Hi Mike,
My access to research has been terminated, which I used to assess expectations. However, I think it is very likely that Siebel will post 100% growth because its applications have really accelerated internationally. Then, next year, the comparisons will become much tougher, and that's when the growth rate will slow.
I think more interesting than the revenue growth rate this quarter will be whether or not margins expand. Tom Siebel has already articulated a slowing growth rate (to prepare investors for the slower growth). But, in the last quarter, he remarked that he slowed the growth of the "services" line item because it was having a negative impact on customer service quality by bringing in a lot of new and inexperienced people. So, he wanted to make sure that the services provided to existing customers was top notch. Ultimately, by slowing down services a little bit, while still achieving a reasonably solid license revenue growth (with many sales going to existing customers), the gross margin and operating margin could be tweaked upward. This would achieve satisfying results down the income statement despite a slowing revenue growth rate. To be sure, I think people will focus on the slowing growth in the short-term, but in the long-term, the is plenty of room to improve the income statement.
I also think the balance sheet and cash flow statement are ignored by most people and yet Siebel's have looked very good. By cutting down the DSO over the past year, they increased cash from operations by well over $100 million. So, the company is financially sound.
Whether or not CRM applications are mission critical as "mtnlady" suggests - she may know more than I do. If they are not, its still only short-term. Having a solid balance sheet and cash flows are important in slow downs and Siebel looks pristine. On the other hand, the Internet goes on - recession or no recession - and my experience has been that without customers and facilitating relationships with customers and obtaining information about them to offer better services, you don't have a business.
Best,
John |
