**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, 2000**

**OR**

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

**For the transition period from ________to _________**

**Commission file number 0-20725**

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



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

**2207 Bridgepoint ParkwaySan Mateo, CA     94404**(Address of principal executive offices)

**(650) 295-5000**(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 31, 2000, was 429,542,402.







**SIEBEL SYSTEMS, INC.
                                    FORM 10-Q
                 For the Quarterly Period Ended September 30, 2000
                               Table of Contents**

**Part I.  Financial Information**



|ITEM 1.   Financial Statements                                                                                                                | Page
|--------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                              |     
|Consolidated Balance Sheets as of
          
September 30, 2000 and December 31, 1999                                                         | 3   
|                                                                                                                                              |     
|Consolidated Statements of Operations and Comprehensive Income
          
    for the three and nine months ended September 30, 2000 and 1999 | 4   
|                                                                                                                                              |     
|Consolidated Statements of Cash Flows
          
    for the nine months ended September 30, 2000 and 1999                                    | 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                                                                          | 30  
|                                                                                                                                              |     

**Part II.  Other Information**



|ITEM 1.   Legal Proceedings                         | 32
|--------------------------------------------------- | --
|                                                    |   
|ITEM 2.   Changes in Securities and Use of Proceeds | 32
|                                                    |   
|ITEM 6.   Exhibits and Reports on Form 8-K          | 32
|                                                    |   
|**Signatures**                                      | 35

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**Part I.  Financial Information**

**Item 1.  Financial Statements.**

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

`September 30,  December 31,
                                                           2000          1999
                                                       ------------  ------------
Assets

Current assets:
   Cash and cash equivalents......................... $    858,603  $    476,409
   Short-term investments............................      272,618       197,565
   Marketable equity securities......................       37,088       141,939
   Accounts receivable, net..........................      353,193       295,396
   Deferred income taxes.............................       40,713          --
   Prepaids and other................................       41,940        31,050
                                                       ------------  ------------
          Total current assets.......................    1,604,155     1,142,359

Property and equipment, net..........................      137,430        57,939
Other assets.........................................       72,581        41,612
                                                       ------------  ------------
          Total assets............................... $  1,814,166  $  1,241,910
                                                       ============  ============

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable.................................. $      9,101  $     12,049
   Accrued expenses..................................      303,193       128,119
   Income taxes payable..............................       20,351          --
   Deferred revenue..................................      174,882        87,933
   Deferred income taxes.............................         --          22,240
                                                       ------------  ------------
          Total current liabilities..................      507,527       250,341

Convertible subordinated debentures..................      300,000       300,000
Deferred income taxes................................        1,429         1,439
                                                       ------------  ------------
          Total liabilities..........................      808,956       551,780
                                                       ------------  ------------

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

Commitments and contingencies

Stockholders' equity:
  Common stock; $0.001 par value; 800,000
    shares authorized; 421,237 and 391,064 shares
    issued and outstanding, respectively.............          421           391
  Additional paid-in capital.........................      819,189       413,108
  Notes receivable from stockholders.................         (406)         (484)
  Deferred compensation..............................       (1,191)       (1,297)
  Accumulated other comprehensive income.............       13,692        83,611
  Retained earnings..................................      173,505       114,342
                                                       ------------  ------------
          Total stockholders' equity.................    1,005,210       609,671
                                                       ------------  ------------
          Total liabilities and stockholders' equity. $  1,814,166  $  1,241,910
                                                       ============  ============`

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       1999         2000       1999
                                                       ---------  ----------  -----------  ---------
Revenues:
  Software........................................... $ 300,379  $  127,680  $   735,766  $ 333,351
  Professional services, maintenance and other.......   180,570      80,803      445,088    194,309
                                                       ---------  ----------  -----------  ---------
      Total revenues.................................   480,949     208,483    1,180,854    527,660
                                                       ---------  ----------  -----------  ---------
Cost of revenues:
  Software...........................................     4,881       1,626       13,957      5,309
  Professional services, maintenance and other.......   118,844      50,211      284,668    113,122
                                                       ---------  ----------  -----------  ---------
      Total cost of revenues.........................   123,725      51,837      298,625    118,431
                                                       ---------  ----------  -----------  ---------
      Gross margin...................................   357,224     156,646      882,229    409,229
                                                       ---------  ----------  -----------  ---------
Operating expenses:
  Product development................................    35,880      18,290       89,859     54,319
  Sales and marketing................................   187,752      78,018      475,195    201,110
  General and administrative.........................    38,254      17,558       95,640     44,045
  Merger-related expenses............................         --          --      10,002          --
                                                       ---------  ----------  -----------  ---------
      Total operating expenses.......................   261,886     113,866      670,696    299,474
                                                       ---------  ----------  -----------  ---------
      Operating income...............................    95,338      42,780      211,533    109,755
Other income, net....................................    19,220       2,797       48,418      7,156
                                                       ---------  ----------  -----------  ---------
      Income before income taxes.....................   114,558      45,577      259,951    116,911
Income taxes.........................................    43,532      18,316      102,033     44,441
                                                       ---------  ----------  -----------  ---------
      Net income ....................................    71,026      27,261      157,918     72,470

Accretion of preferred stock.........................         --     (3,104)     (98,755)   (45,013)
                                                       ---------  ----------  -----------  ---------
      Net income available to common stockholders.... $  71,026  $   24,157  $    59,163  $  27,457
                                                       =========  ==========  ===========  =========

Diluted net income available per common share........ $    0.14  $     0.05  $      0.12  $    0.06
                                                       =========  ==========  ===========  =========

Basic net income available per common share.......... $    0.17  $     0.06  $      0.15  $    0.07
                                                       =========  ==========  ===========  =========

Shares used in diluted net income available
 per common share computation........................   506,237     453,965      496,056    442,921
                                                       =========  ==========  ===========  =========

Shares used in basic net income available
 per common share computation........................   417,248     380,164      406,405    374,283
                                                       =========  ==========  ===========  =========

Comprehensive income:
      Net income .................................... $  71,026  $   27,261  $   157,918  $  72,470
Other comprehensive income (loss), net
  of tax:
      Foreign currency translation adjustments.......    (4,085)        465       (3,838)       726
      Unrealized gain (loss) on securities...........    (7,673)    (10,213)     (66,081)    25,151
                                                       ---------  ----------  -----------  ---------
Other comprehensive income (loss)....................   (11,758)     (9,748)     (69,919)    25,877
                                                       ---------  ----------  -----------  ---------
      Total comprehensive income..................... $  59,268  $   17,513  $    87,999  $  98,347
                                                       =========  ==========  ===========  =========`

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        1999
                                                                   ----------  ----------
Cash flows from operating activities:
   Net income.................................................... $  157,918  $   72,470
   Adjustments to reconcile net income to net cash
    provided by operating activities:
      Compensation related to stock options......................        608         168
      Compensation related to stock warrants.....................         --         269
      Depreciation and amortization..............................     31,781      16,482
      Exchange of software for cost-method investments...........     (9,563)         --
      Loss from equity method investee...........................      7,481          --
      Deferred income taxes......................................    (22,462)     (2,939)
      Tax benefit from exercise of stock options.................     97,854      33,575
      Loss on disposal of property and equipment.................         --         737
      Write-down of assets acquired in OpenSite Merger...........        622          --
      Gain on sale of marketable equity securities...............    (60,152)         --
      Charitable contribution of marketable equity securities....     28,700          --
      Provision for doubtful accounts and returns, net...........     18,945       5,462
      Changes in operating assets and liabilities:
         Accounts receivable.....................................    (75,349)    (99,505)
         Prepaids and other......................................     (9,930)     (7,360)
         Accounts payable and accrued expenses...................    189,223      34,493
         Deferred revenue........................................     85,354      12,345
                                                                   ----------  ----------
           Net cash provided by operating activities.............    441,030      66,197
                                                                   ----------  ----------
Cash flows from investing activities:
   Proceeds from sale of marketable equity securities............     35,337          --
   Purchases of property and equipment...........................    (99,436)    (27,667)
   Purchases, sales and maturities of short-term investments, net    (74,289)     (7,500)
   Proceeds from disposal of property and equipment..............         --      13,260
   Cash acquired in acquisitions.................................         --         993
   Purchase of Paragren Technologies, Inc........................    (18,050)         --
   Purchase of Wind S.r.l. ......................................     (3,257)         --
   Purchase of MOHR Development, Inc., net of acquired cash......     (7,905)         --
   Other non-operating assets and non-marketable securities......     (3,946)     (4,289)
   Advance to affiliate, net.....................................    (10,150)         --
                                                                   ----------  ----------
           Net cash used in investing activities.................   (181,696)    (25,203)
                                                                   ----------  ----------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases....    126,620      43,536
   Proceeds from issuance of mandatorily redeemable convertible
      preferred stock............................................         --      23,875
   Proceeds from issuance of convertible debt, net...............         --     291,750
   Borrowings on line of credit..................................         --       4,431
   Repayments of line of credit and capital lease obligations....         --        (726)
   Subchapter S distributions....................................         --      (1,289)
   Repurchase of common stock and preferred stock................         --      (4,193)
   Repayments of stockholder notes...............................         78          --
                                                                   ----------  ----------
           Net cash provided by financing activities.............    126,698     357,384
                                                                   ----------  ----------
Effect of exchange rate fluctuations on cash and cash equivalents     (3,838)          4
                                                                   ----------  ----------
Change in cash and cash equivalents..............................    382,194     398,382
Cash and cash equivalents, beginning of period...................    476,409      83,017
                                                                   ----------  ----------
Cash and cash equivalents, end of period......................... $  858,603  $  481,399
                                                                   ==========  ==========
Supplemental disclosures of cash flows information:
   Cash paid for interest........................................ $   16,225  $       --
                                                                   ==========  ==========

   Cash paid for income taxes.................................... $   14,383  $   14,667
                                                                   ==========  ==========
Supplemental disclosures of non-cash activities:
   Purchase price payable-MOHR................................... $    3,000  $       --
                                                                   ==========  ==========

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

   Convertible notes issued for acquisitions..................... $       --  $    6,685
                                                                   ==========  ==========
   Common stock issued for acquisitions.......................... $       --  $    4,934
                                                                   ==========  ==========`

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

Siebel Systems, Inc. ("Siebel" or the "Company")
is the market leader in eBusiness application software for organizations focused
on increasing sales, marketing and customer service effectiveness in field
sales, customer service, telesales, telemarketing, call centers, and third-party
resellers. The Company designs, develops, markets, and supports Siebel eBusiness
Applications, a leading Web-based application software product family designed
to meet the sales, marketing and customer service information system
requirements of even the largest multi-national organizations.

