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

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**FORM 10-Q**

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

**For the quarterly period ended September 30, 2001**

**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 reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [  ]

The number of shares outstanding of the registrant's common stock, par value
      $.001 per share, as of October 25, 2001 was 462,362,959.







**SIEBEL SYSTEMS, INC.
                                    FORM 10-Q
                 For the Quarterly Period Ended September 30, 2001
                               Table of Contents**

**Part I.  Financial Information**



|ITEM 1.   Financial Statements                                                                                                                 | Page
|---------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                               |     
|Consolidated Balance Sheets as of
          
December 31, 2000 and September 30, 2001                                                          | 3   
|                                                                                                                                               |     
|Consolidated Statements of Operations and Comprehensive Income 
          
    for the three and nine months ended September 30, 2000 and 2001 | 4   
|                                                                                                                                               |     
|Consolidated Statements of Cash Flows
          
    for the nine months ended September 30, 2000 and 2001                                     | 5   
|                                                                                                                                               |     
|Notes to Consolidated Financial Statements                                                                                                     | 6   
|                                                                                                                                               |     
|ITEM 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                          | 17  
|                                                                                                                                               |     
|ITEM 3.   Quantitative and Qualitative Disclosures About Market Risk                                                                           | 32  
|                                                                                                                                               |     

**Part II.  Other Information**



|ITEM 1.   Legal Proceedings                | 33
|------------------------------------------ | --
|                                           |   
|ITEM 6.   Exhibits and Reports on Form 8-K | 34
|                                           |   
|**Signatures**                             | 36

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**Part I.  Financial Information**

**Item 1.  Financial Statements.**

**SIEBEL SYSTEMS, INC.****Consolidated Balance Sheets
               (in thousands, except per share data; unaudited)**

`December 31,  September 30,
                                                                 2000          2001
                                                             ------------  ------------
Assets

Current assets:
   Cash and cash equivalents............................... $    751,384  $    776,279
   Short-term investments..................................      401,200       771,487
   Marketable equity securities............................       14,285         1,796
   Accounts receivable, net................................      521,358       415,494
   Deferred income taxes...................................       61,825        60,751
   Prepaids and other......................................       92,825        76,061
                                                             ------------  ------------
          Total current assets.............................    1,842,877     2,101,868

Property and equipment, net................................      189,610       349,663
Other assets...............................................       97,546        99,894
Deferred income taxes......................................       31,708        31,708
                                                             ------------  ------------
          Total assets..................................... $  2,161,741  $  2,583,133
                                                             ============  ============

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable........................................ $     24,113  $     40,907
   Accrued expenses........................................      355,159       322,169
   Deferred revenue........................................      202,523       230,689
                                                             ------------  ------------
          Total current liabilities........................      581,795       593,765

Convertible subordinated debentures........................      300,000       300,000
                                                             ------------  ------------
          Total liabilities................................      881,795       893,765
                                                             ------------  ------------

Commitments and contingencies

Stockholders' equity:
  Common stock; $0.001 par value; 2,000,000
    shares authorized; 442,392 and 461,974 shares
    issued and outstanding, respectively...................          442           462
  Additional paid-in capital...............................    1,062,599     1,272,470
  Notes receivable from stockholders.......................       (1,623)         (422)
  Deferred compensation....................................      (15,199)       (9,266)
  Accumulated other comprehensive income...................        7,479        11,201
  Retained earnings........................................      226,248       414,923
                                                             ------------  ------------
          Total stockholders' equity.......................    1,279,946     1,689,368
                                                             ------------  ------------
          Total liabilities and stockholders' equity....... $  2,161,741  $  2,583,133
                                                             ============  ============`

See accompanying notes to consolidated financial statements.

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**SIEBEL SYSTEMS, INC.****Consolidated Statements of Operations and Comprehensive Income
               (in thousands, except per share data; unaudited)**

`Three Months Ended      Nine Months Ended
                                                                 September 30,          September 30,
                                                             ---------------------  ----------------------
                                                               2000        2001        2000        2001
                                                             ---------  ----------  ----------  ----------
Revenues:
  Software................................................. $ 308,776  $  193,473  $  749,592  $  815,413
  Professional services, maintenance and other.............   187,739     235,014     464,158     751,557
                                                             ---------  ----------  ----------  ----------
      Total revenues.......................................   496,515     428,487   1,213,750   1,566,970
                                                             ---------  ----------  ----------  ----------
Cost of revenues:
  Software.................................................     4,882       1,801      14,011       7,642
  Professional services, maintenance and other.............   122,008     135,472     293,428     447,261
                                                             ---------  ----------  ----------  ----------
      Total cost of revenues...............................   126,890     137,273     307,439     454,903
                                                             ---------  ----------  ----------  ----------
      Gross margin.........................................   369,625     291,214     906,311   1,112,067
                                                             ---------  ----------  ----------  ----------
Operating expenses:
  Product development......................................    39,051      53,089      99,017     151,918
  Sales and marketing......................................   197,284     155,965     499,463     562,523
  General and administrative...............................    42,113      37,213     106,995     134,361
  Merger-related expenses..................................        --          --      10,002          --
                                                             ---------  ----------  ----------  ----------
      Total operating expenses.............................   278,448     246,267     715,477     848,802
                                                             ---------  ----------  ----------  ----------
      Operating income.....................................    91,177      44,947     190,834     263,265
Other income, net..........................................    19,358      10,921      49,126      36,216
                                                             ---------  ----------  ----------  ----------
      Income before income taxes...........................   110,535      55,868     239,960     299,481
Income taxes...............................................    43,032      20,671      97,545     110,806
                                                             ---------  ----------  ----------  ----------
      Net income ..........................................    67,503      35,197     142,415     188,675
Accretion of preferred stock...............................        --          --     (98,755)         --
                                                             ---------  ----------  ----------  ----------
      Net income available to common stockholders.......... $  67,503  $   35,197  $   43,660  $  188,675
                                                             =========  ==========  ==========  ==========

Diluted net income per common share........................ $    0.13  $     0.07  $     0.09  $     0.36
                                                             =========  ==========  ==========  ==========
Basic net income per common share.......................... $    0.16  $     0.08  $     0.10  $     0.41
                                                             =========  ==========  ==========  ==========

