Siebel Joins Software's Warning Club

Oracle is heavily dependent upon its flagship database business, but many analysts believe the company won't resume growth until it expands its application business.

Piper Jaffray Analyst Tad Piper also trimmed estimates for PeopleSoft and Siebel and noted that the end of March, when software companies typically close many deals, presented an unusually difficult environment.

He, too, thought that Friday's market wasn't as brutal as he feared. "The misses were worse than we expected, but long-term the fundamentals in the sector are somewhat stronger," he said. Piper Jaffray has a banking relationship with PeopleSoft, but not with Siebel.

The PeopleSoft announcement prompted a rapid-fire selloff. Shares dropped $2.69, or 16.3%, to $13.81 in after-hours trading. The stock recovered a bit Friday, and in recent trading was off $1.80, or 10.9%, to $14.70.

"Obviously the environment for capital spending worsened in 1Q with added concerns about the war and its impact on the already-weakened economy. The result was delays in corporate purchasing worldwide," PeopleSoft CEO Craig A. Conway said in a prepared statement.

The warnings have reversed a software rally that began on Wednesday, sparked by good war news and a robust earnings announcement by business intelligence vendor Cognos(COGN).

Siebel was off 37 cents, or 4.5%, to $7.79 a share; Oracle lost 19 cents, or 1.7%, to $11.43; Microsoft(MSFT) was down 35 cents, or 1.4%, to $25.38; BEA Systems(BEAS) was down 49 cents, or 4.4%, to $10.63; SAP is off 47 cents, or 2.3%, to $20.09; Sybase(SY), which warned on Thursday, was off 22 cents, or 1.7% to $12.51. Cognos was up 10 cents to $25.42.

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