In May 2000 and December 1999, the Company acquired
OpenSite Technologies, Inc. ("OpenSite") and OnTarget, Inc. ("OnTarget"),
respectively, in business combinations accounted for as poolings-of-interests.
Accordingly, all financial information has been restated to reflect the combined
operations of Siebel and these two companies. See Note 2.

Stock Split

On both September 8, 2000 and November 12, 1999,
the Company completed a 2-for-1 stock split though the issuance of a stock
dividend. The accompanying consolidated financial statements have been restated
to give effect to both of these stock splits.

Basis of Presentation

The accompanying unaudited consolidated financial
statements have been prepared on substantially the same basis as the audited
consolidated financial statements, and in the opinion of management include all
adjustments, consisting only of normal recurring adjustments, necessary for
their fair presentation. All amounts included herein related to the financial
statements as of September 30, 2000 and the three and nine months ended
September 30, 2000 and 1999 are unaudited. The interim results presented are not
necessarily indicative of results for any subsequent quarter or for the year
ending December 31, 2000.

Principles of Consolidation

The accompanying consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries. All intercompany accounts and transactions have been
eliminated.

Revenue Recognition

On January 1, 1998, the Company adopted the
provisions of Statement of Position No. 97-2, "Software Revenue Recognition"
("SOP 97-2"). Revenue is recognized under SOP 97-2 when persuasive evidence of
an arrangement exists and delivery has occurred, provided the fee is fixed and
determinable, collectibility is probable and the arrangement does not require
significant customization of the software. Under SOP 97-2, revenue on multiple
element arrangements is allocated to the various elements based on fair values
specific to the Company.

On January 1, 2000, the Company adopted the provisions of
Statement of Position No. 98-9, "Software Revenue Recognition with Respect to
Certain Arrangements," which requires recognition of revenue using the "residual
method" in a multiple element arrangement when fair value does not exist for one
or more of the undelivered elements in the arrangement. Under the "residual
method," the total fair value of the undelivered elements is deferred and
subsequently recognized in accordance with SOP 97-2.

Professional services, maintenance and other revenues
relate primarily to consulting services, maintenance and training. Maintenance
revenues are recognized ratably over the term of the maintenance contract,
typically 12-months. Consulting and training revenues are recognized as the
services are performed and are usually on a time and materials basis. Such
services primarily consist of implementation services related to the
installation of the Company's products and do not include significant
customization to or development of the underlying software code.

The Company's customer base includes a number of its
suppliers (e.g., AT&T Corporation, BankBoston Robertson Stephens, Bank of
America Corporation, Cabletron Systems, Inc., The Charles Schwab Corporation,
Cisco Systems, Inc., Compaq Computer Corporation, Dell Computer Corporation,
Lucent Technologies, Inc., MCI WorldCom Inc., Microsoft Corporation, PeopleSoft,
Inc., Siemens Corporation and Sun Microsystems, Inc.). 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.



Cost of Revenues

Cost of software consists primarily of media,
product packaging, documentation and other production costs, and third-party
royalties. Cost of professional services, maintenance and other consists
primarily of salaries, benefits and allocated overhead costs related to
consulting, training and customer support personnel, including cost of services
provided by third party consultants engaged by the Company.

Use of Estimates

The preparation of consolidated financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Cash, Cash Equivalents, Short-Term Investments and
Marketable Equity Securities

The Company considers all highly liquid
investments with an original maturity of 90 days or less to be cash equivalents.
Short-term investments generally consist of highly liquid securities with
original maturities in excess of 90 days. Marketable equity securities include
the Company's investment in three publicly traded companies. The Company has
classified its short-term investments and marketable equity securities as
"available for sale." Such investments are carried at fair value with unrealized
gains and losses, net of related tax effects, reported within accumulated other
comprehensive income (loss). Realized gains and losses on available for sale
securities are computed using the specific identification method.

Property and Equipment

Property and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation is calculated using the
straight-line method over the estimated useful lives of the respective assets,
generally three to five years. Leasehold improvements are amortized over the
lesser of the lease term or the estimated useful lives of the improvements,
generally seven years.

Expenditures for maintenance and repairs are charged to
expense as incurred. Cost and accumulated depreciation of assets sold or retired
are removed from the respective property accounts, and gain or loss is reflected
in the statement of operations.

Software Development Costs

Software development costs associated with new
products and enhancements to existing software products are expensed as incurred
until technological feasibility in the form of a working model has been
established. To date, the time period between the establishment of technological
feasibility and completion of software development has been short, and no
significant development costs have been incurred during that period.
Accordingly, the Company has not capitalized any software development costs to
date.

Intangible Assets

Included in other assets are various intangible
assets, primarily goodwill related to acquisitions. These amounts are being
amortized over three to five years using the straight-line method. Gross
intangible assets were $50,503,000 and $17,421,000 at September 30, 2000 and
December 31, 1999, respectively, and the related accumulated amortization was
$12,328,000 and $4,459,000 at September 30, 2000 and December 31, 1999,
respectively.

Advertising

Advertising costs are expensed as incurred.
Advertising expense is included in sales and marketing expense and amounted to
$12,635,000 and $32,122,000 for the three and nine months ended September 30,
2000, respectively, and $6,547,000 and $20,558,000 for the three and nine months
ended September 30, 1999, respectively.

Income Taxes

The Company uses the asset and liability method
of accounting for income taxes. Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the consolidated financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. Deferred tax assets are
recognized for deductible temporary differences, along with net operating loss
carryforwards and credit carryforwards if it is more likely than not that the
tax benefits will be realized. To the extent a deferred tax asset cannot be
recognized under the preceding criteria, allowances must be established.
Deferred tax assets and liabilities are measured using enacted tax rates in
effect for the year in which those temporary differences are expected to be
recovered or settled.

The provision for income taxes would not have been
materially different from the income tax provision as presented if OnTarget (an
S corporation for income-tax reporting purposes prior to acquisition in December
1999) had been a C corporation during the three and nine months ended September
30, 1999.

Net Income Available Per Common Share

Basic net income per share is computed using the
weighted average number of shares of common stock outstanding. Diluted net
income per share is computed using the weighted average number of shares of
common stock and, when dilutive, potential common shares from options to
purchase common stock and warrants outstanding using the treasury stock method.
Dilutive net income per share also gives effect, when dilutive, to the
conversion of the convertible notes, subordinated debentures, and mandatorily
redeemable convertible preferred stock, using the if-converted method.

For both basic and diluted net income available per
common share, the Company has reduced net income by the accretion of mandatorily
redeemable convertible preferred stock to arrive at the net income available to
common stockholders. See Note 7.

Employee Stock Option and Purchase Plans

The Company accounts for its stock-based
compensation plans using the intrinsic value method. As such, compensation
expense is recorded on the date of grant if the current market price of the
underlying stock exceeds the exercise price. The Company
records and measures deferred compensation for options granted to non-employees
at their fair value.

Foreign Currency Translation

The Company considers the functional currency of
its foreign subsidiaries to be the local currency, and accordingly, the foreign
currency is translated into U.S. dollars using exchange rates in effect at
period end for assets and liabilities and average exchange rates during each
reporting period for the results of operations. Adjustments resulting from
translation of foreign subsidiary financial statements are reported within
accumulated other comprehensive income.

The Company utilizes foreign currency forward contracts
to hedge its exchange risk on foreign currency receivables, payables, and
intercompany balances. While these forward contracts are subject to fluctuations
in value, which are recorded in current results of operations, such fluctuations
are generally offset by the changes in value of the underlying exposures being
hedged. The Company does not hold or issue financial instruments for speculative
or trading purposes.

Concentrations of Credit Risk

Financial instruments that potentially subject
the Company to a concentration of credit risk principally consist of trade
accounts receivable. The Company performs ongoing credit evaluations of its
customers and generally does not require collateral on accounts receivable, as
the majority of the Company's customers are large, well established companies.
The Company maintains reserves for potential credit losses, but historically has
not experienced any significant losses related to any particular industry or
geographic area since the Company's business is not concentrated on any one
particular customer or customer base. No single customer accounts for more than
10% of total revenues, and the Company's customer base is sufficiently broad
such that the Company does not consider itself significantly exposed to
concentrations of credit risk.

