SAN FRANCISCO – Siebel Systems Inc. (SEBL) ousted Chief Executive Michael Lawrie on Wednesday, days after the business software maker warned quarterly sales would be the lowest in five years and as a group of disgruntled shareholders was to meet to mull the company's future.
Siebel named George Shaheen (search), a Siebel board member for the past 10 years, as the new CEO. Shaheen left Anderson Consulting, where he was president, during the dotcom years to become CEO of now defunct online grocer Webvan Group Inc (search).
"The board determined that a change was necessary," said Tom Siebel, chairman of the board and company founder, in a conference call.
"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.
Shaheen said in the call that Siebel's costs would come under scrutiny and that calls by some shareholders for Siebel to better-use its $2.25 billion in cash were being examined.
"We take (those shareholder concerns) very seriously and we'll be addressing that ... there are many options the company will consider, including possible acquisitions," Shaheen said.
"We are in the envious position of having the financial strength to look at acquisitions and make stuff happen," Shaheen said, adding he would look at "quality" acquisitions.
Shaheen would not give a timeline for changes that could be made, but said he would provide more details when the company reports quarterly earnings on April 27.
Activist shareholder fund Providence Capital, which has scheduled a Wednesday afternoon meeting for shareholders together holding about one third of Siebel's shares, said Lawrie's departure sent a positive signal about the future.
"It's clear the board is willing to take decisive action. Mr. Shaheen is a well respected, seasoned executive ... and I think he's going to be focused on margin improvement," said Herbert Denton, president of Providence Capital, whose affiliate Providence Recovery Partners LP owns less than 1 percent of Siebel stock.
Providence Capital sent Siebel's board a letter on March 18 outlining issues it wanted addressed, including the use of Siebel's cash and possibly positioning the company to be sold in the future, but has not yet heard from the company.
JP Morgan analyst Adam Holt, in a research note, said there was speculation Lawrie's removal sets the stage for Siebel to be bought, but that he believed that was unlikely.
"Given that Lawrie's appointment was less than a year ago, the board would need to have had a rapid change of heart on the direction of (Siebel) to make a change for this reason," Holt said.
Siebel, which has been mentioned as a possible takeover target by Oracle Corp.(Nasdaq:ORCL - news), a week ago lowered the top-end of its first-quarter sales range by 13 percent to $300 million, the lowest level since 2000, from $345 million in late January.
San Mateo, California-based Siebel, the top maker of software that manages sales accounts, has been beset by a weak sales climate and increased pressure from rivals such as SAP AG and Salesforce.com (CRM). "First-quarter preliminary results were so disastrous, (Lawrie's) current strategy of building business is not working out." said EKN Inc. analyst Jim Yin. "A change in direction could indicate more drastic cutting or a sale of the company."
Lawrie was hired last May when the company founder and chairman stepped aside as CEO. Under Lawrie's watch, Siebel's performance has been unstable, with two quarters of shortfalls and one quarter of better-than-expected results.
Siebel shares were down 29 cents, or 3.2 percent, at $8.68 on the Nasdaq in afternoon trade in New York.
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