New Siebel chief: 'We can do better'

Siebel's newly crowned leader acknowledges his company must improve but rules out a strategy of cost-cutting.

BARCELONA, Spain--Siebel's newly appointed CEO is defending his company amid speculation that it is an acquisition target, while acknowledging it has made some costly mistakes.

Chief Executive George Shaheen, speaking here on Monday at the software maker's annual user conference, remained defiant in the face of hard questioning from journalists about the fate of the company that he took over last week.

George Shaheen
George Shaheen
CEO, Siebel

"We intend to be here next year and for years beyond that," he said in his first press conference as Siebel's chief executive. "This is a very strong company, and we will be here."

Shaheen said that concerns over the company's financial health, following disappointing first-quarter results, are unjustified given that the company has cash reserves of $2.2 billion.

"We have financial strength. We harvest around $200 million a year in cash. This is not a company that is standing on its laurels. This is not a company that is standing pat on previous successes and its customer base," Shaheen said.

However, Shaheen acknowledged that the company, which specializes in customer relationship management, or CRM, software, had made mistakes that need to be addressed.

"I think what our customers and Wall Street are saying to us is that we can do better. Frankly I think we can do better. We can do a better job of reacting to our customers' needs," he said.

On the specific issue of whether Siebel would consider a potential takeover offer by rival Oracle, Shaheen said that as chief executive of a publicly traded company he has limited control over acquisition attempts but that ultimately his strategy is to look after investors. "I have a responsibility to do the best for the shareholders," he said.

The former chief executive, Mike Lawrie, left the company abruptly last week--days before the user conference was due to begin. So unexpected was this announcement that Siebel's official event schedule had Lawrie down to deliver the main keynote speech that kicks off the weeklong gathering.

Shaheen instead used the keynote to announce that Siebel was putting renewed efforts into serving its customers.

Part of Lawrie's strategy, which he had less than a year to implement before his tenure was cut short, involved cutting nonessential costs such as marketing and advertising. When asked about his plans to reduce outgoings, Shaheen said he didn't believe that drastically reducing costs was the way forward.

"I do not expect to go into this in slashing mode," he said. "I have never seen a company deliver success through slashing costs."

Industry analysts have credited hosted CRM providers, such as Salesforce.com, as the architects of Siebel's current struggles.

Shaheen acknowledged that his company had failed to see the threat that Salesforce.com and others posed but was working hard to compete more effectively in the future.

"I think we took our eye off the ball. We let a competitor get entrenched in our space while we were focused on our existing business. They have our attention now, but shame on us for not getting there earlier," he said.

Bruce Cleveland, a senior vice president, asserted that his company could make up ground and even overtake Salesforce.com's success by 2007, based on current sales forecasts. "If they continue on their run-rate and we continue on our run-rate, then we should overcome them in two years time," he said.

Industry analyst AMR Research recently hinted that Tom Siebel, company founder and board chairman, was instrumental in the decision to remove Lawrie and is still involved in the day-to-day direction of the company. Commenting on the likely future for Sheehan, AMR analyst Laura Preslan, said, "Tom Siebel and the board must give his plan time to take effect."

Questioned on Tom Siebel's continued involvement in the running of the company, Shaheen said that the founder had handed over the reins completely.

"He is not involved in the day-to-day running of the company," Shaheen said. "He said to me, 'Let's get through this. This is your company.' I have taken that literally."

Andrew Donoghue of ZDNet UK reported from Barcelona. Donoghue traveled to Barcelona as a guest of Siebel.

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