Siebel Systems Reports Revenue and Earnings for the Quarter Ended June 30, 2001; Q2 2001 Revenues Increase 38 Percent over Q2 2000.

Business/Technology Editors

SAN MATEO, Calif.--(BUSINESS WIRE)--July 18, 2001

Siebel Systems, Inc. (Nasdaq: SEBL), the world's leading provider of eBusiness applications software, today announced results for the quarter ended June 30, 2001.

Revenues for the second quarter of 2001 were $549.7 million, compared to $397.5 million for the same period in 2000, an increase of 38 percent. Net income was $76.6 million, or $0.15 per share, compared with pro-forma net income of $49.1 million, or $0.10 per share, for the second quarter of 2000, representing increases of 56 percent and 50 percent, respectively.

Revenues from license fees for the second quarter of 2001 were $286.8 million, compared to $245.3 million for the same period in 2000, an increase of 17 percent. Revenues from maintenance, consulting, and other services were $262.9 million, compared to $152.2 million for the same period in 2000, an increase of 73 percent.

The Company's cash, cash equivalents, and short-term investments were $1.5 billion at June 30, 2001, an increase of $153 million from March 31, 2001.

Pro-forma net income for the second quarter of 2000 excludes accretion of mandatorily redeemable preferred stock of OpenSite Technologies, Inc. (acquired by Siebel Systems in May 2000). Net income and net income per share for the second quarter of 2000, including accretion of mandatorily redeemable preferred stock, was $17.9 million and $0.04, respectively.

Quarterly Highlights

Siebel Systems continued to lead the rapidly growing global market for eBusiness applications software, a technology that organizations increasingly view as essential to their ability to acquire and retain loyal customers. The following highlights were announced or occurred since Siebel Systems' last earnings statement:

New Customer Engagements

Ingersoll-Rand Company, a multinational industrial manufacturer and leading solutions provider for the security and safety, climate control, industrial productivity, and infrastructure markets, selected Siebel eBusiness Applications to manage its sales, service, call center, and dealer sales operations. To drive long-term customer satisfaction, Ingersoll-Rand recognized that it needed a single, comprehensive system to interact with its customers and dealers globally. Service engineers, customer service agents, and sales professionals will be able to consistently share up-to-the-minute customer and product information, optimizing Ingersoll-Rand's responsiveness to dealers and end customers.

Malaysia National Insurance Berhad (MNI), Malaysia's largest provider of insurance products and services, is deploying Siebel eInsurance Applications throughout the company to drive new market development opportunities and improve service. Siebel eInsurance Applications will allow MNI to do business with customers through multiple channels, thereby increasing customer loyalty and retention. Through greater customer understanding, MNI will be able to effectively cross-sell and up-sell products to maximize revenue per customer, or "wallet share."

Schering Healthcare UK Ltd., a leading research-based pharmaceutical company, selected Siebel ePharma to create a comprehensive multichannel customer information management system. Through the use of Siebel ePharma, Schering Healthcare sales and customer care professionals will be able to collaborate seamlessly, provide highly personalized service, and enhance both productivity and customer satisfaction.

Siebel Systems Secured New Customers: Select new customers standardizing on Siebel eBusiness Applications in the second quarter of 2001 included Allianz First Life Insurance Co. Ltd.; Banco do Estado De Estado Sao Paulo S.A.; Clarima SpA; DGZ DekaBank Deutsche Kommunalbank; Experian Information Solutions, Inc.; Fujitsu System Solutions; Hummingbird Ltd.; LG-EDS Systems, Inc.; NTT DoCoMo, Inc.; Sumitomo Bank and Trust Co. Ltd.; United HealthCare Services, Inc.; and Verizon Global Solutions, Inc.

Existing Customers Expanded Their Siebel eBusiness Applications Deployments

Bayer AG, the highly successful German life sciences and chemical group, standardized on Siebel eBusiness Applications worldwide to enhance the ability of all Bayer sales, service, and marketing professionals -- or half of the company's 119,000 employees -- to identify, acquire, and retain customers through multiple channels. Bayer anticipates that, by 2004, its eBusiness strategy will create nearly $5 billion in sales revenues, with some groups deriving up to 50 percent of their sales through online commerce.

Deutsche Telekom AG, the leading telecommunications company in Europe, standardized on Siebel eCommunications across its business and residential sales and customer services organizations serving more than 40 million customers. Based on the proven return on investment from its previous Siebel eBusiness Applications deployments, Deutsche Telekom committed to a significant reorder of employee, customer, and partner facing Siebel eBusiness Applications. When the system is fully deployed, Deutsche Telekom will have more than 40,000 users of Siebel eCommunications.

