Siebel Ousts Lawrie

Siebel Systems continued its string of disappointing news by ousting CEO Michael Lawrie on Wednesday. Lawrie will be replaced by former Andersen Consulting president George Shaheen, who left Andersen to run the ill-fated online grocer Webvan during the dot-com boom. Shaheen has been a Siebel board member for the past 10 years.

The announcement comes on the heels of Siebel's warning to Wall Street that its quarterly sales would be the lowest in five years, and it continues the run of bad news the company has had in recent years. Siebel has struggled recently to keep pace with its rivals, in no small part because of its widely publicized rejection of the move from software to services that many of its competitors embraced. But after seeing the success of Salesforce.com and the services divisions of companies such as IBM, Siebel finally began to recognize the value of delivering some of its software as services last year.

The warning to analysts came last week, when the company announced that it was lowering the high end of its first-quarter sales range by 13 percent to $300 million from $345 million in late January. Under Lawrie's leadership, the company had two quarters of shortfalls and one quarter of generally positive results.

The question now is whether the company waited too long to adapt to the changing software marketplace. In a conference call on Wednesday, Siebel chairman Tom Siebel explained the timing of the move.

"The board determined that a change was necessary," he says. "Results over the last four quarters, in general, did not meet investor expectations, and they did not meet our internal expectations. The board did a very thorough review," he added.

Ironically, Lawrie originally got the CEO job largely because of his services background. He joined Siebel last May from IBM, where he led Big Blue's global operations. At the time, Siebel was (and is) a key "on-demand" applications partner for IBM, inking a deal in 2003 that enabled IBM to provide the data-center hosting for Siebel's CRM applications.

The service, dubbed Siebel CRM On Demand, was Siebel's initial foray into delivering its software as a service and was intended to complement the traditional packaged applications offering from Siebel.

Also during Wednesday's conference call, Shaheen said Siebel would explore how to better use its $2.25 billion in cash, something shareholders have demanded recently. "We take their concerns very seriously, and we'll be addressing that," he says, adding that the company will consider "many options" going forward, including possible acquisitions.

Financial analysts are split on whether this series of news makes Siebel itself an acquisition target. Some think Oracle has the company in its crosshairs, but others are convinced the company will continue to try and improve its position on its own.

One thing they all agree on is how poor Siebel's recent financial news is.

"First-quarter preliminary results were so disastrous, (Lawrie's) current strategy of building business is not working out," says EKN analyst Jim Yin. "A change in direction could indicate more drastic cutting, or a sale of the company."