Results from CRM big hitters disappoint, but SAP leaves room for hope

Siebel and PeopleSoft have missed their targets for the current fiscal quarter, but SAP is looking good, bringing some much needed cheer to a continuing tough market..

Siebel said second-quarter sales fell to $301 million from $333.3 million a year earlier. The company had predicted revenue of $340 million to $365 million. Net income for the quarter to June 30 was $2 million to $4 million, down from $9.77 million in the same period a year earlier. Licence revenue will be about $S95 million for the quarter, compared with a forecast of $120 million to $140 million made in April.

"There was a significant shift to a larger number of small deals that had longer sales cycles and required more levels of approval on the part of our customers,” said Siebel's chief executive Michael Lawrie. "Our customers are continuing to watch their capital expenditures very, very carefully. We firmly believe the demand is there. There is no question – none – that there is a growing opportunity."

Meanwhile PeopleSoft released its preliminary second-quarter 2004 results, still blaming Oracle’s hostile bid for the company for its decline. The company expects to report revenue of $655 million to $665 million for the quarter, including licence revenue of $129 million to $133 million.

In stark contrast, SAP says that it expects its second-quarter revenue to be up 9 per cent and its software revenue to grow 15 per cent in the same period. SAP said it expected its second-quarter revenue will total approximately 1.78 billion euros ($2.2 billion) and its operating income will be between 380 and 390 million euros ($471.3 million to $483.7 million).

Despite the spate of earnings warnings, Forrester Research remains convinced that overall spending on business software will grow by 10 per cent in 2004. It expects that the rate of decline in software prices will slow. Software buyers expect on average discounts of 31 per cent off list price during 2004, however 35 per cent of those surveyed expect to pay more per unit of software next year.

Forrester also reckons funding for new IT investments is on the rise. The percentage of IT dollars allocated to new investments increased to 30 per cent in 2004 from 21 per cent this past year. Of these dollars, 30 per cent still aren't earmarked for a project.