Siebel to axe 1,200 jobs after profits fall short

Customer service software maker Siebel Systems has reported second-quarter earnings that failed to meet Wall Street expectations...

Customer service software maker Siebel Systems has reported second-quarter earnings that failed to meet Wall Street expectations and announced that it will cut 1,200 staff.

For the second quarter ended 30 June, Siebel reported revenue of $405.6m (£259.3m), down about 28% from the second quarter a year ago when the company reported revenue of $560.2m (£358.2m), Siebel said.

Net income fell by about 61% to $29.8m, or $0.06 per share, compared with $76.6m, or $0.15 per share in the same quarter a year ago.

Analysts had expected Siebel to report a profit of $0.09 per share on revenue of $437.1m, according to a survey of analysts polled by financial research company Thomson Financial/First Call.

Chief financial officer Ken Goldman announced a reduction of nearly 1,200 jobs, reducing its work force to about 6,000 employees. Siebel will reinstate bonus programs and merit increases for its remaining employees, he said.

Additionally, the company will close some excess facilities and consolidate each of its IT, marketing and sales divisions, he said. Those reorganisation efforts, combined with the layoffs, will bring a charge to the company's third-quarter earnings of between $200m and $250m, the company said.

"It is difficult to express how weak [the market] is. In Europe, in Asia and in the United States we can see that technology vendors are not really making any significant sales [and] companies are not spending," Tom Siebel, the company's chief executive, said. "There is just not a lot of business being done in the information technology market. There does not appear to be any improvement in the medium-term."

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