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Falling sales weigh on Siebel

The software maker reports lower second-quarter profit and revenue, with slipping sales of software licenses playing a part.

Software maker Siebel Systems reported on Tuesday lower second-quarter profits and revenue, with sales of software licenses slipping by more than a third.

Siebel, which makes business applications for streamlining call centers, sales and marketing, said revenue fell 18 percent to $333.3 million in the second quarter ended June 30. It reported earnings of 2 cents per share, or $9.8 million in net income, down from 6 cents per share or $29.8 million in net income in the same quarter a year ago--a drop of 67 percent.

Revenue from license fees, the core of most software businesses, was $109.9 million, down from $170.1 million in the year-ago quarter. Sales of licenses fell 35 percent.

"We have seen a long, dry spell in the business applications market," Siebel Chief Executive Tom Siebel said during an analyst conference call Tuesday. "It's unlikely that it will last forever."

Siebel's sales have been dropping during the past two years, as have sales of a number of its competitors, as customers cut IT spending in the face of a stagnant global economy.

Confusion in the market caused by Oracle's contentious bid for PeopleSoft, both Siebel competitors, also had a "negative effect" on Siebel's quarter, causing some customers to postpone buying decisions, CEO Siebel said. "It wasn't good for anyone," he said.

The company said it would cut 490 jobs and move some business operations offshore to boost its bottom line. It has already eliminated 350 jobs. The remaining workers will be laid off in the next few weeks, leaving the company with about 5,000 employees by October, Siebel said.

The software maker said it expects to save nearly $40 million a quarter by the second half of next year as a result of restructuring. In its movement of operations offshore, Siebel will focus mainly on quality assurance and testing activities, it added.

Siebel warned investors earlier this month that it expected to miss Wall Street expectations for the quarter. In April, the San Mateo, Calif., company forecast a profit of 2 cents to 4 cents a share on sales of $340 million to $360 million.