Sales slump at Siebel triggers layoffs, closures
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Siebel Systems has warned of a 35% crash in software sales, blaming a weak economy and "uncertainty" wrought by Oracle's bid for PeopleSoft.
4 July 2003 Siebel Systems highlighted the continuing weakness in the customer relationship management (CRM) software market with the announcement yesterday that a slump in software sales in its latest quarter would lead to further layoffs and the disposal of unprofitable parts of its business.
In a profits warning, the CRM market leader said that software licence sales for its second quarter to the end of June were about $110 million, a 35% drop from the same period a year ago. Total revenue for the quarter will likely be between $330 million and $334 million, down from $405 million a year ago.
The company will now embark on a new wave of re-structuring intended to "significantly reduce [its] cost structure". CEO Tom Siebel said that the company plans to end "some unprofitable business operations", though he declined to specify which areas of the business would be closed or sold.
Additionally, the company intends to cut its headcount still further, "eliminating a layer of management". Over the past year it has reduced its workforce from over 7,000 to around 5,590. Several analysts suggest that 1,000 jobs still need to go if the company is to meet a target of a 15% operating margin at current revenue levels.
Aside from a weak economy, Tom Siebel blamed the downturn on confusion in the business applications market created by Oracle's hostile takeover bid for PeopleSoft. That has added to the "uncertainty and fear" among enterprise software buyers, he said.