Commonwealth of Virginia expanded its deployment of Siebel eBusiness Applications to enhance citizen service as part of the Department of Taxation's comprehensive reengineering program known as the Partnership Project. An example of how public agencies are striving to increase service efficiency and improve constituent satisfaction, the Virginia Department of Taxation is employing Siebel eBusiness Applications to allow taxpayers to communicate with the agency anytime and from any place, via phone or email. The state is also relying on Siebel eBusiness Applications to realize more efficient resource use through improved case management, while increasing revenue and compliance.

National Australia Bank, the largest bank in Australia, added 8,000 users of Siebel eFinance Applications to its current deployment in the call center, branch sales, and business banking departments. Using Siebel eFinance Applications, National's customer-facing employees in Australia -- some 10,000 in total -- will be able to conduct multichannel sales and service transactions with multiple segments of customers, both business and residential, enabling the bank to increase revenue, productivity, and customer satisfaction.

Siebel Systems Secures Repeat Orders: Additional orders from existing customers continued at a rapid pace during the second quarter. Siebel Systems realized significant reorders from Albacom SpA; BT; Canadian Imperial Bank of Commerce; Caterpillar, Inc.; Cisco Systems, Inc.; Compaq Computer Corporation; Dura Pharmaceuticals, Inc.; Electricite de France; General Motors Corporation; Italgas SpA; Johnson & Johnson, Ltd.; Novartis Pharmaceuticals UK, Ltd.; nPower, Ltd.; Starwood Hotels & Resorts Worldwide, Inc.; Sun Microsystems, Inc.; Telecom Italia; Telstra Corporation Limited; Thomson Learning; TXU Energy Services Company; Qualcomm, Inc.; and many others.

Siebel Systems Expanded and Enhanced Its Product Line

The release of new products in the second quarter significantly enhanced Siebel Systems' market and technology leadership in eBusiness applications software.

Siebel Systems Ships Siebel Employee Relationship Management: In the second quarter, the company introduced Siebel Employee Relationship Management (ERM), a new product line targeted for use by every employee in an organization. Siebel ERM is an eBusiness application that helps organizations attract, develop, manage, and retain employees, supporting every stage of an employee's life cycle. Through Siebel ERM, organizations can align their employees with corporate objectives, communicate corporate priorities and policies, and provide the information and tools employees need to be effective in their jobs. Select customers of Siebel ERM include FleetBoston Financial Corporation; Hyder Business Services Group, Ltd.; and Old Mutual South Africa.

Siebel Systems Delivers Next-generation Multichannel eBusiness Applications for the Automotive and Vehicle Industries: Siebel Systems shipped the latest version of its leading industry-specific applications, Siebel eAutomotive 2000.3. The new products allow automotive and vehicle companies to manage, synchronize, and coordinate multichannel sales, marketing, and customer service and include best-in-class analytic and marketing capabilities to attract new customers and enhance the individual buying experience. An increasing number of the world's largest vehicle manufacturers, importers, distributors, and retailers -- including global leaders such as DaimlerChrysler Corporation; Fleetwood Enterprises, Inc.; Ford Motor Company; General Motors Corporation; Mitsubishi Motor Sales of America, Inc.; and Renault S.A. -- have standardized on Siebel eBusiness Applications to satisfy customers virtually anytime, anywhere, through any sales or service channel.

Siebel Systems Announced Additional U.S. Patents for Data Synchronization Technology: Siebel Systems announced that the United States Patent and Trademark Office issued two additional patents to the Company for its unique data synchronization technology for use with mobile disconnected users and between distributed database servers. Addressing organizations' need to provide reliable and accurate information to their mobile professionals in the field, Siebel Systems is the only applications software company to offer scalable database synchronization to the enterprise as a core component of its product lines.

Siebel Systems Extends Mobile eBusiness with Siebel Handheld: Adding to its unrivalled support for mobile client devices, the Company also announced the second quarter availability of Siebel Sales Handheld on the Microsoft Pocket PC for the Compaq iPAQ Pocket PC. This powerful combination delivers Siebel eBusiness Applications to the point of customer contact, allowing mobile sales professionals to access vital sales, marketing, and service information anytime, anywhere.

Expanded Management Leadership

Siebel Systems significantly expanded the Company's leadership in the second quarter:

-- Marc F. Racicot, former Governor (1993-2001) and Attorney General (1988-1993) of the State of Montana, was named to the Board of Directors.

-- William R. McDermott, former President of Gartner, Inc., joined Siebel Systems as Executive Vice President, Worldwide Sales Operations. McDermott will oversee all aspects of the company's sales efforts and serve as a member of Siebel Systems' executive management team.