Shares used in diluted share computation...................   523,684     516,282     513,068     520,402
                                                             =========  ==========  ==========  ==========
Shares used in basic share computation.....................   429,334     460,756     418,181     454,762
                                                             =========  ==========  ==========  ==========
Comprehensive income:
      Net income .......................................... $  67,503  $   35,197  $  142,415  $  188,675
      Other comprehensive income (loss), net of tax:
         Foreign currency translation adjustments..........    (4,500)      7,986      (4,697)      1,317
         Realized (gain) loss previously recognized
           in other comprehensive income...................   (10,040)       (944)    (60,152)     (2,718)
         Unrealized gain (loss) on investments.............     2,367       7,140      (5,929)      5,123
                                                             ---------  ----------  ----------  ----------
              Other comprehensive income (loss)............   (12,173)     14,182     (70,778)      3,722
                                                             ---------  ----------  ----------  ----------
      Total comprehensive income........................... $  55,330  $   49,379  $   71,637  $  192,397
                                                             =========  ==========  ==========  ==========`

See accompanying notes to consolidated financial statements.

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**SIEBEL SYSTEMS, INC.****Consolidated Statements of Cash Flows
                           (in thousands; unaudited)**

`Nine Months Ended
                                                                                      September 30,
                                                                                  ----------------------
                                                                                     2000        2001
                                                                                  ----------  ----------
Cash flows from operating activities:
   Net income................................................................... $  142,415  $  188,675
   Adjustments to reconcile net income to net cash
    provided by operating activities:
      Compensation related to stock options.....................................      7,279       4,047
      Depreciation and amortization.............................................     35,493      81,849
      Exchange of software for cost-method investments..........................     (9,563)       (971)
      Loss from equity method investee..........................................      7,481          --
      Deferred income taxes.....................................................    (27,829)       (556)
      Tax benefit from exercise of stock options................................     97,854      53,800
      Loss (gain) on investments and marketable equity securities...............    (60,152)        355
      Charitable contribution of marketable equity securities...................     28,700          --
      Provision for doubtful accounts and returns, net..........................     18,945      23,404
      Write-down of acquired companies' assets to be disposed of................        622          --
      Changes in operating assets and liabilities:
         Accounts receivable....................................................    (88,164)     83,218
         Prepaids and other.....................................................    (13,657)     17,094
         Accounts payable and accrued expenses..................................    194,822     (17,084)
         Deferred revenue.......................................................     89,215      28,166
                                                                                  ----------  ----------
           Net cash provided by operating activities............................    423,461     461,997
                                                                                  ----------  ----------
Cash flows from investing activities:
   Proceeds from sale of marketable equity securities...........................     35,337         821
   Purchases of property and equipment..........................................   (101,481)   (218,691)
   Purchases, sales and maturities of short-term investments, net...............    (73,295)   (354,090)
   Cash received in connection with Sales.com acquisition.......................         --      11,550
   Purchase consideration paid to the shareholders of Wind S.r.l. ..............     (3,257)       (929)
   Purchase consideration paid to the shareholders of MOHR Development, Inc. ...     (7,905)       (310)
   Purchase consideration paid to the shareholders of Paragren Technologies, Inc    (18,050)     (1,756)
   Other non-operating assets and non-marketable securities.....................     (3,964)    (16,536)
   Repayments from (advances to) affiliate, net.................................    (10,150)     10,579
                                                                                  ----------  ----------
           Net cash used in investing activities................................   (182,765)   (569,362)
                                                                                  ----------  ----------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases...................    130,704     129,742
   Proceeds from issuance of OnLink preferred stock.............................     19,975          --
   Repayments of line of credit and capital lease obligations...................       (222)         --
   Repayments of stockholder notes..............................................         78       1,201
                                                                                  ----------  ----------
           Net cash provided by financing activities............................    150,535     130,943
                                                                                  ----------  ----------
Effect of exchange rate fluctuations on cash and cash equivalents...............     (4,697)      1,317
                                                                                  ----------  ----------
Change in cash and cash equivalents.............................................    386,534      24,895
Cash and cash equivalents, beginning of period..................................    486,321     751,384
                                                                                  ----------  ----------
Cash and cash equivalents, end of period........................................ $  872,855  $  776,279
                                                                                  ==========  ==========
Supplemental disclosures of cash flows information:
   Cash paid for interest....................................................... $   16,226  $   16,768
                                                                                  ==========  ==========

   Cash paid for income taxes................................................... $   14,434  $   17,469
                                                                                  ==========  ==========
Supplemental disclosures of non-cash activities:
   Issuance of common stock for Sales.com....................................... $       --  $   28,235
                                                                                  ==========  ==========
   Conversion of preferred stock into common stock.............................. $  179,214  $       --
                                                                                  ==========  ==========`

See accompanying notes to consolidated financial statements.

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SIEBEL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



1. Summary of Significant Accounting Policies
2. Business Combinations
3. Acquisitions
4. Stockholders' Equity
5. Segment and Geographic Information
6. Commitments and
Contingencies
7. Convertible Subordinated Debentures
8. Preferred Stock and Mandatorily Redeemable Convertible
Preferred Stock
9. Acquisition of nQuire Software, Inc.





Item 2.   Management's Discussion and
Analysis of Financial Condition and Results of Operations.



The statements contained in this Quarterly Report on
Form 10-Q (the "Report") 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.



Overview



Siebel 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, automotive,
technology, public sector and finance markets.  With best-of-class
functionality, 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 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.



In May 2000, October 2000 and November 2000, the Company
acquired OpenSite, OnLink and Janna, respectively.  Each of these acquisitions
has been accounted for as a pooling-of-interests.  Accordingly, the financial
statements of the Company have been restated to include the financial position
and results of operations of each of these entities for all periods
presented.



Results of Operations for the three and nine months ended
September 30, 2000 and 2001



The Company and its subsidiaries are principally
engaged in the design, development, marketing and support of Siebel eBusiness
Applications.  Substantially all of the Company's revenues are derived from the
licensing of the Company's software products and the related professional and
customer support (maintenance) services.   Professional services consist of
implementation services related to the installation of the Company's products
and training revenues, which typically are recognized as the services are
performed on a time and materials basis over a three to six month period
subsequent to licensing of the Company's software.  The implementation services
related to the installation of the Company's products do not include significant
customization to or development of the underlying software code.  First-year
maintenance typically is sold with the related software license and renewed on
an annual basis thereafter.  Maintenance revenue is deferred based on vendor-specific
objective evidence of fair value and amortized over the term of the
maintenance contract, typically 12 months.



