Goldman Conference: Siebel Sees No Slowdown

LA QUINTA, Calif. -- It was the kind of bravado that makes corporate lawyers cringe, and the reason Wall Street can't get enough of Siebel Systems (SEBL Quote).

In comments during the keynote address here Monday at the Goldman Sachs Technology Investment Symposium, Siebel CEO Tom Siebel didn't concede any ground to bears, the economic doomsayers or his competition when he said business at his company is better than it has ever been.

"We are right now more enthusiastic about the market opportunity going forward than we have been any day that we've been in business," Siebel said. "Demand for these systems in the next year is quite breathtaking, and it's everything that we can do right now to keep up with it."

But what about the reports of lower technology spending budgets, of layoffs, of a general slowdown? Siebel would hear none of it. At a recent planning session with his top executives, he simply couldn't find a reason to tone down his company's outlook, even though he said he tried.

After reading analysts' reports and seeing projections for the slowing economy, Siebel said he proposed to his top managers that the company take down some of its internal targets -- targets, he said, that were still well above Wall Street's consensus estimates.

Yet at the end of the session, he said, his managers came back to him with projections, estimates and demand forecasts from the sales force that suggested the company would be able to meet the original, higher numbers. And so that's what the company stuck with.

"That's a pretty strong statement," Siebel said. Indeed, it is, and one that Siebel will be held accountable for should demand suddenly dry up, as other technology executives have said it did during the fourth quarter. For now, though, he's confident that the customer relationship software that his company makes will remain in vogue for some time to come.

The reason for that, he said, is because companies are changing the way they sell products. Instead of a single or even several sales channels, which have been used in the past, Siebel said companies now sell their products any way customers want. Executives who are trying to adapt to that new way of doing business want the kind of software Siebel makes, he said.

Why is Siebel so confident? He pointed to the numbers.

The firm's average payment term in the fourth quarter was just 34 days -- lower than during all of 1999. How long a company gives its customers to pay their bills is usually a good indicator of demand. If demand is high, companies can be strict and force their customers to pony up quickly. If demand is low, they often need to offer payment incentives to encourage customers to buy now.

Siebel added that his accounts receivable -- or money that's owed to a company by its customers but hasn't been paid yet -- are lower now than they have been in five quarters. Low receivables also indicate strong demand. And he reiterated that while competitor Oracle (ORCL Quote) has been giving away its customer relationship management software for free, his average price per user has actually increased in each of the last 16 quarters. (Siebel did plenty of Oracle-bashing during his presentation, but that's hardly news.)

"So how tough can it be," Siebel asked. "The fact of the matter suggests that maybe things aren't so strained out there."