Fair Value of Financial Instruments

The fair value of the Company's cash, cash
equivalents, short-term investments, accounts receivable, and accounts payable
approximate their respective carrying amounts. The fair value of the Company's
convertible subordinated debentures was $1,453,890,000 at September 30, 2000,
based on the quoted market price of the debentures. The net unrealized loss of
the Company's derivative financial instruments at September 30, 2000 was
approximately $683,000.



Impairment of Long-Lived Assets

The Company evaluates long-lived assets,
including goodwill, for impairment whenever events or changes in circumstances
indicate that the carrying value of an asset may not be recoverable based on
expected undiscounted cash flows attributable to that asset. The amount of any
impairment is measured as the difference between the carrying value and the fair
value of the impaired asset. In connection with the acquisition of OpenSite, the
Company reviewed the carrying value of OpenSite's fixed assets and certain long-
term assets and as a result recorded a charge to earnings of $622,000 for assets
that the Company plans on abandoning or disposing of at less than their carrying
value. This provision has been reflected in merger-related expenses in the nine
months ended September 30, 2000. The Company does not have any additional long-
lived assets it considers to be impaired.

Recent Accounting Pronouncements



In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. If certain conditions are met, a derivative may be
specifically designated and accounted for as (a) a hedge of the exposure to
changes in the fair value of a recognized asset or liability or an unrecognized
firm commitment, (b) a hedge of the exposure to variable cash flows of a
forecasted transaction, or (c) a hedge of the foreign currency exposure of a net
investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. For a derivative not designated as a hedging instrument, changes in
the fair value of the derivative are recognized in earnings in the period of
change. This statement will be effective for all annual periods beginning after
June 15, 2000, as amended by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of SFAS No. 133"
and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities, amendment of SFAS No. 133." Management does not believe the
adoption of this pronouncement will have a material effect on the Company's
consolidated financial position or results of operations.

In December 1999, the Securities and Exchange
Commission ("SEC") issued Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements" ("SAB 101"). SAB 101 summarizes
certain of the SEC's views in applying generally accepted accounting principles
to revenue recognition in financial statements. In October 2000, the SEC issued
further guidance with respect to adoption of specific issues addressed by SAB 101.
Management does not believe the adoption of SAB 101 will have a
material effect on the Company's consolidated financial position or results of
operations.



OpenSite Technologies, Inc.

On May 17, 2000, the Company
acquired OpenSite Technologies, Inc. OpenSite develops and markets Internet
auction and dynamic pricing technology that enables companies to create branded,
interactive, real-time Internet auctions. OpenSite's products and services
automate the client's process of installing, running and maintaining its dynamic
commerce applications. Primary customers of OpenSite include a full range of
small, medium and large businesses that are focusing on expanding their sales
focus to include dynamic commerce.

Under the terms of the agreement, each outstanding share
of OpenSite common stock was exchanged for 0.262956 newly issued shares of
common stock of the Company. This resulted in the issuance of approximately
7,400,000 additional shares of the Company's common stock. In addition, all
outstanding stock options of OpenSite were converted into the right to acquire
the Company's common stock at the same exchange ratio with a corresponding
adjustment to the exercise price. The transaction was accounted for as a
pooling-of-interests and, accordingly, the financial position, results of
operations and cash flows of OpenSite have been combined with those of the
Company for the same dates and periods as if the entities had been combined from
the earliest date presented. There were no adjustments to conform accounting
methods.

During the second quarter of 2000, the Company expensed
approximately $10,002,000 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. As of September 30, 2000, the Company had settled approximately $2,608,000
of these merger-related costs and, accordingly, has reflected the remaining
$7,394,000 of these merger-related costs in accrued liabilities. The remaining
unpaid merger-related costs consist of approximately $7,206,000 of investment
banker and other professional fees and $188,000 of severance-related costs. The
Company expects to settle these liabilities by December 31, 2000.

OnTarget, Inc.

On December 1, 1999, the Company acquired
OnTarget, Inc. OnTarget develops and implements advanced sales and marketing
training and consulting programs for sales organizations competing in complex,
multilevel sales campaigns. Primary customers include corporate clients and
business owners who wish to provide for the development and training of their
sales and marketing personnel.

Under the terms of the agreement, each outstanding share
of OnTarget common stock was exchanged for 0.615503 newly issued shares of
common stock of the Company. This resulted in the issuance of approximately
7,400,000 additional shares of the Company's common stock. In addition, all
outstanding stock options of OnTarget were converted into the right to acquire
the Company's common stock at the same exchange ratio with a corresponding
adjustment to the exercise price. The acquisition of OnTarget has been accounted
for as a pooling-of-interests and, accordingly, the financial position, results
of operations and cashflows of OnTarget have been combined with those of the
Company for the same dates and periods as if the entities had been combined from
the earliest date presented. There were no adjustments to conform accounting
methods. The Company did not incur any significant merger-related costs in
connection with the acquisition of OnTarget.





`Three Months Ended      Nine Months Ended
                                   September 30,           September 30,
                              ----------------------  ----------------------
                                 2000        1999        2000        1999
                              ----------  ----------  ----------  ----------
   Total revenues:
       Siebel............... $  480,949  $  195,317  $1,177,145  $  493,783
       OnTarget.............         --      11,027          --      29,152
       OpenSite.............         --       2,139       3,709       4,725
                              ----------  ----------  ----------  ----------
                             $  480,949  $  208,483  $1,180,854  $  527,660
                              ==========  ==========  ==========  ==========

   Net income (loss):
       Siebel............... $   71,026  $   30,094  $  164,228  $   77,186
       OnTarget.............         --        (841)         --         (80)
       OpenSite.............         --      (1,992)     (6,310)     (4,636)
                              ----------  ----------  ----------  ----------
                             $   71,026  $   27,261  $  157,918  $   72,470
                              ==========  ==========  ==========  ==========`

The results of operations of the Company in the above
schedule include the operations of the acquired companies from the date of
acquisition for all periods presented. For the nine months ended September 30,
2000, the Company's net income has been reduced by $10,002,000 of merger-related
expenses in connection with the Company's acquisition of OpenSite.

Wind S.r.l.

On September 27, 2000, the Company acquired
approximately 81% of the outstanding shares of Wind S.r.l. ("Wind"), an Italian
consulting company and a Siebel partner since 1999. Wind specializes in
eBusiness, ERP and business intelligence systems implementation. Wind's
customers include medium and large telecommunications, manufacturing and
services companies. The Company acquired the 81% interest in Wind for net cash
consideration of $3,257,000. The Company has the option to acquire, and Wind's
shareholders have the option to require the Company to purchase, the remaining
19% interest in Wind in September 2001 for cash consideration of approximately
$930,000. This transaction was accounted for by the purchase method of
accounting and, accordingly, the operating results of Wind have been included in
the accompanying consolidated financial statements of the Company from the date
of acquisition. The purchase price was allocated to tangible net assets,
including current assets of $654,000, assumed current liabilities of $430,000
and property and equipment of $103,000. The excess of the purchase price over
the fair value of the tangible net assets acquired, $2,930,000, was allocated to
goodwill. This amount is being amortized over three years. In the event that
Wind meets certain revenue targets, as defined in the merger agreement, during
the fourth quarter of 2000 and the years ended December 31, 2001 and 2002, the
Company could pay to the shareholders of Wind additional cash consideration in
an aggregate amount of $3,257,000. The additional consideration will be recorded
as goodwill, if paid, and amortized over the remaining life of the goodwill. Pro
forma information giving effect to this acquisition has not been presented since
it would not differ materially from the historical results of the
Company.

MOHR Development, Inc.

On June 22, 2000, the Company acquired all of the
outstanding securities of MOHR Development, Inc. ("MOHR"), a privately held
provider of sales training solutions and consulting services. MOHR focuses on
customers in the financial services, manufacturing and technology business
sectors. The Company acquired MOHR for net cash consideration of $7,905,000 and
an obligation to pay an additional $3,000,000. This transaction was accounted
for by the purchase method of accounting and, accordingly, the operating results
of MOHR have been included in the accompanying consolidated financial statements
of the Company from the date of acquisition. The purchase price was allocated to
tangible net assets, including current assets of $799,000, assumed current
liabilities of $2,031,000 and property and equipment of $115,000. The excess of
the purchase price over the fair value of the tangible net assets acquired,
$12,022,000, was allocated to goodwill. This amount is being amortized over
three years. In the event that (i) MOHR meets certain revenue targets, as
defined in the merger agreement, during the period from June 22, 2000 to
December 31, 2000 and the fiscal year ended December 31, 2001 and (ii) certain
individuals meet certain post closing requirements, as defined in the merger
agreement, the Company could pay additional cash consideration in an aggregate
amount of $5,000,000. The additional consideration will be recorded as goodwill,
if paid, and amortized over the remaining life of the goodwill. Pro forma
information giving effect to this acquisition has not been presented since it
would not differ materially from the historical results of the Company.

Paragren Technologies, Inc.

On January 14, 2000, the Company acquired all
of the outstanding securities of Paragren Technologies, Inc. ("Paragren"), a
leading provider of high-performance marketing automation software based in
Reston, Virginia. Paragren was previously a wholly owned subsidiary of APAC
Customer Services, Inc. The Company acquired Paragren for cash consideration of
$18,050,000. This transaction was accounted for by the purchase method of
accounting and, accordingly, the operating results of Paragren have been
included in the accompanying consolidated financial statements of the Company
from the date of acquisition. The purchase price was allocated to tangible net
assets, including current assets of $942,000, assumed current liabilities of
$1,442,000 and property and equipment of $976,000. An independent appraiser was
engaged to perform a valuation on Paragren and it was determined that there was
no purchased in-process research and development. As a result, the excess of the
purchase price over the fair value of the tangible net assets acquired of
$17,574,000 was allocated to intangible assets and will be amortized over three
years. Pro forma information giving effect to this acquisition has not been
presented since it would not differ materially from the historical results of
the Company.

