A plot twist

Talk about lousy timing. Right when Siebel Systems' PR machine was entrenched in a campaign to get the press to write about the company's improving performance under CEO Michael Lawrie, it had a cave-in when Lawrie was forced to explain first-quarter earnings results that were almost as lousy as the timing.

It began as a classic PR manoeuvre: convince the press to regurgitate the "Chapter 2" strategy Siebel introduced last October by using Lawrie's approaching one-year anniversary at the helm as the news hook. Then the quarterly-results bomb was dropped. At least the company's marketing guys could take heart that they hadn't used Roman numerals for the campaign. "Chapter II" looks way too much like "Chapter 11." The jokes would have been relentless.

Last week, instead of waxing poetic on his authorship of the new chapter, Lawrie, a 26-year IBM veteran who took the CEO reins from company founder Tom Siebel last May, had to account for his surprise that Siebel's first-quarter revenue was so low. The CRM vendor now expects the figure to be in the range of $US297 million to $300 million, down from analysts' projections of $337.5 million and the $329.3 million it generated in the first quarter of last year. Siebel is looking at software licence revenue of about $75 million for the quarter, compared with $126.8 million in last year's first quarter.

According to a Siebel statement, Lawrie blamed the shortfall on "a combination of poor execution on our part exacerbated by a challenging economic and IT environment." It turns out the company was counting on some contracts that didn't get wrapped up by April Fool's Day.

What's puzzling about all this isn't the poor execution. Hey, who among us is immune to that particular affliction? The real head-scratcher is how the whole thing could have caught Siebel's top brass so off-guard.

It's hard to imagine that this new PR initiative, which positions Lawrie as a saviour who's leading the company back to prosperity, would have been allowed to proceed if Siebel's top executives had the slightest idea that the business was faring as poorly as it was. You just don't put your CEO under the spotlight unless you're as certain as you can be that nothing's going to happen that will embarrass him and force him to tap-dance around hard questions.

There's no way for us to know if Lawrie really did try to explain the company's surprising shortfall by referring to problems that were exacerbated by a challenging economic environment. The comments attributed to Lawrie were very likely composed by the PR team (that's just how these things work), and Lawrie may or may not have actually signed off on them (sometimes a top lieutenant does that). If he didn't, then he probably learnt a lesson: that he needs to pay a lot more attention to the words being put in his mouth. If he did . . . well, that's bad.

We're talking about explaining something that was unexpected. To cite existing economic conditions as a reason for a surprising turn of events is nonsensical. It's the kind of goofy statement that slips through when you're fumbling for answers.

In any case, it's consistent with the premise that the company was out of touch with its own performance -- something that won't be lost on Siebel's users. Let's hope it does better in Chapter 3.

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