Siebel goes out with a bang with fourth quarter results

After years of poor results, Siebel's last set of numbers as an independent company came in ahead of expectations with fourth quarter revenue up 20 per cent.

Revenue rose to $469 million from $392 million a year ago. The company had expected to post $340 million to $360 million. Licence revenue nearly doubled from last year to $214 million, beating the company's guidance of $110 million to $130 million.

Analysts were not convinced that the improvement would impact significantly on Oracle's performance once the acquisition closes this month. "We believe the acquisition will close as expected, but we are not anticipating Oracle‘s guidance to reflect the exceptionally strong Siebel results going forward," Lazard Capital Markets analyst John Rizzuto wrote in a research note.

Instead Rizzuto expects Oracle's application business to remain sluggish. "We believe the strength in the quarter, while notable, may have been affected by the accelerated closing of deals ahead of the Oracle acquisition; which will likely have an adverse affect on the company's pipeline," he added.

"We believe that much work needs to be completed for Oracle to fully integrate Siebel's technology into its application stack," Rizzuto wrote. "We do not believe that the acquired Siebel technology will fully utilize Oracle's Fusion platform until late 2007 at the earliest."

Meanwhile more details have emerged of how Oracle is paying for Siebel with the news that it sold $5.75 billion in debt to fund the takeover. The sale is the largest company debt offering since PG&E Corp.'s Pacific Gas & Electric unit sold $6.7 billion in March 2004.

The sale will increase Oracle's long-term debt from $150 million as of November 2005. The company's short-term borrowings increased to $7.21 billion as of February 2005, after Oracle arranged a $9.5 billion loan for the PeopleSoft takeover. The company's short-term borrowings were $907 million as of November.

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