Target Marketing Systems and The Sales Consultancy,
Inc.

In January and February 1999,
OnTarget acquired Target Marketing Systems Worldwide Limited, Target Marketing
Systems S.A., and The Sales Consultancy Inc. in exchange for convertible notes
and OnTarget stock. OnTarget recorded goodwill of $9,745,000 in connection with
these acquisitions. The goodwill is being amortized over a five-year period
using the straight-line method. Pro forma information giving effect to these
mergers has not been presented since it would not differ materially from the
historical results of the Company.





Stock-Based Compensation



During the nine months ended September 30, 1999, OpenSite
granted an aggregate of approximately 46,400 options with a weighted average
exercise price of $1.45 per share to employees in which the exercise prices were
below the fair market value of their common stock. Accordingly, the Company
recorded deferred compensation during the nine months ended September 30, 1999
related to these options of $119,000. These grants are being amortized on a
straight-line basis over the vesting period of the individual options, which
range from three to five years.

During 1999, the Company granted an aggregate of 40,000
options to non-employees. The Company records and measures deferred compensation
cost for options granted to non-employees at their fair value pursuant to the
requirements of SFAS No. 123 and EITF 96-18. In February 2000 these individuals
became employees of the Company and, accordingly, adjustments to deferred
compensation related to these individuals were no longer required to be
recorded. Prior to these individuals becoming employees in February 2000, the
Company recorded an increase to deferred compensation of $531,000 and $538,000
during the nine months ended September 30, 2000 and 1999, respectively. These
amounts are being amortized over the vesting period of five years.

Net Income Per Share

The following is a reconciliation of the number
of shares used in the basic and diluted earnings per share computations for the
periods presented (in thousands):

`Three Months Ended      Nine Months Ended
                                                            September 30,          September 30,
                                                       ---------------------  ----------------------
                                                          2000       1999         2000        1999
                                                       ---------  ----------  -----------  ---------
Shares used in basic net income per
  share computation..................................   417,248     380,164      406,405    374,283
Effect of dilutive potential common shares
  resulting from stock options and common stock
  subject to repurchase..............................    88,989      73,801       89,651     68,638
                                                       ---------  ----------  -----------  ---------
Shares used in diluted net income per
  share computation..................................   506,237     453,965      496,056    442,921
                                                       =========  ==========  ===========  =========`

The Company excludes potentially dilutive securities from
its diluted net income per share computation when either the exercise or
conversion price of the securities exceeds the average fair value of the
Company's common stock, because their effect would be anti-dilutive. The
following common stock equivalents were excluded from the earnings per share
computation as their inclusion would have been anti-dilutive (in thousands):

`Three Months Ended      Nine Months Ended
                                                            September 30,          September 30,
                                                       ---------------------  ----------------------
                                                          2000       1999         2000        1999
                                                       ---------  ----------  -----------  ---------
Options excluded due to the exercise exceeding the
  average fair value of the Company's common stock
  during the period..................................     1,342         120       11,501      2,967

Weighted average shares issuable upon conversion
  of the convertible subordinated debentures.........    12,867       2,098       12,867        704

Weighted average shares issuable upon conversion of
  mandatorily redeemable onvertible preferred stock..        --       5,324        2,682      4,371
                                                       ---------  ----------  -----------  ---------
Total common stock equivalents excluded from
  diluted net income per share computation...........    14,209       7,542       27,050      8,042
                                                       =========  ==========  ===========  =========`

The shares excluded from the earnings per share
computation due to the exercise prices exceeding the average fair value of the
Company's common stock during the three and nine months ended September 30, 2000
and the three and nine months ended September 30, 1999 had weighted average
exercise prices of $94.81, $80.74, $38.42 and $29.86 per share, respectively.

Warrants For Common Stock

In August 1998, OpenSite entered into a consulting
agreement with a former OpenSite director. Pursuant to this agreement, OpenSite
issued warrants to purchase 66,430 shares of Siebel equivalent common stock at
an exercise price of $0.80 per share (weighted-average fair value on date of
grant of $0.19 per warrant). A warrant representing a total of 14,824 shares of
common stock was repurchased from the holder in connection with the Series C
preferred stock financing in March 1999. The remaining 51,606 warrants were
exercised in February 2000. During 1999, OpenSite also issued warrants to the
same former director to purchase 58,128 shares of Siebel equivalent common stock
at an exercise price per share of $0.15 (weighted-average fair value on date of
grant of $0.04 per warrant), which were exercised in April 1999. During the
period the warrants were outstanding, in the event that the holders of OpenSite
Series A preferred stock requested the redemption of their shares pursuant to
the terms described in Note 7, this director could have elected to put any
outstanding warrants back to OpenSite at the per share redemption value of the
Series A preferred stock, less the exercise price of the warrants.

During the nine months ended September 30, 1999, OpenSite
recognized consulting expense of approximately $269,000 to reflect the increase
in value of the put feature of these warrants. In conjunction with the issuance
of OpenSite Series C preferred stock and the director's resignation from
OpenSite's board of directors in March 1999, the warrants were amended such that
the redemption provision expired on March 31, 1999. Accordingly, the carrying
amount of the remaining outstanding warrants was transferred to additional paid-
in capital as of that date.



The Company and its subsidiaries are principally
engaged in the design, development, marketing and support of Siebel eBusiness
Applications, its family of industry-specific eBusiness software applications.
Substantially all revenues result from the licensing of the Company's software
products and related consulting and customer support (maintenance) services. The
Company's chief operating decision-maker reviews financial information presented
on a consolidated basis, accompanied by disaggregated information about revenues
by geographic region for purposes of making operating decisions and assessing
financial performance. Accordingly, the Company considers itself to be in a
single industry segment, specifically the license, implementation and support of
its software.



Letters of Credit



Professional Service Arrangements

In March 1999, OpenSite entered into an agreement
with Protégé Software Limited ("Protégé"), pursuant
to which Protégé managed OpenSite's European subsidiary, OpenSite
Europe Ltd. The initial term of the agreement was for a period of eighteen
months beginning April 1, 1999; however, the agreement was terminated by the
Company effective June 30, 2000. Under the original terms of the agreement,
Protégé earned a cash bonus (the "Cash Bonus") based on a
percentage of sales within Protégé's territory, as defined in the
agreement. At the option of Protégé, the Cash Bonus for the period
ending March 30, 2000 could be converted into shares of common stock at a price
of approximately $8.00 per share. During the three months ended March 31, 2000
OpenSite recorded a one-time non-cash expense of approximately $1,800,000
related to OpenSite's commitment to issue shares of common stock to
Protégé. In May 2000, Protégé elected to convert its
Cash Bonus for the 12-month period ended March 30, 2000 into shares of common
stock, and subsequently was issued an aggregate of 34,690 shares of equivalent
Siebel common stock as full satisfaction of such election. Neither OpenSite nor
the Company is obligated to issue Protégé any shares of its common
stock for periods subsequent to March 31, 2000.

Legal Actions







The Company completed a private placement of
$300,000,000 of convertible subordinated debentures in September 1999. In
connection with the issuance of these convertible subordinated debentures the
Company incurred $8,684,000 of issuance costs, which primarily consisted of
investment banker fees, legal, and other professional fees. The seven-year term
notes bear interest at a rate of 5.50% per annum and are convertible into an
aggregate of approximately 12,867,000 shares of the Company's common stock at
any time prior to maturity, at a conversion price of approximately $23.32 per
share, subject to adjustment under certain conditions. The notes may be
redeemed, in whole or in part, by the Company at any time on or after September
15, 2002. The redemption price will range from $309,420,000 to $302,370,000 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
$300,000,000. Accrued interest to the redemption date will be paid by the
Company to the note holder in each redemption.



During 1998, OpenSite sold 1,097,956 shares of its Series
A mandatorily redeemable convertible preferred stock and 1,314,784 shares of its
Series B mandatorily redeemable convertible preferred stock in private placement
transactions for net proceeds of $555,000 and $3,938,000, respectively. During
1999, OpenSite sold 3,155,470 shares of its Series C mandatorily redeemable
convertible preferred stock in a private placement transaction for net proceeds
of $23,875,000. In conjunction with the sale of the Series C mandatorily
redeemable convertible preferred stock, OpenSite repurchased 490,022 shares of
common stock, 245,010 shares of Series A mandatorily redeemable convertible
preferred stock, and warrants to purchase 14,824 shares of common stock for an
aggregate purchase price of $4,266,000. As of December 31, 1999, the Series A,
B, and C mandatorily redeemable convertible preferred stock (collectively, the
"Preferred Stock") had an aggregate liquidation preference of $600,000,
$4,000,000, and $48,000,000, respectively. As of December 31, 1999, there were
852,946 Series A shares, 1,314,784 Series B shares, and 3,155,470 Series C
shares outstanding.

