**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 March 31, 2001**

**OR**

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

**For the transition period from ________to _________**

**Commission file number 0-20725**

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



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

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

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







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

The number of shares outstanding of the registrant's common stock, par value
      $.001 per share, as of April 25, 2001 was 453,140,236.







**SIEBEL SYSTEMS, INC.
                                    FORM 10-Q
                 For the Quarterly Period Ended March 31, 2001
                               Table of Contents**

**Part I.  Financial Information**



|ITEM 1.   Financial Statements                                                                                                           | Page
|---------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                         |     
|Consolidated Balance Sheets as of
          
December 31, 2000 and March 31, 2001                                                        | 3   
|                                                                                                                                         |     
|Consolidated Statements of Operations and Comprehensive Income (Loss)
          
    for the three  months ended March 31, 2000 and 2001 | 4   
|                                                                                                                                         |     
|Consolidated Statements of Cash Flows
          
    for the three  months ended March 31, 2000 and 2001                                 | 5   
|                                                                                                                                         |     
|Notes to Consolidated Financial Statements                                                                                               | 6   
|                                                                                                                                         |     
|ITEM 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                    | 16  
|                                                                                                                                         |     
|ITEM 3.   Quantitative and Qualitative Disclosures About Market Risk                                                                     | 31  
|                                                                                                                                         |     

**Part II.  Other Information**



|ITEM 1.   Legal Proceedings                | 32
|------------------------------------------ | --
|                                           |   
|ITEM 5.   Other Information                | 32
|                                           |   
|ITEM 6.   Exhibits and Reports on Form 8-K | 33
|                                           |   
|**Signatures**                             | 35

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**Part I.  Financial Information**

**Item 1.  Financial Statements.**

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

`December 31,   March 31,
                                                           2000          2001
                                                       ------------  ------------
Assets

Current assets:
   Cash and cash equivalents......................... $    751,384  $    910,555
   Short-term investments............................      401,200       426,895
   Marketable equity securities......................       14,285         4,394
   Accounts receivable, net..........................      521,358       496,432
   Deferred income taxes.............................       61,825        64,477
   Prepaids and other................................       92,825        71,809
                                                       ------------  ------------
          Total current assets.......................    1,842,877     1,974,562

Property and equipment, net..........................      189,610       267,911
Other assets.........................................       97,546       104,545
Deferred income taxes................................       31,708        31,708
                                                       ------------  ------------
          Total assets............................... $  2,161,741  $  2,378,726
                                                       ============  ============

Liabilities and Stockholders' Equity

Current liabilities:
   Accounts payable.................................. $     24,113  $     30,052
   Accrued expenses..................................      355,159       354,525
   Deferred revenue..................................      202,523       247,282
                                                       ------------  ------------
          Total current liabilities..................      581,795       631,859

Convertible subordinated debentures..................      300,000       300,000
                                                       ------------  ------------
          Total liabilities..........................      881,795       931,859
                                                       ------------  ------------

Commitments and contingencies

Stockholders' equity:
  Common stock; $0.001 par value; 800,000
    shares authorized; 442,392 and 451,919 shares
    issued and outstanding, respectively.............          442           452
  Additional paid-in capital.........................    1,062,599     1,158,671
  Notes receivable from stockholders.................       (1,623)         (925)
  Deferred compensation..............................      (15,199)      (13,356)
  Accumulated other comprehensive income (loss)......        7,479        (1,144)
  Retained earnings..................................      226,248       303,169
                                                       ------------  ------------
          Total stockholders' equity.................    1,279,946     1,446,867
                                                       ------------  ------------
          Total liabilities and stockholders' equity. $  2,161,741  $  2,378,726
                                                       ============  ============`

See accompanying notes to consolidated financial statements.

