**UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549**

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**FORM 10-K**

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**[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934**

**For the fiscal year ended December 31, 2000**

**OR**

**[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934**

**For the transition period from ________to _________**

**Commission File Number: 0-20725**

**SIEBEL SYSTEMS, INC.**
(Exact name of registrant as specified in its charter)



|**Delaware**                                                   | **94-3187233**                      
|-------------------------------------------------------------- | ------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification Number)

**2207 Bridgepointe ParkwaySan Mateo, CA     94404**(Address of principal executive offices, including zip code)

**(650) 477-5000**(Registrant's telephone number, including area code)







Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates
of the registrant, based on the closing sale price of the Registrant's Common Stock on
February 2, 2001 as reported on the Nasdaq National Market was
approximately $24,908,533,000. Shares of Common Stock held by each current
executive officer and director and by each person who is known by the
registrant to own 5% or more of the outstanding Common Stock have been
excluded from this computation in that such persons may be deemed to be
affiliates of the Registrant. Share ownership information of certain persons
known by the Registrant to own greater than 5% of the outstanding common
stock for purposes of the preceding calculation is based solely on
information on Schedule 13G filed with the Commission and is as of
December 31, 2000. This determination of affiliate status is not a
conclusive determination for other purposes.

The number of shares outstanding of the registrant's Common Stock, par
value $.001 per share, as of  February 2, 2001, was 447,164,222.







**TABLE OF CONTENTS**



|Part I.   |                                                                                       | Page
|--------- | ------------------------------------------------------------------------------------- | ----
|Item 1.   | Business                                                                              | 1   
|Item 2.   | Properties                                                                            | 9   
|Item 3.   | Legal Proceedings                                                                     | 9   
|Item 4.   | Submission of Matters to a Vote of Security Holders                                   | 9   
|Part II.  |                                                                                       |     
|Item 5.   | Market for the Registrant's Common Equity and Related Stockholder Matters             | 9   
|Item 6.   | Selected Financial Data                                                               | 10  
|Item 7.   | Management's Discussion and Analysis of Financial Condition and Results of Operations | 11  
|Item 7a.  | Quantitative and Qualitative Disclosures About Market Risks                           | 24  
|Item 8.   | Financial Statements and Supplementary Data                                           | 26  
|Item 9.   | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures | 26  
|Part III. |                                                                                       |     
|Item 10.  | Directors and Executive Officers of the Registrant                                    | 26  
|Item 11.  | Executive Compensation                                                                | 27  
|Item 12.  | Security Ownership of Certain Beneficial Owners and Management                        | 27  
|Item 13.  | Certain Relationships and Related Transactions                                        | 27  
|Part IV.  |                                                                                       |     
|Item 14.  | Exhibits, Financial Statements and Reports on Form 8-K                                | 28  
|SIGNATURE |                                                                                       | 57  

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**Documents Incorporated By Reference**

Portions of the registrant's Proxy Statement for its 2001 Annual Meeting
of Stockholders are incorporated by reference in Part III hereof.

The statements contained in this annual
report on Form 10-K that are not historical are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including statements regarding
our expectations, beliefs, intentions or strategies regarding the future.
Forward-looking statements include, without limitation, statements regarding the
extent and timing of future revenues and expenses and customer demand,
statements regarding the deployment of our products, and statements regarding
reliance on third parties.  All forward-looking statements included in this
Report are based on information available to us as of the date hereof and we
assume no obligation to update any forward-looking statements.  Forward-looking
statements involve known and unknown risks, uncertainties and other factors,
which may cause our actual results, performance or achievements, or industry
results to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.  Some of
these factors are discussed under the heading "Risk Factors" and
elsewhere  in this Report.
PART I


Item 1.  Business

Overview
Siebel Systems, Inc. ("Siebel" or the
"Company") is the world's leading provider of eBusiness applications
software.  Siebel eBusiness Applications are a family of leading Web-based
applications software designed to meet the sales, marketing and customer service
information system requirements of even the largest multinational organizations.
Siebel eBusiness Applications enable organizations to sell to, market to, and
service their customers across multiple channels, including the Web, call
centers, field, resellers, retail and dealer networks.  By employing
comprehensive eBusiness applications to better manage their customer
relationships, our customers achieve high levels of customer satisfaction and
continue to be competitive in their markets.

Siebel eBusiness Applications are available in industry-
specific versions designed for the pharmaceutical, healthcare, consumer goods,
telecommunications, insurance, energy, apparel and footwear, automotive,
technology, public sector and finance markets.  With best-of-class functionality
of eBusiness software, Siebel eBusiness Applications enable organizations to
create a single source of customer information that sales, service and marketing
professionals can use to tailor product and service offerings to meet each of
their customer's unique needs.  By using Siebel eBusiness Applications,
organizations can develop new customer relationships, profitably serve existing
customers and integrate their systems with those of their partners, suppliers
and customers, regardless of location.

Our customers are known for delivering the highest levels of
quality in their products and services and for their commitment to maintaining
the highest levels of customer satisfaction.  Spanning diverse industries and
locations, Siebel eBusiness Applications customers represent organizations of
all sizes.

Through global strategic alliances with industry-leading
organizations, we continue to enhance Siebel eBusiness Applications, ensuring
that we continue to fully support our customers' rapidly evolving technology
requirements and industry best practices, today and in the future.

ProductsSiebel eBusiness 2000, released in the
second quarter of 2000, is the industry's most comprehensive suite of Web-based
eBusiness application software.  Siebel eBusiness provides organizations with
one view of the customer across multiple distribution channels including the
Web, call center, field sales and service, resellers, partners and dealer
channels.  Our Web-based architecture and diverse product offerings are designed
to provide support for sales, marketing and customer service organizations and
seamlessly unite the organization's partners, resellers and customers in one
global information system.

Siebel Sales

Siebel Sales is designed to allow
teams of sales and marketing professionals to manage sales information
throughout the entire sales cycle.  This core application includes the
Opportunity Management, Account Management, Contact Management, Activity
Tracking, Message Broadcasting, Siebel Search, Quotas and Incentives modules.

Siebel Sales options, as of December 31, 2000, include Siebel
Quotes, Siebel Revenue Forecasting, Siebel Product Forecasting, Siebel
Proposals, Siebel Presentations, Siebel Campaigns, Siebel Sales Assistant,
Siebel Target Account Selling, Siebel Order Entry, Siebel Distance Learning,
Siebel Incentive Compensation, Siebel Executive Information System, Siebel
Expense Reporting, Siebel Reports, Siebel Data Quality, Siebel Customer Service
Integration, Siebel Product Configuration Integration Object and Siebel Sales
Handheld.

Siebel Service

Siebel Service enables teams of customer service, sales and
marketing professionals to help ensure complete customer satisfaction by using
closed-loop, service request management capabilities.  The base application
includes the Service Request Management, Account Management, Asset Tracking,
Contact Management, Activity Tracking, Message Broadcasting, Solution Management
and Siebel Search modules.

Siebel Service options, as of December 31, 2000, include
Siebel Service Assistant, Siebel Quality Management, Siebel CTI, Siebel Paging
and Siebel eMail Response.

Siebel Field Service

Siebel Field Service extends upon Siebel's customer service
solution and provides field engineers with service functionality for
entitlement/contracts management, integration with other customer facing
departments, dispatch and scheduling, parts management and repair center
operations.  Siebel Field Service provides a complete solution for the mobile
technician as well as the connected service agent.

Siebel Field Service options, as of December 31, 2000,
include Siebel Service Inventory, Siebel Shipping/Receiving, Siebel Logistics
Manager, Siebel Repair, Siebel Preventive Maintenance, Siebel Barcode, Siebel
Service Assistant, Siebel Quality Management and Siebel Field Service
Handheld.

Siebel Call Center

Siebel Call Center provides a blended Siebel Sales and
Siebel Service functionality that enables call center agents to provide both
sales and customer service assistance to customers.  It accesses the power of
Siebel Sales and Service to integrate all available customer information.  This
allows each service request to result in additional sales opportunities and
provides integrated sales and service histories for each opportunity.  This base
application includes the Opportunity Management, Service Request Management,
Account Management, Asset Tracking, Contact Management, Activity Tracking,
Message Broadcasting, Solution Management and Siebel Search modules.

Siebel Call Center options, as of December 31, 2000, include
all of the options available for both Siebel Sales and Siebel Service.

Siebel Marketing and Siebel Analytics

Siebel Marketing is a comprehensive suite of applications
for the planning, management and execution of multichannel marketing programs.
Siebel Marketing supports the entire closed-loop marketing process with
integrated analytic, campaign management, data quality and personalization
capabilities.

Siebel Analytics is a suite of applications that provide
managers and executives with complete and in-depth insight into their customers
and multichannel eBusiness operations.  Siebel Analytics includes an extensive
library of out-of-the-box analyses covering sales, marketing and service.
Siebel Analytics also utilizes information from the Siebel data warehouse and
custom built data warehouses.  Siebel Analytics enables organizations to
transform data across the enterprise into valuable information for strategic
analysis and decision-making.

Siebel Marketing and Siebel Analytics options, as of December
31, 2000, include Siebel Sales Analysis, Siebel Service Analysis and Siebel
Marketing Analysis.

Siebel Interactive Selling



Siebel Interactive Selling is a comprehensive suite of
Web applications to help organizations provide online advice, guidance and
recommendations to more effectively engage and better serve the customer across
multiple channels, including the Web, telesales, direct sales force and dealer
networks.  By interacting with customers through the selling process, Siebel
Interactive Selling enables greater customer acquisition and retention as well
as increasing the effectiveness of direct and indirect sales forces.



Siebel Interactive
Selling applications allow companies to offer customer-centric, interactive
online advice, catalogs, storefronts, product configuration, dynamic pricing and
online auctions to maximize the value of every customer interaction.  Customers
find instant, expert advice every step of the way using Siebel Interactive
Selling products.



Siebel Interactive Selling options, as of December 31,
2000, include Siebel eSales, Siebel eAdvisor, Siebel eAuction, Siebel ePricer
and Siebel eConfigurator.

Siebel MidMarket Edition

Siebel MidMarket Edition is a family of
multichannel sales, marketing and customer service applications.  Siebel
MidMarket Edition helps small and mid-size companies create a single source of
customer information that makes it easier to sell, market and service customers
across multiple channels, including the Web, call centers, field sales and
reseller networks.  Designed for fast deployment, Siebel MidMarket Edition helps
small and mid-sized companies increase their productivity.

Siebel Employee Portal

Siebel Employee Portal allows all customer employees to
access diverse business information to ensure that customer employees receive
consistent, high-quality service.  Employees receive a consolidated,
personalized view of business data from sources inside and outside the
organization.  The application allows access to web applications, news, business
information, productivity tools and other critical resources in a secure,
personalized Web environment.

General Product Options



General product options are typically available on any of the
Siebel eBusiness base applications and as of December 31, 2000, include Siebel
Encyclopedia, Siebel Office, Siebel Calendar, Siebel Reports, Siebel Expense
Reporting, Siebel Executive Information System, Siebel Incentive Compensation,
Siebel Order Entry, Siebel Contracts, Siebel Campaigns, Siebel SmartScript,
Siebel CTI, Siebel CTI Connect, Siebel Remote, Siebel Anywhere, Siebel Workflow
Manager, Siebel Assignment Manager, Siebel Data Quality, Siebel Professional
Services, Siebel Resource Assignment, Siebel Time Management and Reporting,
Siebel Agreements, Siebel Project Planning, Siebel Consultant's Package, Siebel
Distance Learning and Siebel Advanced Search.

Siebel .COM Applications

Siebel .COM Applications allow organizations to interact
directly with prospects, customers and partners over the Internet.  Using Siebel
 .COM Applications, organizations can rapidly deploy scalable, secure and Web-
based applications for acquiring, growing and retaining customers.  Siebel .COM
Applications, as of December 31, 2000, include Siebel eSales, Siebel eMarketing,
Siebel eService, Siebel eMail Response, Siebel eChannel, Siebel eAuction and
Siebel eBriefings.

Siebel eSales.

Siebel eMarketing.

Siebel eService and Siebel eMail Response.  Through
Web- and email-based service automation, Siebel eService and Siebel eMail
Response allow organizations to manage the entire service process and to provide
world-class customer service and support via the Internet.

Siebel
eChannel

Siebel eAuction.  Siebel eAuction enables businesses
to increase return on inventory, test product pricing, develop new sales
channels and create better customer experiences through cross-selling and
promotion.  Using Siebel eAuction, businesses can expand their eCommerce
offering by implementing a variety of pricing options such as forward and
reverse auctions.  Extending the Web and email channels into a new auction
channel, Siebel eAuction is an effective way to transact business, while
maximizing revenue and long-term customer value.

Siebel eBriefings.

Siebel Industry
Applications

Our products are available in
industry-specific versions, all with similar functionality, but each
specifically designed for a particular industry.  Examples of our industry
applications include:























Product Development Expense



During 1998, 1999 and 2000, the Company had product
development expenses of approximately $46.4 million, $81.1 million and $145.5
million, respectively.

Professional Services

We provide implementation consulting and other technical
services to license customers through our worldwide professional services
organization.  We provide these services in connection with similar services
provided by certain global alliance partners to provide the customer with the
full array of services necessary to install, integrate, customize and deploy
Siebel eBusiness Applications.

Customer Support and Training

We offer a comprehensive, multi-tiered, integrated family
of global support programs designed to ensure successful implementation and
customer satisfaction.  These programs include maintenance, technical support,
professional services and customer communications, as well as extensive
educational offerings.  Our educational offerings include technical training,
end user training and advanced sales training.

Marketing and Sales

Our sales and service professionals are located in
thirty-eight countries, with seventy offices in the United States and
seventy offices outside of the United States.  In the United States, we
market and sell our products and services through our direct sales and services
organization and through channel partners including Great Plains, J.D. Edwards,
Compaq Computer and others.  Outside of the United States, we sell our products
primarily through our direct sales and services organization in the countries
where we have an office and through channel partners.  We also market and sell
our products through distributors, primarily in Japan, Latin America, South
Africa and Asia.

Our ability to achieve significant revenue growth in the
future will depend in large part on how successfully we recruit, train and
retain sufficient direct sales, technical and global services personnel, and how
well we continue to establish and maintain relationships with our strategic
partners.  We believe that the complexity of our products and the large scale
deployments anticipated by our customers will require a number of highly trained
global services personnel.

The following key elements comprise our marketing and sales
strategy:

Target Large Multinational Customers in a Broad Range of
Industries

Our customer base consists of a significant number of
large multinational companies.  Siebel eBusiness Applications' Web-based
architecture supports the complex needs of even the largest global
organizations.  We intend to leverage our experience and continue to target
sales and marketing activities through our direct sales force and channel
partners to expand worldwide market acceptance of Siebel eBusiness
Applications.



