Markets & Finance

S&P Says Hold Siebel Systems


Siebel Systems (SEBL): Maintains 3 STARS (hold)

Analyst: Jonathan Rudy

The business software maker announced fourth-quarter preliminary revenues of about $365 million, below S&P's estimate of $380 million. However, the company expects earnings per share of 8 cents, which is better than S&P's estimate of 6 cents. Anticipated license revenue of $150 million is slightly better than S&P's estimate. Despite solid results, in S&P's opinion, S&P would not add to positions with the shares trading at a premium to peers on

price-earnings and p-e-to-growth metrics, and with earnings quality seen as lower than peers. However, given Siebel's solid cash flow and strong balance sheet, S&P would hold positions.

Cablevision (CVC): Upgrades to 3 STARS (hold) from 1 STAR (sell)

Analyst: Tuna Amobi

After what S&P sees as relatively immaterial restatements from a "substantially completed" independent forensic review, S&P doubts that new adverse information will surface from the Securities and Exchange Commissions probe. With the company's fully upgraded cable system and footprint-wide voice-over-Internet protocol set to boost advanced digital services, S&P thinks the narrowed discount to Tier 1 cablers based on relative enterprise value-to-EBITDA seems warranted, despite risk with Rainbow DBS and refinancing. S&P sees positive free cash by 2004, with S&P's 2004 loss estimate at 90 cents. S&P's target price is $25, up from $17.

AmerisourceBergen (ABC) 54.00 ): Reiterates 3 STARS (hold)

Analyst: Phillip Seligman

S&P is disappointed by the pharmaceutical-services company's loss of the $2.9 billion Veterans Affairs pact, about 6.3% of fiscal 2003 (Sep.) operating revenue. AmerisourceBergen's 10% cut of fiscal 2004 earnings per share guidance to a range of $4.10 to $4.20, from a range of $4.50 to $4.60, suggests that overall competition, while always tough, is increasing. S&P is lowering the fiscal 2004 earnings per share estimate by 42 cents, to $4.18, assuming AmerisourceBergen quickly cuts the costs related to the Veterans Affairs' deal and speeds up other cost cuts. S&P is trimming the fiscal 2005 estimate by 70 cents, to $4.60. AmerisourceBergen trades at 13 times S&P's fiscal 2004 estimate. Assuming fiscal 2005 earnings per share grows faster than in fiscal 2004, S&P would cut the p-e to 12, at most; thus, S&P is reducing its target price on AmerisourceBergen to $55, from $66.


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