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

`Three Months Ended
                                                                  March 31,
                                                            ---------------------
                                                              2000        2001
                                                            ---------  ----------
Revenues:
  Software................................................ $ 195,515  $  335,101
  Professional services, maintenance and other............   124,176     253,640
                                                            ---------  ----------
      Total revenues......................................   319,691     588,741
                                                            ---------  ----------
Cost of revenues:
  Software................................................     5,356       2,983
  Professional services, maintenance and other............    72,505     162,666
                                                            ---------  ----------
      Total cost of revenues..............................    77,861     165,649
                                                            ---------  ----------
      Gross margin........................................   241,830     423,092
                                                            ---------  ----------
Operating expenses:
  Product development.....................................    26,435      48,687
  Sales and marketing.....................................   140,547     212,513
  General and administrative..............................    28,893      54,496
                                                            ---------  ----------
      Total operating expenses............................   195,875     315,696
                                                            ---------  ----------
      Operating income....................................    45,955     107,396
Other income, net.........................................    13,211      14,699
                                                            ---------  ----------
      Income before income taxes..........................    59,166     122,095
Income taxes..............................................    23,853      45,174
                                                            ---------  ----------
      Net income .........................................    35,313      76,921

Accretion of preferred stock..............................   (77,048)         --
                                                            ---------  ----------
      Net income (loss) available to common stockholders.. $ (41,735) $   76,921
                                                            =========  ==========

Diluted net income (loss) per common share................ $   (0.10) $     0.15
                                                            =========  ==========

Basic net income (loss) per common share.................. $   (0.10) $     0.17
                                                            =========  ==========

Shares used in diluted share computation..................   408,280     519,873
                                                            =========  ==========

Shares used in basic share computation....................   408,280     448,025
                                                            =========  ==========

Comprehensive income (loss):
      Net income ......................................... $  35,313  $   76,921
      Other comprehensive income (loss), net of tax:
         Foreign currency translation adjustments.........    (1,203)     (4,868)
         Realized gains on securities.....................   (38,919)       (504)
         Unrealized gain (loss) on securities.............      (716)     (3,251)
                                                            ---------  ----------
           Other comprehensive income (loss)..............   (40,838)     (8,623)
                                                            ---------  ----------
      Total comprehensive income (loss)................... $  (5,525) $   68,298
                                                            =========  ==========`

See accompanying notes to consolidated financial statements.

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

`Three Months Ended
                                                                                         March 31,
                                                                                  ----------------------
                                                                                     2000        2001
                                                                                  ----------  ----------
Cash flows from operating activities:
   Net income................................................................... $   35,313  $   76,921
   Adjustments to reconcile net income to net cash
    provided by operating activities:
      Compensation related to stock options.....................................      3,641       1,446
      Depreciation and amortization.............................................      9,531      21,621
      Exchange of software for cost-method investments..........................     (2,429)       (720)
      Loss from equity method investee..........................................      2,531          --
      Deferred income taxes.....................................................    (83,897)        (48)
      Tax benefit from exercise of stock options................................     97,854      31,000
      Gain on sale of short-term investments and marketable equity securities...    (38,919)       (504)
      Charitable contribution of marketable equity securities...................     28,700          --
      Provision for doubtful accounts and returns, net..........................      3,595      11,516
      Changes in operating assets and liabilities:
         Accounts receivable....................................................     (8,186)     14,258
         Prepaids and other.....................................................     (9,681)     21,346
         Accounts payable and accrued expenses..................................     37,504       4,417
         Deferred revenue.......................................................     63,652      44,759
                                                                                  ----------  ----------
           Net cash provided by operating activities............................    139,209     226,012
                                                                                  ----------  ----------
Cash flows from investing activities:
   Proceeds from sale of marketable equity securities...........................     10,219          --
   Purchases of property and equipment..........................................    (28,128)    (91,944)
   Purchases, sales and maturities of short-term investments, net...............    (28,932)    (21,343)
   Cash received in connection with Sales.com acquisition.......................         --      11,550
   Payment of MOHR earnout......................................................         --        (310)
   Purchase consideration paid to the shareholders of Paragren Technologies, Inc.   (18,000)     (1,756)
   Other non-operating assets and non-marketable securities.....................     (3,471)     (6,692)
   Repayments from (advances to) affiliate, net.................................     (5,260)     10,579
                                                                                  ----------  ----------
           Net cash used in investing activities................................    (73,572)    (99,916)
                                                                                  ----------  ----------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net of repurchases...................     30,613      37,244
   Proceeds from issuance of preferred stock....................................     19,975          --
   Repayments of line of credit and capital lease obligations...................        (50)         --
   Repayments of stockholder notes..............................................         --         698
                                                                                  ----------  ----------
           Net cash provided by financing activities............................     50,538      37,942
                                                                                  ----------  ----------
Effect of exchange rate fluctuations on cash and cash equivalents...............     (1,067)     (4,867)
                                                                                  ----------  ----------
Change in cash and cash equivalents.............................................    115,108     159,171
Cash and cash equivalents, beginning of period..................................    486,321     751,384
                                                                                  ----------  ----------
Cash and cash equivalents, end of period........................................ $  601,429  $  910,555
                                                                                  ==========  ==========
Supplemental disclosures of cash flows information:
   Cash paid for interest....................................................... $    7,980  $    8,301
                                                                                  ==========  ==========