In connection with the Company's acquisition of OpenSite, the
holders of the Preferred Stock converted their shares pursuant to their existing
terms on a one-for-one basis into shares of OpenSite's common stock on May 17,
2000. Prior to the conversion of the Preferred Stock, the holders of the
Preferred Stock had certain preferences over the holders of OpenSite's common
stock, including liquidation preferences, dividend rights and redemption rights.
In accordance with the redemption rights of the Preferred Stock, the holders of
the Preferred Stock could require OpenSite to repurchase the Preferred Stock at
the then current fair value of OpenSite's common stock, subject to certain
restrictions as defined in the purchase agreements regarding the Preferred
Stock. As a result of the conversion of the Preferred Stock, the Company stopped
recording the accretion on the Preferred Stock on May 17, 2000. The Company
recorded a non-cash charge to stockholders' equity of $3,104,000 and $45,013,000
during the three and nine months ended September 30, 1999, respectively, to
reflect the Preferred Stock at its fair value. Prior to the conversion of the
Preferred Stock in May 2000, the Company recorded a non-cash charge to
stockholders' equity of $98,755,000 during 2000 to reflect the Preferred Stock
at its fair value. These charges to equity have been deducted from the Company's
net income in calculating both basic and diluted earnings per share.



OnLink Technologies, Inc.

On October 2, 2000, the Company acquired OnLink
Technologies, Inc. ("OnLink"), a provider of eCommerce software. OnLink's
technology is designed to provide companies with guided, interactive online
communication with their customers to find out what they need and automatically
match them to product and service configurations. Primary customers of OnLink
include a full range of small, medium and large businesses.

Under the terms of the agreement, each outstanding share
of OnLink common stock was exchanged for 0.330791 newly issued shares of common
stock of the Company. This resulted in the issuance of approximately 7,400,000
additional shares of the Company's common stock. In addition, all outstanding
stock options of OnLink were converted into the right to acquire the Company's
common stock at the same exchange ratio with a corresponding adjustment to the
exercise price. The transaction was accounted for as a pooling-of-interests and,
accordingly, the financial position, results of operations and cash flows of
OnLink will be combined with those of the Company for the same dates and periods
as if the entities had been combined from the earliest date presented.

The following unaudited supplemental combined data
summarizes the combined results of operations of the Company and OnLink as if
the combination had been consummated as of the earliest period presented:

`Three Months Ended     Nine Months Ended
                                   September 30,           September 30,
                              ----------------------  ----------------------
                                 2000        1999        2000        1999
                              ----------  ----------  ----------  ----------
   Total revenues:
       Company.............. $  480,949  $  208,483  $1,180,854  $  527,660
       OnLink...............      3,490         568       8,183       1,226
                              ----------  ----------  ----------  ----------
                             $  484,439  $  209,051  $1,189,037  $  528,886
                              ==========  ==========  ==========  ==========

   Net income (loss):
       Company.............. $   71,026  $   27,261  $  157,918  $   72,470
       OnLink...............     (5,031)     (1,505)    (13,450)     (3,768)
                              ----------  ----------  ----------  ----------
                             $   65,995  $   25,756  $  144,468  $   68,702
                              ==========  ==========  ==========  ==========`

The Company's results of operations in the above table
include the results of operations of OpenSite and OnTarget as discussed in Note
2. There were no adjustments to OnLink's results of operations to conform
accounting methods.

Janna Systems Inc.

On September 11, 2000, the Company announced an
agreement to acquire Janna Systems Inc. ("Janna"), a leading provider of
eBusiness solutions for the financial services industry. Under the terms of the
agreement, each outstanding share of Janna common stock would be exchanged at a
fixed exchange ratio of 0.4970 for newly issued shares of common stock of the
Company or, with respect to Janna shareholders resident in Canada, 0.4970 of
newly issued exchangeable shares of a Canadian subsidiary of the Company that is
currently exchangeable for the Company's common stock. All outstanding stock
options of Janna will also be exchanged for the Company's stock options at the
same exchange ratio with a corresponding adjustment to the exercise price. This
will result in the issuance of approximately 11,000,000 additional shares of
common stock of the Company. The transaction is expected to be accounted for as
a pooling-of-interests. The acquisition is subject to the approval of Janna's
shareholders as well as the satisfaction of certain customary closing
conditions. The transaction is expected to close in the fourth calendar quarter
of 2000.

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 the
Company's 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 the Company's products, and statements
regarding reliance on third parties. All forward-looking statements included in
this document are based on information available to the Company as of the date
hereof, and the Company assumes no obligation to update any such forward-looking
statements. It is important to note that the Company's actual results could
differ materially from those in such forward-looking statements.

Overview

Siebel Systems, Inc. ("Siebel" or "the Company") is
the market leader in eBusiness application software. 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
continue to be leaders in their markets.

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

In May 2000 and December 1999, the Company acquired
OpenSite Technologies, Inc. ("OpenSite") and OnTarget, Inc. ("OnTarget"),
respectively. Each of these acquisitions have been accounted for as pooling-of-
interests and, accordingly, the financial statements of the Company have been
restated to include the financial position and results of operations of OpenSite
and OnTarget for all periods presented. Under the terms of each of the
agreements, each outstanding share of OpenSite and OnTarget common stock was
exchanged for 0.262956 and 0.615503, respectively, of newly issued shares of
common stock of the Company. This resulted in the issuance of approximately
7,400,000 additional shares of the Company's common stock in each transaction to
the former shareholders of OpenSite and OnTarget. In addition, all outstanding
stock options of OpenSite and OnTarget were converted into the right to acquire
the Company's common stock at the same respective exchange ratio with a
corresponding adjustment to the exercise price.

OpenSite develops and markets internet auction and
dynamic pricing technology that enables companies to create branded,
interactive, real-time Internet auctions. OpenSite's products and services are
designed to automate the client's process of installing, running and maintaining
its dynamic commerce applications. OnTarget develops and implements advanced
sales and marketing training and consulting programs for sales organizations
competing in complex, multilevel sales campaigns. OnTarget's goal is to provide
its clients with a pragmatic, repeatable and implementable process that will
create lasting change within sales organizations, and which are designed to
enable Siebel's clients to effectively respond to today's market challenges.



Results of Operations for the Three
and Nine Months Ended September 30, 2000 and 1999

Revenues

Software. License revenues increased to
$300,379,000 for the three months ended September 30, 2000 from $127,680,000 for
the three months ended September 30, 1999. License revenues as a percentage of
total revenue were 62% in the third quarter of 2000 as compared to 61% in the
third quarter of 1999. License revenue increased to $735,766,000 for the nine
months ended September 30, 2000 from $333,351,000 for the nine months ended
September 30, 1999 and decreased as a percentage of total revenues to 62% in the
fiscal 2000 period from 63% in the fiscal 1999 period. License revenues
increased in absolute dollars during this period as compared to the respective
prior period due to an increase in the number of licenses of Siebel applications
sold to new and existing customers and also due to licenses of new modules,
released with the latest version of Siebel applications, sold to existing users
of Siebel base applications. The increase in the number of licenses was
primarily due to continued demand by new and existing customers for products in
the Siebel applications family both in the United States and internationally.
The Company expects that license revenues will continue to grow in absolute
dollars, but will remain the same or decrease as a percentage of total revenues
as the Company's maintenance and other services revenues continue to grow as a
result of increases in the installed base of customers purchasing such
services.

Professional Services, Maintenance and Other.
Professional services, maintenance and other revenues increased to $180,570,000
for the three months ended September 30, 2000 from $80,803,000 for the three
months ended September 30, 1999 and as a percentage of total revenues were 38%
in the third quarter of 2000 as compared to 39% in the third quarter of 1999.
Professional services, maintenance and other revenues increased to $445,088,000
for the nine months ended September 30, 2000 from $194,309,000 for the nine
months ended September 30, 1999 and increased as a percentage of total revenue
to 38% in the fiscal 2000 period from 37% in the fiscal 1999 period. The
increase in the absolute dollar amount was due to growth in the Company's sales
and marketing training business, consulting business and growth in the installed
base of customers receiving maintenance. First-year maintenance is typically
sold with the related software license. Revenue related to such maintenance is
deferred based on vendor-specific objective evidence of fair value and amortized
over the term of the maintenance contract, typically 12 months. The Company
expects that professional services, maintenance and other revenues will remain
the same or increase as a percentage of total revenues due to increased
maintenance revenues derived from the Company's growing installed customer base
and due to the Company's expansion of its consulting and training organization
to meet anticipated customer demands in connection with product implementation
and sales training.

For the three months
ended September 30, 2000 and 1999, sales to the Company's ten largest customers
accounted for 38% and 34%, respectively, of total license revenues. For the nine
months ended September 30, 2000 and 1999, sales to the Company's ten largest
customers accounted for 26% and 22%, respectively, of total license revenues.

The Company markets its products in the United States
through its direct sales force and internationally through its sales force and
distributors, primarily in Europe, Latin America, South Africa and Asia Pacific.
International license revenues accounted for 43% and 27% of total license
revenues for the three months ended September 30, 2000 and 1999, respectively.
International license revenues accounted for 40% and 30% of total license
revenues for the nine months ended September 30, 2000 and 1999, respectively.
The Company is increasing its international sales force and is seeking to
establish distribution relationships with appropriate strategic partners and
expects international revenues will continue to account for a substantial
portion of total revenues in the future.

On January 14, 2000, the Company acquired Paragren
Technologies, Inc. ("Paragren") in a purchase transaction for cash consideration
of $18,050,000. Concurrently, the Company licensed software to APAC Customer
Services, Inc. ("APAC"), the former parent of Paragren. The Company recognized
$540,000 of license revenue from the APAC transaction in the quarter ended
September 30, 2000 and $1,620,000 of license revenue in the nine months ended
September 30, 2000.

