Siebel Forces Out CEO of 11 Months in Wake of Disappointing Quarter

Siebel Systems Inc. ousted J. Michael Lawrie as its chief executive on Wednesday, coming off a disappointing quarter that raised questions about his ability to turn around the business software maker.

Lawrie resigned at the request of Siebel Systems’ board, which concluded he hadn’t made adequate progress since becoming chief executive last May, said Tom Siebel, chairman and founder of the San Mateo, Calif.-based company.

“This is all about improved and acceptable performance,” Siebel told analysts in a conference call. “That’s the only issue.”

Longtime Siebel board member George Shaheen, best-known in Silicon Valley for overseeing the collapse of online grocer Webvan Group Inc. in 2001, is replacing the 51-year-old Lawrie.

Shaheen, 60, ran Andersen Consulting -- now known as Accenture -- before becoming one of the first CEOs to leave a well-established company to run an Internet business during the dot-com mania of the late 1990s.

“It would be more difficult to imagine someone more qualified than George to lead Siebel Systems to its next level of success,” Tom Siebel told analysts.

The compliment echoed Siebel’s description of Lawrie when he was introduced as CEO last year. “Mike Lawrie is the single best choice to lead and take Siebel Systems to the next level,” Tom Siebel said at the time.

Lawrie turned around various divisions of IBM Corp. before joining Siebel last May in an effort to pull the company out of its financial funk. Once one of the nation’s fastest-growing companies, Siebel fell on hard times in 2001 as corporations cutailed technology spending.

Siebel’s headaches have been compounded by tougher competition from much larger software makers such as Redwood City, Calif.-based Oracle Corp. and Germany-based SAP, as well as more-nimble upstarts.

While grappling with the challenges, Siebel’s annual revenue has shriveled from $2.1 billion in 2001 to $1.3 billion last year. To offset the sales losses, Siebel has jettisoned 3,800 jobs in the last four years, winnowing its workforce to 5,000 employees.

Shaheen indicated more job cuts could be coming but didn’t provide details. “I start in a very strong position,” he said. “It’s not like we have fallen off the charts. I just think we can do better.”

Shaheen, a Siebel director for the last decade, didn’t elaborate on his vision for the company, something that appeared to frustrate investors.

Siebel’s shares fell 29 cents to $8.68 in Nasdaq trading.

The company’s sagging stock price threatens to make Siebel vulnerable to a takeover, according to industry analysts. Oracle listed Siebel among its top takeover candidates in a shopping list that became public during a trial last summer.

Siebel’s outlook seemed to be brightening after the company ended last year with a strong quarter. But investor optimism dimmed last week when the company announced its first quarter would fall well below previous expectations.

The shortfall reflected continuing weak demand for Siebel’s products, which primarily consist of software designed to help other companies understand their customers’ needs.

Siebel said first-quarter sales of new software licenses were $75 million, the weakest performance in nearly seven years.

Lawrie cited customers’ reluctance to spend on technology.