Siebel faces restructuring, flat revenue

Customer relationship management software vendor Siebel Systems Inc. plans to cut out a layer of its operating hierarchy and reduce staff as it faces continued flat revenues.

Reporting its preliminary earnings for its second quarter, which ended June 30, the San Mateo, Calif.-based company recently estimated its overall revenue at the high end would be around US$334 million, roughly similar to the first quarter’s US$332.8 million. It estimated revenue from new license fees, a reliable indicator of a company’s health, at US$110 million, down slightly from US$112 million in the first quarter of 2003.

In a statement, Siebel laid blame for the weak numbers to the “unexpected delays in purchasing decisions” by customers and prospects because of the uncertain economic climate.

In a conference call, chief financial officer Kenneth Goldman also said Siebel would eliminate 263 jobs, reducing the workforce to 5,589.

CEO Tom Siebel said that because the economy is not picking up, the company will be restructuring over the next two months. As part of these efforts, the firm will eliminate a layer of management along with some unprofitable business operations. The company will be left with a “structure that we think will allow faster decisions, faster feedback from the market, and simpler interaction for the customer.”

Siebel also said the changes would not disrupt service to the company’s clients. “The customer today goes through a number of points of contact into Siebel, and (this) will be kind of consolidated. And so the customer will just simply have a primary contact that will tend to manage all those various activities for the customer, so they don’t have to manage it themselves across, say, education, professional services, sales, customer support, all of the expert services, multi-channel services,” said Siebel.

The company will report its final results for the second quarter on July 22.