Maintain and Extend Advanced Technology Position

We provide what we believe to be the industry's most
comprehensive family of multichannel eBusiness applications, enabling
organizations to sell to, market to and service customers across multiple
channels, including the Web, call centers, field, resellers, retail and dealer
networks.  Siebel eBusiness Applications enable organizations to manage,
synchronize and coordinate their customer touchpoints.  Utilizing advanced
information technology, Siebel eBusiness Applications are built on a
component-based architecture that provides a broad range of functionality for
eBusiness applications deployments.



We intend to continue investing substantial resources in
technological research and developments, such as:



Proven, Component-based Architecture: The Siebel
eBusiness architecture includes Siebel Remote, one of the industry's most
scalable data synchronization technologies for mobile clients and server-to-
server replication; Siebel Workflow Manager, which allows organizations to
visually model business processes and apply workflow automation rules across all
channels of distribution; Siebel Tools, a visual development toolset that allows
organizations to customize their user interface, business rules and data; and
Siebel EAI, which provides pre-built integration with leading middleware
products and industry-specific back office products.



Support for Multiple Computing Platforms:  To
enable immediate access to key customer information, Siebel eBusiness
Applications can operate on multiple computing platforms used by organizations,
including mobile clients, connected clients, thin clients, wireless clients and
handheld clients.

Web-based Architecture:  The Siebel eBusiness
Applications product architecture is entirely Web-based and designed for fast
performance.  Siebel eBusiness Applications are capable of operating within a
standard Web browser as thin clients, with no Siebel software installed on the
client computing device.  This technology contributes to a dramatic reduction of
the costs of deploying Siebel eBusiness Applications by nearly eliminating
client software distribution costs.

Full Life Cycle Management:

The Siebel eBusiness Applications product architecture
enables organizations to configure their Siebel eBusiness Applications once and
then deploy that same configuration to all their users.  Once an organization
makes customizations to the underlying objects, the customizations can operate
automatically across nearly all types of client computing devices.  This
technology is designed to provide significant cost savings in deployment and
implementation costs and assures consistency across customer-facing
channels.



Global Market Support:  We designed and built Siebel
eBusiness Applications to support global deployments, including most major
European and Asian languages.  Siebel eBusiness Applications support both single
and double byte characters, multiple currencies, automatic currency conversions
including the ENU standards for supporting the Euro and real-time interfaces to
accept new exchange rates from leading online services.

Siebel eBusiness Applications provide
support for multiple organizations, allowing companies to define different
organizational structures to manage data visibility, security and business
processes across both centralized and decentralized deployment topologies.



Develop and Maintain Global Strategic Alliances

Having long recognized the power and value of
strategic partnerships, one ofour core competencies is our ability to
develop and maintain long-term global strategic partnerships with the largest
and most influential corporations in the technology marketplace, including IBM,
Avaya, Accenture (formerly Andersen Consulting), Compaq, Deloitte Consulting,
Unisys and PricewaterhouseCoopers.



We have partnered with best-of-class business and system
integrators, hardware, software, support and training partners to help ensure
the successful deployment of Siebel eBusiness Applications.  These global
strategic partnerships with industry leaders help ensure that we deliver
solutions that meet our global customers' sales, marketing and customer service
requirements.  We believe these partnerships enable us to deliver the most
comprehensive suite of eBusiness solutions to our customers.



Siebel's partners include the following industry
leaders:

|System Integrator         | Software    | Platform        
|------------------------- | ----------- | ----------------
|Accenture                 | Alcatel     | Compaq          
|Cap Gemini Ernst & Young  | Ariba       | IBM             
|Deloitte Consulting       | Avaya       | MicroSoft       
|EDS                       | BroadVision | Nokia           
|IBM                       | Cisco       | Sun Microsystems
|PricewaterhouseCoopers    | i2          | Sprint PCS      
|Siemens Business Services | Manugistics | Unisys          





Support Successful Customer
Implementations

Our success depends on our customers' successful
implementations of Siebel eBusiness Applications.  As a result, we
actively support the customer's deployment efforts by providing Internet and
telephone technical support and comprehensive instructor-led training, and
assigning an account management team to each customer that consists of a sales
representative, a technical account manager and an executive sponsor.



Expand Global Sales Capabilities

We currently have operations in Argentina, Australia,
Austria, Belgium, Brazil, Canada, Chile, China, Colombia, Czech Republic,
Denmark, Finland, France, Germany, Hong Kong, Hungary, Ireland, Italy, Japan,
Korea, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Norway,
Poland, Portugal, Scotland, Singapore, South Africa, Spain, Sweden, Switzerland,
Taiwan, Turkey, the United Kingdom and the United States, and have introduced
localized versions of Siebel eBusiness Applications for major European
and Asian markets. We intend to further expand our global sales and marketing
capabilities by increasing the size of our direct sales and marketing
organizations in major markets, and by continuing to develop our channel partner
relationships.  As market conditions warrant, we intend to increase our direct
sales and marketing activities worldwide.



During each of 1998, 1999 and 2000, no individual
customer accounted for more than 10% of revenues.  International license
revenues for 1998, 1999 and 2000 were $89.3 million, $157.7 million and $447.9
million, respectively.  This represented 30%, 31% and 40% of total license
revenues in 1998, 1999 and 2000, respectively.



Acquisitions

In May 2000, October 2000 and November 2000, we
acquired OpenSite Technologies, Inc. ("OpenSite"), OnLink
Technologies, Inc. ("OnLink") and Janna Systems Inc.
("Janna"), respectively.  Each of these acquisitions has been
accounted for as a pooling-of-interests.  Accordingly, our financial statements
have been restated to include the financial position and results of operations
of OpenSite, OnLink and Janna for all periods presented.



Under the terms of the OpenSite and OnLink acquisition
agreements, each outstanding share of OpenSite and OnLink common stock was
exchanged for approximately 0.2630 and 0.3308, respectively, of newly issued
shares of our common stock.  This resulted in the issuance of approximately 7.4
million additional shares of our common stock in each transaction to the former
shareholders of OpenSite and OnLink.



Under the terms of Janna acquisition agreement, each
outstanding Janna common share was exchanged for 0.4970 newly issued shares of
our common stock or, at the election of Janna shareholders resident in Canada,
0.4970 of newly issued exchangeable shares (the "Exchangeable Shares") of our
Canadian subsidiary ("ExchangeCo") that are currently exchangeable for
our common stock.  Until November 30, 2005 (or earlier under certain
circumstances), the Exchangeable Shares are exchangeable for our common stock on
a one-for-one basis at any time at the option of the holder.  This resulted in
the issuance of approximately 9.4 million shares of our common stock to the
former Janna shareholders (which number assumes that all of the Exchangeable
Shares have been exchanged for our common stock).   Except as otherwise
indicated in this Report, the number of shares of our common stock issued and
outstanding as of a specific date shall assume that all of the Exchangeable
Shares have been exchanged for our common stock.



In connection with the acquisition of Janna, we also
issued one share of our Series A1 Preferred Stock to Montreal Trust Company of
Canada (the "Trustee"), as trustee on behalf of the holders of the
Exchangeable Shares.  The Series A1 Preferred Stock gives the holders of
Exchangeable Shares the ability to vote at our stockholder meetings as if they
held shares of our common stock. The Trustee, as the holder of the Series A1
Preferred Stock, is entitled to a number of votes equal to the number of
Exchangeable Shares outstanding.  The votes attached to the Series A1 Preferred
Stock will be exercised by the trustee in accordance with an agreement among the
Trustee, ExchangeCo and Siebel.



All outstanding stock options of OpenSite, OnLink and
Janna were converted into the right to acquire our common stock at the same
respective exchange ratio with a corresponding adjustment to the exercise
price.



OpenSite's technology enables companies to create
branded, interactive, real-time Internet auctions and automates the process of
installing, running and maintaining a company's dynamic commerce applications.
OnLink's technology is designed to provide companies with guided, interactive
online communication with customers to identify what the customer needs and
automatically match the customer with the appropriate product and service
configurations.  Janna is a leading provider of eRelationship Management (eRM)
solutions for the financial services industry.  Janna's technology enables
enterprises to synchronize customer interactions across multiple channels,
including the Internet, and to offer personalized Web "self-service" eBusiness
solutions to their customers.



Competition

The market for our products is intensely competitive,
subject to rapid change and is significantly affected by new product
introductions and other market activities of industry participants.  Our
products are targeted at the emerging market for sales, marketing and customer
information systems.  We face competition from customers' internal development
efforts, custom system integration products, as well as other application
software providers that offer a variety of products and services designed to
address this market.  We believe that the market for global eBusiness
information systems has historically not been well served by the application
software industry.  We believe that most customer deployments have been the
result of large internal development projects, custom solutions from systems
integrators or the application of personal and departmental productivity tools
to the global enterprise.  Please see "Risk Factors - To be successful, we
must effectively compete in the eBusiness systems market."

Internal Development

Many of our customers and potential customers have in the
past attempted to develop sales, marketing and customer service information
systems in-house, either alone or with the help of systems integrators.
Internal information technology departments have staffed projects to build their
own systems utilizing a variety of tools.  In some cases, such internal
development projects have been successful in satisfying the needs of an
organization.  The competitive factors in this area require that we produce a
product that conforms to the customer's information technology standards, scales
to meet the needs of large enterprises, operates globally and costs less than
the result of an internal development effort.  We cannot assure you that we will
be able to compete effectively against such internal development efforts.

Custom System Integration Projects

A second source of competition results from system
integrators engaged to build a custom development application.  The introduction
of a system integrator typically increases the likelihood of success for the
customer.  The competitive factors in this area require that we demonstrate to
the customer the cost savings and advantages of a configurable, upgradeable and
commercially supported product developed by a dedicated professional software
organization.



We frequently rely on system consulting and system
integration firms for implementation and other global services, as well as
recommendations of our products during the evaluation stage of the purchase
process.  Although we seek to maintain close relationships with these service
providers, many of these third parties have similar and often more established
relationships with our competitors.  We cannot assure you that these third
parties, many of which have significantly greater resources than us, will not
market software products in competition with us in the future or will not
otherwise reduce or discontinue their relationships with or support of us and
our products.

Other Competitors

A large number of personal, departmental and other
products exist in the Siebel eBusiness Applications market.  Companies such as
Allegis Corporation, Ariba, Inc., Art Technology Group, Blue Martini Software,
Inc., Brightware, Inc., BroadVision, Inc., Broadbase Software, Inc., Calico
Commerce, Inc., Callidus Software, Inc., Chordiant Software, Inc., Dendrite
International, Epicor Software Corporation, E.piphany, Inc., FirePond,
Inc., FrontRange Solutions, Inc., i2 Technologies, Inc., Intershop, Inc.,
Invensys plc, Kana Communications, Inc., Lucent Technologies, Inc., Moai
Technologies, Inc., Marketsoft Corp., Niku Corporation, Nortel Networks,
ONYX Software Corporation, Oracle Corporation, Pegasystems, Inc., PeopleSoft,
Inc., Pivotal Software, Inc., Prime Response, Inc., Remedy Corporation, Quintus
Corp., SalesLogix (a division of Interact Commerce Corporation), SAP AG,
Saratoga Systems, Inc., Trilogy Software, Inc., update.com software and Vignette
Corporation are among the many firms in this market segment.  Some of these
competitors have longer operating histories, significantly greater financial,
technical, marketing and other resources, significantly greater name recognition
and a larger installed base of customers than we do.  In addition, many
competitors have well-established relationships with our current and potential
customers.  As a result, these competitors may be able to respond more quickly
to new or emerging technologies and changes in customer requirements, or to
devote greater resources to the development, promotion and sale of their
products than we can.  We believe that we compete favorably in this marketplace
based on the following competitive advantages: a breadth and depth of
functionality, a modern and enduring Web-based product architecture, an ability
to manage all customer interactions support across multiple channels,
configurable business objects, support for the global enterprise, scalability
allowing support for large user communities and strategic alignments with
industry leaders.  In general, we have priced our products at or above those of
our competitors, which pricing we believe is justified by the scope of
functionality delivered and the performance characteristics afforded by our
products.

There are many factors that may increase competition in the
eBusiness systems market, including (i) entry of new competitors, (ii) alliances
among existing competitors, (iii) consolidation in the software industry and
(iv) technological changes or changes in the use of the Internet.  Increased
competition may result in price reductions, reduced gross margins and loss of
market share, any of which could materially and adversely affect our business,
operating results and financial condition.  We cannot assure you that we will be
able to compete successfully against current and future competitors or that
competitive pressures faced by us will not materially and adversely affect our
business, operating results and financial condition.

Employees

As of December 31, 2000, we had a total of 7,389
employees, of which 2,561 were engaged in sales and marketing, 1,023 were in
product development, 3,167 were in global services, and 638 were in finance,
administration and operations.  Our future performance depends in significant
part upon the continued service of our key technical, sales and senior
management personnel, particularly Thomas M. Siebel, our Chairman and Chief
Executive Officer, none of whom is bound by an employment agreement.  The loss
of the services of one or more of our key employees could have a material
adverse effect on our business, operating results and financial condition.  Our
future success also depends on our continuing ability to attract, train and
retain highly qualified technical, sales and managerial personnel.  Competition
for such personnel is intense, and there can be no assurance that we can retain
our key technical, sales and managerial personnel in the future.  None of our
employees are represented by a labor union.  We have not experienced any work
stoppages and consider our relations with our employees to be good.



Item 2.  Properties

Our principal administration, sales, marketing,
support and research and development facilities are located in San Mateo,
California, pursuant to leases which expire between September 2005 and December
2015, and Emeryville, California, pursuant to a lease which expires in February
2013.  We currently also occupy a number of domestic and international sales and
support offices.



Item 3.  Legal Proceedings



We are engaged in certain legal actions arising in the
ordinary course of business.  We believe we have adequate legal defenses and
that the ultimate outcome of these actions will not have a material adverse
effect on our consolidated financial position or results of operations.



Item 4.  Submission of Matters to a Vote of Security Holders



No matters were submitted to a vote of security holders
during the fourth quarter of the fiscal year ended December 31, 2000.



PART II



Item 5.  Market for Registrant's Common Equity and Related Stockholder
Matters

(a)  Our common stock is traded on the Nasdaq
National Market under the symbol "SEBL."  The following high and low
sales prices were reported by Nasdaq in each quarter during the last two years.
All amounts give retroactive effect to the Company's stock splits, which were
effective November 1, 1999 and September 8, 2000.

`High      Low  
                                                     -------  -------
Quarter Ended March 31, 1999 ...................... $ 13.63  $  7.94
Quarter Ended June 30, 1999........................   16.84     7.88
Quarter Ended September 30, 1999...................   19.44    12.09
Quarter Ended December 31, 1999....................   46.00    15.92
Quarter Ended March 31, 2000.......................   87.56    32.75
Quarter Ended June 30, 2000........................   85.13    37.69
Quarter Ended September 30, 2000...................  118.44    66.00
Quarter Ended December 31, 2000....................  119.88    55.75`

As of December 31, 2000, we had approximately 1,321
holders of record of our common stock.  We have never paid any cash dividends on
our capital stock and do not expect to pay any such dividends in the foreseeable
future.  The last reported sale price of our common stock on February 2, 2001
was $63.00 per share.



