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Siebel Stalls, Restarts

For all the legitimate beefs we've had here with executive pay, it's worth noting that when you're the guy at the top, and the company starts going south, all fingers start pointing your way. Fast. That's a pretty tough gig to manage. Turns out it wasn't manageable for Mike Lawrie, now ex-CEO of Siebel (Nasdaq: SEBL  ) . He stepped down yesterday after pressure from the board. Lawrie had the top job for only 11 months.

But let's be honest: Lawrie was canned, plain and simple. The tone of the conference call unveiling former Accenture (NYSE: ACN  ) and Webvan CEO George Shaheen as the new chief made that clear. Maybe Lawrie deserved it. Founder Tom Siebel seemed to think so, commenting yesterday that the change was about performance. And that makes some sense: Barely a week ago the company announced its first-quarter results would be well below expectations.

I'd be more optimistic about the change if I knew what the strategy was. But Shaheen wasn't talking, and, frankly, I don't blame him. Siebel is a mess. Though boasting decent products and a good market position, the company is under massive competitive pressure. In large-scale packaged business software, there are the twin kingpins Oracle (Nasdaq: ORCL  ) and SAP (NYSE: SAP  ) to worry about. And then, below, in on-demand business software made available over the Web, there's (NYSE: CRM  ) . SAP and Salesforce have grown sales handily over the past three years, Oracle was flat until last year, but Siebel has seen three straight years of declining revenue. Not good.

Shaheen knows all this, of course. He's been around since the good old days of 1995. Back then, Siebel made a habit of doubling its sales each year. No wonder he waxed optimistic on yesterday's call. Indeed, Shaheen claimed that Siebel could potentially tap a market worth $100 billion annually. I have no way of corroborating that number, but it sure seems aggressive considering that, late last year, industry analysts said the customer relationship management (CRM) software market -- Siebel's home turf -- could grow to between $11 billion and $14 billion by 2008. Maybe Shaheen is thinking he can make Siebel into the viable third alternative between SAP and Oracle, a role that Microsoft (Nasdaq: MSFT  ) has thus far refused?

I can't say for sure. Heck, no one can. But I'll admit I'm rooting for Siebel. I know people there, I like the business model, and I believe businesses will always need software. I only wish the numbers backed up the stock. Even at today's quote, the shares appear overpriced by nearly 40% -- using the discounted cash flow calculator available to subscribers of Motley Fool Inside Value. Siebel's $2.2 billion in cash on hand certainly reduces risks for would-be investors here. But the stock price is likely to remain at the current level until growth is once again assured. Don't hold your breath waiting for that day.

For related Foolishness:

  • Ironically, it was almost a year ago that Siebel made a small step forward.
  • It wasn't a month later that founder Tom Siebel decided to step down as CEO.
  • Too bad the company just can't keep a secret.

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Fool contributor Tim Beyers wonders if Larry Ellison has his eye on Siebel, too. Hmmmmm. What's your take? Share your thoughts with other Fools at the Siebel Systems discussion board. Tim owns shares of Oracle. You can find out what else is in his portfolio by checking Tim's Fool profile, which is here. The Motley Fool has a disclosure policy.

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