The overall demand for the Company's software depends in
large part on the general economic and business conditions.  Throughout the
three and nine months ended September 30, 2001, the global economy and
particularly the economy of the United States continued to weaken and, as a
result, the Company experienced a decrease in sequential quarterly software
license revenues and in the year-on-year growth rate of its software license
revenue.  The recent terrorist attacks upon the United States only exacerbated
this weakening of the global economy and the decline in software license
revenue.  Please refer to the risk factor "Economic conditions could
adversely affect our revenue growth and ability to forecast revenue."  The
Company's professional services, maintenance and other revenues have continued
to grow over the comparable periods in fiscal 2000 due primarily to: (i) the
continued growth in the Company's installed base of customers receiving
maintenance and (ii) the Company services' growth rate not being impacted to the
extent of the software license growth rate due to the fact that implementation
services are typically provided over a three to six month period subsequent to a
license of the Company's software.



Through the use of the Company's proprietary software for
managing the sales pipeline and forecasting revenues, management has responded
to the weakening global economy by further implementing its cost control
initiatives, including reducing advertising expenditures and other discretionary
expenditures, such as travel.  Accordingly, the Company has continued to manage
the Company's operations to ensure a cash-flow positive, profitable business in
these challenging economic times.



The following table sets forth the consolidated statement
of operations data for the three and nine months ended September 30, 2000 and
2001, expressed as a percentage of total revenues:

`Three Months Ended      Nine Months Ended
                                                     September 30,           September 30,
                                                 ----------------------- ----------------------
                                                   2000        2001        2000       2001
                                                 ---------   ---------   ---------  ---------
Revenues:
  Software......................................     62.2 %      45.2 %      61.8 %     52.0 %
  Professional services, maintenance and other..     37.8        54.8        38.2       48.0
                                                 ---------   ---------   ---------  ---------
      Total revenues............................    100.0       100.0       100.0      100.0
                                                 ---------   ---------   ---------  ---------
Cost of revenues:
  Software......................................      1.0         0.4         1.1        0.5
  Professional services, maintenance and other..     24.6        31.6        24.2       28.5
                                                 ---------   ---------   ---------  ---------
      Total cost of revenues....................     25.6        32.0        25.3       29.0
                                                 ---------   ---------   ---------  ---------
        Gross margin............................     74.4        68.0        74.7       71.0
                                                 ---------   ---------   ---------  ---------
Operating expenses:
  Product development...........................      7.9        12.4         8.2        9.7
  Sales and marketing...........................     39.7        36.4        41.2       35.9
  General and administrative....................      8.5         8.7         8.8        8.6
  Merger-related expenses.......................       --          --         0.8         --
                                                 ---------   ---------   ---------  ---------
      Total operating expenses..................     56.1        57.5        59.0       54.2
                                                 ---------   ---------   ---------  ---------
        Operating income........................     18.3        10.5        15.7       16.8
Other income, net...............................      3.9         2.5         4.1        2.3
                                                 ---------   ---------   ---------  ---------
        Income before income taxes..............     22.2        13.0        19.8       19.1
Income taxes....................................      8.6         4.8         8.1        7.1
                                                 ---------   ---------   ---------  ---------
        Net income..............................     13.6 %       8.2 %      11.7 %     12.0 %
                                                 =========   =========   =========  =========`

Revenues







Software license revenues increased by 9% from $749.6
million for the nine months ended September 30, 2000 to $815.4 million for the
nine months ended September 30, 2001 primarily due to an increase in the number
of licenses of Siebel applications sold to new and existing customers, and
licenses of new modules, released with the latest version of Siebel
applications, sold to existing users of Siebel applications.   Throughout the
nine months ended September 30, 2001, the global economy and particularly the
economy of the United States continued to weaken and, as a result, the Company
experienced a decrease in the year-on-year growth rate of its software license
revenue.  Due in part to this decrease in the year-on-year growth rate of
software license revenue and the reasons described above for the quarter ended
September 30, 2001, the Company's software license revenues as a percentage of
total revenues decreased from 62% in the nine months ended September 30, 2000 to
52% in the nine months ended September 30, 2001.



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, Asia, Japan, and Latin America.
International software license revenues were 45% and 42% of total software
license revenues for the three months ended September 30, 2000 and 2001,
respectively, and were 41% and 45% of total software license revenues for the
nine months ended September 30, 2000 and 2001, respectively.  The Company
expects international software license revenues will continue to account for a
significant portion of total software license revenues in the future.



The Company's customers include a number of its suppliers
and, on occasion, the Company has purchased goods or services for the Company's
operations from these vendors at or about the same time Siebel has licensed its
software to these organizations.  These transactions are separately negotiated
and recorded at terms the Company considers to be arm's-length.  During the
three months ended September 30, 2001, the Company recognized $11.7 million of
software license revenues from transactions with vendors where the Company
purchased goods or services from those vendors at or about the same time as the
software license transactions.



During fiscal 2000, the Company established a program whereby
qualified start-up companies could obtain Siebel eBusiness software in exchange
for shares of their equity securities.  Qualified start-up companies are
generally companies that 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 $5.4 million of
software license revenues related to this program during three months ended
September 30, 2000 and none in the three months ended September 30, 2001.



Professional Services, Maintenance and Other.
Professional services, maintenance and other revenues increased from $187.7
million, or 38% of total revenues, for the three months ended September 30, 2000
to $235.0 million, or 55% of total revenues, for the three months ended
September 30, 2001.  Professional services, maintenance and other revenues
increased from $464.2 million, or 38% of total revenues, for the nine months
ended September 30, 2000 to $751.6 million, or 48% of total revenues, for the
nine months ended September 30, 2001.  The increase in the absolute dollar
amount in the fiscal 2001 periods over the comparable periods in fiscal 2000 was
primarily due to growth in the installed base of customers receiving maintenance
and the growth of the Company's consulting and training services.  The increase
in professional services, maintenance and other revenues as a percentage of
total revenues in the fiscal 2001 periods over the comparable periods in fiscal
2000 was also due to the growth in the number of customers receiving maintenance
and in the Company's consulting and training services, along with the decrease
in software license revenues.  The continued growth of the Company's
professional services, maintenance and other revenues depends on the growth of
the Company's software license revenues.  Accordingly, the Company expects that
professional services, maintenance and other revenue in terms of absolute
dollars and as a percentage of total revenues will remain the same or decrease
in the fourth quarter of fiscal 2001 compared to the levels obtained during the
third quarter of fiscal 2001.