(b) The effective date of our first registration
statement, filed on Form S-1 under the Securities Act of 1933, as amended, (No.
333-12061) relating to our initial public offering of our Common Stock, was June
27, 1996.  There has been no change to the disclosure contained in our report on
Form 10-Q for the quarter ended March 31, 1998, regarding the use of proceeds
generated by our initial public offering.

Item 6.  Selected Financial Data

The following selected financial data should be
read in conjunction with our Consolidated Financial Statements and Notes thereto
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Form 10-K.  The selected
financial data for each of the years in the three-year period ended December 31,
2000, and as of December 31, 1999 and 2000, is derived from our consolidated
financial statements that have been included in this Form 10-K and has been
audited by KPMG LLP, independent auditors.  The selected financial data as of
December 31, 1996, 1997 and 1998 and the years ended December 31, 1996 and 1997
is derived from consolidated financial statements that have not been included in
this Form 10-K.



For each of the periods presented the Company's financial
data has been restated to reflect the acquisitions of Scopus Technology, Inc.
("Scopus") in 1998, OnTarget, Inc. ("OnTarget") in 1999 and
OpenSite Technologies, Inc. ("OpenSite"), OnLink Technologies, Inc.
("OnLink") and Janna Systems Inc. ("Janna") in 2000, all of
which have been accounted for as poolings-of-interests.

`Year Ended December 31,
                                           ----------------------------------------------------------
                                             1996        1997        1998        1999         2000
                                           ---------   ---------   --------   ----------   ----------
                                               (in thousands, except per share data and employees)    
Operating Data:
   Total revenues.......................  $ 113,514   $ 226,221   $417,861   $  813,461   $1,795,384
   Operating income.....................  $  14,356   $   8,394   $ 64,469   $  161,187   $  322,535
   Net income...........................  $   9,979   $     560   $ 42,290   $  110,025   $  221,899
   Net income available to
    common stockholders(1)..............  $   9,979   $     560   $ 41,926   $   56,861   $  123,144
   Pro forma net income (loss) (2)......  $   9,574   $     (93)  $ 41,914   $  109,660   $  221,899
   Pro forma net income (loss) available
    to common stockholders(1)...........  $   9,574   $     (93)  $ 41,550   $   56,496   $  123,144
   Pro forma diluted net income (loss)
    available per common share..........  $    0.03   $   (0.00)  $   0.10   $     0.12   $     0.24
   Pro forma basic net income (loss)
    available per common share..........  $    0.04   $   (0.00)  $   0.11   $     0.15   $     0.29
   Total assets.........................  $ 210,838   $ 275,592   $464,063   $1,275,601   $2,161,741
   Convertible subordinated debentures..  $      --   $      --   $     --   $  300,000   $  300,000
   Mandatorily redeemable convertible
    preferred stock.....................  $      --   $      --   $  4,818   $   80,459   $       --
   Total stockholders' equity...........  $ 173,388   $ 213,532   $299,068   $  644,670   $1,279,946
   Employees............................        553       1,030      1,655        3,604        7,389`

(1) Both net income and pro forma net income (loss) have been
reduced by the accretion of OpenSite's mandatorily redeemable convertible
preferred stock to determine net income available to common stockholders and pro
forma net income (loss) available to common stockholders, respectively.  The
accounting for OpenSite's mandatorily redeemable convertible preferred stock
required non-cash accretion to the then current fair value of the common stock
into which the mandatorily redeemable convertible preferred stock was
convertible.  This resulted in a non-cash charge to accretion and offsetting
credit to mandatorily redeemable convertible preferred stock for each of the
years ended December 31, 1998, 1999 and 2000, the only periods in the above
table in which the mandatorily redeemable convertible preferred stock was
outstanding.  The amount of accretion for a statement of operations period was
dependent upon how much the fair value of OpenSite's common stock fluctuated
during that period.  In connection with the Company's acquisition of OpenSite,
the holders of the mandatorily redeemable convertible preferred stock converted
their shares pursuant to their existing terms on a one-for-one basis into shares
of OpenSite's common stock.  Accordingly, the Company stopped recording
accretion on the mandatorily redeemable convertible preferred stock on May 17,
2000.



(2) Prior to the acquisition of OnTarget by the Company in
1999, OnTarget had elected subchapter S status for Federal income tax purposes.
Prior to January 1, 1998 and July 1, 1998, OpenSite and OnLink, respectively,
had also elected subchapter S status for Federal income tax purposes.
Accordingly, no income tax provision was presented in the historical financial
statements of OnTarget, OpenSite and OnLink for these periods, as the income was
taxable personally to the stockholders.  The Company has reduced net income and
net income available to common stockholders by pro forma income taxes in order
to reflect income tax expense that would have been reported if OnTarget,
OpenSite and OnLink had been C corporations for each of the applicable periods
in which they were subchapter S corporations.



Item 7.  Management's Discussion and Analysis of
Financial Condition and Results of Operations



Overview

Siebel is the



Siebel eBusiness Applications are available in industry-
specific versions designed for the pharmaceutical, healthcare, consumer goods,
telecommunications, insurance, energy, apparel and footwear, automotive,
technology, public sector and finance markets.  With best-of-class functionality
of eBusiness software, Siebel eBusiness Applications enable organizations to
create a single source of customer information that sales, service and marketing
professionals can use to tailor product and service offerings to meet each of
their customer's unique needs.  By using Siebel eBusiness Applications,
organizations can develop new customer relationships, profitably serve existing
customers and integrate their systems with those of their partners, suppliers
and customers, regardless of location.







Under the terms of the OpenSite and OnLink acquisition
agreements, each outstanding share of OpenSite and OnLink common stock was
exchanged for approximately 0.2630 and 0.3308, respectively, of newly issued
shares of the Company's common stock.  This resulted in the issuance of
approximately 7.4 million additional shares of the Company's common stock in
each transaction to the former shareholders of OpenSite and OnLink.  Under the
terms of Janna's acquisition agreement, each outstanding Janna common share was
exchanged for 0.4970 newly issued shares of the Company's common stock or, at
the election of Janna shareholders resident in Canada, 0.4970 of newly issued
exchangeable shares (the "Exchangeable Shares") of the Company's Canadian
subsidiary ("ExchangeCo") that are currently exchangeable for the
Company's common stock.  This resulted in the issuance of approximately 9.4
million shares of the Company's common stock to the former Janna shareholders
(which number assumes that all of the Exchangeable Shares have been exchanged
for our common stock).  In addition, all outstanding stock options of OpenSite,
OnLink and Janna were converted into the right to acquire the Company's common
stock at the same respective exchange ratio with a corresponding adjustment to
the exercise price.



OpenSite's technology enables companies to create
branded, interactive, real-time Internet auctions and automates the process of
installing, running and maintaining a company's dynamic commerce applications.
OnLink's technology is designed to provide companies with guided, interactive
online communication with customers to identify what the customer needs and
automatically match the customer with the appropriate product and service
configurations.  Janna is a leading provider of eRelationship Management (eRM)
solutions for the financial services industry.  Janna's technology enables
enterprises to synchronize customer interactions across multiple channels,
including the Internet, and to offer personalized Web "self-service" eBusiness
solutions to their customers.

Results of Operations

The following table sets forth the
consolidated statement of operations data for each of the years in the three-year
period ended December 31, 2000 expressed as a percentage of total
revenues:

`Year Ended December 31,
                                                 -------------------------
                                                  1998     1999     2000
                                                 -------  -------  -------
Revenues:
    Software....................................     71 %     63 %     62 %
    Professional services, maintenance and other     29       37       38
                                                 -------  -------  -------
        Total revenues..........................    100      100      100
                                                 -------  -------  -------
Cost of revenues:
    Software....................................      1        1        1
    Professional services, maintenance and other     16       22       24
                                                 -------  -------  -------
        Total cost of revenues..................     17       23       25
                                                 -------  -------  -------
        Gross margin............................     83       77       75
                                                 -------  -------  -------
Operating expenses:
    Product development.........................     11       10        8
    Sales and marketing.........................     44       38       38
    General and administrative..................      9        9        9
    Merger-related expenses.....................      3       --        2
                                                 -------  -------  -------
        Total operating expenses................     67       57       57
                                                 -------  -------  -------
        Operating income........................     16       20       18
Other income, net...............................      1        2        3
                                                 -------  -------  -------
        Income before income taxes..............     17       22       21
Income taxes....................................      7        8        9
                                                 -------  -------  -------
        Net income..............................     10 %     14 %     12 %
                                                 =======  =======  =======`

For Each of the Years Ended
December 31, 1998, 1999 and 2000



Revenues

Software.  License revenues increased from $294.7 million and $510.9 million for
the years ended December 31, 1998 and 1999, respectively, to $1,114.8 million
for the year ended December 31, 2000.  License revenues as a percentage of total
revenues were 71% in fiscal 1998 and 63% in fiscal 1999 as compared to 62% in
the fiscal 2000 period.  License revenues increased in absolute dollars during
these periods from the respective prior year periods due to an increase in the
number of licenses of Siebel applications sold to new and existing customers and
also due to licenses of new modules, released with the latest version of Siebel
applications, to existing users of Siebel base applications.  This increase in
the number of licenses was primarily due to continued demand by new and existing
customers for products in the Siebel applications family both in the United
States and internationally.  The Company expects that license revenues will
continue to increase in absolute dollars, but will remain the same or decrease
as a percentage of total revenues as the Company's maintenance and other
services revenues continue to grow as a result of increases in the installed
base of customers purchasing such services.



Professional Services, Maintenance
and Other.Professional services, maintenance and other
revenues increased from $123.1 million and $302.6 million for the years ended
December 31, 1998 and 1999, respectively, to $680.6 million for the year ended
December 31, 2000 and as a percentage of total revenues were 29% in fiscal 1998
and 37% in fiscal 1999 as compared to 38% in the fiscal 2000 period.  These
increases in absolute dollars were due to growth in the Company's sales and
marketing training businesses, consulting business and in the installed base of
customers receiving maintenance.  First-year maintenance is typically sold with
the related software license.  Revenue related to such maintenance is deferred
based on vendor-specific objective evidence of fair value and amortized over the
term of the maintenance contract, typically twelve months.  The Company expects
that professional services, maintenance and other revenues will remain the same
or increase as a percentage of total revenues due to increased maintenance
revenues derived from the Company's growing installed customer base and due to
the Company's expansion of its consulting and training organization to meet
anticipated customer demands in connection with product implementation and sales
training.



The Company markets its products in the United States
through its direct sales force and internationally through its sales force and
distributors, primarily in Europe, Latin America, South Africa and Asia.
International license revenues accounted for 30%, 31% and 40% of license
revenues in 1998, 1999 and 2000, respectively.  The Company is increasing its
international sales force and establishing distribution relationships with
strategic partners and expects international revenues will continue to account
for a substantial portion of total revenues in the future.



On January 14, 2000, the Company acquired Paragren
Technologies, Inc. ("Paragren") in a purchase transaction for cash
consideration of $18.1 million.  Concurrently, the Company licensed software to
APAC Customer Services, Inc. ("APAC"), the former parent of Paragren.
The Company recognized $2.2 million of license revenue from APAC during the year
ended December 31, 2000.



During the first quarter of 2000, the Company established
a program whereby qualified startup companies can obtain Siebel eBusiness
software in exchange for shares of their equity securities.  Qualified startup
companies are generally companies who have received and are expected to continue
to receive funding and guidance from top-tier venture capital firms, have passed
a credit review consistent with other Siebel customers, and have a sound
business model and experienced management team.  The Company recognized $13.1
million of license revenues related to this program during the year ended
December 31, 2000.



Cost of Revenues

Software.Cost of software license revenues includes third-party software royalties,
product packaging, documentation and production.  Cost of software license
revenues has averaged approximately 2% of software license revenues for each of
the years in the three-year period ended December 31, 2000.  All costs incurred
in the research and development of software products and enhancements to
existing products have been expensed as incurred, and, as a result, cost of
license revenues includes no amortization of capitalized software development
costs.  These costs are expected to remain the same or increase as a percentage
of total revenues.



Professional Services, Maintenance
and Other.Cost of professional services, maintenance
and other revenues consist primarily of personnel, facilities and systems costs
incurred in providing sales and marketing training, consulting and other global
services.  Cost of professional services, maintenance and other revenues
increased from $66.8 million and $178.1 million for the years ended December 31,
1998 and 1999, respectively, to $426.5 million for the year ended December 31,
2000 and as a percentage of professional services, maintenance and other
revenues were 54% in fiscal 1998 and 59% in fiscal 1999 as compared to 63% in
fiscal 2000.  The increase in the absolute dollar amount reflects increased
costs resulting from the Company's expansion of its maintenance and support
organization and growth in the Company's consulting and training businesses.
The increase as a percentage of professional services, maintenance and other
revenues reflects an increased proportion of this revenue coming from
implementation services that are at lower margins versus maintenance services,
which are at higher margins.  The Company expects that professional services,
maintenance and other costs will continue to increase in absolute dollar amount
as the Company expands its global services organization to support a growing
installed customer base; its consulting organization to meet anticipated
customer demands in connection with product implementation; and the training
organization to support the growing needs of its customers.  These costs are
expected to remain the same or increase as a percentage of total revenues in the
future.



Operating Expenses

Product Development.Product development expenses include expenses associated with the
development of new products, enhancements of existing products and quality
assurance activities, and consist primarily of employee salaries, benefits,
consulting costs and the cost of software development tools.  Product
development expenses increased from $46.4 million and $81.1 million for the
years ended December 31, 1998 and 1999, respectively, to $145.5 million for the
year ended December 31, 2000 and decreased as a percentage of total revenues
from 11% and 10% in the fiscal 1998 and 1999 periods, respectively, to 8% in the
fiscal 2000 period.  The increases in the absolute dollar amount of product
development expenses were primarily attributable to costs of additional
personnel in the Company's product development operations.  Due in part to
efficiencies obtained related to the Company's acquisitions (see Notes 10 and 11
to the consolidated financial statements for a discussion of the acquisitions),
product development expenses as a percentage of total revenues has declined in
each of the last two years.  The Company anticipates that it will continue to
devote substantial resources to product development.  The Company expects
product development expenses to continue to increase in absolute dollar amount
but remain at a similar percentage of total revenues as in 2000.  The Company
considers technological feasibility of its software products to have been
reached upon completion of a working model that has met certain performance
criteria.  The period between achievement of technological feasibility and
general release of a software product is typically very short, and development
costs incurred during that period have not been material.  Accordingly, the
Company has not capitalized any software development costs to date.



