Updated from 4:59 p.m. EST

Siebel Systems

(SEBL)

bettered its own recently hiked guidance and Wall Street's expectations for the fourth quarter.

The struggling business software maker said after the bell Thursday that net income for the quarter was $54 million, or 10 cents a share, compared with $40.7 million, or 7 cents a share, last year. The company benefited from a lower-than-expected tax rate.

Total revenue for the December quarter was $392 million, an increase of 24%, sequentially, and 7% year over year.

After the lead of Siebel's Jan. 5 guidance, analysts polled by Thomson Financial were expecting a profit of 8 cents on sales of $384.24 million.

CEO Mike Lawrie said he was generally pleased with the quarter, but there were disappointments, notably in Asia-Pacific and in the financial services sector.

As a result, the company has made management changes in those areas, as well as in others.

Lawrie also said he is tying management pay to revenue growth, margin improvement and customer satisfaction.

"This marks a return of year-over-year growth we haven't seen since 2001," he said on a conference call. "While we have a lot of work to do, I view this as another data point of our progress," he added.

Looking ahead, the company said to expect a first-quarter profit of 5 cents or 6 cents on sales ranging from $325 million to $345 million.

Analysts were expecting a 5-cent profit with revenue of $328 million.

Siebel, which faces competition at the high end of its market for business software from

SAP

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and

Oracle

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-- and at the low end from a number of players, including

Salesforce.com

(CRM) - Get Report

-- is beginning to cut prices for Web-based software to beat back Salesforce.

Although Siebel admits that it is far behind Salesforce, for the first time it appears to be making some headway.

The company said its on-demand business now has 28,000 seats but did not say how many customers, that is companies at which the users are employed, it has won. The contract value of those seats is $26.1 million; for the quarter it totaled $9.71 million, a sequential gain of 28%. (Siebel did not have an on-demand business last year.)

The report didn't do much to excite Wall Street, which would have liked more upside in the guidance. In recent after-hours trading, shares of Siebel were off 3 cents to $9.11.The stock closed the regular trading day with a gain of 4 cents to $9.14 a share.