% of the total in Q298 to "only" 67%. Compare that with Vantive and Clarify whose licensing revenue is 46% and 55%, resspectively, of the total.
Siebel's Q2 licensing revenue grew 63% year-to-year compared to Vantive's and Clarify's growth of 15% and 46%, respectively. Siebel's sequential growth was 18%, compared to Vantive's and Clarify's growth of 0% (no, that's not a mistake) and 18%, respectively.
Summary: It's apparent that Siebel is increasing market share based on the data we have available. Oracle might disagree, but that's for another discussion.
Other stuff, though less important to gorilla gamers.
R&D continues to fall. It's now down to 10% of revenue. If that's sufficient to stay ahead of the competition in getting superior products and a lead to the market, it's great to be able to do it while decreasing relative costs. But I wouldn't mind if R&D increased.
Sales & Marketing as a percentage of revenue fell from 42% to 37% in Q2, year over year. I like the improving economies of scale.
As a result of decreasing R&D and Sales & Marketing, operating margins increased from 20% to 24% in Q2, year over year. Similarly, net margins increased from 13% to 15%.
Valuation
Using the updated 107,690,000 fully diluted shares, the market cap stands at $6.6 billion. Only $3.4 billion to go before we qualify for Uncle Frank's G&K index. We'll be submitting our application sometime next year. :)
Using current estimates for FY2000, the trailing PE (excluding one-time charges) is just a tad shy of three times the expected growth rate. That's nose-bleed territory considering Siebel's history. It will come down somewhat if (I should say, "when") analysts raise their estimates.
Comments anyone?
--Mike Buckley
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