To: Kayaker who wrote (4176 ) 12/19/2000 1:50:50 PM From: Kayaker Respond to 12:15 ET Siebel Systems (SEBL): 70 9/16 -7 13/16: A CSFB note has lead to a 10% decline in SEBL shares today. Growth prospects in core US enterprise accounts are called into question as an economic slowdown impacts corporate spending. However, Siebel is not seeing demand soften for CRM applications, as e-business and CRM software is one of the better investments a company can make in terms of ROI. Oracle (ORCL) used that argument to ease investor concerns of IT spending cuts, and their Q2 results certainly support their case. The part of the note that the market seems to be ignoring today is the argument for growth drivers in mid-market and international business. Large enterprise growth is moderating, but international sales have shown impressive growth over the past four quarters, growing from 28% of license revenues in 3Q99 to 43% in Q300 when the company reported 131% top line growth. Mid-market business, as defined by customers with less than $250 mln in annual revenues or less than 1,000 employees, has also been showing traction, growing from 13% in 1Q00 to 27% in 3Q00. As for the core domestic large enterprise business, although the growth rate has slowed, there is no evidence that Siebel is losing market share. CSFB notes that the declining growth rates are not a sign of North American CRM saturation, and Siebel 2001, their new product release scheduled for mid next year, will spark the large enterprise business. Anytime an analyst suggests growth is slowing, the market is going to hit the sell button, but that clearly was not the message that CSFB analyst Brent Thill was trying to send. No software vendor is immune from a weak economy, slowing hardware sales and corporate IT spending cuts, but Siebel is well positioned to weather this storm. - Matt Gould, Briefing.com
