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

To: The Gambler who wrote (5758)	4/17/2002 8:55:25 PM
From: puborectalis	Read Replies (2) \| Respond to of 6974

Siebel Hits Earnings Estimate, Falls Just Shy on Revenue By Ronna Abramson Staff Reporter 04/17/2002 08:04 PM EDT Updated from 6:02 p.m. EDT A week after its CEO said the first quarter may have been the worst in the software industry's history, Siebel Systems (SEBL:Nasdaq - news - commentary - research - analysis) reported earnings Wednesday in line with Wall Street expectations on revenue that fell short of estimates. CEO Tom Siebel repeated that refrain over and over on an earnings call Wednesday after markets closed and forecast that revenue would most likely remain flat sequentially in the second quarter. "Business that you would normally think would close just didn't close," Siebel said. "I suspect this would have been for the industry one of the worst quarters ever." Siebel stuck to his guns that IT spending will pick up later this year. "I can't believe it's not going to pick up in the second half of the year," the CEO said. He added that he believes the consumer side is picking up and expects the tech market to lag the consumer side by a quarter or two. The San Mateo, Calif.-based maker of customer relationship management software reported net income of $64.6 million, or 12 cents a share, compared with net income of $76.9 million, or 15 cents a share, in the same period a year earlier. Revenue fell 20.2% year over year, to $477.8 million, from $598.8 million a year ago. Wall Street was expecting the company to report earnings of 12 cents a share on $483 million in revenue for the first quarter, according to Thomson Financial/First Call. Sequentially, net income fell a penny from the fourth quarter and revenue fell slightly from $481.4 million in the fourth quarter. Related Stories Veritas Drops on Downbeat Outlook Oracle Still Waiting for Apps to Live Up to Potential Siebel Comments Devastate Software Stocks Cognos Beats Estimates The CEO said more than 50 deals in excess of $1 million that were forecast to close in the quarter moved out into the summer. But he said the company's pipeline is larger than it was in the first quarter. In addition to giving his vague guidance about revenue likely to remain flat, Siebel also described two other scenarios for the second quarter. He said if the market continues deteriorating, which he believes is highly unlikely, license revenue would decline 10% to 15%. And if there is significant improvement, he said, expect substantial license revenue growth. For the second quarter, the consensus on Wall Street was for the company to earn 13 cents a share on $517 million in revenue. Earlier this year, Siebel projected license revenue would increase 15% in 2002 compared with 2001, which is looking increasingly unlikely. "We're modeling in the low-single digits," said Jon Ekoniak, an analyst with U.S. Bancorp Piper Jaffray who has an outperform rating on the company. "I think it [Siebel's 15% estimate] is realistic if the environment significantly improves, but what we saw and what we're seeing was there was a large deterioration over the quarter." Indeed, just a day earlier, storage software maker Veritas (VRTS:Nasdaq - news - commentary - research - analysis) reported major "erosion" in its momentum during the last few weeks of the first quarter. Still, Ekoniak called Siebel's results "impressive given the environment." He stressed that the company's burgeoning analytics business as an important area of growth for the software maker, noting that other companies in the analytics field such as Cognos (COGN:Nasdaq - news - commentary - research - analysis) have lowered second-quarter numbers very slightly. Pat Walravens, an analyst with Jolson Merchant Partners, said he believes revenue growth will be flat to 5% in the year and yet Siebel is trading at 50 times his 2002 earnings estimate. "They also trade at a price that suggests it's a very well-managed company," he said. But "it all comes down to how fast is this company going to be able to grow." Walravens, who has a hold rating on Siebel, noted that the company's CEO also said in its last earnings call that it was operating under the most adverse economic conditions. His firm hasn't done any banking business with the company. Still, analysts said Siebel deserves credit for eluding a disappointing preannouncement bug that hit other enterprise software makers in recent weeks, including PeopleSoft (PSFT:Nasdaq - news - commentary - research - analysis) and Oracle (ORCL:Nasdaq - news - commentary - research - analysis). Analysts and investors have cited a few reasons why Siebel has outperformed in these tough economic times while others have not. That includes strong management, an undisputed leadership position in the CRM field and the launch of a product upgrade in the fourth quarter. Siebel cited a raft of numbers to prove that the CRM market remains largely untapped, with low single-digit penetration in many business areas. Before its announcement, shares of Siebel fell $2.41, or 8.5%, to close at $25.90 in heavy trading. After its earnings announcement, shares fell to $25.56.