Cost of Revenues



Software.  Cost of software license revenues
includes third-party software royalties, product packaging, documentation and
production.  Cost of software license revenues decreased from $4.9 million and
$14.0 million for the three and nine months ended September 30, 2000,
respectively, to $1.8 million and $7.6 million for the three and nine months
ended September 30, 2001, respectively.  As a percentage of software license
revenues, cost of license revenues decreased from 2% in the three and nine
months ended September 30, 2000 to 1% for the three and nine months ended
September 30, 2001.  Cost of license revenues decreased in absolute dollars and
as a percentage of software license revenue primarily due to a shift from
products subject to third-party software royalties and the Company renegotiating
certain third-party royalty agreements to more favorable terms.  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 as a percentage of software
license revenues.



Professional Services, Maintenance and Other.
Cost of professional services, maintenance and other revenues consist primarily
of personnel, facilities and systems costs incurred to provide training,
consulting and other global services.  Cost of professional services,
maintenance and other revenues increased from $122.0 million for the three
months ended September 30, 2000 to $135.5 million for the three months ended
September 30, 2001 and decreased as a percentage of professional services,
maintenance and other revenues from 65% in the third quarter of 2000 to 58% in
the third quarter of 2001.  Cost of professional services, maintenance and other
revenues increased from $293.4 million for the nine months ended September 30,
2000 to $447.3 million for the nine months ended September 30, 2001 and
decreased as a percentage of professional services, maintenance and other
revenues from 63% for the fiscal 2000 period to 60% for the fiscal 2001 period.
The increase in the absolute dollar amount reflects increased costs from the
Company's expansion of its global services organization in order to meet the
demand for the Company's consulting and training services.  The decrease as a
percentage of professional services, maintenance and other revenues reflects a
higher utilization of the Company's global services' personnel, a lower use of
third party contractors and an acceleration of the Company's cost control
initiatives in early 2001, including reductions of headcount in geographic
regions with low personnel utilization.  The Company expects that professional
services, maintenance and other costs as a percentage of professional services,
maintenance and other revenues will remain comparable to the percentage obtained
during the quarter ended September 30, 2001.



Operating Expenses



Product Development.  Product development expenses
include costs 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 $39.1 million
for the three months ended September 30, 2000 to $53.1 million for the three
months ended September 30, 2001 and as a percentage of total revenues, product
development expenses were 8% and 12% in the third quarter of fiscal 2000 and
2001, respectively.  Product development expenses increased from $99.0 million
for the nine months ended September 30, 2000 to $151.9 million for the nine
months ended September 30, 2001 and as a percentage of total revenues, product
development expenses were 8% and 10% of total revenues during the nine months
ended September 30, 2000 and 2001, respectively.  The increase in the absolute
dollar amount of product development expenses was primarily attributable to
costs of additional personnel in the Company's product development operations,
including additional personnel to support the development and testing of the
Company's release of Siebel 2001 ("Siebel 7.0").  The increase as a
percentage of total revenues was primarily due to the growth in the Company's
product development personnel during a period in which the Company's software
license revenues decreased as a result of the weakening global economy.  The
Company expects product development expenses in terms of absolute dollars to
remain comparable in the fourth quarter of fiscal 2001 with the levels in the
third quarter of fiscal 2001 and that product development as a percentage of
total revenues will remain the same as or decrease in the fourth quarter of
fiscal 2001 from the levels in the third quarter of fiscal 2001.  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, along with bad debt expense.
General and administrative expenses decreased from $42.1 million for the three
months ended September 30, 2000 to $37.2 million for the three months ended
September 30, 2001 and as a percentage of total revenues were 9% in both the
three-month periods ended September 30, 2000 and 2001.  The decrease in absolute
dollars from the third quarter of fiscal 2000 to the third quarter of fiscal
2001 was primarily due to management's cost control initiatives, along with
reductions in variable compensation and bad debt expense.  General and
administrative expenses increased from $107.0 million for the nine months ended
September 30, 2000 to $134.4 million for the nine months ended September 30,
2001 and as a percentage of total revenues were 9% in each of the nine months
ended September 30, 2000 and 2001.  The increase in the absolute dollar amount
of general and administrative expenses from the nine months ended September 30,
2000 to the nine months ended September 30, 2001 was primarily due to increased
staffing and associated expenses necessary to manage and support the Company's
increased scale of operations, partially offset by reductions in discretionary
costs as a result of the Company's cost control initiatives.  The Company
believes that general and administrative expenses in terms of absolute dollars
and as a percentage of total revenues will remain comparable in the fourth
quarter of fiscal 2001 to the levels in the third quarter of fiscal 2001.



Merger-Related Expenses.  During the nine months
ended September 30 2000, the Company expensed $10.0 million of direct merger-related
expenses in connection with the Company's acquisition of OpenSite.
These costs primarily consisted of investment banker fees, along with attorneys,
accountants and other professional fees.  The Company settled these liabilities
by December 31, 2000.  The Company did not incur any significant merger-related
costs during the first nine months of 2001.



Operating Income and Operating
Margin



Operating income was $91.2 million and $44.9 million for
the three months ended September 30, 2000 and 2001, respectively, and operating
margin was 18% and 11% in the third quarters of 2000 and 2001, respectively.
Operating margins decreased in the three months ended September 30, 2001 from
the comparable period in 2000 primarily due to: (i) the decrease in software
license revenues on a year-over-year basis as a result of the weakening global
economy and the recent terrorist attacks upon the United States; (ii) the
increase in the Company's investment in product development to support the
release of Siebel 7.0; and (iii) the increase as a percentage of total revenues
during the third quarter of 2001 of professional services, maintenance and other
revenues, which operate at lower margins than software license revenues.
Management's cost control initiatives and the efficiencies obtained from
integrating OpenSite, OnLink and Janna only partially offset the above factors
that contributed to the decline in operating margins.



