Siebel Comments Devastate Software Stocks

Software shares tumbled Wednesday after the CEO of

Siebel Systems

(SEBL)

said the first quarter may have been the worst in the industry's history.

Tom Siebel's remarks, reported by

Bloomberg

, dragged shares of the San Mateo, Calif.-based company down $2.73, or 9.9%, to $24.83 in recent trading on heavy volumes. Shares of

Oracle

(ORCL) - Get Report

fell $1.03, or 8.6%, to $10.95 -- its lowest point since Sept. 21.

Manugistics

(MANU) - Get Report

fell $1.98, or 10.8%, to $16.40.

SeeBeyond

(SBYN)

, which announced an expanded partnership with Siebel Wednesday, fell 61 cents, or 8.7%, to $6.39.

Tom Siebel, whose comments came during a conference in Barcelona, said the tech industry hasn't picked up yet and the contraction is not over, according to

Bloomberg

. The company declined to confirm or elaborate on Siebel's comments.

Siebel, which makes customer relationship management software, has avoided joining competitors PeopleSoft and Oracle in preannouncing disappointing earnings for the previous quarter. Siebel said his company is sticking by its forecast of 15% growth in software sales this year.

But SoundView analyst Jim Mendelson reduced his revenue and earnings estimates for Siebel for 2002 and 2003, citing a recent survey showing that a healthy demand for CRM applications will not translate into tangible spending until the fourth quarter of this year. "

The survey did underscore that spending would be very heavily back-end loaded at the end of the year," Mendelson said.

Mendelson, who has a hold rating on Siebel, trimmed 2002 earnings per share to 55 cents from his prior estimate of 62 cents and 2003 earnings to 72 cents from 75 cents. He reduced 2002 revenue to $2.08 billion from $2.18 billion and 2003 revenue to $2.52 billion from $2.65 billion. Mendelson's firm hasn't done any banking with Siebel.

The consensus estimate is for Siebel to earn 58 cents a share on $2.16 billion in revenue in 2002 and 75 cents a share on $2.61 billion in revenue in 2003, according to Thomson Financial/First Call.

Mendelson said he does not believe Siebel is immune to the tight IT spending that has led companies such as PeopleSoft and more recently

IBM

(IBM) - Get Report

to preannounce disappointing numbers. But Mendelson believes Siebel entered the first quarter with enough backlog and momentum to make first-quarter numbers.

Wall Street is expecting the company to report $483 million in first-quarter revenue -- an 18% decline from the same period a year ago -- and earnings of 12 cents a share -- a 20% decline from a year ago.