-- Michael C. Maibach, former Vice President of Government Affairs at Intel Corporation, joined the company as Senior Vice President, Government Affairs.

-- James F. McGuirk, II, former General Manager of North America Sales and Services at Unisys Corporation, was named Vice President, Federal Sales.

Industry Recognition

Siebel Systems received notable media recognition in the second quarter:

-- BusinessWeek, in June 2001, ranked Siebel Systems second among the world's best-performing software companies, and 14th overall in the "IT 100," an annual report on the 100 top-performing companies in high technology.

-- Forbes, in May 2001, acknowledged Siebel Systems for having the best alliances program in the computer applications industry in its "Magnetic 40."

-- CRN, in June 2001, recognized Siebel Systems with its annual "e-Star" award for CRM applications, based on the company's market leadership, financial performance, technology innovation, and strength of presence in the solution provider channel.

Siebel Alliances

Siebel Systems Formed New Strategic Alliances: In the second quarter, Siebel Systems announced key strategic alliances with best-in-class partners, including AT&T Wireless, Experian, and Quest Software, Inc. AT&T Wireless will jointly market and provide wireless access to Siebel eBusiness Applications via AT&T GSM/GPRS. Experian, a worldwide provider of customer data integration and authentication solutions, will integrate its solutions with Siebel eBusiness Applications. Quest Software and Siebel Systems will jointly develop and market comprehensive application monitoring solutions.

Siebel Systems Secured New Wireless Alliances: Siebel Systems formed a range of new alliances focused on providing end-to-end wireless solutions. In addition to AT&T Wireless, key new wireless partners include Cingular Wireless LLC; Aether Systems, Inc.; and Research In Motion Limited (RIM). Siebel eBusiness Applications will be enabled for the entire array of Cingular Wireless networks, giving users of Cingular-powered devices access to Siebel Mobile Solutions. Aether Systems and RIM joined the alliance program to deliver Siebel eBusiness Applications on the acclaimed BlackBerry Wireless Handheld with integration services and support by wireless software and services leader, Aether Systems.

About Siebel Systems

Siebel Systems, Inc. (Nasdaq: SEBL) is the world's leading provider of eBusiness applications software. Siebel Systems provides an integrated family of eBusiness applications software, enabling multichannel sales, marketing, and customer service systems to be deployed over the Web, call centers, field, reseller channels, and retail and dealer networks. Siebel Systems' sales and service facilities are located in more than 37 countries. For more information, please visit Siebel Systems' Web site at www.siebel.com.

Note to Editors: Siebel is a trademark of Siebel Systems, Inc. and may be registered in certain jurisdictions. All other product and company names mentioned are the property of their respective owners and are mentioned for identification purposes only.

Except for the historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties. The success of the relationships and products described above and the future operating results of Siebel Systems, Inc. may differ from the results discussed or forecasted in the forward-looking statements due to factors that include, but are not limited to, risks associated with the eBusiness software applications market, dependence on the Internet, risks associated with Siebel Systems, Inc.'s relationships with new and existing customers, risks associated with general economic conditions, risks associated with new versions and new products and risks associated with rapid technological change. Further information on potential factors that could affect the financial results of Siebel Systems, Inc. are included in its Annual Report on Form 10-K, quarterly reports on Form 10-Q and its other filings with the Securities and Exchange Commission, which are available at www.sec.gov. -0-

                         SIEBEL SYSTEMS, INC.
                      Consolidated Balance Sheets
                 (In thousands, except per share data)



                                              June 30,    December 31,
                                                 2001            2000
                                        ----------------  ------------
Assets

Current assets:
  Cash and cash equivalents                  $  831,545   $    751,384

         $
  Short-term investments                        658,993        401,200
  Marketable equity securities                    5,176         14,285
  Accounts receivable, net                      449,726        521,358
  Deferred income taxes                          64,487         61,825
  Prepaids and other                             86,232         92,825
                                        ----------------  ------------

       Total current assets                   2,096,159      1,842,877

Property and equipment, net                     329,764        189,610
Other assets                                     98,464         97,546
Deferred income taxes                            31,708         31,708
                                        ----------------  ------------

       Total assets                        $  2,556,095   $  2,161,741

         $
                                        ================  ============

Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable                         $     19,074   $     24,113

         $
  Accrued expenses                              364,988        355,159
  Deferred revenue                              250,944        202,523
                                         ---------------  ------------

       Total current liabilities                635,006        581,795

  Convertible subordinated debentures           300,000        300,000
                                        ----------------  ------------

       Total liabilities                        935,006        881,795
                                        ----------------  ------------