Sales and Marketing.



General and
Administrative.General and administrative expenses
consist primarily of salaries and occupancy costs for administrative, executive
and finance personnel.  General and administrative expenses increased from $37.8
million and $73.6 million for the years ended December 31, 1998 and 1999,
respectively, to $158.5 million for the year ended December 31, 2000 and as a
percentage of total revenues were 9% in each of the years in the three-year
period ended December 31, 2000.  The increases in the absolute dollar amount of
general and administrative expenses were primarily due to increased staffing and
associated expenses necessary to manage and support the Company's increased
scale of operations.  The Company believes that its general and administrative
expenses will continue to increase in absolute dollar amount as a result of the
continued expansion of the Company's administrative staff and facilities to
support growing operations.  The Company anticipates that general and
administrative expenses as a percentage of total revenues will remain the same
or decrease as a percentage of total revenues as compared to the percentage of
total revenues in 2000.







The Company did not incur any significant merger-related
costs during  fiscal 1999.  In connection with the Company's acquisition of
Scopus in 1998, the Company incurred direct merger-related expenses of $13.5
million, comprised of investment bankers, attorneys, accountants and other
professional fees; integration charges related to duplicate facilities and
equipment; and other miscellaneous expenses.



Operating Income and Operating Margin

Operating income increased from $64.5 million for the
year ended December 31, 1998 and $161.2 million for the year ended December 31,
1999 to $322.5 million for the year ended December 31, 2000 and operating margin
was 16% and 20% in the fiscal 1998 and 1999 periods, respectively, as compared
to 18% in the fiscal 2000 period.  Excluding merger-related expenses, operating
income increased from $78.0 million and $161.2 million for the years ended
December 31, 1998 and 1999, respectively, to $359.0 million for the year ended
December 31, 2000 and operating margin was 19% and 20% in the fiscal 1998 and
1999 periods, respectively, as compared to 20% in the fiscal 2000 period.  As a
result of operating efficiencies obtained subsequent to the Company's
acquisition of OpenSite, OnLink and Janna, the Company's fiscal 2000 operating
margins, excluding merger-related expenses, were consistent with that of fiscal
1999, even though both OpenSite's and OnLink's fiscal 2000 operating losses
increased for the period prior to their respective acquisitions by an aggregate
of $10 million over the full fiscal year ended December 31, 1999.  The increase
in OpenSite's and OnLink's operating loss prior to their acquisition was the
result of OpenSite and OnLink expanding their sales and marketing activities to
build brand recognition without a corresponding increase in sales.



Other Income, Net

For fiscal 1998, 1999 and 2000, other income, net was
comprised of the following (in thousands):

`1998       1999       2000
                                               ---------  ---------  ---------

Interest income.............................. $   7,861  $  18,086  $  56,766
Interest expense.............................       (96)    (6,100)   (17,909)
Losses from equity method investee(Sales.com)        --         --     (7,481)
Charitable contributions.....................        --     (6,000)   (30,705)
Net gains on sale of investments and
  marketable equity securities...............        --     12,343     60,901
Other, net...................................    (1,279)    (3,239)       303
                                               ---------  ---------  ---------
                                              $   6,486  $  15,090  $  61,875
                                               =========  =========  =========`

Interest income represents earnings on the Company's
increased balances of cash and cash equivalents and short-term investments.  In
September 1999, the Company issued $300.0 million of convertible subordinated
debentures bearing interest at 5.50% and, accordingly, the Company's other
income, net reflects the interest expense for the period the convertible
subordinated debentures were outstanding.  In December 1999, the Company sold a
controlling interest in Sales.com and has accounted for this investment under
the equity method of accounting during fiscal 2000.  During fiscal 2000 the Company had realized
gains of $60.9 million, which primarily represented gains on the Company's
investment in USinternetworking, Inc.  Fiscal 2000 charitable contributions were
primarily comprised of the Company's contribution of a portion of the investment
in USinternetworking, Inc. to various charitable organizations.



Pro Forma Income Taxes



Income taxes, which were comprised primarily of
federal and state taxes, totaled $28.7 million, $66.3 million and $162.5 million
for the years ended December 31, 1998, 1999 and 2000, respectively.  Prior to
the acquisition of OnTarget by the Company in December 1999, OnTarget had
elected subchapter S status for Federal income tax purposes.  Prior to July 1,
1998, OnLink had also elected subchapter S status for Federal income tax
purposes.  Accordingly, no income tax was presented in the historical financial
statements of OnTarget or OnLink for these periods as the income was taxable
personally to the stockholders.  Pro forma income taxes for each of the three
years ended December 31, 2000 reflect income tax expense that would have been
reported if OnTarget and OnLink had been subchapter C corporations for each of
the applicable periods in which they were subchapter S corporations.  Pro forma
income taxes were $29.0 million, $66.6 million and $162.5 million in 1998, 1999
and 2000, respectively.  Pro forma income taxes as a percentage of pretax income
were 41%, 38% and 42% in 1998, 1999 and 2000, respectively.  The pro forma tax
rate for both fiscal 1998 and 2000 was higher than the rate in 1999 primarily
due to non-deductible items related to acquisitions.  As a result of deductions
relating to stock options, the Company paid no U.S. federal income taxes during
2000.

Pro Forma Net Income and Pro Forma Net Income Available to Common
Stockholders

The Company had pro forma net income of $41.9
million, $109.7 million and $221.9 million for the years ended December 31,
1998, 1999 and 2000, respectively.  Pro forma net income available to common
stockholders was $41.6 million and $56.5 million for the years ended December
31, 1998 and 1999, respectively, as compared to $123.1 million for the year
ended December 31, 2000.  Pro forma net income has been reduced by accretion on
OpenSite's mandatorily redeemable convertible preferred stock to determine pro
forma net income available to common stockholders.  The accounting for
OpenSite's mandatorily redeemable convertible preferred stock required non-cash
accretion to the then current fair value of the common stock into which the
mandatorily redeemable convertible preferred stock was convertible.  This
resulted in a non-cash charge to accretion and offsetting credit to mandatorily
redeemable convertible preferred stock for each of the years ended December 31,
1998, 1999 and 2000.  The amount of accretion for an income statement period was
dependent upon how much the fair value of OpenSite's common stock fluctuated
during that period.  In connection with the Company's acquisition of OpenSite,
the holders of the mandatorily redeemable convertible preferred stock converted
their shares pursuant to their existing terms on a one for one basis into shares
of OpenSite's common stock.  Accordingly, the Company stopped recording
accretion on the mandatorily redeemable convertible preferred stock on May 17,
2000.



Pro forma diluted net income available per common share
was $0.10, $0.12 and $0.24 in fiscal 1998, 1999 and 2000, respectively.





Liquidity and Capital Resources

The Company's cash, cash equivalents and short-term
investments in aggregate increased from $685.2 million as of December 31, 1999
to $1,152.6 million as of December 31, 2000, representing approximately 54% and
53% of total assets, respectively.  The Company's days sales outstanding in
accounts receivable was 98 days as of December 31, 1999 compared with 81 days as
of December 31, 2000.  As of February 2, 2001, the fair value of the Company's
marketable equity securities was $12.6 million.



At December 31, 2000, the Company had $300.0 million of
convertible subordinated debentures outstanding.  The seven-year term notes bear
interest at a rate of 5.50% and are convertible into 12.9 million shares of the
Company's common stock at any time prior to maturity, at a conversion price of
$23.32 per share, subject to adjustment under certain conditions.  The Company
may redeem the notes, in whole or in part, at any time on or after September 15,
2002.  The redemption price will range from $309.4 million to $302.4 million if
the notes are redeemed between September 15, 2002 through September 14, 2006.
Any redemption made on or after September 15, 2006 will be redeemed at $300.0
million.  In addition, accrued interest to the redemption date will be paid by
the Company in each redemption.



Cash provided by operating activities was $86.4 million,
$89.7 million and $438.6 million for fiscal 1998, 1999 and 2000, respectively.
The increase in cash provided from operations in fiscal 1999 was primarily the
result of: (i) revenue growth and increased profits from operations of $110.0
million, (ii) a tax benefit from the exercise of employee stock options of $91.7
million and (iii) increases in accounts payable, accrued expenses and deferred
revenue of $76.7 million, partially offset by an increase in accounts receivable
and prepaids of $192.5 million.  The increase in cash provided from operations
in fiscal 2000 was primarily the result of: (i) revenue growth and increased
profits from operations of $221.9 million; (ii) a tax benefit from the exercise
of employee stock options of $185.6 million and (iii) increases in accounts
payable, accrued expenses and deferred revenue of $343.7 million, partially
offset by an increase in accounts receivable and prepaids of $317.3 million.



Cash used in investing activities was $101.8 million,
$90.5 million and $384.3 million for fiscal 1998, 1999 and 2000, respectively.
For both fiscal 1998 and 1999, the Company's investing activities consisted
primarily of purchases of property and equipment, short-term investments and
other long-term assets.  For fiscal 2000, cash used in investing activities was
primarily the result of the Company's purchases in the aggregate of $360.0
million of short-term investments and property and equipment, including
leasehold improvements, along with the acquisitions of Paragren Technologies,
Inc., MOHR Development, Inc. and Wind S.r.l. totaling $29.2 million, partially
offset by proceeds from sales of marketable equity securities of $35.4
million.



During fiscal 1999, the Company entered into a lease
agreement for a new headquarters facility in San Mateo, California.  The Company
has incurred and expects to continue to incur significant capital expenditures
in connection with tenant improvements and furniture and fixtures for the
Company's leased facilities.  The Company has used full-serviced office suites
on a month-to-month rental basis to establish its presence in new locations.  As
these locations expand, the Company has begun to transition more of the office
suites to leased space.  This transition has involved build-out of tenant
improvements, acquisition of furniture and fixtures and other capital costs,
which were not incurred in connection with the use of fully serviced office
suites.  The Company has already built out a number of leased facilities and
expects this trend to continue.  Capital expenditures of the nature described
above are expected to increase during 2001.



Cash provided by financing activities was $38.4 million,
$396.5 million and $208.9 million for fiscal 1998, 1999 and 2000, respectively.
For fiscal 1998, the Company's financing activities consisted primarily of $29.0
million of proceeds from the issuance of common stock pursuant to the exercise
of stock options and proceeds of $10.5 million from the issuance of preferred
stock by OpenSite and OnLink prior to their acquisition.  For fiscal 1999, the
Company's financing activities consisted primarily of $291.3 million of net
proceeds received from the issuance of the subordinated convertible debentures,
$76.2 million of net proceeds from the issuance of common stock pursuant to the
exercise of stock options and $33.1 million from the issuance of preferred stock
by OpenSite and OnLink prior to their acquisition, offset by net repayments of
debt of $2.1 million and subchapter S distributions by OnTarget of $2.1 million
prior to its acquisition. For fiscal 2000, cash provided by financing activities
resulted primarily from proceeds of $189.2 million from the issuance of common
stock, primarily pursuant to the exercise of stock options, and proceeds of
$20.0 million from the issuance of preferred stock by OnLink prior to its
acquisition in October 2000.



While the Company believes that the anticipated cash
flows from operations, along with cash and cash equivalents and short-term
investments will be adequate to meet its cash needs for working capital and
capital expenditures for at least the next twelve months, the Company may elect
to raise additional capital through a public offering in the future, depending
upon market conditions.



Risk Factors

Our total revenue and operating results may fluctuate.

We may experience a shortfall in revenue or earnings
or otherwise fail to meet public market expectations, which could materially and
adversely affect our business and the market price of our common stock.  Our
total revenue and operating results may fluctuate significantly because of a
number of factors, many of which are outside of our control.  These factors
include:

- Level of product and price competition;
- Length of our sales cycle and customer licensing
patterns;
- The size and timing of individual license
transactions;
- Delay or deferral of customer implementations of our
products;
- Success in expanding our global services organization,
direct sales force and indirect distribution channels;
- Timing of new product introductions and product
enhancements;
- Appropriate mix of products licensed and services
sold;
- Levels of international transactions;
- Activities of and acquisitions by competitors;
- Timing of new hires and the allocation of our
resources;
- Changes in the economy and foreign currency exchange
rates;
- Increases in the cost of software and professional
services; and
- Our ability to develop and market new products and
control costs.

One or more of the foregoing factors may cause our operating
expenses to be disproportionately high during any given period or may cause our
net revenue and operating results to fluctuate significantly.  Based upon the
preceding factors, we may experience a shortfall in revenue or earnings or
otherwise fail to meet public market expectations, which could materially and
adversely affect our business, financial condition, results of operations and
the market price of our common stock.

Our quarterly operating results may fluctuate.

Our total revenue and operating results may vary
drastically from quarter to quarter.  The main factors that may affect these
fluctuations are:

- The discretionary nature of our customers' purchase and
budget cycles;
- The size and complexity of our license
transactions;
- The potential delays in recognizing revenue from license
transactions;
- The timing of new product releases;
- Seasonal variations in operating results; and
- Variations in the fiscal or quarterly cycles of our
customers.

Each customer's decision to implement our products and
services is discretionary, involves a significant commitment of resources and is
subject to its budget cycles.  In addition, the timing of license revenue is
difficult to predict because of the length of our sales cycle, which has ranged
to date from one to twenty-four months.  We base our operating expenses on
anticipated revenue trends.  Because a high percentage of these expenses are
relatively fixed, a delay in recognizing revenue from license transactions could
cause significant variations in operating results from quarter to quarter and
could result in operating losses.  If these expenses precede, or are not
subsequently followed by, increased revenues, our operating results could be
materially and adversely affected.

As a result of these and other factors, revenues for any
quarter are subject to significant variation and we believe that period-to-period
comparisons of our results of operations are not necessarily meaningful.
You should not rely on these comparisons as indications of future performance.
Our future quarterly operating results from time to time may not meet the
expectations of market analysts or investors, which would likely have an adverse
effect on the price of our common stock.



We need to successfully integrate acquisitions and manage
growth.

Our business strategy includes pursuing opportunities
to grow our business, both internally and through selective acquisitions,
investments, joint ventures and strategic alliances.  Our ability to implement
this strategy depends, in part, on our success in making such acquisitions,
investments, joint ventures and strategic alliances on satisfactory terms and
successfully integrating them into our operations.  Implementation of our growth
strategy may impose significant strains on our management, operating systems and
financial resources.  Failure to manage this growth, or unexpected difficulties
encountered during expansion, could have an adverse effect on our business,
operating results and financial condition.

We rely on strategic relationships with systems
integrators, distributors, resellers and technology vendors.

Failure to maintain existing strategic relationships
with systems integrators, distributors, resellers and technology vendors, or to
establish new relationships in the future, could have a material adverse effect
on our business.  We have established strategic relationships with a number of
organizations that we believe are important to our sales, marketing and support
activities, and the implementation of our products.  We believe that our
relationships with these organizations provide marketing and sales opportunities
for our direct sales force and expand the distribution of our products.  These
relationships allow us to keep pace with the technological and marketing
developments of major software vendors and provide us with technical assistance
for our product development efforts.

