April 8, 2005

Is Siebel's report a red flag showing overall software sales slowdown?

Author: Melanie Hollands

Are sales in the software business slowing? The Siebel Systems warning
on Tuesday, April 5 was not good news and could indicate the business is softening.
Sluggish software licensing sales at Siebel led to
Melanie Hollands

revenues for the
quarter of around $300 million, $7 million below prior expectations.

I don't think the software business is any stronger today than it was
last year, and there's still a real possibility that any company is
going to miss in any given quarter. Software is just like any other
capital good: a strong cycle is often followed by a weak one. Companies
bought too much software/hardware in the 1990s. During the recession
they realized they didn't have to buy anything. CFOs, meanwhile, have
centralized and elevated software spending decisions -- in some cases as
high as the CEO with board of directors' approval. So, it's harder to
sell any kind of software to senior management than it was to CIOs.

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