- SEBL ($15.80-$14.80) posts quarterly profit, but licensing revenue drops
Wednesday January 21, 8:15 pm ET
(Adds forecast, executive comment from conference call, more analyst comment)
SAN FRANCISCO, Jan 21 (Reuters) - Siebel Systems Inc. (NasdaqNM:SEBL - News) on Wednesday posted a 9 percent gain in quarterly earnings on revenue that slipped 7 percent as the company clinched more contracts for its sales management software but with smaller dollar values.
ADVERTISEMENT
Siebel said that the past quarter showed a turnaround in corporate spending on information technology and the gains from its earlier cost-cutting as it posted results in line with the higher forecast it had given earlier this month.
But the company offered a cautious forecast for earnings in the current quarter compared to Wall Street expectations and its stock slipped about 4 percent in after-hours trade.
Net income for the fourth quarter was $41.5 million, or 8 cents per share, compared with a net loss of $38 million, or 8 cents per share, a year earlier.
Revenue fell to $366.7 million from $394.7 million a year ago, the San Mateo, California-based company said.
Software license sales, a key gauge of future growth, totaled $150.3 million, compared with $157.4 million a year ago and Siebel's revised forecast of $150 million.
"Maintenance revenue drove the growth. We're seeing excellent renewals," Ken Goldman, chief financial officer, said in a conference call with analysts.
There was a "significantly improved IT (information technology spending) environment in the quarter," said Tom Siebel, chairman and chief executive.
For the current quarter, Siebel said it expected earnings per share of 4 cents to 5 cents, total revenue of $315 million to $335 million and license revenue of $110 million to $125 million.
In the second quarter, the company expects earnings per share of 6 cents to 8 cents, total revenue of $340 million to $365 million and license revenue of $120 million to $140 million, he said.
Siebel declined to provide specific guidance for the full year, saying it would depend on how the overall economy does and whether the uptick in corporate spending continues.
CONSERVATIVE FORECAST
"I think they're being a little conservative" with their guidance, said Patrick Mason, an analyst at Pacific Growth Equities. "They don't want to miss (their forecast) again, but the general health of the business is probably better than they're guiding to."
Company results fell short of its forecasts twice last year, he added.
"The stock will probably trade down tomorrow a little bit due to the guidance, but it will eventually" rise again, Mason said.
Siebel shares fell to $14.90 in after-hours trade after initially reaching $15.64 earlier. The stock, which closed at $15.45 on the Nasdaq, has nearly doubled in the past year.
Siebel said that its fourth-quarter revenue declined as a result of average deal size going down despite an increase in the number of total deals from a year ago.
Although the number of deals valued at over $1 million and $5 million rose in the fourth quarter from a year ago to 42 from 19 and 5 from 3, respectively, the average deal size dropped to $370,000 from $403,000, a company spokeswoman said.
"In the past there were very significant deals," said John Torrey, an analyst at Adams, Harkness & Hill. "Those deals have largely gone away. We don't see that kind of buying anymore."
Siebel had forecast earnings of 8 cents per share and revenue of $365 million on Jan. 5, a stronger outlook than its prior forecast of earnings of 5 cents to 6 cents a share and revenue of $335 million to $355 million.
RESTRUCTURING SAVINGS
As a result of its restructuring, Siebel saved more than $100 million between 2002 and 2003 from lower costs related to compensation, travel and other expenses, Goldman said.
Siebel also addressed a question related to a U.S. Securities and Exchange Commission (News - Websites) recommendation that the company and two officials be held accountable for potentially violating federal selective disclosure rules after talking to a group of analysts at a dinner at a financial conference.
"We believe that there is no evidence to support a conclusion that a violation (of Regulation FD) occurred," he said. If the SEC decides to launch a formal investigation into the matter, it could take two to three years to resolve, he added.
On Tuesday, Siebel said it was acquiring Ineto Services Inc., which hosts Internet-based customer relationship management software, enabling it to better compete against Oracle Corp. (NasdaqNM:ORCL - News), PeopleSoft Inc. (NasdaqNM:PSFT - News) and Salesforce.com. |