In particular, we have established non-exclusive strategic
relationships with Accenture (formerly Andersen Consulting), IBM Global
Services, PricewaterhouseCoopers and Deloitte Consulting.  A significant portion
of our revenues has historically been derived from customers for whom the
systems integrators with which we have a relationship have been engaged to
provide system integration services.  Any deterioration of our relationship with
these significant third-party systems integrators could have a material adverse
effect on our business, financial condition and results of operations.  We also
have relationships with technology vendors such as IBM Corporation, Compaq
Computer Corporation, Microsoft Corporation and Sun Microsystems, Inc., among
others.  Failure to maintain existing relationships on terms equally favorable
to us, or to establish new relationships in the future, could have a material
adverse effect on our business, results of operations and financial
condition.

Our current and potential customers may also rely on third-
party systems integrators to develop, deploy or manage Siebel eBusiness
Applications.  If we do not adequately train a sufficient number of system
integrators, or if these integrators do not have, or do not devote, the
resources necessary to implement our products, our business, operating results
and financial condition could be materially and adversely affected.

We may not be able to compete effectively in the
Internet-related products and services market.

Siebel eBusiness Applications communicate through
public and private networks over the Internet.  The success of our products may
depend, in part, on our ability to continue developing products that are
compatible with the Internet.  We cannot predict with any assurance whether the
demand for Internet-related products and services will increase or decrease in
the future.  The increased commercial use of the Internet could require
substantial modification and customization of our products and the introduction
of new products.

Critical issues concerning the commercial use of the
Internet, including security, privacy, demand, reliability, cost, ease of use,
accessibility, quality of service and potential tax or other government
regulation, remain unresolved and may affect the use of the Internet as a medium
to support the functionality of our products and distribution of our software.
If these critical issues are not favorably resolved, our business, operating
results and financial condition could be materially and adversely affected.

We operate in a competitive and rapidly changing
market.

If the Web-based applications market fails to grow or
grows more slowly than we currently anticipate, our business, operating results
and financial condition could be materially and adversely affected.  The market
for Web-based application software is relatively new, highly competitive and
rapidly changing.  We market our products only to customers who have migrated or
are in the process of migrating their enterprise computing systems to Web-based
computing environments.  Our future financial performance will partly depend on
the continued growth of organizations successfully adopting Web-based computing
environments.



Our customers may not successfully implement our
products.

If existing customers have difficulty deploying
Siebel eBusiness Applications or for any other reason are not satisfied with
Siebel eBusiness Applications, our business, operating results and financial
condition could be materially and adversely affected.  Many of our customers
purchase and implement our products in phases.  Our customers frequently deploy
our products to large numbers of sales, marketing and customer service
personnel.  These end-users may not accept our products.  Our products are also
being deployed on a variety of computer hardware platforms and used with a
number of third-party software applications and programming tools.  This use may
present significant technical challenges, particularly as large numbers of
personnel attempt to use our product concurrently.

A limited number of products providea substantial part of our license
revenues.

A substantial majority of our license revenues are
attributable to sales of Siebel Sales, Siebel Service, Siebel Call Center and
related products.  In addition, we offer
industry-specific versions of these products.We expect
that these products and related consulting, maintenance and training services
will continue to account for a majority of our future revenues.Our success depends in part on our ability to market and
maintain the industry-specific versions of our products.  Factors adversely affecting the cost and pricing of, or demand for, these
products, such as competition or technological change, could have a material
adverse effect on our business, operating results and financial condition.

The length of time required to engage a client and to
implement our products may be lengthy and unpredictable.

The timing of the sales and implementation of our
products and services is lengthy and not predictable with any degree of
accuracy.  You should not rely on prior sales and implementation cycles as any
indication of future cycles.

The license of our software products is often an enterprise-wide
decision by prospective customers and generally requires us to provide a
significant level of education to prospective customers regarding the use and
benefits of our products.  In addition, the implementation of our products
involves a significant commitment of resources by prospective customers and is
commonly associated with substantial reengineering efforts that may be performed
by the customer or third-party systems integrators.  The cost to the customer of
our product is typically only a portion of the related hardware, software,
development, training and integration costs of implementing a large-scale
eBusiness software system.  For these and other reasons, the period between
initial contact and the implementation of our products is often lengthy and is
subject to a number of factors that may cause significant delays, over many of
which we have little or no control.  These factors include the size and
complexity of the overall project and delays in our customers' implementation of
Web-based computing environments.  A delay in the sale or implementation of even
a limited number of license transactions could have a material adverse effect on
our business and operations and cause our operating results to vary
significantly from quarter to quarter.

Our success will require us to continue to expand our
direct sales force and technical support staff.

Failure to expand our direct sales force or technical
and global services staff or to expand our distribution channels could
materially and adversely affect our business, operating results and financial
condition.  We have expanded the distribution of our products in recent years.
This expansion has placed new and increased demands on our direct sales force
and technical and sales support staff.  Our ability to achieve revenue growth in
the future will depend, in part, on our success in recruiting and training
sufficient direct sales, technical and global services personnel.  Although we
invest significant resources to expand our direct sales force and our technical
and global services staff, there are only a limited number of qualified
personnel in these areas.  Therefore, we may not be able to expand our direct
sales force and technical support staff as necessary to support our growing
operations.  In addition, such expansion may not result in increased
revenues.

Our expanding distribution channels may create
additional risks.

Failure to minimize channel conflicts could
materially and adversely affect our business, operating results and financial
condition.  We have recently entered into a number of relationships with
resellers in order to obtain broad market coverage.  We have generally avoided
exclusive relationships with resellers of our products.  Discount policies and
reseller licensing programs are intended to support each distribution channel
with a minimum level of channel conflicts.



Our revenue is concentrated in a relatively small number of
customers.

Our success depends on maintaining relationships with
our existing customers.  A relatively small number of customers have accounted
for a significant percentage of our revenues.  For 2000, license revenues from
our ten largest customers accounted for approximately 19% of total license
revenues.  We expect that licenses of our products to a limited number of
customers will continue to account for a significant percentage of revenue for
the foreseeable future.  The loss of a small number of customers or any
reduction or delay in orders by any such customer, or failure to successfully
market our products to new customers or to new
industries, could have a material adverse effect on our
business, financial condition and results of operations.

Our continued success will require us to keep pace with
technological developments, evolving industry standards and changing customer
needs.

The software market in which we compete is
characterized by (i) rapid technological change, (ii) frequent introductions of
new products, (iii) changing customer needs and (iv) evolving industry
standards.  To keep pace with technological developments, evolving industry
standards and changing customer needs, we must support existing products and
develop new products.  We may not be successful in developing, marketing and
releasing new products or new versions of the Siebel eBusiness Applications that
respond to technological developments, evolving industry standards or changing
customer requirements.  We may also experience difficulties that could delay or
prevent the successful development, introduction and sale of these enhancements.
In addition, these enhancements may not adequately meet the requirements of the
marketplace and may not achieve any significant degree of market acceptance.  If
release dates of any future products or enhancements to the Siebel eBusiness
Applications are delayed, or if these products or enhancements fail to achieve
market acceptance when released, our business, operating results and financial
condition could be materially and adversely affected.  In addition, new products
or enhancements by our competitors may cause customers to defer or forego
purchases of our products, which could have a material adverse effect on our
business, financial condition and results of operations.

To be successful, we must effectively compete in the
eBusiness systems market.

Our products target the eBusiness systems market.
This market is highly competitive, rapidly changing and significantly affected
by new product introductions.  We face competition primarily from our customers'
internal information technology departments and systems integrators, as well as
from other application software providers that offer a variety of products and
services to address this market.  Many of our customers and potential customers
have attempted to develop eBusiness systems in-house, either alone or with the
help of systems integrators.  We may not be able to compete successfully against
such internal development efforts.

We rely on a number of systems consulting and systems
integration firms for a substantial portion of implementation and other global
services, as well as for recommendations of our products during the evaluation
stage of the purchase process.  Although we seek to maintain close relationships
with these service providers, many of them have similar and often more
established, relationships with our competitors.  If we are unable to develop
and retain effective, long-term relationships with these third parties, our
competitive position could be materially and adversely affected.  Further, many
of these third parties have significantly greater resources than we do and may
market software products that compete with us.

A large number of personal, departmental and other products
exist in the Siebel eBusiness applications market.  Companies such as Allegis
Corporation, Ariba, Inc., Art Technology Group, Blue Martini Software, Inc.,
Brightware, Inc., BroadVision, Inc., Broadbase Software, Inc., Calico Commerce,
Inc., Callidus Software, Inc., Chordiant Software, Inc., Dendrite
International, Epicor Software Corporation, E.piphany, Inc., FirePond,
Inc., FrontRange Solutions, Inc., i2 Technologies, Inc., Intershop, Inc.,
Invensys plc, Kana Communications, Inc., Lucent Technologies, Inc., Moai
Technologies, Inc., Marketsoft Corp., Niku Corporation, Nortel Networks,
ONYX Software Corporation, Oracle Corporation, Pegasystems, Inc., PeopleSoft,
Inc., Pivotal Software, Inc., Prime Response, Inc., Remedy Corporation, Quintus
Corp., SalesLogix (a division of Interact Commerce Corporation), SAP AG,
Saratoga Systems, Inc., Trilogy Software, Inc., update.com software and Vignette
Corporation are among the many firms in this market segment.  Some of these competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources,
significantly greater name recognition and a larger installed base of customers
than we do.  In addition, many competitors have well-established relationships
with our current and potential customers.  As a result, these competitors may be
able to respond more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the development,
promotion and sale of their products than we can.

There are many factors that may increase competition in the
eBusiness systems market, including (i) entry of new competitors, (ii) alliances
among existing competitors, (iii) consolidation in the software industry and
(iv) technological changes or changes in the use of the Internet.  Increased
competition may result in price reductions, reduced gross margins or loss of
market share, any of which could materially and adversely affect our business,
operating results and financial condition.  If we cannot compete successfully
against current and future competitors or overcome competitive pressures, our
business, operating results and financial condition may be adversely affected.

If we do not maintain our relationships with third-
party vendors, interruptions in the supply of our products may result.

We may not be able to replace the functionality
provided by the third-party software currently offered with our products if that
software becomes obsolete or incompatible with future versions of our products
or is not adequately maintained or updated.  Portions of our products
incorporate software that was developed and is maintained by third-party
software developers.  Although we believe there are other sources for these
products, any significant interruption in the supply of these products could
adversely impact our sales unless and until we can secure another source.  We
depend in part on these third parties' abilities to enhance their current
products, to develop new products on a timely and cost-effective basis and to
respond to emerging industry standards and other technological changes.  The
absence of or any significant delay in the replacement of functionality provided
by third-party software in our products could materially and adversely affect
our sales.

Software errors or defects in our products could reduce
revenues.

Software products frequently contain errors or
failures, especially when first introduced or when new versions are released,
and could be affected by viruses.  We have, in the past, been forced to delay
the commercial release of products until the correction of software problems.
We could lose revenues as a result of software viruses, errors or defects,
including defects in third party products with which our products work.  Our
products are intended for use in sales applications that may be critical to a
customer's business.  As a result, we expect that our customers and potential
customers will have a greater sensitivity to product defects than the market for
software products generally.  Testing errors may also be found in new products
or releases after commencement of commercial shipments, resulting in loss of
revenue or delay in market acceptance, damage to our reputation, or increased
service and warranty costs, any of which could have a material adverse effect
upon our business, operating results and financial condition.

If we do not successfully manage our growth, our
business may be negatively impacted.

If we fail to manage our growth effectively, our
business, financial condition and results of operations could be materially and
adversely affected.  Our business has grown rapidly in recent years.  This
growth has placed a significant strain on our management systems and resources.

Integration of personnel and operations relating to our
previous or future acquisitions may disrupt our business and management.

We have acquired several companies within the past
year, and we may not be able to successfully assimilate the additional
personnel, operations, acquired technology and products into our business.  In
particular, we will need to assimilate and retain key professional services,
sales, engineering and marketing personnel.  Key personnel from the acquired
companies have in certain instances decided, and they may in the future decide,
to pursue other opportunities.  In addition, it may be necessary to integrate
products of these companies with our technology, and it is uncertain whether we
may accomplish this easily or at all.  These integration difficulties could
disrupt our ongoing business, distract management and employees or increase
expenses.  Acquisitions are inherently risky, and we may also face unexpected
costs, which may adversely affect operating results in any quarter.

Due to these and other factors, we may not meet expectations
of securities analysts or investors with respect to revenues or other operating
results of the combined company, which could adversely affect our stock
price.



If we acquire additional companies, products or technologies,
we may face risks similar to those faced in our other acquisitions.

We may continue to make other investments in
complementary companies, products or technologies.  We may not realize the
anticipated benefits of any other acquisition or investment.  If we acquire
another company, we will likely face the same risks, uncertainties and
disruptions as discussed above with respect to our other acquisitions.  In
addition, our profitability may suffer because of acquisition-related costs or
amortization costs for acquired goodwill and other intangible assets.

Rising energy costs and power system shortages in
California may result in increased operating expenses and reduced net income,
and harm to our operations due to power loss.

California is currently experiencing an energy crisis
and has recently experienced significant power shortages.  As a result, energy
costs in California, including natural gas and electricity, may rise
significantly over the next several months relative to the rest of the United
States.  Because our principal operating facilities are located in California,
our operating expenses may increase significantly if this trend continues.  In
addition, a sustained or frequent power failure could disrupt our operations and
the operations of our third party service providers, which would limit our
ability to provide our products and services to our customers, harming our
customer relationships, and having an adverse effect on our operating results.

The loss of key personnel could negatively affect our
performance.

Our performance depends on the continued service
of our key technical, sales and senior management personnel, particularly Thomas
M. Siebel, our Chairman and Chief Executive Officer.  On July 18, 2000, we
announced the appointment of Kenneth A. Goldman as our Senior Vice President,
Finance and Administration and Chief Financial Officer.  He replaced Howard H.
Graham, who retired in August 2000.  To integrate into our company, new senior
personnel must spend a significant amount of time learning our business model
and management system, in addition to performing their regular duties.
Accordingly, until these individuals have become familiar with our business
model and systems, their integration may result in some disruption to our
ongoing operations.  None of our key employees has entered into an employment
agreement with us.  On March 5, 2001, we announced the resignation of Thomas E. Hogan,
our former Senior Vice President, Sales.  We have appointed an interim replacement
for Mr. Hogan.  The loss of the services of one or more of our executive
officers could have a material adverse effect on our business, operating results
and financial condition.



Substantial leverage and debt service obligations may
adversely affect our cash flow.