Operating income increased from $190.8 million for the
nine months ended September 30, 2000 to $263.3 million for the nine months ended
September 30, 2001 and operating margin was 16% and 17% in the nine-month
periods ended September 30, 2000 and 2001, respectively.  Excluding merger-related
expenses, operating income increased from $200.8 million for the first
nine months of 2000 to $263.3 million for the first nine months of 2001 and
operating margin was 17% for each of the nine-month periods ended September 30,
2000 and 2001.  Operating margins during the nine months ended September 30,
2001 remained comparable to the prior year due to the Company's further
implementation of its cost control initiatives and the efficiencies obtained in
integrating OpenSite, OnLink and Janna, both of which offset the negative impact
on operating margins from the decline of software license revenues as a
percentage of total revenues.

Other Income, Net





`Three Months Ended    Nine Months Ended
                                                    September 30,         September 30,
                                                 --------------------  --------------------
                                                   2000       2001       2000       2001
                                                 ---------  ---------  ---------  ---------
Interest income................................ $  16,326  $  16,355  $  39,134  $  52,599
Interest expense...............................    (4,522)    (4,453)   (13,425)   (13,549)
Losses from equity method investee (Sales.com).    (2,073)        --     (7,481)        --
Charitable contributions.......................        --     (1,007)   (28,700)    (1,267)
Gain (loss) on investments.....................    10,040        281     60,152       (355)
Other, net.....................................      (413)      (255)      (554)    (1,212)
                                                 ---------  ---------  ---------  ---------
                                                $  19,358  $  10,921  $  49,126  $  36,216
                                                 =========  =========  =========  =========`

Interest income for the three months ended September 30,
2001 was comparable with that of the three months ended September 30, 2000,
despite the decrease in interest rates, primarily due to the Company's increased
balances of cash, cash equivalents and short-term investments.  Interest income
has increased during the nine months ended September 30, 2001 from the nine
months ended September 30, 2000 primarily due to the increased balances of cash,
cash equivalents and short-term investments, partially offset by a decline in
interest rates.  Interest expense for all periods presented represents interest
on the Company's $300.0 million of convertible subordinated debentures.  In
January 2001, the Company acquired the remaining interest in Sales.com and,
accordingly, no longer accounted for its investment under the equity method of
accounting.  During the three and nine months ended September 30, 2000, the
Company had realized gains on investments of $10.0 million and $60.2 million,
respectively, which primarily represented gains on the Company's investment in
USinternetworking, Inc.  During the three and nine months ended September 30,
2001, the Company's net gains and losses on investments primarily related to the
write-down to fair value of the Company's cost method investments net of
realized gains on short-term investments.  Charitable contributions during the
nine months ended September 30, 2000 were primarily comprised of contributions
of marketable equity securities to various charitable organizations.  Charitable
contributions during the three and nine months ended September 30, 2001
primarily relate to cash contributions made to charities assisting with the
September 11, 2001 disaster relief efforts.  Other, net for all periods
presented is primarily composed of banking fees and foreign currency gains or
losses.



Provision for Income Taxes







Net Income and Net Income Available to Common
Stockholders



The Company had net income of $67.5 million and $35.2
million for the three months ended September 30, 2000 and 2001, respectively.
Net income increased from $142.4 million for the nine months ended September 30,
2000 to $188.7 million for the nine months ended September 30, 2001.



The Company had net income available to common
stockholders of $67.5 million and $35.2 million for the three months ended
September 30, 2000 and 2001, respectively, and net income available to common
stockholders of $43.7 million and $188.7 million for the nine months ended
September 30, 2000 and 2001, respectively.  Net income for the nine months ended
September 30, 2000 has been reduced by accretion on OpenSite's mandatorily
redeemable convertible preferred stock to determine 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 non-cash charges to accretion
and offsetting credits to mandatorily redeemable convertible preferred stock for
the nine months ended September 30, 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.



Diluted net income per share was $0.13 in the third
quarter of 2000 and $0.07 in the third quarter of 2001.  For the nine months
ended September 30, 2000 diluted net income per share was $0.09 compared to
diluted net income per share of $0.36 for the nine months ended September 30,
2001.



Adoption of Accounting Pronouncements



On January 1, 2001, the Company adopted SFAS 133, as
amended by SFAS 137 and SFAS 138.  The cumulative transition adjustment upon
adoption on January 1, 2001 was insignificant.  SFAS 133 establishes accounting
and reporting standards for derivative instruments and hedging activities.  SFAS
133 requires that all derivatives be recognized as either assets or liabilities
at fair value.  Derivatives or portions of derivatives that are not designated
as hedging instruments are adjusted to fair value through earnings and are
recognized in the period of change in their fair value.  The Company does not
believe that ongoing application of SFAS 133 will significantly alter the
Company's hedging strategies.  However, its application may increase the
volatility of other income and expense and other comprehensive income.



Recent Accounting Pronouncements



In July 2001, the Financial Accounting Standards Board issued
SFAS No. 141 "Business Combinations" ("SFAS 141") and SFAS
No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142").
As further described under "Recent Accounting Pronouncements" in Note
1 to the accompanying unaudited financial statements, SFAS 141 and 142 prescribe
new accounting guidance for business combinations and the related acquired
intangible assets.  The Company is currently evaluating the impact the adoption
of these pronouncements may have on its financial position and results of
operations; however, due to the extensive effort needed to comply with adopting
SFAS 141 and 142 and due to the Company's expectations that the FASB will issue
further guidance with respect to adoption of both SFAS 141 and 142, the Company
is currently unable to determine the impact the adoption of these pronouncements
may have on its financial position or results of operations.







Liquidity and Capital Resources



The Company's cash, cash equivalents and short-term
investments in aggregate increased from $1,152.6 million as of December 31, 2000
to $1,547.8 million as of September 30, 2001, representing 53% and 60% of total
assets, respectively.  The Company's days sales outstanding in accounts
receivable was 81 days as of December 31, 2000 compared with 87 days as of
September 30, 2001.



