Tech Industry

Siebel optimistic about turnaround strategy

Makeover includes plans to shave costs, restructure Siebel's sales organization and make some strategic acquisitions.

Responding to growing investor concern over its prospects, Siebel Systems executives are trying to assure analysts that a major turnaround is in the works.

At a meeting in New York on Thursday, Siebel Chief Executive George Shaheen said a bright future for the company lies ahead, and that getting there is a matter of becoming leaner, better organized and more focused on big market opportunities.

"We're going to position this company for growth," Shaheen said. "We're going to return to our roots of growth and profitability."

Siebel delivered the sunny outlook against a dreary backdrop. Investors have grown sour on the company as profits and sales have declined in recent years. Rumors are swirling that the company is for sale, which has buoyed its stock price during the past few days.

In addition, analysts are critical of Shaheen's ability to help Siebel regain its footing. He became CEO last month after Siebel ousted Mike Lawrie from the post following an earnings miss.

Siebel's detractors say the company's problems run deeper than a matter of organization and resolve and that intense competition from SAP, Oracle and has simply overwhelmed the company.

Shaheen--a Siebel board member and longtime ally of Siebel Chairman Tom Siebel--attempted to counter that view Thursday by highlighting the company's strengths and opportunities. He also promised to do a better job of running the company, particularly the sales group.

"Frankly, we get in our own way," Shaheen said. "We're going to be more aggressive and more nimble."

The corporate makeover includes plans to shave costs, restructure Siebel's sales organization, make some strategic acquisitions and aggressively exploit new market opportunities, he said.

Shaheen remained vague, however, about what type of acquisitions the company might make. In terms of cutting costs and restructuring, executives said they're examining sales, marketing and development groups for opportunities to "re-size" operations but did not go into detail about staff cuts. The company said it was targeting cost savings of around $25 million per quarter this year in areas like sales and research and development to help achieve margins of 15 percent by year-end.

Executives also discussed plans for a new product, code-named Project Nexus, which they expect will make Siebel's software more customizable and interoperable. Project Nexus will be compatible with both Java and Microsoft development environments, the company said. Customers will be able to use the new tools to build their own Siebel-compatible programs such as applications for billing, executives said.

Siebel expects strong demand for Project Nexus. Business reporting programs and subscription software are other promising markets on which the company is concentrating, executives said.

Reuters contributed to this report.