SEBL ($34-$38-$32) P/E 73..beats by 4 cents, rev's come in higher than expected.
Company reports Q4 earnings of $0.13 per share, $0.04 better than the consensus estimate; reports Q4 revenues of $481.4 mln versus the consensus estimate of $444.7 mln; no formal guidance issued with report
-- Update -- On call, company has not offered guidance yet, but speaks very positively about the Dec qtr; notes that linearity in qtr was best in 5 of past 6 qtrs; license revenue rose 29% sequentially, better than the total increase of 12%; DSOs fell 9 days to 72; no mega-deals indicating a broad pick-up in business; particular strength in financial services and in international (Germany up over 100% yr/yr); deferred revenue rose to $241 mln from $230 mln. Stock +0.36 from close.
Update -- On call, Tom Siebel says that there was a significant change in buying behavior in the CRM business in Nov/Dec, and it has continued in January; calls it a return to rational business processes and buying behavior; is optimistic about 2002.
Update -- On call, Tom Siebel doing his usual trash-talking of the competition; says ORCL "remains a non-issue"; with regard to SAP, he notes that Germany is Siebel's fastest growing market; finally, he spends a long time bashing PSFT and its Vantive product, says its market share has gone from 35% in 1997 to 5-6% today and that avg price per user is close to $30 compared to roughly $2,000 for SEBL.
Update -- On call, company finally provides guidance, sees license revenue roughly flat sequentially in Q1 and services revenue flat throughout the year, suggesting little change in Q1 revenues vs Q4, or roughly $481 mln vs current Multex consensus of $443.9 mln.
Update -- On call, offers guidance for 2002 of 15% license revenue growth and flat services revenue; suggesting total revenue of roughly $2.2 bln vs Multex consensus of $2.0 bln. Sees operating margins of 20% in Q1, rising to 23% by Q4. Overall, a good Q4 and positive guidance for Q1 and 2002. Stock up 0.90 from close at 35.70.
Siebel Systems (SEBL)34.11 +1.92: Salomon Smith Barney's upgrade this morning of Siebel is a good example of what to look for when you purchase an enterprise software stock. Margins are expanding as the company has done a good job of managing expenses. When the IT market slows, it's critical that management gets tough on costs. Another factor that gets you through a tough IT environment is a strong balance sheet. Siebel has $1.55 bln, or $3.35 per share, in cash/investments. The benefits here are two-fold. First, a company can continue to invest in developing new products whereas weaker competitors might sacrifice the long term benefits of research and development to make payroll and pay necessary overhead costs. Second, a company with a lot of cash is less likely to tap into the equity market for additional funding. The worst thing management can do is have a secondary offering when the stock is low as dilution will occur with little return. For example, a company with a $10 stock will suffer the same dilution on a percentage basis as it would if its stock were $50, however, less cash will be raised. Also, it sends a scary message to the market. Either management is forced into a secondary to maintain itself or management believes the stock is expensive, so it's time to cash in which begs the question: what else is wrong? Finally, Salomon's upgrade is also based on Siebel's product upgrade cycle. The ability to upsell products is important for the long term health of a software company. You can expect decent sales momentum during an upcycle as customers will want to ensure they have the best technology relative to competitors. Certainly, some customers will push off an upgrade for the time being, but it's nice to have a built-in sale as it's just a matter of time. -- Robert J. Reid, Briefing.com |
