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To: Mike Buckley who wrote (37451)	1/3/2001 11:47:21 AM
From: mtnlady	Read Replies (1) \| Respond to of 54805

"What's your thinking about Q4 and what are the revenue estimates?" Mike, historically Q4 has always been Siebel's strongest. However, I don't know which way they will play it. Blow out the numbers or hold back revenue to make sure they make the next 2-3 quarters will the economic slow down in front of us. My guess (purely a guess mind you) is that they will 'respectfully' beat the numbers but defer more revenue for next year. The last thing Siebel wants to do is be forced to lower forcasts or worse yet.. miss a number (highly doubtful). One thing to keep in mind though. CRM is not a 'mission' critical product (no matter what the vendors tell you!). If the economy really goes into the sh*t can CRM projects will get delayed. On the plus side Siebel totally owns this market now - outside of a few niches in help desk etc.. AND (!) they should be really going like gang busters in Europe this year (note: Vantive/Peoplesoft have always had a strong European presence as well so they may also benefit from a strong European sector). Funny how things work out. Wasn't it just last quarter that Intel and others blamed their shortfalls on a weak Europe and in 2001 Europes recovery may help keep the US from sliding into a recession.

To: Mike Buckley who wrote (37451)	1/3/2001 2:07:16 PM
From: johndelvecchio	Read Replies (1) \| Respond to of 54805

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