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Siebel turns to layoffs as profits dive

Siebel Systems says it will trim 250 jobs by the end of June, after a dismal first quarter in which profits plunged 93 percent and revenue fell by a third.

Siebel Systems said it will trim 250 jobs by the end of June, following a dismal first quarter in which profits plunged 93 percent and revenue fell by a third.

The San Mateo, Calif.-based software company, which employs 5,850, said on a conference call Wednesday that the cuts are part of an effort to reduce costs and boost profits as Siebel struggles with weak global demand for business software. Siebel executives also said they expect revenue and earnings to improve only slightly in the current quarter, which ends June 30.The company provided no further financial guidance.

Although Siebel makes a practice of firing 5 percent of its staff every six months to eliminate weak performers and then hires replacements, this time it doesn't plan to fill the empty spots, the executives said.

Siebel, once the star of the booming customer relationship management software market, is not alone in thinning its ranks amid a two-year business software slump. PeopleSoft, a competitor, said Tuesday that it plans to lay off 200 of its more than 8,000 employees after a similarly tough quarter. Both companies, along with a number of competitors, missed financial targets for the quarter, ended March 31.

The company, which began handing out pink slips on Monday, has trimmed staff back twice before, eliminating about 1,100 jobs in July and nearly 750 in April of 2001.

Patrick Walravens, an analyst at JMP Securities, said further staff cuts do not bode well for the company.

"Every time they downsize, they reduce their selling capacity," said Walravens. "That makes it less likely they will ever return to (their) former grand stature."

CEO Tom Siebel said he expects the company will make a comeback as soon as the economy improves, but until then he's focused on running a cash-positive, profitable business.