As of September 30, 2001, 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 $423.5 million
and $462.0 million for the nine months ended September 30, 2000 and 2001,
respectively.  For the nine months ended September 30, 2000, cash provided by
operating activities was primarily due to net income of $142.4 million; the tax
benefit from exercise of stock options of $97.9 million; noncash expenses such
as depreciation, amortization and provision for doubtful accounts that in the
aggregate totaled $61.7 million; increases in accounts payable, accrued expenses
and deferred revenue of $284.0 million; partially offset by increases in
accounts receivable and prepaid expenses of $101.8 million and the gain on sale
of marketable equity securities of $60.2 million.  For the nine months ended
September 30, 2001, cash provided by operating activities was primarily due to
net income of $188.7 million; the tax benefit from exercise of stock options of
$53.8 million; noncash expenses such as depreciation, amortization and provision
for doubtful accounts that in the aggregate totaled $109.3 million; decreases in
accounts receivable of $83.2 million and prepaid expenses of $17.1 million; and
increases in deferred revenue of $28.2 million, partially offset by decreases in
accounts payable and accrued expenses of $17.1 million.



Cash used in investing activities was $182.8 million and
$569.4 million for the nine months ended September 30, 2000 and 2001,
respectively.  Cash used in investing activities during the first nine months of
fiscal 2000 was primarily the result of: (i) the Company's purchase of $73.3
million of short-term investments; (ii) the Company's purchase of $101.5 million
of property and equipment, including leasehold improvements; (iii) the
acquisitions of Paragren, MOHR, and Wind for proceeds totaling $29.2 million;
and (iv) advances to an affiliate of $10.2 million, partially offset by proceeds
from the sale of marketable equity securities of $35.3 million.  Cash used in
investing activities during the first nine months of fiscal 2001 was primarily
the result of: (i) the Company's purchase of $354.1 million of short-term
investments; (ii) the Company's purchase of $218.7 million of property and
equipment, including leasehold improvements; (iii) additional purchase price in
the aggregate of $3.0 million paid to the stockholders of Paragren, Wind and
MOHR; and (iv) purchases of other non-operating assets, primarily non-marketable
securities, of $16.5 million, partially offset by cash received in the amount of
$11.6 million as part of the Sales.com acquisition and repayments of $10.6
million from an affiliate.



During the nine months ended September 30, 2001, the
Company increased its capital expenditures primarily as a result of the
following: (i) the expansion of the Company's infrastructure to support the
development and testing of the Company's release of Siebel 7.0; (ii) the
expansion of the Company's domestic and international staff from approximately
7,400 employees as of December 31, 2000 to approximately 7,800 employees as of
September 30, 2001; (iii) increased purchases of tenant improvements and
furniture and fixtures due to converting the Company's full-serviced office
suites, which were rented on a month-to-month basis, to leased space; and (iv)
increased purchases of tenant improvements and furniture and fixtures for new
leased facilities.  This transition to leased space 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 may purchase land and buildings in the future to
meet its facilities' needs.



Cash provided by financing activities was $150.5 million
and $130.9 million for the nine months ended September 30, 2000 and 2001,
respectively.  For the nine months ended September 30, 2000, the Company's
financing activities consisted primarily of $130.7 million of proceeds from the
issuance of common stock pursuant to the exercise of stock options and the
Company's employee stock purchase plan, along with proceeds of $20.0 million
from the issuance of preferred stock by OnLink prior to its acquisition by the
Company.  For the nine months ended September 30, 2001, the Company's financing
activities consisted primarily of $129.7 million of proceeds from the issuance
of common stock pursuant to the exercise of stock options and the Company's
employee stock purchase plan.



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

Set forth below and elsewhere in this Report and in
the other documents we file with the SEC are risks and uncertainties that could
cause actual results to differ materially from the results contemplated by the
forward-looking statements contained in this Report.  Prospective and existing
investors are strongly urged to carefully consider the various cautionary
statements and risks set forth in this Report and our other public filings.

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;
- 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 domestic and international economic and
business conditions 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;
- Domestic and international economic and business
conditions; 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.



Economic conditions could adversely affect our revenue growth
and ability to forecast revenue.

The revenue growth and profitability of
our business depends on the overall demand for eBusiness application software
and services.  Because our sales are primarily to major corporate and government
customers, our business also depends on general economic and business
conditions.  The general weakening of the global economy has caused the Company
to experience a decrease in the growth rate of its software license revenues in
the first nine months of 2001.  A softening of demand for computer software
caused by a continued weakening of the economy, domestically or internationally,
may result in a continued decrease in revenues and growth rates.  In addition,
the financial, political, economic and other uncertainties following the recent
terrorist attacks upon the United States have lead to a further weakening of the
global economy.  Subsequent terrorist acts and/or the threat of future outbreak
or continued escalation of hostilities involving the United States or other
countries could adversely affect the growth rate of the Company's software
license revenue and have an adverse effect on our business, operating results
and financial condition.



Management uses our proprietary software to identify, track
and forecast future revenues, backlog and trends in our business.  Our sales
personnel monitor the status of all proposals, such as the date when they
estimate that a transaction will close and the potential dollar amount of such
sale.  We aggregate these estimates periodically in order to generate a sales
pipeline and then evaluate the pipeline at various times to look for trends in
our business.  While this pipeline analysis provides visibility to our potential
customers and the associated revenues for budgeting and planning purposes, these
pipeline estimates may not consistently correlate to revenues in a particular
quarter or over a longer period of time.  A slowdown in the economy,
domestically and internationally, has caused and may continue to cause customer
purchasing decisions to be delayed, reduced in amount or canceled, all of which
have reduced and could continue to reduce the rate of conversion of the pipeline
into contracts.  A variation in the pipeline or in the conversion of the
pipeline into contracts could cause us to plan or budget improperly and thereby
could adversely affect our business, financial condition or results of
operations.  In addition, primarily due to a substantial portion of our license
revenue contracts closing in the latter part of a quarter, management may not be
able to adjust the Company's cost structure in response to a variation in the
conversion of the pipeline into contracts in a timely manner, and thereby
adversely affecting our business, financial condition or results of
operations.

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, financial condition, and results of
operations.

