Siebel Joins Software's Warning Club

Updated from 11:43 a.m. EST

Siebel Systems(SEBL) joined the long list of software companies issuing warnings this week, when it told investors after the close Friday that it would miss analysts' estimates for the March quarter by 3 cents a share and undershoot revenue expectations by as much as 10%.

As did the dozen or so other software companies that warned in the last few days, the company blamed the poor world economy and war jitters for the shortfall. CEO Thomas Siebel said several major deals set to close on the very last day of the quarter were not signed. "Our biggest five competitors in the quarter were the economy," he said in a call with analysts.

Siebel said revenue for the quarter would fall between $330 million to $335 million. Wall Street expectations were for revenue of $368.86 million, according to Thomson Financial/First Call.

Siebel's post-close announcement ended a day in which software stocks drifted downward for the whole session. In fact, the biggest surprise of the day was that the losses weren't greater.

In regular trading Friday, Siebel was down 36 cents, or 4.4%, to $7.80. After hours, shares were rising 0.6%.

The retreat began after the closing bell on Thursday when PeopleSoft(PSFT), one of the world's largest software companies, said it could miss license revenue estimates by as much as 40%.

The Pleasanton, Calif.-based company now expects first-quarter earnings of 11 cents to 12 cents a share on total revenue of $450 million to $455 million. Wall Street had expected the company to earn 14 cents on revenue of $483.6 million in the March quarter.

Tellingly, PeopleSoft has reduced its guidance for a key measure -- revenue derived from license sales -- from a range of $125 million to $135 million to $80 million to $85 million. Analysts called the results "shocking and appalling," and quickly moved to adjust estimates for the sector.

Patrick Walravens of JMP Securities cut estimates on the seven enterprise software companies he covers, including PeopleSoft, Oracle(ORCL), SAP(SAP), Siebel(SEBL) and J.D. Edwards(JDEC) for the next three quarters. JMP has no banking relationship with the companies mentioned.

Like most of the other companies dispensing bad news on Thursday, PeopleSoft execs blamed the war and the weak economy for at least part of their company's woes. Moreover, PeopleSoft's problems could mean that other major companies that sell applications, such as Oracle and Siebel, are also in for a bad time, said analyst Mark Murphy of First Albany. "It's hard to believe that something isn't going on that would affect application sales for other companies."