Siebel Systems Warns

The company will log a $75 million restructuring charge.
Author:
Publish date:

Updated from July 7

Siebel Systems

(SEBL)

said its second quarter would consist of revenue below analysts' expectations and a $75 million pretax restructuring charge.

In early Friday trading, the stock fell 2.2% to $8.60.

The business software maker said after the bell Thursday that it expects revenue for the quarter ended June 30 to be about $312 million to $314 million -- the latest Thomson First Call analyst consensus estimate was $319.2 million.

Siebel anticipates expects license revenue will be about $78 million, while maintenance revenue is expected to be about $123 million.

In addition, the company said it adopted a restructuring plan on June 30 to "better align the Company's resources with its strategic business objectives." Siebel expects to incur about $75 million in pretax restructuring and other charges, $62 million of which is related to consolidating leased facilities and the sale and write-off of certain fixed assets.

Including the $75 million charge, Siebel expects a pretax loss for the second quarter of $60 million to $63 million. Excluding the charge, pretax income for the second quarter of 2005 is expected to be about $12 million to $15 million.

Siebel also expects to incur additional restructuring charges in the third quarter of about $10 million to $15 million, primarily related to further consolidation of leased facilities.

"Siebel's preliminary second-quarter results show encouraging signs of progress but also underscore clear areas for improvement," said George T. Shaheen, Siebel's CEO, in a statement.

"Although we achieved sequential growth in all revenue categories, increased Siebel CRM OnDemand total contract value by over 90% sequentially and made progress against our cost savings initiatives, we underperformed against our license revenue and profitability goals," he added. "While we had sufficient license revenue pipeline to meet or exceed management guidance, some business in our pipeline, particularly in the public sector, where sales cycles can be more challenging to manage, were delayed in the last few days of the quarter and did not close."