   Cash paid for income taxes................................................... $    4,741  $    5,251
                                                                                  ==========  ==========
Supplemental disclosures of non-cash activities:
   Issuance of common stock for Sales.com....................................... $       --  $   28,235
                                                                                  ==========  ==========`

See accompanying notes to consolidated financial statements.

---

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



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

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



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



Overview



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



Siebel eBusiness Applications are available in industry-specific versions designed for the pharmaceutical,
healthcare, consumer goods, telecommunications, insurance, energy, 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, October 2000 and November 2000, the Company acquired OpenSite, OnLink and Janna, respectively.
Each of these acquisitions has been accounted for as a pooling-of-interests.  Accordingly, the financial statements of the Company
have been restated to include the financial position and results of operations of each of these entities for all periods
presented.



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



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







Results of Operations for the Three Months Ended March 31, 2000 and 2001



The following table sets forth the consolidated statement of operations data for the three months ended
March 31, 2000 and 2001, expressed as a percentage of total revenues:

`Three Months Ended March 31,
                                                 --------------------------
                                                    2000          2001
                                                 ----------    ----------
Revenues:
    Software...................................       61.2 %        56.9 %
    Professional services, maintenance and other      38.8          43.1
                                                 ----------    ----------
        Total revenues.........................      100.0         100.0
                                                 ----------    ----------
Cost of revenues:
    Software...................................        1.7           0.5
    Professional services, maintenance and other      22.7          27.6
                                                 ----------    ----------
        Total cost of revenues.................       24.4          28.1
                                                 ----------    ----------
        Gross margin...........................       75.6          71.9
                                                 ----------    ----------
Operating expenses:
    Product development........................        8.3           8.3
    Sales and marketing........................       44.0          36.1
    General and administrative.................        9.0           9.2
                                                 ----------    ----------
        Total operating expenses...............       61.3          53.6
                                                 ----------    ----------
        Operating income.......................       14.3          18.3
Other income, net..............................        4.1           2.5
                                                 ----------    ----------
        Income before income taxes.............       18.4          20.8
Income taxes...................................        7.5           7.7
                                                 ----------    ----------
        Net income.............................       10.9 %        13.1 %
                                                 ==========    ==========`

Revenues



Software.  License revenues increased from $195.5 million for the three months ended March 31, 2000 to
$335.1 million for the three months ended March 31, 2001.  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 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's license revenue growth depends on the overall demand for eBusiness application software,
particularly in the product segments in which the Company competes.  Because the Company's sales are primarily to major corporate and
government customers, the Company's business depends on general economic and business conditions.  The Company experienced a decrease in the
year-on-year growth rate of its software license revenues in the first quarter of 2001 as a result of the general softening of the U.S.
economy.   Software license revenues as a percentage of total revenues were 61% in the first quarter of 2000 as compared to 57% in the first quarter
of 2001.  Software license revenues decreased as a percentage of total revenues primarily due to the growth of the Company's professional
services business to meet the growing demand for implementation of the Company's products.  While the
Company expects software license revenues to continue to grow in absolute dollars over the comparable period in the prior year, the Company
believes that software license revenue for the second quarter of 2001 will remain comparable to or decrease from the levels achieved in the
first quarter of 2001.  Please refer to the risk factor "Economic conditions could adversely affect our revenue growth
and ability to forecast revenue."



