Swap shop inflates Siebel earnings

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An increasing tranche of Siebel Systems revenue of around 7 per cent is coming from swap deals, accounting for $76.4 million of turnover. That’s a sevenfold leap from the previous year’s ‘swap’ figure of $11.6 million or around one per cent of overall revenue.

Swaps are sales booked from deals in which Siebel sold software to a company around the same time it bought goods or services from the same company. Such transactions are legal but in the wake of the Enron accounting scandal and the increased dependence on dubious pro forma financial reporting by software firms, the role played by such swap arrangements is coming under increased scrutiny.

Siebel said it got about $38 million in software revenue from such transactions in the first quarter of 2001, but the full extent of its dependence on swap revenue emerged with the filing of the company’s 10K financial report with the Securities and Exchange Commission.

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