Leaked Memo Sends Siebel Into a Hissy Fit

The company holds a conference call saying part of a confidential survey was deliberately distributed.
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Embattled

Siebel Systems

(SEBL)

is crying dirty tricks in the wake of a leaked internal memo containing unflattering comments by customers.

The enterprise software vendor took the unusual step of hosting a conference call after the bell Wednesday to vent some anger and to tell reporters that most Siebel customers are, in fact, happy with the company.

"Someone with a lot of organizational support and very malicious intent elected to distribute this data selectively," said Nitsa Zuppas, senior director of the company's public relations department.

The leaked data consisted of eight slides taken from a confidential, 75-page report done as part of a regularly scheduled customer satisfaction survey in the third quarter of last year. Some of the leaked slides showed a moderate level of customer dissatisfaction with some features of the new version of its flagship CRM suite, Siebel 7. The company later fixed the problems and shipped a maintenance release, said Steve Mankoff, a senior vice president.

Zuppas said the documents and a handwritten note have been distributed in plain white envelopes to industry analysts, traders and reporters over the last few weeks. When the distribution list widened, the company notified the FBI and decided to tell the story publicly, she said.

On a generally poor day on Wall Street, Siebel was down 25 cents, or 3.1%, to $7.79 a share, on lighter-than-average volume at the close. The stock regained a penny in after-hours trading.

The company displayed other slides via Webcast, including one that showed 90% of current customers would recommend the company to potential buyers. Mankoff conceded that not everything in the survey was positive, and said "finding problems so we can correct them is why we do the survey."

Last week, Siebel joined

PeopleSoft

(PSFT)

,

Sybase

(SY) - Get Report

and at least 10 other software companies issuing warnings this month, when it told investors 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 recently, 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.