We have substantial amounts of outstanding
indebtedness, primarily consisting of our 5.50% convertible subordinated notes
due September 15, 2006 (see Note 3 to the consolidated financial statements).
As a result of this indebtedness, our principal and interest payment obligations
are substantial.  We may be unable to generate cash sufficient to pay the
principal of, interest on and other amounts due in respect of our indebtedness
when due.  We also expect to add additional equipment loans and lease lines to
finance capital expenditures and may obtain additional long-term debt, working
capital lines of credit and lease lines.  There can be no assurance that any
financing arrangements will be available.

Our substantial leverage could have significant negative
consequences, including:

- Increasing our vulnerability to general adverse economic
and industry conditions;
- Limiting our ability to obtain additional
financing;
- Requiring the dedication of a substantial portion of our
expected cash flow from operations to service our indebtedness, thereby reducing
the amount of our expected cash flow available for other purposes, including
capital expenditures;
- Limiting our flexibility in planning for, or reacting to,
changes in our business and the industry in which we compete; and
- Placing us at a competitive disadvantage compared to less
leveraged competitors and competitors that have better access to capital
resources.



We may not be able to protect our proprietary
information.

We rely primarily on a combination of patent,
copyright, trade secret and trademark laws, confidentiality procedures and
contractual provisions to protect our proprietary rights.  We also believe that
the technological and creative skills of our personnel, new product
developments, frequent product enhancements, name recognition and reliable
product maintenance are essential to establishing and maintaining a technology
leadership position.  We seek to protect our software, documentation and other
written materials under patent, trade secret and copyright laws, which afford
only limited protection.  Any patents issued to us may be invalidated,
circumvented or challenged.  Any of our pending or future patent applications,
whether or not being currently challenged, may not be issued with the scope of
the claims we seek, if at all.  Furthermore, others may develop technologies
that are similar or superior to our technology or design around our patents.

Despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy aspects of our products or to obtain
and use information that we regard as proprietary.  Policing unauthorized use of
our products is difficult.  In addition, the laws of some foreign countries do
not protect our proprietary rights as fully as do the laws of the United States.
Our means of protecting our proprietary rights in the United States or abroad
may not be adequate.  We have entered into agreements with substantially all of
our customers that require us to place Siebel eBusiness Applications source code
into escrow.  Such agreements generally provide that such parties will have a
limited, non-exclusive right to use such code if (i) there is a bankruptcy
proceeding by or against us, (ii) we cease to do business or (iii) we fail to
meet our support obligations.

Although we do not believe that we are infringing any
proprietary rights of others, third parties may claim that we have infringed
their intellectual property rights.  Furthermore, former employers of our
former, current or future employees may assert claims that such employees have
improperly disclosed to us the confidential or proprietary information of such
former employers.  Any such claims, with or without merit, could (i) be time
consuming to defend, (ii) result in costly litigation, (iii) divert management's
attention and resources, (iv) cause product shipment delays and (v) require us
to pay monetary damages or enter into royalty or licensing agreements.  A
successful claim of product infringement against us and our failure or inability
to license or create a workaround for such infringed or similar technology may
materially and adversely affect our business, operating results and financial
condition.

We license certain software from third parties.  These third-party
software licenses may not continue to be available to us on acceptable
terms.  The loss of, or inability to maintain, any of these software licenses
could result in shipment delays or reductions.  This could materially and
adversely affect our business, operating results and financial condition.

Our international operations involve unique risks.

Our revenues are primarily derived from large multi-national
companies.  To service the needs of these companies, we must provide
worldwide product support services.  We have expanded and intend to continue
expanding, our international operations and enter additional international
markets.  This will require significant management attention and financial
resources that could adversely affect our operating margins and earnings.  We
may not be able to maintain or increase international market demand for Siebel
eBusiness Applications.  If we do not, our international sales will be limited
and our business, operating results and financial condition could be materially
and adversely affected.

Our international operations are subject to a variety of
risks, including (i) foreign currency fluctuations, (ii) economic or political
instability, (iii) shipping delays and (iv) various trade restrictions.  Any of
these risks could have a significant impact on our ability to deliver products
on a competitive and timely basis.  Significant increases in the level of
customs duties, export quotas or other trade restrictions could also have an
adverse effect on our business, financial condition and results of operations.
In situations where direct sales are denominated in foreign currency, any
fluctuation in foreign currency or the exchange rate may adversely affect our
business, financial condition and results of operations.  We manage our foreign
currency exchange rate risk by entering into contracts to sell foreign currency
at the time a foreign currency receivable is generated.  When the foreign
currency receivable is collected, the contract is liquidated, thereby converting
the foreign currency to U.S. dollars and mitigating the exchange rate risk.  In
certain instances, we have not hedged foreign currency receivables when the
forward contracts in the relevant currency were not readily available or were
not cost effective.



Some of our stockholders may be able to exercise control over
matters requiring stockholder approval.

Our current officers, directors and entities
affiliated with us together beneficially owned a significant portion of the
outstanding shares of common stock as of December 31, 2000.  While these
stockholders do not hold a majority of our outstanding common stock, they will
be able to exercise significant influence over matters requiring stockholder
approval, including the election of directors and the approval of mergers,
consolidations and sales of our assets.  This may prevent or discourage tender
offers for our common stock.

Our stock price may continue to be volatile.

Our stock price has fluctuated substantially since
our initial public offering in June 1996.  The trading price of our common stock
is subject to significant fluctuations in response to variations in quarterly
operating results, the gain or loss of significant orders, changes in earning
estimates by analysts, announcements of technological innovations or new
products by us or our competitors, general conditions in the software and
computer industries and other events or factors.  In addition, the stock market
in general has experienced extreme price and volume fluctuations that have
affected the market price for many companies in industries similar or related to
ours and that have been unrelated to the operating performance of these
companies.  These market fluctuations have adversely affected and may continue
to adversely affect the market price of our common stock.

Provisions in our charter documents may prevent certain
corporate actions.

Our Board of Directors is authorized to issue up to
2,000,000 shares of preferred stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further approval by our stockholders.  One of these shares
has been designated Series A-1 Preferred Stock, which was issued in connection
with the acquisition of Janna.  Please see "Item 1. Business -
Acquisitions."  The preferred stock could be issued with voting,
liquidation, dividend and other rights superior to those of the common stock.
The rights of the holders of common stock will be subject to and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future.  The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could make it more difficult for a third party to acquire a
majority of our outstanding voting stock.  We have a classified Board of
Directors.  This and certain other provisions of our certificate of
incorporation and certain provisions of our Bylaws and of Delaware law could
delay or make more difficult a merger, tender offer or proxy contest.

Item 7A.  Quantitative and Qualitative Disclosures About Market
Risk

The tables below provide information about the
Company's derivative financial instruments and financial instruments that are
subject to market risk.  These include foreign currency forward contracts used
to hedge foreign currency receivables, payables and intercompany balances, which
are subject to exchange rate risk, cash equivalents and available-for-sale
short-term investments, which are subject to interest rate risk.



The Company manages its foreign currency exchange rate
risk by entering into contracts to sell or buy foreign currency at the time a
foreign currency receivable or payable is generated.  When the foreign currency
asset or liability is extinguished, the contract is liquidated, and the
resulting gain or loss on the contract mitigates the exchange rate risk of the
associated asset or liability.



The following summarizes the Company's foreign currency
forward contracts, all of which mature in 2001, by currency, as of December 31,
2000.  Contract amounts are representative of the expected payments to be made
under these instruments (in thousands):

`Fair
                                         Contract                    Value at
                                          Amount       Contract    December 31,
                                      (Local Currency)  Amount      2000 (US$)
                                      ---------------  ---------   ------------
Australian dollars ("AUD") (contracts
  to pay AUD/receive US$)............    (AUD) 10,308   US$5,110  $       (637)

British pounds ("GBP") (contracts to
  pay GBP/receive US$)...............     (GBP) 3,800   US$5,430  $       (246)

Japanese yen ("YEN") (contracts to
  pay Yen/receive US$)............... (YEN) 3,516,540  US$32,199  $      1,447

Canadian dollars ("CAN") (contracts
  to receive CAN/pay US$)............     (CAN) 3,581   US$2,288  $        100

Singapore dollars ("SGD") (contracts
  to pay SGD/receive US$)............    (SGD) 11,690   US$6,716  $        (37)

Euro ("EUR") (contracts to pay
  EUR/receive US$)...................    (EUR) 59,683  US$59,280  $      3,333

Swiss Franc ("CHF") (contracts to
  receive CHF/pay EUR)...............    (CHF) 11,657  EUR 7,692  $        (27)

British pounds ("GBP") (contracts to
  pay GBP/receive EUR)...............    (GBP) 17,000  EUR 29,043 $      1,833`





`Expected maturity date
                         ------------------------------------------------------
                                                                        There-
                           2001     2002     2003     2004      2005    after
                         -------- -------- -------- --------- -------- --------
US Treasury and Agency
  securities............ $25,611  $11,412  $70,294   $16,953  $20,179       --
Wtd. Avg. Yld...........    6.41%    5.64%    5.17%     5.49%    5.47%

Municipal securities.... $33,773  $27,241   $4,315        --       --       --
Wtd. Avg. Yld...........    4.06%    4.26%    4.48%

Corporate bonds......... $99,642  $39,110  $28,965   $13,533  $10,172       --
Wtd. Avg. Yld...........    5.05%    6.33%    6.28%     6.06%    6.25%`





The Company manages its interest rate risk by maintaining
an investment portfolio with debt instruments of high credit quality and
relatively short maturities.  The Company also manages interest rate risk by
maintaining sufficient cash and cash equivalent balances such that it is
typically able to hold its investments to maturity.



The Company is exposed to equity price risks on
marketable equity securities.  These investments are in publicly-traded
companies in the high-technology industry.  The Company typically does not
attempt to reduce or eliminate its market exposure on these securities.  A 10%
adverse change in the equity price would result in an approximate $1.4 million
decrease in the fair value of the Company's marketable equity securities as of
December 31, 2000.

The fair value of the Company's convertible subordinated
debenture fluctuates based upon changes in the price of the Company's common
stock,

Item 8.  Financial Statements and Supplementary Data

The Company's consolidated financial statements,
together with related notes and the report of KPMG LLP, the Company's
independent auditors, are set forth on the pages indicated in Item 14.



Item 9.  Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure

Not Applicable.



PART III



Certain information required by Part III is omitted
from this Report on Form 10-K since the Company will file a definitive Proxy
Statement for its 2001 Annual Meeting of Stockholders, pursuant to Regulation
14A of the Securities Exchange Act of 1934, as amended (the "Proxy
Statement"), not later than 120 days after the end of the fiscal year
covered by this Report, and certain information included in the Proxy Statement
is incorporated herein by reference.



Item 10.  Directors and Executive Officers of the Registrant

(a) 	Executive Officers



The executive officers of the Company as of March
8, 2001, and their ages as of such date, are as follows:



|Name               | Age | Position                                                                     
|------------------ | --- | -----------------------------------------------------------------------------
|Thomas M. Siebel   | 48  | Chairman and Chief Executive Officer                                         
|Patricia A. House  | 46  | Vice Chairman, Co-founder and Vice President, Strategic Planning             
|Paul Wahl          | 48  | President & Chief Operating Officer                                          
|R. David Schmaier  | 37  | Executive Vice President, Products                                           
|Kenneth A. Goldman | 51  | Senior Vice President, Finance and Administration
and Chief Financial Officer
|Bruce Cleveland    | 42  | Senior Vice President, Marketing                                             
|Mark D. Hanson     | 40  | Senior Vice President, Corporate Development                                 
|Karen M. Riley     | 47  | Senior Vice President, Global Services                                       
|David C. Schwartz  | 36  | Senior Vice President, Engineering                                           

Thomas M. Siebel has served as the Company's
Chairman and Chief Executive Officer since its inception in July 1993.



Patricia A. House has been with the Company since
its inception in July 1993 and has served as the Company's Vice Chairman, Co-
Founder and Vice President, Strategic Planning since January 2001.  From
February 1996 to January 2001, she served as the Company's Co-Founder and
Executive Vice President and from July 1993 to February 1996 as Co-Founder and
Senior Vice President, Marketing.



Paul Wahlhas served as President and Chief
Operating Officer of the Company since April 1999.  From November 1998 to April
1999, he served as Chief Executive Officer and President of TriStrata, an
internet security company.  From June 1991 to September 1998, Mr. Wahl served as
Chief Executive Officer of SAP America, Inc., a software company, and was an
Executive Board Member of  SAP AG.



R. David Schmaier has served as Executive Vice
President, Products since January 2001 and served as Senior Vice President,
Products from March 1994 to January 2001.



Kenneth A. Goldman has served as the Company's Senior
Vice President, Finance and Administration and Chief Financial Officer since
August 2000.  From July 1996 to July 2000, Mr. Goldman served as Senior Vice
President of Finance and Chief Financial Officer of Excite@Home, Inc.
From 1992 to 1996, Mr. Goldman served as Senior
Vice President of Finance and Chief Financial Officer of Sybase, Inc.  Mr.
Goldman is an advisory council member of the Financial Accounting Standards
Board and serves on the board of directors of Legato Systems, Inc. and Hyperion
Solutions Corporation.



Bruce Cleveland



Mark D. Hanson has served as the Company's Senior
Vice President, Corporate Development since January 2001.  From December 1998 to
January 2001, Mr. Hanson served as the Company's Vice President, Corporate
Development.  From 1984 to March 1998, Mr. Hanson served in a variety of senior
management positions in the high-tech industry, including positions at Visigenic
Software, Inc., Sybase, Inc., Macromedia, Inc. and Informix Software.



Karen M. Rileyhas served as Senior Vice President, Global Services since
January 2001 and served as Vice President, Global Services from May 1999 to
January 2001.  From 1979 to April 1999, Ms. Riley served in a variety of
software development, product management and services executive positions and as
General Manger of Global CRM and business process outsourcing services practices
at IBM.



David C. Schwartz has served as the Company's
Senior Vice President, Engineering since June 2000.  From 1994 to June 2000, Mr.
Schwartz served in a variety of engineering positions within the Company.  From
1986 to 1994, Mr. Schwartz served in a variety of software development, product
management and services management positions for Oracle Corporation.

Our current officers, directors and entities affiliated with us together
beneficially owned a significant portion of the outstanding shares of our common
stock as of December 31, 2000.  While these stockholders do not hold a majority
of our outstanding common stock, they will be able to exercise significant
influence over matters requiring stockholder approval, including the election of
directors and the approval of mergers, consolidations and sales of our assets.
This may prevent or discourage tender offers for our common stock.



(b) 	Directors



The information required by this Item is incorporated by
reference to the section entitled "Election of Directors" in the Proxy
Statement.



Item 11.  Executive Compensation

The information required by this Item is incorporated
by reference to the section entitled "Executive Compensation" in the
Proxy Statement.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The information required by this Item is incorporated
by reference to the section entitled "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement.



