Although ebusiness applications software company, Siebel Systems exceeded consensus expectations when it posted an 84 per cent increase in revenues, the company laid off 800 people, or 10 per cent, of its workforce across multiple divisions.
The cutbacks were disclosed after Siebel reported net income of $76.9m, or 15 cents a share, a penny more than Wall Street had expected. That was up 118 per cent from the same quarter a year ago.
Brent Thill, an analyst at Credit Suisse First Boston, said: "They definitely had the best showing of any of the software companies I follow."
Yet during a conference call with analysts and reporters, chairman and chief executive Tom Siebel said that although the company met investor expectations during the first quarter, its business began to drop off dramatically in February.
"This is an extremely soft market," Siebel said. "I believe that what we are looking at is a global recession."
He predicted America's economic flu would soon spread to Europe, where Siebel Systems does about 26 per cent of its business.
Siebel described the 10 per cent layoff of the workforce as consistent with the company practice of handing pink slips every six months to five per cent of employees who had been identified as the poorest performers.
"We took the bottom 10 per cent to get our human capital structure in line with current growth," he said. He did not comment further on where the layoffs would occur.
Furthermore, the company will reduce its travel budgets and cut the salaries of its senior vice presidents by 20 per cent. Executive bonuses are also being frozen, and the company is curtailing its recruiting and an expansion of its sales facilities.
The following day Siebel said it plans to shut down its web-based sales force automation service as of 30 June. That move comes after a failed bid to spin it off as a separate company.
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