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Siebel's Cost-Cutting on Track

Siebel Systems (SEBL:Nasdaq - news - research - Cramer's Take), in a midquarter update Monday, had nothing to say about its performance in the current quarter, but did assure investors that its cost-cutting goals are on track.

Chief Financial Officer Ken Goldman said the software vendor, which has been plagued by falling license revenue and shrinking share value, expects to cut expenses in the third, or current, quarter to $300 million from $310 million in the last quarter. Some of the saving will come as management eliminates another 28 jobs, bringing the workforce to 4,900.

Goldman said the company "reaffirms its commitment" to bring operating margins to 15% on a sustainable basis. He noted that margins could reach that high in the seasonally strong fourth quarter, but that would not necessarily signal that margins will stay that high.

Areas that will be hit by ongoing cuts in expenses include R&D, which now consumes about 20% of Siebel's revenue. Goldman said companies wishing to lead their industry sector typically spend about 15% of revenue on research and development.
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