Item 13.  Certain Relationships and Related Transactions

The information required by this Item is incorporated
by reference to the section entitled "Certain Relationships and Related
Transactions" in the Proxy Statement.



PART IV

Item 14.  Exhibits, Financial Statements and Reports on Form 8-K

(a) The following documents are filed as part of this
Report:



1. 	Financial Statements



|                                                  | Page
|------------------------------------------------- | ----
|Independent Auditors' Report                      | 30  
|Consolidated Financial Statements:                |     
|Balance Sheets                                    | 31  
|Statements of Operations and Comprehensive Income | 32  
|Statements of Stockholders' Equity                | 33  
|Statements of Cash Flows                          | 34  
|Notes to Consolidated Financial Statements        | 35  

2. 	Financial Statement Schedule



|Schedule II - Valuation and Qualifying Accounts | 56
|----------------------------------------------- | --

3. 	Exhibits

|Exhibit Number | Description of Document                                                                                                                                                                            
|-------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            | Agreement and Plan of Merger and Reorganization, dated March 1, 1998, among the Registrant,
Syracuse Acquisition Sub, Inc. and Scopus Technology, Inc. (4)                                         
|2.2            | Agreement and Plan of Merger and Reorganization dated November 17, 1999, among the
Registrant, SE Acquisition Corp. and OnTarget, Inc. (8)                                                         
|2.3            | Agreement and Plan of Merger and Reorganization dated April 5, 2000, among the Registrant,
OS Acquisition Corp., OpenSite Technologies, Inc. and Alan Taetle as Stockholders' Agent. (10)          
|2.4            | Agreement and Plan of Merger and Reorganization dated August 3, 2000, among the Registrant,
Ocelot  Acquisition Corp., OnLink Technologies, Inc. and Cornell P. French as Stockholders'
Agent. (12)
|2.5            | Arrangement Agreement dated September 11, 2000 among the Registrant, certain indirectly
wholly-owned subsidiaries of the Registrant, and Janna Systems Inc. (13)                                   
|3.1            | Amended and Restated Certificate of Incorporation of the Registrant. (3)                                                                                                                           
|3.2            | Certificate of Amendment of the Amended and Restated Certificate of
Incorporation of the Registrant. (9)                                                                                           
|3.3            | Bylaws of the Registrant. (1)                                                                                                                                                                      
|4.1            | Reference is made to Exhibits 3.1 and 3.2.                                                                                                                                                         
|4.2            | Specimen Stock Certificate. (1)                                                                                                                                                                    
|4.3            | Restated Investor Rights Agreement, dated December 1, 1995, between the
Registrant and certain investors, as amended April 30, 1996 and June 14,
1996. (1)                                         
|4.4            | Certificate of Designation of Series A1 Preferred Stock of the Company.  (15)                                                                                                                      
|10.1           | Registrant's 1996 Equity Incentive Plan, as amended. (3)                                                                                                                                           
|10.2           | Registrant's Employee Stock Purchase Plan, as amended. (3)                                                                                                                                         
|10.3           | Form of Indemnity Agreement entered into between the Registrant and its
officers and directors. (1)                                                                                                
|10.4           | Registrant's Deferred Compensation Plan, dated January 10, 1997. (5)                                                                                                                               
|10.5           | Master Alliance Agreement, dated March 17, 1995, between the Registrant and
Andersen Consulting LLP. (1)(2)                                                                                        
|10.6           | Assignment Agreement, dated September 20, 1995, by and between the Registrant
and Thomas M. Siebel. (1)                                                                                            
|10.7           | Lease Agreement, dated June 4, 1996, by and between the Registrant and
Crossroad Associates and Clocktower Associates. (1)                                                                         
|10.8           | Lease Agreement, dated March 11, 1999, by and between the Registrant and
Sobrato Interests III, as amended. (9)                                                                                    
|10.8.1         | First Amendment to Lease  dated June 11, 1999 and Second Amendment to Lease dated
July 31, 1999. (14)                                                                                              
|10.9           | Lease Agreement, dated March 11, 1999, by and between the Registrant and
Sobrato Interests III, as amended. (9)                                                                                    
|10.9.1         | First Amendment to Lease  dated June 11, 1999 and Second Amendment to Lease dated
July 31, 1999. (14)                                                                                              
|10.10          | Lease Agreement, dated June 11, 1999, by and between the Registrant and
Sobrato Interests III, as amended. (9)                                                                                     
|10.10.1        | First Amendment to Lease  dated September 23, 2000. (14)                                                                                                                                           
|10.11          | Lease Agreement, dated August 24, 1994, by and between the Registrant and
Watergate Tower Associates. (9)                                                                                          
|10.12          | Lease Agreement, dated August 16, 1999, by and between the Registrant and
Spieker Properties, L.P. (9)                                                                                             
|10.13          | Lease Amendment 10, dated April 8, 1999, by and between the Registrant and
Spieker Properties, L.P. (9)                                                                                            
|10.14          | Lease Amendment 11, dated August 13, 1999, by and between the Registrant
and Spieker Properties, L.P. (9)                                                                                          
|10.15          | Lease Amendment 12, dated October 28, 1999, by and between the Registrant and
Spieker Properties, L.P. (9)                                                                                         
|10.16          | Registrant's 1998 Equity Incentive Plan, as amended. (11)                                                                                                                                          
|23.1           | Consent of KPMG LLP, Independent Auditors. (16)                                                                                                                                                    

__________________

(1)	Incorporated by reference to
the Registrant's Registration Statement on Form S-1 (No. 333-03751), as
amended.

(2) 	Confidential treatment has been granted with respect
to portions of this exhibit.

(3)	Incorporated by reference to the Registrant's
Registration Statement on Form S-8 (No. 333-07983), as amended.

(4)	Incorporated by reference to Exhibit 99.1 of the
Registrant's Current Report on Form 8-K filed on March 16, 1998.

(5)	Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.

(6)	Incorporated by reference to Exhibit 99.3 of the
Registrant's Current Report on Form 8-K filed on March 16, 1998.

(7)	Incorporated by reference to Exhibit 99.5 of the
Registrant's Current Report on Form 8-K filed on March 16, 1998.

(8)	Incorporated by reference the Registrant's Current
Report on Form 8-K filed on January 7, 2000.

(9)	Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1999.

(10)	Incorporated by reference to the Registrant's Current
Report on Form 8-K filed on June 1, 2000.

(11)	Incorporated by reference to the Registrant's
Registration Statement on Form S-8 (No. 333-72969), as amended.

(12) Incorporated by reference to the Registrant's Current
Report on Form 8-K filed on October 10, 2000.

(13) Incorporated by reference to the Registrant's Current
Report on Form 8-K filed on November 27, 2000.

(14)	Incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.

(15) Incorporated by reference to the Registrant's
Registration Statement on Form S-8 (No. 333-20725), filed on November 27, 2000.

(16)	Filed herewith.

(b) Reports on Form 8-K



On October 10, 2000, the Registrant filed a Current
Report on Form 8-K relating to the Registrant's acquisition of OnLink
Technologies, Inc.  On November 27, 2000, the Registrant filed a Current Report
on Form 8-K relating to the Registrant's acquisition of Janna Systems Inc.

---



INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders

Siebel Systems, Inc.:



We have audited the accompanying consolidated balance
sheets of Siebel Systems, Inc. and subsidiaries (the "Company") as of
December 31, 1999 and 2000, and the related consolidated statements of
operations and comprehensive income, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 2000.  These
consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.



We conducted our audits in accordance with auditing
standards generally accepted in the United States of America.  Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Siebel Systems, Inc. and subsidiaries as of December 31, 1999 and
2000, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States of America.



/s/ KPMG LLP

Mountain View, California
 January 22, 2001

---

**SIEBEL SYSTEMS, INC.

                Consolidated Balance Sheets**
         (in thousands, except per share data)

`December 31,
                                                                --------------------------
                                                                    1999          2000
                                                                ------------  ------------

                            Assets                                                        

Current assets:
   Cash and cash equivalents.................................. $    486,321  $    751,384
   Short-term investments.....................................      198,878       401,200
   Marketable equity securities...............................      141,939        14,285
   Accounts receivable, net...................................      300,468       521,358
   Deferred income taxes......................................          --         61,825
   Prepaids and other.........................................       33,401        92,825
                                                                ------------  ------------
          Total current assets................................    1,161,007     1,842,877

Property and equipment, net...................................       60,624       189,610
Other assets..................................................       53,970        97,546
Deferred income taxes.........................................          --         31,708
                                                                ------------  ------------
          Total assets........................................ $  1,275,601  $  2,161,741
                                                                ============  ============

             Liabilities and Stockholders' Equity                                         

Current liabilities:
   Accounts payable........................................... $     12,944  $     24,113
   Accrued expenses...........................................      131,824       355,159
   Deferred revenue...........................................       89,240       202,523
   Deferred income taxes......................................       15,025           --
                                                                ------------  ------------
          Total current liabilities...........................      249,033       581,795

Convertible subordinated debentures...........................      300,000       300,000
Deferred income taxes.........................................        1,439           --
                                                                ------------  ------------
          Total liabilities...................................      550,472       881,795
                                                                ------------  ------------

Mandatorily redeemable convertible preferred stock............       80,459           --

Commitments and contingencies

Stockholders' equity:
  Preferred stock; $0.001 par value; 3,222 shares authorized;
    2,819 and no shares issued and outstanding, respectively..            3           --
  Common stock; $0.001 par value; 800,000 shares authorized;
    402,779 and 442,392 shares issued and outstanding,
    respectively..............................................          403           442
  Additional paid-in capital..................................      461,270     1,062,599
  Notes receivable from stockholders..........................         (548)       (1,623)
  Deferred stock compensation.................................       (3,550)      (15,199)
  Accumulated other comprehensive income......................       83,988         7,479
  Retained earnings...........................................      103,104       226,248
                                                                ------------  ------------
          Total stockholders' equity..........................      644,670     1,279,946
                                                                ------------  ------------
          Total liabilities and stockholders' equity.......... $  1,275,601  $  2,161,741
                                                                ============  ============`

See accompanying notes to consolidated financial statements.

---

**SIEBEL SYSTEMS, INC.

       Consolidated Statements of Operations and Comprehensive Income**
               (in thousands, except per share data)

`Year Ended December 31,
                                                            ----------------------------------
                                                               1998        1999        2000
                                                            ----------  ----------  ----------
Revenues:
    Software.............................................. $  294,728  $  510,874  $1,114,753
    Professional services, maintenance and other..........    123,133     302,587     680,631
                                                            ----------  ----------  ----------
        Total revenues....................................    417,861     813,461   1,795,384
                                                            ----------  ----------  ----------
Cost of revenues:
    Software..............................................      5,656       8,150      17,311
    Professional services, maintenance and other..........     66,773     178,113     426,458
                                                            ----------  ----------  ----------
        Total cost of revenues............................     72,429     186,263     443,769
                                                            ----------  ----------  ----------
        Gross margin......................................    345,432     627,198   1,351,615
                                                            ----------  ----------  ----------
Operating expenses:
    Product development...................................     46,385      81,053     145,514
    Sales and marketing...................................    183,323     311,337     688,612
    General and administrative............................     37,755      73,621     158,450
    Merger-related expenses...............................     13,500         --       36,504
                                                            ----------  ----------  ----------
        Total operating expenses..........................    280,963     466,011   1,029,080
                                                            ----------  ----------  ----------
        Operating income..................................     64,469     161,187     322,535
Other income, net.........................................      6,486      15,090      61,875
                                                            ----------  ----------  ----------
        Income before income taxes........................     70,955     176,277     384,410
Income taxes..............................................     28,665      66,252     162,511
                                                            ----------  ----------  ----------
        Net income........................................     42,290     110,025     221,899
Distributions to preferred stockholders...................        (39)        --          --
Accretion of preferred stock..............................       (325)    (53,164)    (98,755)
                                                            ----------  ----------  ----------
        Net income available to common stockholders....... $   41,926  $   56,861  $  123,144
                                                            ==========  ==========  ==========

Diluted net income per common share....................... $     0.10  $     0.12  $     0.24
                                                            ==========  ==========  ==========
Basic net income per common share......................... $     0.11  $     0.15  $     0.29
                                                            ==========  ==========  ==========
Pro forma net income and per share data:
    Income before income taxes as reported................ $   70,955  $  176,277  $  384,410
    Pro forma income taxes................................     29,041      66,617     162,511
                                                            ----------  ----------  ----------
    Pro forma net income..................................     41,914     109,660     221,899
    Distributions to preferred stockholders as reported...        (39)        --          --
    Accretion of preferred stock as reported..............       (325)    (53,164)    (98,755)
                                                            ----------  ----------  ----------
    Pro forma net income available to common stockholders. $   41,550  $   56,496  $  123,144
                                                            ==========  ==========  ==========

Pro forma diluted net income per common share............. $     0.10  $     0.12  $     0.24
                                                            ==========  ==========  ==========
Pro forma basic net income per common share............... $     0.11  $     0.15  $     0.29
                                                            ==========  ==========  ==========
Shares used in diluted share computation..................    416,395     467,907     522,321
                                                            ==========  ==========  ==========
Shares used in basic share computation....................    364,964     387,867     423,067
                                                            ==========  ==========  ==========
Comprehensive income:
      Net income.......................................... $   42,290  $  110,025  $  221,899
Other comprehensive income (loss), net of tax:
    Foreign currency translation adjustments..............       (793)      1,365       1,836
    Realized gains on securities..........................        --      (12,343)    (60,901)
    Unrealized gains (loss) on securities.................        201      96,009     (17,444)
                                                            ----------  ----------  ----------
      Other comprehensive income (loss)...................       (592)     85,031     (76,509)
                                                            ----------  ----------  ----------
      Total comprehensive income.......................... $   41,698  $  195,056  $  145,390
                                                            ==========  ==========  ==========`

See accompanying notes to consolidated financial statements.