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 provide

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.  Prior sales and implementation cycles should not be relied upon 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 manage the size of our
employee base, particularly our direct sales force and global support staff.

The majority of our expenses are personnel-related
costs such as employee compensation and benefits, along with the cost of the
infrastructure (occupancy and equipment) to support our employee base.  The
failure to adjust our employee base, particularly our direct sales force and
technical and global services staff, to the appropriate level to support our
revenues could materially and adversely affect our business, operating results
and financial condition.  In addition, expansion of the distribution of our
products may place new and increased demands on our direct sales force and
technical and sales support staff.  Although we currently invest sufficient
resources in our direct sales force and our technical and global services staff,
there are only a limited number of qualified personnel in these areas.  Our
ability to achieve expanded distribution and revenue growth in the future will
depend, in part, on our success in recruiting and training sufficient direct
sales, technical and global services personnel.  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 a number of relationships with resellers, which assist us in
obtaining 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 gaining new customers and
maintaining relationships with our existing customers.  From quarter to quarter,
a relatively small number of customers generally account for a significant
percentage of our revenues.  License revenues from our ten largest customers in
the three and nine months ended September 30, 2001 accounted for 39% and 27%,
respectively, of total license revenues for such period.  We expect that
licenses of our products to a limited number of customers will continue to
account for a significant percentage of revenue in an individual quarter for the
foreseeable future.  However, because the top ten customers vary from quarter to
quarter, we anticipate that license revenues from the top ten customers for the
year ending December 31, 2001 will continue to decrease as a percentage of total
license revenues.  The failure to successfully market our products to new
customers or to new industries, or the loss of a small number of customers or
any reduction or delay in orders by any such customer, 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 (e.g. Siebel 7.0, which is scheduled for release in the
fourth quarter of 2001).  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 Amdocs Limited, Dendrite, International, Inc., E.piphany, Inc.,
FrontRange Solutions, Inc., Interact Commerce Corporation, Kana Communications,
Inc., ONYX Software Corporation, Oracle Corporation, PeopleSoft, Inc., Pivotal
Corporation, Remedy Corporation, and SAP AG 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.
In addition, this growth may require us to implement new systems or upgrade
current systems, and the failure to successfully implement such new or improved
systems could materially and adversely affect our business.  To manage future
growth, we must continue to (i) implement and improve our financial, operational
and management controls, reporting systems and procedures on a timely basis and
(ii) expand, train and manage our employee work force.



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 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.

Earlier this year the western United States (and
California in particular) experienced significant power shortages, and such
shortages may continue or worsen in the near future.  As a result, energy costs
in California, including natural gas and electricity, have risen significantly
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 shortage recurs or worsens.  In addition, certain of our
operations or facilities may be subject to "rolling blackouts" or
other unscheduled interruptions of electrical power.  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 business, operating results and financial condition.

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.  None of our key employees
has entered into an employment agreement with us.  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.  On May 24, 2001, we
announced the appointment of William R. McDermott as our Executive Vice
President, Worldwide Sales Operations.  He replaced Thomas E. Hogan, who
resigned in March of 2001.  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.



Catastrophic events could
negatively affect our information technology infrastructure.

The efficient operation of our business, and
ultimately our operating performance, depends on the uninterrupted use of our
critical business and information technology systems.  Many of these systems
require the use of specialized hardware and other equipment that is not readily
available.  A significant portion of these critical business and information
technology systems are concentrated at or near the same location.  In the event
of a natural disaster, a fire or other catastrophic event, such as the recent
terrorist attacks upon the United States, at these locations that results in the
destruction of these systems, the replacement of these systems and restoration
of the archived data and normal operation of our business could take several
days to several weeks.  During the intervening period when our critical business
and information technology systems are inoperable, our ability to conduct normal
business operations could be significantly and adversely impacted and as a
result our business, operating results and financial condition could be
adversely affected.



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 7 to the unaudited consolidated financial
statements).  As a result of this outstanding indebtedness, our principal and
interest payment obligations are substantial.  Moreover, in the future, we may
obtain equipment loans and lease lines to finance capital expenditures and may
obtain additional long-term debt, working capital lines of credit and lease
lines.  While our current cash and short-term investments are sufficient to pay
our current outstanding indebtedness, we may be unable to generate sufficient
cash to pay the principal of, interest on and other amounts due in respect of
our current and future indebtedness when due.  We cannot assure you that any
future financing arrangements will be available, or if available, on terms
acceptable to us.  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 or purchases are denominated in foreign
currency, any fluctuation in 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 or purchase
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.  In certain
instances, we have not hedged foreign currency receivables and payables 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 September 30, 2001.  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, changes in the domestic and international
economic, political, and business conditions, 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 Systems Inc.  Please see Note 2 to the unaudited
consolidated financial statements for a more detailed description of this
transaction.  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 3.   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.  The first table includes the Company's foreign currency contracts
used to minimize the impact of changes in currency rates on existing foreign
currency receivables, payables and intercompany balances, which are subject to
exchange rate risk.  The second table includes the Company's 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, by currency, as of September 30, 2001.  All of the Company's
foreign currency forward contracts mature within a year.  Contract amounts are
representative of the expected payments to be made under these instruments (in
thousands):

`Contract                  Fair Value at
                                              Amount       Contract    September 30,
                                          (Local Currency)  Amount      2001 (US$)
                                          ---------------  ---------   ------------
Australian dollars ("AUD") (contracts
  to pay AUD/receive US$)................     (AUD) 5,319   US$3,431  $        822

Brazilian real ("BRL") (contracts to
  pay BRL/receive US$)...................     (BRL) 8,637   US$3,193  $         32

British pounds ("GBP") (contracts to
  pay GBP/receive EUR)...................       (GBP) 729  EUR 1,315  $        138

Japanese yen ("YEN") (contracts to
  pay Yen/receive US$)................... (YEN) 1,798,491  US$14,972  $       (293)

Mexican peso ("MXN") (contracts
  to pay MXN/receive US$)................    (MXN) 18,582   US$2,017  $         65

Singapore dollars ("SGD") (contracts
  to pay SGD/receive US$)................     (SGD) 3,761   US$2,168  $         40

Canadian dollars ("CAD") (contracts
  to receive CAD/pay US$)................     (CAD) 7,640   US$4,882  $        (24)