During the first quarter of 2000, the Company established
a program whereby qualified startup companies can obtain Siebel eBusiness
software in exchange for shares of their equity securities.  Qualified startup companies are generally
companies who have received and are expected to continue to receive funding and guidance from
top-tier venture capital firms, have passed a credit review consistent with other Siebel
customers, and have a sound business model and experienced management team.  The Company
recognized $5,367,000 and $9,563,000 of license revenues related to this program
during the three and nine months ended September 30, 2000, respectively.

Cost of Revenues

Software. Cost of license revenues includes third
party software royalties, product packaging, documentation and production. Cost
of license revenues increased to $4,881,000 for the three months ended September
30, 2000 from $1,626,000 for the three months ended September 30, 1999 and as a
percentage of total revenues were 1% for each of the three months ended
September 30, 2000 and 1999. Cost of license revenues increased to $13,957,000
for the nine months ended September 30, 2000 from $5,309,000 for the nine months
ended September 30, 1999 and as a percentage of total revenues were 1% for each
of the nine months ended September 30, 2000 and 1999. 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.
Cost of license revenues are expected to remain the same as the first nine
months of 2000 or increase as a percentage of total revenues.

Professional Services, Maintenance and Other. Cost
of professional services, maintenance and other revenues consists primarily of
personnel, facilities and systems costs incurred in providing sales and
marketing training, consulting, and customer support. Cost of professional
services, maintenance and other revenues increased to $118,844,000 for the three
months ended September 30, 2000 from $50,211,000 for the three months ended
September 30, 1999 and increased as a percentage of professional services,
maintenance and other revenues to 66% in the third quarter of 2000 from 62% in
the third quarter of 1999. Cost of professional services, maintenance and other
revenues increased to $284,668,000 for the nine months ended September 30, 2000
from $113,122,000 for the nine months ended September 30, 1999 and increased as
a percentage of professional services, maintenance and other revenues to 64% in
the fiscal 2000 period from 58% in the fiscal 1999 period. The increase in the
absolute dollar amount and as a percentage of revenues reflects increased costs resulting from the
Company's expansion of its maintenance and support organization and growth in
the Company's consulting business. The Company expects that professional
services, maintenance and other costs will continue to increase in absolute
dollar amount as the Company expands its customer support organization to
support a growing installed customer base; its consulting organization to meet
anticipated customer demands in connection with product implementation; and the
training organization to support the growing needs of its customers. These costs
are expected to remain the same as the first nine months of 2000 or increase as
a percentage of both total revenues and professional services, maintenance and
other revenues.

Operating Expenses

Product Development. Product development expenses
include expenses associated with the development of new products, enhancements
of existing products and quality assurance activities, and consist primarily of
employee salaries, benefits, consulting costs and the cost of software
development tools. Product development expenses increased to $35,880,000 for the
three months ended September 30, 2000 from $18,290,000 for the three months
ended September 30, 1999 and as a percentage of total revenues were 7% and 9%
for the three months ended September 30, 2000 and 1999, respectively. Product
development expenses increased to $89,859,000 for the nine months ended
September 30, 2000 from $54,319,000 for the nine months ended September 30, 1999
and decreased as a percentage of total revenues to 8% in the fiscal 2000 period
from 10% in the fiscal 1999 period. 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. The
Company anticipates that it will continue to devote substantial resources to
product development. The Company expects product development expenses to
increase in absolute dollar amount but remain at a similar percentage of total
revenues as in the first nine months of 2000. The Company considers
technological feasibility of its software products to have been reached upon
completion of a working model that has met certain performance criteria. The
period between achievement of technological feasibility and general release of a
software product is typically very short, and development costs incurred to date
during that period have not been material. Accordingly, the Company has not
capitalized any software development costs to date.

Sales and Marketing. Sales and marketing expenses
consist primarily of salaries, commissions and bonuses earned by sales and
marketing personnel, field office expenses, travel and entertainment, advertising and
promotional expenses. Sales and marketing expenses increased to $187,752,000 for
the three months ended September 30, 2000 from $78,018,000 for the three months
ended September 30, 1999 and increased as a percentage of total revenues to 39%
in the third quarter of 2000 from 37% in the third quarter of 1999. Sales and
marketing expenses increased to $475,195,000 for the nine months ended September
30, 2000 from $201,110,000 for the nine months ended September 30, 1999 and
increased as a percentage of total revenues to 40% in the fiscal 2000 period
from 38% in the fiscal 1999 period. The increase in the absolute dollar amount
of sales and marketing expenses reflects primarily the hiring of additional
sales and marketing personnel and costs associated with expanded promotional
activities. The Company expects that sales and marketing expenses will continue
to increase in absolute dollars as the Company continues to expand its sales and
marketing efforts, establishes additional sales offices in the United States and
internationally and increases its promotional activities. These expenses are
expected to remain at a similar percentage of total revenues as the first nine
months of 2000.

General and Administrative. General and
administrative expenses consist primarily of salaries and occupancy costs for
administrative, executive and finance personnel. General and administrative
expenses increased to $38,254,000 for the three months ended September 30, 2000
from $17,558,000 for the three months ended September 30, 1999 and as a
percentage of total revenues were 8% for both the three months ended September
30, 2000 and 1999. General and administrative expenses increased to $95,640,000
for the nine months ended September 30, 2000 from $44,045,000 for the nine
months ended September 30, 1999 and as a percentage of total revenues were 8% in
both the fiscal 2000 and fiscal 1999 periods. The increase in the absolute
dollar amount of general and administrative expenses was primarily due to
increased staffing and associated expenses necessary to manage and support the
Company's increased scale of operations. The Company believes that its general
and administrative expenses will continue to increase in absolute dollars as a
result of the continued expansion of the Company's administrative staff and
facilities to support growing operations. The Company anticipates that its
general and administrative expenses as a percentage of total revenues should
remain at a similar percentage as in the nine months ended September 30,
2000.

Merger-Related Expenses. During the second quarter
of 2000, the Company expensed $10,002,000 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. As of September 30, 2000, the Company had settled
approximately $2,608,000 of these merger-related costs and, accordingly, has
reflected the remaining $7,394,000 of these merger-related costs in accrued
liabilities. The remaining unpaid merger-related costs consist of approximately
$7,206,000 of investment banker and other professional fees and $188,000 of
severance-related costs. The Company expects to settle these liabilities by
December 31, 2000. The Company did not incur any significant merger-related
costs during the first nine months of 1999.

Operating Income and Operating Margin

Operating income increased to $95,338,000 for the three
months ended September 30, 2000 from $42,780,000 for the three months ended
September 30, 1999 and operating margin decreased to 20% in the third quarter of
2000 from 21% in the third quarter of 1999. The decrease in the operating margin
for the third quarter of 2000 compared to the third quarter of 1999 was
primarily due to increased costs for personnel and recruitment, primarily in the
professional services, sales, and product development organizations, in the
first half of 2000. Operating income increased to $211,533,000 for the nine
months ended September 30, 2000 from $109,755,000 for the nine months ended
September 30, 1999 and operating margin decreased to 18% in the fiscal 2000
period from 21% in the fiscal 1999 period. Excluding merger-related expenses,
operating income increased to $221,535,000 for the nine months ended September
30, 2000 from $109,755,000 for the nine months ended September 30, 1999 and
operating margin decreased to 19% in the first nine months of 2000 from 21% in
the first nine months of 1999. The decrease in the operating margin, excluding
merger-related expenses, for the nine months ended September 30, 2000 compared
to the nine months ended September 30, 1999 was primarily due to: (i) increased
costs for personnel and recruitment, primarily in the professional services,
sales, and product development organizations, in the first half of 2000 and (ii)
OpenSite incurring approximately $4,000,000 more in operating losses prior to
its acquisition in May 2000 than in the entire nine months ended September 30,
1999. Prior to OpenSite's acquisition by the Company, OpenSite was expanding its
sales and marketing activities to build brand recognition without a
corresponding increase in sales resulting in the increase in OpenSite's
operating losses.

Other Income, Net



`Three         Nine
                                                  Months        Months
                                                   Ended        Ended
                                               September 30, September 30,
                                                   2000          2000
                                                -----------  ------------
Interest income............................... $15,805,000  $ 38,343,000
Interest expense..............................  (4,472,000)  (13,382,000)
Losses from equity method investee............  (2,073,000)   (7,481,000)
Contribution of marketable equity securities..         --    (28,700,000)
Gain on sale of marketable equity securities..  10,321,000    60,152,000
Other, net....................................    (361,000)     (514,000)
                                                -----------  ------------
                                               $19,220,000  $ 48,418,000
                                                ===========  ============`

Provision for Income Taxes

Income taxes are comprised primarily of federal
and state taxes. Income taxes would not have been materially different from the
income tax provision as presented if OnTarget (an S corporation for income tax
reporting purposes) had been a C corporation during 1999. Income taxes were
$43,532,000 and $18,316,000 for the three months ended September 30, 2000 and
1999, respectively. The provision for income taxes as a percentage of pretax
income decreased to 38% during the three months ended September 30, 2000 from
40% during the three months ended September 30, 1999. Income taxes increased to
$102,033,000 for the nine months ended September 30, 2000 from $44,441,000 for
the nine months ended September 30, 1999 and as a percentage of pretax income
increased to 39% in the fiscal 2000 period from 38% in the fiscal 1999 period.
The increase in the provision for income taxes as a percentage of pretax income
for the nine months ended September 30, 2000 compared to the nine months ended
September 30, 1999 was primarily due to non-deductible merger-related expenses.
The Company expects its effective tax rate for the remainder of 2000 to be
approximately 38%, excluding the effect of non-deductible costs such as merger-
related expenses.