---

**SIEBEL SYSTEMS, INC.

                Consolidated Statements of Stockholders' Equity**

                                (in thousands)

`Notes                  Accumulated
                                                                Preferred Stock     Common Stock      Additional  Receivable    Deferred       Other                   Total
                                                              ----------------- --------------------   Paid-in       from         Stock     ComprehensiveRetained   Stockholders'
                                                               Shares   Amount   Shares     Amount     Capital    Stockholders Compensation Income (Loss)Earnings      Equity
                                                              --------  ------- ---------  ---------  ----------  -----------  -----------  -----------  ---------  ------------
Balances, December 31, 1997..................................     --   $   --    356,939  $     357  $  203,566  $      (406) $      (639) $      (451) $  11,105  $    213,532
Issuance of common stock under Employee Stock Option Plans...     --       --     13,534         14      17,848       --           --           --           --          17,862
Issuance of common stock under Employee Stock Purchase Plans.     --       --      2,464          2       8,532       --           --           --           --           8,534
Issuance of common stock.....................................     --       --      1,404          1       1,815          (82)      --           --           --           1,734
Adjustment to conform acquired company's year-end............     --       --       --         --         --          --           --           --         (1,464)       (1,464)
Cancellation of stock options issued below fair value........     --       --       --         --           (39)      --               39       --           --             --
Forgiveness of notes payable to a shareholder of
  OnLink Technologies, Inc. .................................     --       --       --         --           141       --           --           --           --             141
Issuance of common stock related to Interactive Data
  Systems acquisition........................................     --       --        886          1         303       --             (144)      --           --             160
Issuance of Series A convertible preferred stock.............   1,786        2      --         --         6,049       --           --           --           --           6,051
Tax benefit from stock options...............................     --       --       --         --        13,517       --           --           --           --          13,517
Amortization of deferred compensation related to stock
  options....................................................     --       --       --         --         --          --              288       --           --             288
Unrealized gain on short-term investments (net of
  taxes of $118).............................................     --       --       --         --         --          --           --              201       --             201
Currency translation adjustment (net of taxes of $486).......     --       --       --         --         --          --           --             (793)      --            (793)
Transfer of common stock to employees........................     --       --       --         --           631       --           --           --           --             631
Subchapter S distributions by OnTarget and OpenSite..........     --       --       --         --         --          --           --           --         (3,252)       (3,252)
Change of OpenSite and OnLink from S corporations
  to C corporations..........................................     --       --       --         --            (8)      --           --           --              8           --
Distributions to preferred stockholders......................     --       --       --         --         --          --           --           --            (39)          (39)
Accretion of mandatorily redeemable convertible                                                           --
  preferred stock............................................     --       --       --         --         --          --           --           --           (325)         (325)
Net income...................................................     --       --       --         --         --          --           --           --         42,290        42,290
                                                              --------  ------- ---------  ---------  ----------  -----------  -----------  -----------  ---------  ------------
Balances, December 31, 1998..................................   1,786        2   375,227        375     252,355         (488)        (456)      (1,043)    48,323       299,068
Issuance of common stock under Employee Stock Option Plans...     --       --     21,505         22      59,341          (60)      --           --           --          59,303
Issuance of common stock under Employee Stock Purchase Plans.     --       --      1,666          2      15,735       --           --           --           --          15,737
Issuance of common stock under stock award plan..............     --       --       --         --           198       --           --           --           --             198
Issuance of common stock under stock warrants................     --       --         58       --             8       --           --           --           --               8
Issuance of common stock.....................................     --       --        390       --         3,996       --           --           --           --           3,996
Repurchase of common stock...................................     --       --       (490)      --        (2,795)      --           --           --           --          (2,795)
Termination of put provision of redeemable common
  stock warrants.............................................     --       --       --         --           323       --           --           --           --             323
Repurchase of common stock which was subject
  to vesting.................................................     --       --        (79)      --           (27)      --           --           --           --             (27)
Issuance of Series A and B convertible preferred stock.......   1,033        1      --         --        10,661       --           --           --           --          10,662
Issuance of warrants in connection with license agreement....     --       --       --         --             4       --           --           --           --               4
Tax benefit from stock options...............................     --       --       --         --        91,679       --           --           --           --          91,679
Compensation related to stock options........................     --       --       --         --         4,274       --           (4,274)      --           --             --
Amortization of deferred compensation related to
  stock options..............................................     --       --       --         --         --          --            1,180       --           --           1,180
Unrealized gain on short-term investments (net of                                                         --
  taxes of $51,279)..........................................     --       --       --         --         --          --           --           83,666       --          83,666
Currency translation adjustment (net of taxes                                                             --
  of $837)...................................................     --       --       --         --         --          --           --            1,365       --           1,365
Subchapter S distributions by OnTarget.......................     --       --       --         --         --          --           --           --         (2,080)       (2,080)
Conversion of convertible notes to common stock..............     --       --      1,290          1       6,918       --           --           --           --           6,919
Issuance of common stock related to
  LivePage acquisition.......................................     --       --      1,520          2      11,733       --           --           --           --          11,735
Issuance of common stock related to
  Archer  acquisition........................................     --       --        222       --         1,706       --           --           --           --           1,706
Issuance of common stock related to Target Marketing
  Systems and Target Marketing Systems S.A.
  acquisitions...............................................     --       --      1,470          1       5,161       --           --           --           --           5,162
Accretion of mandatorily redeemable convertible
  preferred stock............................................     --       --       --         --         --          --           --           --        (53,164)      (53,164)
Net income...................................................     --       --       --         --         --          --           --           --        110,025       110,025
                                                              --------  ------- ---------  ---------  ----------  -----------  -----------  -----------  ---------  ------------
Balances, December 31, 1999..................................   2,819        3   402,779        403     461,270         (548)      (3,550)      83,988    103,104       644,670
Issuance of common stock under Employee Stock Option Plans...     --       --     29,498         29     147,382       (1,153)      --           --           --         146,258
Issuance of common stock under Employee Stock Purchase Plans.     --       --        885          1      40,088       --           --           --           --          40,089
Issuance of common stock under stock warrants................     --       --         52       --            41       --           --           --           --              41
Issuance of common stock for services rendered...............     --       --         35       --         1,921       --           --           --           --           1,921
Issuance of common stock.....................................     --       --        327       --         2,801       --           --           --           --           2,801
Repurchase of common stock which was subject
  to vesting.................................................     --       --        (24)      --           (16)      --           --           --           --             (16)
Issuance of Series C convertible preferred stock.............     697        1      --         --        19,974       --           --           --           --          19,975
Issuance of warrants in connection with license agreement....     --       --       --         --         1,176       --           --           --           --           1,176
Tax benefit from stock options...............................     --       --       --         --       185,613       --           --           --           --         185,613
Compensation related to stock options........................     --       --       --         --        24,307       --          (24,307)      --           --             --
Cancellation of stock options issued below
  fair value.................................................     --       --       --         --        (1,167)      --            1,167       --           --             --
Amortization of deferred compensation related to
  stock options..............................................     --       --       --         --         --          --           11,491       --           --          11,491
Unrealized gain on short-term investments (net of
  taxes of $47,938)..........................................     --       --       --         --         --          --           --          (78,345)      --         (78,345)
Currency translation adjustment (net of taxes
  of $1,125).................................................     --       --       --         --         --          --           --            1,836       --           1,836
Repayments of stockholder notes..............................     --       --       --         --         --              78       --           --           --              78
Conversion of mandatorily redeemable convertible
  preferred stock............................................     --       --      5,324          5     179,209       --           --           --           --         179,214
Conversion of Series A, Series B, and Series C
  convertible preferred stock................................  (3,516)      (4)    3,516          4       --          --           --           --           --             --
Accretion of mandatorily redeemable convertible
  preferred stock............................................     --       --       --         --         --          --           --           --        (98,755)      (98,755)
Net income...................................................     --       --       --         --         --          --           --           --        221,899       221,899
                                                              --------  ------- ---------  ---------  ----------  -----------  -----------  -----------  ---------  ------------
Balances, December 31, 2000..................................     --   $    --   442,392  $     442  $1,062,599  $    (1,623) $   (15,199) $     7,479  $ 226,248  $  1,279,946
                                                              ========  ======= =========  =========  ==========  ===========  ===========  ===========  =========  ============`

See accompanying notes to consolidated financial statements.

---

**SIEBEL SYSTEMS, INC.

                     Consolidated Statements of Cash Flows**
                           (in thousands)

`Year Ended December 31,
                                                                                -------------------------------
                                                                                  1998       1999       2000
                                                                                ---------  ---------  --------- 
Cash flows from operating activities:
   Net income................................................................. $  42,290  $ 110,025  $ 221,899
   Adjustments to reconcile net income to net cash
    provided by operating activities:
      Compensation related to stock options...................................       288      1,180     11,491
      Compensation related to stock warrants..................................        54        269          --
      Depreciation and amortization...........................................    13,936     24,155     51,391
      Exchange of software for cost-method investments........................         --         --   (13,068)
      Loss from equity method investee........................................         --         --     7,481
      Deferred income taxes...................................................    (9,188)   (18,217)   (62,059)
      Tax benefit from exercise of stock options..............................    13,517     91,679    185,613
      Loss on disposal of property and equipment..............................     4,557        737         13
      Write-down of acquired companies' assets to be disposed.................         --         --     2,298
      Gain on sale of short-term investments and marketable equity securities.         --   (12,343)   (60,901)
      Charitable contribution of marketable equity securities.................         --         --    28,700
      Provision for doubtful accounts and returns, net........................     6,661      8,111     39,385
      Changes in operating assets and liabilities:
         Accounts receivable..................................................   (70,120)  (175,842)  (258,882)
         Prepaids and other...................................................    (7,009)   (16,705)   (58,464)
         Accounts payable and accrued expenses................................    60,294     40,745    230,807
         Deferred revenue.....................................................    31,150     35,952    112,864
                                                                                ---------  ---------  ---------
           Net cash provided by operating activities..........................    86,430     89,746    438,568
                                                                                ---------  ---------  ---------
Cash flows from investing activities:
   Proceeds from sale of marketable equity securities.........................         --         --    35,351
   Purchases of property and equipment........................................   (40,641)   (45,604)  (162,186)
   Purchases, sales and maturities of short-term investments, net.............   (58,454)   (35,458)  (197,800)
   Proceeds from disposal of property and equipment...........................         --    13,284         25
   Cash acquired in acquisitions..............................................       (31)       993          --
   Purchase of LivePage Corporation...........................................         --      (802)         --
   Purchase of Archer Enterprise Systems, Inc. ...............................         --      (441)         --
   Purchase of Paragren Technologies, Inc.....................................         --         --   (18,050)
   Purchase of MOHR Development, Inc., net of acquired cash...................         --         --    (7,905)
   Purchase of Wind S.r.l. ...................................................         --         --    (3,257)
   Other non-operating assets and non-marketable securities...................    (2,641)   (22,519)   (18,084)
   Advance to affiliate, net..................................................         --         --   (12,362)
                                                                                ---------  ---------  ---------
           Net cash used in investing activities..............................  (101,767)   (90,547)  (384,268)
                                                                                ---------  ---------  ---------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases.................    28,987     76,233    189,173
   Proceeds from issuance of preferred stock, net of repurchases..............    10,544     33,139     19,975
   Proceeds from issuance of convertible debt, net............................         --   291,316          --
   Borrowings on line of credit...............................................     1,542      5,874          --
   Repayments of line of credit and capital lease obligations.................       (91)    (7,937)      (299)
   Subchapter S distributions.................................................    (2,546)    (2,080)         --
   Repayments of stockholder notes............................................         --         --        78
                                                                                ---------  ---------  ---------
           Net cash provided by financing activities..........................    38,436    396,545    208,927
                                                                                ---------  ---------  ---------
Effect of exchange rate fluctuations on cash and cash equivalents.............      (203)       115      1,836
                                                                                ---------  ---------  ---------
Change in cash and cash equivalents...........................................    22,896    395,859    265,063
Adjustments to conform acquired company's year end............................    (4,140)         --         --
Cash and cash equivalents, beginning of period................................    71,706     90,462    486,321
                                                                                ---------  ---------  ---------
Cash and cash equivalents, end of period...................................... $  90,462  $ 486,321  $ 751,384
                                                                                =========  =========  =========
Supplemental disclosures of cash flows information:
   Cash paid for interest..................................................... $      12  $       7  $  16,324
                                                                                =========  =========  =========

   Cash paid for income taxes................................................. $  14,198  $  14,545  $  15,434
                                                                                =========  =========  =========
Supplemental disclosures of non-cash activities:
   Purchase price payable to acquired companies............................... $   6,000  $       -- $   3,000
                                                                                =========  =========  =========

   Conversion of preferred stock into common stock............................ $       -- $       -- $ 179,214
                                                                                =========  =========  =========

   Convertible notes issued for acquisitions.................................. $       -- $   6,918  $       --
                                                                                =========  =========  =========
   Common stock issued for acquisitions....................................... $       -- $  18,603  $       --
                                                                                =========  =========  =========`

See accompanying notes to consolidated financial statements.

---

**SIEBEL SYSTEMS, INC.

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

1. Summary of
Significant Accounting Policies
2. Financial Statement
Details
3. Convertible
Subordinated Debentures
4. Commitments and Contingencies
5. Stockholders' Equity
6. Convertible Preferred
Stock and Mandatorily Redeemable Convertible Preferred Stock
7. Income Taxes
8. Related Party Transactions
9. Segment and Geographic
Information
10. Business
Combinations
11. Acquisitions
12. Subsequent
Events
13. Selected Quarterly Financial Data (unaudited)

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.



| |                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SIEBEL SYSTEMS, INC.

Date:  March 26, 2001

By:	/s/ Kenneth A. Goldman
Kenneth A. Goldman

Senior Vice President, Finance and Administration
and Chief Financial Officer

**POWER OF ATTORNEY**

KNOW ALL PERSONS BY THESE PRESENTS, that each of the
persons whose signature appears below hereby constitutes and appoints Thomas M.
Siebel and Kenneth A. Goldman, each of them acting individually, as his or her
attorney-in-fact, each with the full power of substitution, for him or her in
any and all capacities, to sign any and all amendments to this Annual Report on
Form 10-K, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming our signatures as they
may be signed by ours said attorney-in-fact and any and all amendments to this
Annual Report on Form 10-K.

Pursuant to the requirements of the Securities Exchange
Act of 1934, this Annual Report on Form 10-K has been signed by the following
persons in the capacities and on the dates indicated.



|Signature                                            | Title                                                                                                                                           | Date          
|---------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | --------------
|/s/ Thomas M. SiebelThomas M. Siebel                 | Chairman and Chief  Executive
    Officer
    (Principal Executive Officer)                                                                     | March 26, 2001
|/s/ Kenneth A. GoldmanKenneth A. Goldman             | Senior Vice President Finance
       and Administration and Chief
       Financial Officer (Principal
   Financial and Accounting
     Officer) | March 26, 2001
|/s/ Patricia A. HousePatricia A. House               | Vice Chairman, Co-Founder and Vice
President Strategic Planning                                                                                 | March 26, 2001
|/s/ James C. GaitherJames C. Gaither                 | Director                                                                                                                                        | March 26, 2001
|/s/ Eric E. Schmidt, Ph.D.Eric E. Schmidt, Ph.D.     | Director                                                                                                                                        | March 26, 2001
|/s/ Charles R. SchwabCharles R. Schwab               | Director                                                                                                                                        | March 26, 2001
|/s/ George T. ShaheenGeorge T. Shaheen               | Director                                                                                                                                        | March 26, 2001
|/s/ A. Michael Spence, Ph.D.A. Michael Spence, Ph.D. | Director                                                                                                                                        | March 26, 2001

---