Euro ("EUR") (contracts to receive
  EUR/pay US$)...........................    (EUR) 17,752  US$16,033  $        347

Swedish krona ("SEK") (contracts to
  receive SEK/pay EUR)...................    (SEK) 20,449  EUR 2,166  $        (96)

Swiss Franc ("CHF") (contracts to
  receive CHF/pay EUR)...................     (CHF) 9,522  EUR 6,386  $         58`



`Expected maturity date
                         ------------------------------------------------------
                                                                        There-
                           2001     2002      2003     2004     2005    after
                         -------- --------- -------- -------- -------- --------
US Treasury and Agency
  securities............  $9,117   $49,326  $84,728  $25,119  $31,555   27,790
Wtd. Avg. Yld...........    2.95%     2.86%    3.04%    3.26%    3.49%    4.42%

Corporate bonds......... $47,626  $121,091  $96,015  $57,796  $39,664  $49,321
Wtd. Avg. Yld...........    2.98%     3.37%    3.56%    4.10%    4.94%    5.04%

Asset-backed securities.      --   $15,877  $33,842  $48,064  $16,391   18,165
Wtd. Avg. Yld...........              3.19%    3.98%    4.22%    4.44%    4.71%`





The Company manages its interest rate risk by maintaining
an investment portfolio with debt instruments of high credit quality and
relatively short average 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 sector.  The Company typically does
not attempt to reduce or eliminate its market exposure on these securities.  A
10% adverse change in the equity prices would result in an approximate $180,000
decrease in the fair value of the Company's marketable equity securities as of
September 30, 2001.



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

Part II.	Other Information

Item 1.	Legal Proceedings.



The Company is subject to legal proceedings
and claims, either asserted or unasserted, which arise in the ordinary course of
business.  While the outcome of these proceedings and claims cannot be predicted
with certainty, management does not believe that the outcome of any of these
legal matters will have a material adverse effect on the Company's consolidated
results of operations or consolidated financial position.



Item 6.	Exhibits and Reports on Form 8-K.

(a) Exhibits.

|Exhibit Number | Description of Document                                                                                                                                                                           
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            | 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. (1)          
|2.2            | 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. (2)
|2.3            | Arrangement Agreement dated September 11, 2000 among the Registrant, certain indirectly
wholly-owned subsidiaries of the Registrant, and Janna Systems Inc. (3)                                   
|3.1            | Amended and Restated Certificate of Incorporation of the Registrant, as amended to date. (4)                                                                                                      
|3.2            | Bylaws of the Registrant. (5)                                                                                                                                                                     
|4.1            | Reference is made to Exhibit 3.1 and Exhibit 3.2.                                                                                                                                                 
|4.2            | Specimen Stock Certificate. (5)                                                                                                                                                                   
|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. (5)                                        
|4.4            | Certificate of Designation of Series A1 Preferred Stock of the Registrant. (3)                                                                                                                    
|10.1           | Registrant's 1996 Equity Incentive Plan, as amended. (6)                                                                                                                                          
|10.2           | Registrant's Employee Stock Purchase Plan, as amended. (7)                                                                                                                                        
|10.3           | Form of Indemnity Agreement entered into between the Registrant and its officers and directors. (5)                                                                                               
|10.4           | Registrant's Deferred Compensation Plan, dated January 10, 1997. (8)                                                                                                                              
|10.5           | Lease Agreement, dated June 4, 1996, by and between the Registrant and Crossroad Associates
and Clocktower Associates. (5)                                                                        
|10.6           | Lease Agreement, dated March 11, 1999, by and between the Registrant and Sobrato Interests III,
as amended. (9)                                                                                   
|10.6.1         | First Amendment to Lease  dated June 11, 1999 and Second Amendment to Lease dated
July 31, 1999. (10)                                                                                             
|10.7           | Lease Agreement, dated March 11, 1999, by and between the Registrant and Sobrato Interests III,
as amended. (9)                                                                                   
|10.7.1         | First Amendment to Lease  dated June 11, 1999 and Second Amendment to Lease dated
July 31, 1999. (10)                                                                                             
|10.8           | Lease Agreement, dated June 11, 1999, by and between the Registrant and Sobrato Interests III,
as amended. (9)                                                                                    
|10.8.1         | First Amendment to Lease  dated September 23, 2000. (10)                                                                                                                                          
|10.9           | Lease Agreement, dated August 24, 1994, by and between the Registrant and Watergate Tower
Associates. (9)                                                                                         
|10.10          | Lease Agreement, dated August 16, 1999, by and between the Registrant and Spieker
Properties, L.P. (9)                                                                                            
|10.11          | Lease Amendment 10, dated April 8, 1999, by and between the Registrant and Spieker
Properties, L.P. (9)                                                                                           
|10.12          | Lease Amendment 11, dated August 13, 1999, by and between the Registrant and Spieker
Properties, L.P. (9)                                                                                         
|10.13          | Lease Amendment 12, dated October 28, 1999, by and between the Registrant and Spieker
Properties, L.P. (9)                                                                                        
|10.14          | Registrant's 1998 Equity Incentive Plan, as amended. (11)                                                                                                                                         

__________________



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

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

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

(4)	Incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.

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

(6)	Incorporated by reference to the Registrant's Definitive
Proxy Statement on Schedule 14A filed on September 17, 1999.

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

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

(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 Quarterly
Report on Form 10-Q for the quarter ended September 30, 2000.

(11)	Incorporated by reference to the Registrant's
Registration Statement on Form S-8 (No. 333-72218), as amended.





(b)	Reports on Form 8-K.

None.

---

**SIGNATURES**

Pursuant to the requirement of the Security Exchange 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.(Registrant)Dated: November 12, 2001By:
    /s/ Kenneth A. GoldmanKenneth A. GoldmanSenior Vice President Finance and
                                    Administration and
                                    Chief Financial Officer(Principal Financial Officer)

| | 
| | 
| | 

Dated: November 12, 2001



| |     |                    
| | --- | -------------------
| | By: | /s/ Paul J. Gifford

| |                               
| | ------------------------------
| |                               
| | Paul J. Gifford               
| | Vice President, Controller    
| | (Principal Accounting Officer)

---