Net Income and Net Income Available to Common
Stockholders

The Company's net income was $71,026,000 for the
third quarter of 2000 compared to $27,261,000 for the third quarter of 1999 and
as a percentage of total revenues was 15% and 13% for the three months ended
September 30, 2000 and 1999, respectively. Net income increased to $157,918,000
for the nine months ended September 30, 2000 from $72,470,000 for the nine
months ended September 30, 1999 and as a percentage of total revenues was 13%
and 14% for the nine months ended September 30, 2000 and 1999, respectively.

Net income available to common stockholders was
$71,026,000 for the three months ended September 30, 2000 compared to
$24,157,000 for the three months ended September 30, 1999. Net income available
to common stockholders was $59,163,000 for the nine months ended September 30,
2000 compared to net income available to common stockholders of $27,457,000 for
the comparable period in 1999. Net income has been reduced by accretion on
OpenSite's mandatorily redeemable convertible preferred stock to arrive at net
income available to common stockholders. The accounting for mandatorily
redeemable convertible preferred stock requires non-cash accretion to the then
current fair value of the common stock into which the mandatorily redeemable
convertible preferred stock is convertible. This resulted in a non-cash charge
to accretion and offsetting credit to mandatorily redeemable convertible
preferred stock for each period presented. 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 $0.14 in the third
quarter of 2000 and $0.05 in the comparable period in 1999. For the nine months
ended September 30, 2000 diluted net income per share was $0.12 compared to
$0.06 in the fiscal 1999 period.

Liquidity and Capital Resources

The Company's cash and cash equivalents, short-
term investments, and marketable equity securities in aggregate increased to
$1,168,309,000 as of September 30, 2000 from $815,913,000 as of December 31,
1999, representing approximately 64% and 66% of total assets, respectively. This
increase in absolute dollar amount was primarily attributable to net income,
increases in accounts payable, accrued expenses and deferred revenue, issuance
of common stock under the Company's stock option plans, and the public offerings
and subsequent increase in market value of the Company's equity investments,
partially offset by a decrease in deferred income taxes and increases in
purchases of property and equipment. The Company's days sales outstanding in
accounts receivable was 66 as of September 30, 2000 compared with 98 as of
December 31, 1999.
As of October 31, 2000, the fair value of the Company's
marketable equity securities held as of September 30, 2000 was $24,550,000.

For the nine months ended September 30, 2000, cash
provided by operating activities of $441,030,000 was primarily due to net
income, the tax benefit from exercise of stock options, increases in accounts
payable, accrued expenses and deferred revenue, partially offset by increases in
accounts receivable and the gain on sale of marketable equity securities. For
the nine months ended September 30, 1999, cash provided by operating activities
of $66,197,000 was primarily due to net income, the tax benefit from exercise of
stock options, and increases in accounts payable, accrued expenses and deferred
revenue, partially offset by an increase in accounts receivable.

Cash used in investing activities of $181,696,000 for
the nine months ended September 30, 2000 was primarily the result of the
Company's purchases of short-term investments and property and equipment,
including leasehold improvements, along with the purchases of Paragren
Technologies, Inc., MOHR Development, Inc. and Wind S.r.l., partially offset by
proceeds from sales of marketable equity securities. For the nine months ended
September 30, 1999, cash used in investing activities of $25,203,000 was
primarily due to purchases of property and equipment and net purchases of short-
term investments, partially offset by proceeds from disposals of property and
equipment.

For the nine months ended September 30, 2000, cash
provided by financing activities of $126,698,000 resulted primarily from the
issuance of common stock pursuant to the exercise of stock options. For the nine
months ended September 30, 1999, cash provided by financing activities of
$357,384,000 was primarily due to the $291,750,000 of net proceeds received from
the issuance of the subordinated convertible debentures (see Note 6 to the
consolidated financial statements), net proceeds from common stock issued
pursuant to the exercise of stock options and the issuance by OpenSite of Series
C mandatorily redeemable convertible preferred stock (see Note 7 to the
consolidated financial statements).  The Company may elect to raise additional capital
through a public offering in the future, depending upon market conditions.

During the nine months ended September 30, 1999, the
Company entered into a lease agreement for a new headquarters facility in San
Mateo, California. The Company has incurred and expects to continue to incur
significant capital expenditures in connection with tenant improvements and
furniture and fixtures for this facility. These expenditures are expected to be
incurred through the end of 2000. The Company also expects to continue to incur
capital expenditures associated with tenant improvements and furniture and
fixtures for newly leased offices.

The Company has used full-serviced office suites on a
month-to-month rental basis to establish its presence in new locations. As these
locations expand, the Company has begun to transition more of the office suites
to leased space. This transition has involved build-out of tenant improvements,
acquisition of furniture and fixtures, and other capital costs, which were not
incurred in connection with the use of fully serviced office suites. The Company
has already built out a number of leased facilities and expects this trend to
continue.

Capital expenditures of the nature described above are
expected to increase during 2000 and 2001.



Risk Factors

Our total revenue and operating results may fluctuate.

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

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

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

Our quarterly operating results may fluctuate.

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

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

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

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

We need to successfully integrate acquisitions and
manage growth.

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

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

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

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

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

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

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

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

We operate in a competitive and rapidly changing
market.

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

Our customers may not successfully implement our
products.

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

A limited number of products provide

A substantial majority of our license revenues are
attributable to sales of Siebel Sales, Siebel Service, Siebel Call Center and
related products. We expect that such products and related consulting,
maintenance and training services will continue to account for a majority of our
future revenues. As a result, factors adversely affecting the cost of such
products, pricing of or demand for such products, such as competition or
technological change, could have a material adverse effect on our business,
operating results and financial condition.

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

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

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

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

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

Our expanding distribution channels may create
additional risks.

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

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

Our success depends on maintaining relationships with
our existing customers. A relatively small number of customers have accounted
for a significant percentage of our revenues. For the nine months ended
September 30, 2000 and the fiscal year ended December 31, 1999, license revenues
from our ten largest customers accounted for approximately 26% and 16%,
respectively, of total license revenues. We expect that licenses of our products
to a limited number of customers will continue to account for a significant
percentage of revenue for the foreseeable future. The loss of a small number of
customers or any reduction or delay in orders by any such customer, or failure
to successfully market our products to new customers, could have a material
adverse effect on our business, financial condition and results of
operations.

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

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

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

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

We rely on a number of systems consulting and systems
integration firms for a substantial portion of implementation and other customer
support 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 (products) such as
Allegis Corporation (Allegis Sales Partner 4.0), Annuncio Software, Inc.
(Annuncio Live, Annucio Bright), Ariba, Inc. (Ariba B2B Commerce Platform), Blue
Martini Software, Inc. (Blue Martini Customer Interaction System), Brightware,
Inc. (Brightware 2000), BroadVision, Inc. (One-to-One), Broadbase Software, Inc.
(E-Sales, E-Marketing, E-Service, E-Commerce, E-Personalize), Calico Commerce,
Inc. (Calico Configurator, Calico Advisor, Calico Quote, Calico Market Maker,
Calico Loyalty Builder), Callidus Software, Inc. (TrueComp), Chordiant Software,
Inc. (Chordiant v. 2.0), Dendrite International (Dendrite WebForce,
ScripMax), Epicor Software Corporation (Epicor eFrontOffice, Epicor
eCommerce Suite, Epicor eIntelligence), E.piphany, Inc. (E.5 System), FirePond,
Inc. (FirePond Application Suite 2.0), Firstwave Technologies, Inc. (Firstwave
eRM), GoldMine Software Corporation (GoldMine Frontoffice 2000), I2
Technologies, Inc. (RYTHM), Kana Communications, Inc. (Kana Connect, Kana
Response, Kana Assist, Kana Advisor, Kana I-Mail, Kana Chat, Kana Voice, Kana
Phone, Kana Service, Kana Commerce, Kana eBusiness Platform, Kana Conduits),
MarketFirst Software, Inc. (MarketFirst 2.4), MarketSoft (eLeads), Niku
Corporation (iNiku, eNiku4, xNiku), Nortel Networks (Clarify eFrontOffice
9.0), ONYX Software Corporation (Onyx Front Office 2000), Oracle Corporation
(eBusiness Suite 11i), Pegasystems, Inc. (Pegasystems), PeopleSoft, Inc.
(Vantive 8.5), Pivotal Software, Inc. (eRelationship 2000, eSelling 2000), Prime
Response, Inc. (Prime@Vantage.com), Quintus Corp. (Quintus eContact Suite),
SalesLogix, a division of Interact Commerce Corporation (CommerceLogix,
SupportLogix, ACT!), SAP AG (mySAP.comTM Customer Relationship Management),
Saratoga Systems, Inc. (Avenue®), ServiceSoft, Inc. (ServiceSoft 2001),
Trilogy Software, Inc. (MultiChannel Commerce 2.0), and update.com software
(Marketing Manager®) 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. 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 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. To
manage future growth, we must continue to (i) improve our financial 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,
engineering and marketing personnel. Key personnel from the acquired companies
have in certain instances decided, and they may in the future decide, to pursue
other opportunities. In addition, it may be necessary to integrate products of
these companies with our technology, and it is uncertain whether we may
accomplish this easily or at all. These integration difficulties could disrupt
our ongoing business, distract management and employees or increase expenses.
Acquisitions are inherently risky, and we may also face unexpected costs, which
may adversely affect operating results in any quarter.

