Updated from 5 p.m.

You can exhale now.

Siebel Systems

(SEBL)

managed to squeak by. But the road ahead looks very rocky.

The customer relationship software company, which was one of the few big technology firms

not

to warn about lower-than-expected quarterly numbers, earned 15 cents per share for the quarter ended March 31, a penny better than analysts were expecting, according to

Multex.com

. On a revenue basis, Siebel comfortably beat expectations, with sales of $588.7 million, compared with the $558.1 million the Street was looking for.

A year ago, the company earned 7 cents per share on revenue of $319.7 million.

But Tom Siebel, the company's cocksure founder and CEO, said the company's software license revenue growth would be just 25% to 30% for the second quarter. Analysts were expecting growth of 40% or more. Siebel said license revenue could come in as low as $280 million for the quarter if the economy gets worse, or as high as $350 million if spending picks up again.

The company also said that it has laid off the bottom 10% of its workforce, will cut the salaries of top-tier executives by 20%, and is suspending all executive bonuses. It also acknowledged that it had shuttered its

Sales.com

unit, a Web-based service allowing salespeople to manage customer contracts.

Siebel's results ended several days of speculation that the company wouldn't meet its numbers for the first quarter, because CEO Tom Siebel drastically changed his bullish tone in public comments at the end of March. Along with those rumors, layoff talk began to circulate last week.

"Clearly, this is a much better quarter than I think anyone imagined. It's really pretty remarkable," said Jim Pickrel, an analyst at

J.P. Morgan H&Q

who rates Siebel a buy. "There really are no holes to poke in it, but the headline will be that the outlook has certainly deteriorated." (His firm has done underwriting for the company.)

On a conference call with analysts, Siebel, who until just a month ago was bullish on business prospects, gave a blunt appraisal of the economy.

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"I believe we're looking at a global economic recession. That's not a problem, it's just a fact," Siebel said. "But as a team, we've been able to respond very quickly to a change that has not yet been recognized by

The Wall Street Journal

or

CNBC

."

He said Wednesday's half-point rate cut by the

Fed

was an admission that things are still getting worse, not better.

Siebel chastised management at other technology companies for insisting they can't see what lies down the road for their business. Siebel said he can see what lies ahead, and that it's not pretty.

"I'm very interested in these comments I hear from CEOs of technology companies that they have a lack of visibility. We had very good visibility. We might not have liked what we saw, but there was no question what we were looking at I have tremendous respect for any technology company that made its numbers last quarter."

Analysts had anticipated Siebel notching down its guidance.

Banc of America

analyst Bob Austrian this morning took down his earnings estimates from 16 cents to 14 cents for the company's June quarter, citing the difficult selling environment that has caused major headaches for nearly every software sales rep in the country over the last four months.

"We're lowering our estimates on Siebel in light of a continuing ultra-tough environment for software," wrote Austrian, who rates Siebel a buy. "We believe Siebel will guide future estimates lower than current Street consensus, citing the economy and recent tech blowups as air cover." (His firm has done underwriting for the company.)

But speculation that Siebel might miss its number didn't stop investors from buying the stock, as they have with other technology shares in the last two weeks. Siebel's stock has jumped 48%. During Wednesday's Fed inspired-rally, Siebel gained $1.04, or 3%, to end at $33.92.

In after-hours trading, the shares jumped $3.28, or 9.6%, to $37.20.

The layoffs, which were expected by Wall Street, were less severe than some analysts anticipated. But they were also double the routine 5% cuts the company makes twice yearly to weed out the laggards on its team.

"They just sort of increased the scope of what they usually do," says J.P. Morgan H&Q's Pickrel. "But when you add into that the management salary reductions and the bonus freezes, they're clearly seeing potential for a lot less business in the near term."

These kinds of cuts are usually viewed as positive by analysts, because they indicate management is willing to keep an eye on costs and act to control them. But there's a downside, too.

"They represent an incremental sign that management is forecasting a more challenging environment," Banc of America's Austrian wrote.

For a while, Siebel's customer relationship software was seen as somewhat immune to slower tech spending. But as the company's bullishness has been reined in, it's become clear that that's not the case.