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To: 2MAR$ who wrote (7584)	7/19/2001 8:01:54 PM
From: 2MAR$	Read Replies (2) \| Respond to of 208838

SEBL in review: Siebel's Warning Rattles Investors By Lisa Baertlein PALO ALTO, Calif. (Reuters) - Investors were rattled on Wednesday after global software powerhouse Siebel Systems Inc. (NasdaqNM:SEBL - news) joined a chorus of other vendors to warn it will be stung by an economic downturn that already has left many technology companies whimpering. Investors dumped shares of the customer relationship management (CRM) giant after Siebel's chief executive told analysts he expects fourth-quarter earnings to be 4 cents per share lower than the year-ago period. Siebel's shares, which ended the regular session down 13.57 percent at $37.64, fell another $2.76 in after-hours trade on Instinet. The warning from Siebel -- which saw second-quarter revenue growth dip under 40 percent after coming in at better than 100 percent a year ago -- arrived just one day after data management software maker Veritas Software Corp. (NasdaqNM:VRTS - news) shocked the market by lowering its forecast for the remainder of 2001. The Veritas and Siebel warnings hit particularly hard because the companies are undisputed leaders in segments that many expected to be largely insulated from the technology spending slowdown that has hammered earnings far and wide. ``There's nowhere to hide right now in software,'' Goldman Sachs analyst Thomas Berquist said. ``Even more broadly there's nowhere to hide in technology at all. I feel like we're in free fall and I don't know what is going to stop it,'' he said. GOOD NEWS LOST Siebel beat and Veritas matched average second-quarter earnings forecasts issued by Wall Street analysts. The companies also said their European business was strong during the three months ended June 30, contradicting reports from other technology players, which said the continent had caught the same flu that knocked down sales in the United States. That good news was lost as Mercury Interactive Corp. (NasdaqNM:MERQ - news), Micromuse Inc. (NasdaqNM:MUSE - news) and computer giant International Business Machines Corp. (IBM) (NYSE:IBM - news) -- which counts software and services among its key revenue drivers -- joined the flood of companies to issue gloomy outlooks. Mercury Interactive shares took a beating after the software performance and testing company's lowered guidance overshadowed second-quarter results that matched the Street's consensus expectations. Micromuse Inc. (MUSE.O), which sells software that monitors network performance, posted fiscal third-quarter earnings that more than tripled. It also warned that sales would drop in the current quarter and remain depressed through March 2002. IBM's software sales fell five percent to $3 billion in the second-quarter. The computer titan -- which is aggressively targeting Oracle Corp.'s (NasdaqNM:ORCL - news) database customers -- said its second-half results would be hurt by a slowdown in its chipmaking business, investment write-downs and the strong dollar. A PLACE TO HIDE? Prudential Securities analyst John McPeake said companies that produce software for mainframe systems -- Computer Associates International Inc. (NYSE:CA - news), Compuware Corp. (NasdaqNM:CPWR - news) and BMC Software Inc. (NYSE:BMC - news) -- may be islands of safety because their stock already has been down for nearly a year. ``You have to be very valuation sensitive,'' McPeake said, adding that investors should be wary and steer clear of companies that have seen revenue growth rapidly decelerate. J.P. Morgan analyst Jim Pickrel, however, cautioned that the global economy may throw companies a few more curves. ``The concern is how long does this economic weakness persist and to what extent does it really spread to Europe. If Europe weakens more than expected, that would be a concern,'' Pickrel said.