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

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

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

The loss of key personnel could negatively affect our
performance.



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

We have substantial amounts of outstanding
indebtedness, primarily consisting of our 5.50% convertible subordinated notes
due September 15, 2006 (see Note 6 to the consolidated financial statements). As
a result of this indebtedness, our principal and interest payment obligations
are substantial. We may be unable to generate cash sufficient to pay the
principal of, interest on and other amounts due in respect of our indebtedness
when due. We also expect to add additional equipment loans and lease lines to
finance capital expenditures and may obtain additional long-term debt, working
capital lines of credit and lease lines. There can be no assurance that any
financing arrangements will be available.

Our substantial leverage could have significant negative
consequences, including:

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

We may not be able to protect our proprietary
information.

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

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

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

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

Our International operations involve unique risks.

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

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

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

Our current officers, directors and entities
affiliated with us together beneficially owned a significant portion of the
outstanding shares of common stock as of September 30, 2000. While these
stockholders do not hold a majority of our outstanding common stock, they will
be able to exercise significant influence over matters requiring stockholder
approval, including the election of directors and the approval of mergers,
consolidations and sales of our assets. This may prevent or discourage tender
offers for our common stock.

Our stock price may continue to be volatile.

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

Provisions in our charter documents may prevent certain
corporate actions.

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

Item 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. These include foreign currency forward contracts used to hedge
foreign currency receivables, payables and intercompany balances, which are
subject to exchange rate risk, cash equivalents and available-for-sale short-
term investments, which are subject to interest rate risk.

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

The following summarizes the Company's foreign currency
forward contracts, all of which mature in 2000, by currency, as of September 30,
2000. Contract amounts are representative of the expected payments to be made
under these instruments (in thousands):

`Fair
                                         Contract      Contract      Value at
                                          Amount        Amount     September 30,
                                     (Local Currency)   (US $)      2000 (US$)
                                     ----------------  ---------   ------------
Australian dollars ("AUD") (contracts
  to pay AUD/receive US$)...........      (AUD) 9,346   US$5,645  $        495

British pounds (contracts to pay
 Pounds/receive US$)................  (Pounds)  2,300   US$3,437  $         69

Japanese yen (contracts to pay
 Yen/receive US$)...................  (Yen) 2,903,000  US$27,064  $         35

Canadian dollars ("CAN") (contracts
 to pay CAN/receive US$)............      (CAN) 1,669   US$1,213  $         97

Singapore dollars ("SING") (contract
 to pay SING/receive US$)...........     (SING) 8,000   US$4,619  $         30

Euro (contracts to pay
  EUR/receive US$)..................      (EUR) 64,452 US$59,565  $      2,770

Euro (contracts to receive
  EUR/pay US$)......................      (EUR) 50,986 US$48,870  $     (3,941)

British pounds (contracts to pay
 Pounds/receive EUR)................   (Pounds) 3,201  EUR 5,048  $       (238)`



`Expected maturity date
                         -----------------------------------------------------
                                                                       There-
                           2000     2001     2002     2003     2004    after
                         -------- -------- -------- -------- -------- --------
US Treasury and Agency
securities..............  $7,555  $12,930  $17,496  $24,896   $6,395   $5,180
Wtd. Avg. Yld...........    6.10%    6.64%    6.17%    6.15%    6.68%    5.85%

Municipal securities....  $6,712  $34,045  $27,155   $4,273       --       --
Wtd. Avg. Yld...........    4.18%    4.53%    4.64%    4.92%

Corporate bonds.........  $2,998  $70,219  $30,850   $6,889  $10,276   $4,749
Wtd. Avg. Yld...........    4.04%    6.96%    6.84%    6.94%    6.87%    7.02%`



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 $3,709,000 decrease
in the fair value of the Company's marketable equity securities as of September
30, 2000.

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 2.	Changes in Securities and Use of Proceeds.

The effective date of the Company's first
registration statement, filed on Form S-1 under the Securities Act of 1933 (No.
333-12061) relating to the Company's initial public offering of its common
stock, was September 27, 1996. There has been no change to the disclosure
contained in the Company's report on Form 10-Q for the quarter ended March 31,
1998 regarding the use of proceeds generated by the Company's initial public
offering of its common stock.

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

1. Exhibits.



|**Exhibit Number** | **Description of Document**                                                                                                                                                                       
|------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1                | Agreement and Plan of Merger and Reorganization, dated March 1, 1998, among the
Registrant, Syracuse Acquisition Sub, Inc. and Scopus Technology, Inc.(4)                                         
|2.2                | Agreement and Plan of Merger and Reorganization dated November 17, 1999,
among the Registrant, SE Acquisition Corp. and OnTarget, Inc. (8)                                                        
|2.3                | Agreement and Plan of Merger and Reorganization dated April 5, 2000,
among the Registrant, OS Acquisition Corp., OpenSite Technologies, Inc. and Alan
Taetle as Stockholders' Agent. (10)         
|2.4                | Agreement and Plan of Merger and Reorganization dated August 3, 2000,
among the Registrant, Ocelot Acquisition Corp., OnLink Technologies, Inc. and
Cornell P. French as Stockholders' Agent. (12)
|3.1                | Amended and Restated Certificate of Incorporation of the Registrant.(3)                                                                                                                           
|3.2                | Certificate of Amendment of the Amended and Restated Certificiate of
Incorporation of the Registrant (9)                                                                                          
|3.3                | Bylaws of the Registrant.(1)                                                                                                                                                                      
|4.1                | Reference is made to Exhibits 3.1 and 3.2.                                                                                                                                                        
|4.2                | Specimen Stock Certificate.(1)                                                                                                                                                                    
|4.3                | Restated Investor Rights Agreement, dated December 1, 1995, between the
Registrant and certain investors, as amended April 30, 1996 and June 14,
1996.(1)                                         
|10.1               | Registrant's 1996 Equity Incentive Plan, as amended.(3)                                                                                                                                           
|10.2               | Registrant's Employee Stock Purchase Plan, as amended.(3)                                                                                                                                         
|10.3               | Form of Indemnity Agreement entered into between the Registrant and its
officers and directors.(1)                                                                                                
|10.4               | Registrant's Deferred Compensation Plan, dated January 10, 1997.(5)                                                                                                                               
|10.5               | Master Alliance Agreement, dated March 17, 1995, between the Registrant and
Andersen Consulting LLP.(1)(2)                                                                                        
|10.6               | Assignment Agreement, dated September 20, 1995, by and between the Registrant
and Thomas M. Siebel.(1)                                                                                            
|10.7               | Lease Agreement, dated June 4, 1996, by and between the Registrant and
Crossroad Associates and Clocktower Associates.(1)                                                                         
|10.8               | Lease Agreement, dated March 11, 1999, by and between the Registrant and
Sobrato Interests III, as amended.(9)                                                                                    
|10.8.1             | First Amendment to Lease  dated June 11, 1999 and Second Amendment to Lease dated
July 31, 1999. (14)                                                                                             
|10.9               | Lease Agreement, dated March 11, 1999, by and between the Registrant and
Sobrato Interests III, as amended.(9)                                                                                    
|10.9.1             | First Amendment to Lease  dated June 11, 1999 and Second Amendment to Lease dated
July 31, 1999. (14)                                                                                             
|10.10              | Lease Agreement, dated June 11, 1999, by and between the Registrant and
Sobrato Interests III, as amended.(9)                                                                                     
|10.10.1            | First Amendment to Lease  dated September 23, 2000 (14)                                                                                                                                           
|10.11              | Lease Agreement, dated August 24, 1994, by and between the Registrant and
Watergate Tower Associates.(9)                                                                                          
|10.12              | Lease Agreement, dated August 16, 1999, by and between the Registrant and
Spieker Properties, L.P.(9)                                                                                             
|10.13              | Lease Amendment 10, dated April 8, 1999, by and between the Registrant and
Spieker Properties, L.P.(9)                                                                                            
|10.14              | Lease Amendment 11, dated August 13, 1999, by and between the Registrant
and Spieker Properties, L.P.(9)                                                                                          
|10.15              | Lease Amendment 12, dated October 28, 1999, by and between the Registrant and
Spieker Properties, L.P.(9)                                                                                         
|10.16              | Registrant's 1998 Equity Incentive Plan, as amended. (11)                                                                                                                                         
|23.1               | Consent of KPMG LLP, Independent Auditors.(13)                                                                                                                                                    
|27.1               | Financial Data Schedule.(14)                                                                                                                                                                      

________

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

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

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

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

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

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

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

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

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

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

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

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

(13) Incorporated by reference to the Registrant's Current
Report on Form 8-K filed by the Registrant on September 28, 2000.

(14) Filed herewith.



(b)	Reports on Form 8-K.

On September 28, 2000, the Registrant filed a Current
Report on Form 8-K relating to the Registrant's acquisition of OpenSite
Technologies, Inc. On October 10, 2000, the Registrant filed a Current Report on
Form 8-K relating to the Registrant's acquisition of OnLink Technologies,
Inc.

---

**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 13, 2000



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

| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                     
| | Kenneth A.Goldman                                                                                                                                   
| | Senior Vice President Finance and
                                    Administration and
                                    Chief Financial Officer
| | (Principal Financial Officer)                                                                                                                       



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

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

---