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Technology Stocks : Siebel Systems (SEBL) - strong buy? -- Ignore unavailable to you. Want to Upgrade?

To: Stephen M. DeMoss who wrote (4348)	1/31/2001 7:13:28 PM
From: Lee L.	Read Replies (1) \| Respond to of 6974

I'm the last person to understand why Siebel goes up or down. In spite of their spectacular numbers and execution, the current valuation seems to have a couple of spectacular years of future performance already built-in. Given the uncertainty in the broader economy in general, and reduced IT expenditures as a result, the market seems to think that Siebel's prospects are somewhat diminished. Personally, I think that the market is over-reacting. Business executives make purchasing decisions for SEBL -- not IT guys. As businesses chose to make strategic investments, implementing modern CRM solutions will be at the top of the list. As Siebel continues to report rapid revenue growth and profitability, then the stock will catch up. We'll see.

To: Stephen M. DeMoss who wrote (4348)	1/31/2001 7:27:01 PM
From: muckraker71	Read Replies (1) \| Respond to of 6974

I have a pretty good idea: When asked by analysts on the call whether they could take up their models, Tom said no. But take a look at expectations for Q1: 0.15. This comes on the heels of 0.20 in Q4; this is a sequential decline for a company growing 100% or more per year!?!? (Yellow penalty flag!) Now, a few quarters ago, Howard Graham did say that SEBL would experience the typical seasonality (seasonal decline from Q4 to Q1) seen elsewhere in the tech business, but the analyst community has not been prepared for this phenomenon in any subsequent calls and I don't recall hearing anything of this nature from Goldman. This is curious because Tom has deliberately prepared the community for slower growth ahead for SEBL overall, so it begs the question, what the hell is with the sequential decline? OK, now look at full year '01 estimates: 0.72 vs. 0.49 in '00. That's 32% earnings growth for a stock with a PE of 100. (Another yellow flag!) And finally, add some cautious comments from Tom starting on the Q3'00 call saying that growth will slow (which he reiterated couple of times in media interviews during Q4). This makes people nervous. (A third flag!) Put these factors together with the fact that the market is jittery and you have a formula for valuation compression. Look at what happened to PSFT today - beat the street, don't raise guidance, they sold it off. Personally (just between you and me - don't tell anyone else), I think Tom is keeping the bar low so as to vault over it, but in this market, no one gets any benefit of doubt, especially not one trading at 100x this year's numbers. Any thoughts anyone?