In related news, rival i2 Technologies on Wednesday met analysts' estimates in its first quarter.
First Call consensus expected Siebel to earn 14 cents a share on sales of $572.6 million.
Shares for the developer of customer relationship management software closed up $1.04 to $33.92 ahead of the earnings report before moving up to $36.81 in after-hours trading.
The $588.7 million in sales marks an 84 percent improvement from the year-ago quarter when it earned $35.3 million, or 7 cents a share, on sales of $319.7 million.
Contrary to speculation swirling ahead of the earnings report, Siebel did not announce massive layoffs, but it reorganized its sales force mid-quarter, implemented some spending reductions and cut 10 percent of its staff through its internal performance evaluation program.
Rumors winding through Wall Street ahead of the earnings report suggested the company would reduce its head count by as much as 20 percent.
The company did cut executive salaries by 20 percent across the board and implemented a complete freeze on executive bonuses.
At this time last year, the company eliminated 5 percent of its staff, those employees who received the least favorable performance reviews from their supervisors. This time around, they lopped off 10 percent of the lowest performers.
"Now we have the opportunity to talk about the facts," said Chief Executive Officer Thomas Siebel during a conference call with analysts. "I think we had really spectacular performance under the most adverse of economic conditions."
By cutting back on travel and some advertising and market expenditures, Siebel was able to beat the Street estimate by a penny a share this quarter, while the vast majority of technology companies reported sales and earnings well below analysts' estimates.
More impressively, 52 percent of the company's sales this quarter came from new customers, the best ratio in five quarters.
"I don't understand why CEOs continue to say they have poor visibility," Siebel said. "We might not like what we see but know what we're looking at. We're in a recession, and I think the Fed basically admitted as much this morning."
Ahead of the earnings report, Dain Rauscher Wessels analyst Cameron Steele predicted the company would fall well short of the Street's view with earnings of only 11 cents a share on sales of $473 million.
"They were at the conferences and saying a lot of bullish things in January," Steele said Tuesday. "But things changed in a hurry. The last two months of the quarter have been rough for everyone."
Craig Wood, an analyst at Merrill Lynch, said the doom-and-gloom predictions for the first quarter were overplayed.
"We're not too concerned (about a possible earnings miss)," Wood said ahead of the earnings report. "We expect sales and earnings to, more or less, be in line with current estimates."
Wood, who maintains a "neutral" rating on the stock, pegged it for a profit of 14 cents a share on sales of $570 million.
He added that while the stock has taken a beating in recent months, it's still trading at roughly 54 times 2001 earnings, a valuation that might be too pricey for investors still reeling from the dramatic sell-off in technology issues in the past year.
"Right now, we're not sure there are any catalysts for this stock in the near-term," Wood said.
In the quarter, license sales jumped 71 percent from the year-ago quarter to $335.1 million, while sales from maintenance, consulting and other services rocketed up 104 percent to $253.6 million.
Next quarter, fiscal year
While Siebel acknowledged the second quarter and rest of fiscal 2001 will be "tough," he said the company has an "exceptionally robust pipeline" of licensing deals.
"We can tell you where each of these 3,400 deals are in the cycle," Siebel said. "We expect (operating) margins to fall between 18 percent and 19 percent, but licensing sales for the second quarter could come in anywhere between $280 million and $350 million."
Siebel did concede that total sales "will grow at a slower rate than we anticipated earlier this year," but did not provide any specific figures.
Following the company's impressive fourth-quarter results, CEO Siebel shocked Wall Street by raising sales and earnings targets for fiscal 2001 despite undeniable signs of a macroeconomic maelstrom swirling around the industry.
At the time, Siebel told analysts the company was comfortable with fiscal 2001 estimates calling for sales of $2.6 billion, up from $1.8 billion in fiscal 2000, and earnings of 67 cents a share, up from 24 cents a share in fiscal 2000.
Moreover, he said the company would likely surpass analysts' sales estimates of $557 million in the first quarter.
Siebel lived up to those bold projections despite a deluge of profit warnings in the industry, most notably from archrival Oracle.
Separately, Siebel announced plans to discontinue as of as of June 30 its Web-based automation service for companies' sales forces.
"At current price points, we do not feel that we are able to deliver to you adequate levels of service and end-user training profitably," wrote Sales.com General Manager Wister Walcott in an e-mail distributed to customers and also sent to Reuters. "This cessation in service applies to all current and new customers.?
Last quarter, Siebel easily topped analysts' estimates when it raked in $106 million, or 20 cents a share, on sales of $581.6 million.
The stock rallied up to a 52-week high of $119.88 in November before crashing to a low of $22.95 earlier this month.
Seventeen of the 21 analysts covering the stock maintain either a "buy" or "strong buy" recommendation.
Rival i2 Technologies
i2 Technologies met analysts' estimates in its first quarter Wednesday, earning $7.5 million, or 2 cents a share, on sales of $356 million.
After the company warned it would miss analysts' estimates earlier in the quarter, analysts lowered their consensus estimate to a profit of 2 cents a share on sales of $186 million.
i2 Technologies shares moved up $1.93 to $19.97 ahead of the earnings report before falling to $18.39 in after-hours trading.
In the year-ago quarter, i2 posted a profit of $13 million, or 4 cents a share, on sales of $186 million.
"i2 performed well this quarter despite the beginning of a down cycle in the economy," said Chief Executive Officer Sanjiv Sidhu in a prepared release. "In this slowing economy, where companies are more focused on bottom-line results and profitability, our customers are realizing the value and efficiencies i2 solutions can create for themselves and their trading partners."
Company executives told analysts to expect sales for the second quarter to fall from the $356 million it recorded in the first quarter, though it did not provide any specific numbers in its release.
For the fiscal year, it expects total sales to grow between 15 percent and 20 percent.
i2 makes supply-chain management software, which helps manufacturers plan and schedule production and related operations such as raw materials procurement and product delivery.
Its shares peaked at $99.44 in September before plunging to a 52-week low of $12.56 earlier this month.
Thirty-one of the 38 analysts tracking the stock rate it either a "buy" or "strong buy."