Stockholders' equity:
  Common stock;  $0.001 par value;
   2,000,000 shares authorized;
   459,544 and 442,392 shares issued
   and outstanding, respectively                460                442
  Additional paid-in capital              1,255,989          1,062,599
  Notes receivable from stockholders           (828)            (1,623)
  Deferred compensation                     (11,277)           (15,199)
  Accumulated other comprehensive
   income (loss)                             (2,981)             7,479
  Retained earnings                         379,726            226,248
                                        ----------------  ------------


      Total stockholders' equity          1,621,089          1,279,946
                                        ----------------  ------------

      Total liabilities and
       stockholders' equity             $  2,556,095     $   2,161,741

         $
                                        ================  ============



                         SIEBEL SYSTEMS, INC.
                 Consolidated Statements of Operations
                 (In thousands, except per share data)


                             Three Months Ended      Six Months Ended
                                   June 30,              June 30,
                           --------------------- ---------------------
                             2001         2000       2001       2000
                           ----------  ---------  ---------  ---------
Revenues:
  Software                 $  286,839  $ 245,301  $ 621,940  $ 440,816
                                                                  $
  Professional services,
   maintenance and other      262,903    152,243    516,543    276,419

   Total revenues             549,742    397,544  1,138,483    717,235

Cost of revenues:
  Software                      2,858      3,773      5,841      9,129
  Professional services,
   maintenance and other      149,123     98,915    311,789    171,420

   Total cost of revenues     151,981    102,688    317,630    180,549

    Gross margin              397,761    294,856    820,853    536,686

Operating expenses:
  Product development          50,142     33,531     98,829     59,966
  Sales and marketing         194,045    161,632    406,558    302,179
  General and administrative   42,652     35,989     97,148     64,882
  Merger-related expenses       -         10,002      -         10,002

    Total operating expenses  286,839    241,154    602,535    437,029

    Operating income          110,922     53,702    218,318     99,657

Other income, net              10,596     16,557     25,295     29,768

    Income before
     income taxes             121,518     70,259    243,613    129,425

Income taxes                   44,961     30,660     90,135     54,513

    Net income             $   76,557  $  39,599  $ 153,478  $  74,912
                                                                  $

Accretion of preferred stock     -       (21,707)      -       (98,755)

   Net income (loss)
    available to common
    stockholders           $   76,557  $  17,892  $ 153,478  $ (23,843)
                                                                  $

Diluted net income
 (loss) per share          $     0.15  $    0.04  $    0.29  $   (0.06)
                                                                  $

Shares used in diluted
 net income (loss)
 per share computation        522,758    511,182    521,846    412,346

Basic net income
 (loss) per share          $    0.17    $   0.04  $   0.34   $   (0.06)
                                                                  $

Shares used in basic
 net income (loss)
 per share computation       455,352     417,334   451,682     412,346



                         SIEBEL SYSTEMS, INC.
            Pro Forma Consolidated Statements of Operations
                 (In thousands, except per share data)


                              Three Months Ended   Six Months Ended
                                   June 30,             June 30,
                              ---------------------------------------
                                2001      2000      2001      2000
                              --------- --------- --------- ---------
Revenues:
      Software                $ 286,839 $ 245,301 $ 621,940 $ 440,816
      Professional services
       maintenance and other    262,903   152,243   516,543   276,419

               Total revenues   549,742   397,544 1,138,483   717,235

Cost of revenues:
      Software                    2,858     3,773     5,841     9,129
      Professional services,
       maintenance and other    149,123    98,915   311,789   171,420

               Total cost of
                revenues        151,981   102,688   317,630   180,549

               Gross margin     397,761   294,856   820,853   536,686

Operating expenses:
      Product development        50,142    33,531    98,829    59,966
      Sales and marketing       194,045   161,632   406,558   302,179
      General and
       administrative            42,652    35,989    97,148    64,882

               Total
                operating
                expenses        286,839   231,152   602,535   427,027

               Operating
                income          110,922    63,704   218,318   109,659

Other income, net                10,596    16,557    25,295    29,768

               Income before
                income taxes    121,518    80,261   243,613   139,427

Income taxes                     44,961    31,211    90,135    55,064

               Net income     $  76,557 $  49,050 $ 153,478 $  84,363

Diluted net income per share  $    0.15 $    0.10 $    0.29 $    0.16

Shares used in diluted net
 income per share computation   522,758   513,932   521,846   511,480

Basic net income per share    $    0.17 $    0.12 $    0.34 $    0.20
                                                             $               $

Shares used in basic net
 income per share computation   455,352   420,084   451,682   416,382