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, Japan and Asia.  International license
revenues accounted for 37% and 38% of total license revenues for the three months ended March 31, 2000 and 2001, respectively.  The
Company is increasing its international sales force and expects international revenues will continue to account for a substantial
portion of total revenues in the future.



The Company's customers include 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, Documentum, Inc., IBM Corporation, Lucent Technologies, Inc., MCI WorldCom Inc., Microsoft
Corporation, PeopleSoft, Inc., Rational Software Corp., RSA Security, Inc., Quest Software, 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.  During the first quarter of 2001, the Company recognized approximately
$38.0 million in software license revenues from transactions with vendors where the Company purchased goods or services from those vendors at
or about the same time as the software license transactions.



During the first quarter of 2000, the Company established a program whereby qualified startup companies could
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 $2.4 million and $0.7 million of license revenues related to this program during three months ended March 31, 2000
and 2001, respectively.



Professional Services, Maintenance and Other.  Professional services, maintenance and other revenues
increased from $124.2 million for the three months ended March 31, 2000 to $253.6 million for the three months ended March 31, 2001
and as a percentage of total revenues were 39% in the first quarter of 2000 as compared to 43% in the first quarter of 2001.  The
increase in the absolute dollar amount was due to growth in the Company's consulting business, sales and marketing training
businesses 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 continue to increase in absolute dollars as a result of the Company's growing installed customer
base and the Company's expansion of its consulting and training organization to meet anticipated customer demands in connection with
product implementation and sales training.



Cost of Revenues



Software.  Cost of software license revenues includes third-party software royalties, product
packaging, documentation and production.  Cost of software license revenues decreased from $5.4 million for the three months ended
March 31, 2000 to $3.0 million for the three months ended March 31, 2001.  As a percentage of software license revenues, cost of
license revenues was 3% and 1% for the three months ended March 31, 2000 and 2001, respectively.  Cost of license revenues decreased
both in absolute dollars and as a percentage of software license revenue due to a shift away from products subject to third-party
software royalties, along with the Company renegotiating certain third-party royalty agreements to more favorable terms.  All costs
incurred in the research and development of software products and enhancements to existing products have been expensed as incurred,
and, as a result, cost of license revenues includes no amortization of capitalized software development costs.  These costs are
expected to remain the same or increase as a percentage of total revenues.



Professional Services, Maintenance and Other.  Cost of professional services, maintenance and other
revenues consist primarily of personnel, facilities and systems costs incurred in providing sales and marketing training, consulting
and other global services.  Cost of professional services, maintenance and other revenues increased from $72.5 million for the three
months ended March 31, 2000 to $162.7 million for the three months ended March 31, 2001 and increased as a percentage of professional
services, maintenance and other revenues from 58% in the first quarter of 2000 to 64% in the first quarter of 2001.  The increase in
the absolute dollar amount reflects increased costs resulting from the Company's expansion of its maintenance and support
organization and growth in the Company's consulting and training businesses.  The increase as a percentage of professional services,
maintenance and other revenues reflects an increased proportion of this revenue coming from consulting services that are at
relatively lower margins than maintenance services.  The Company expects that professional services, maintenance and other costs will
continue to increase in absolute dollar amount as the Company expands its global services organization to support a growing installed
customer base; its consulting organization to meet anticipated customer demands in connection with product implementation; and the
training organization to support the growing needs of its customers.



Operating Expenses



Product Development.  Product development expenses include expenses associated with the development of
new products, enhancements of existing products and quality assurance activities, and consist primarily of employee salaries,
benefits, consulting costs and the cost of software development tools.  Product development expenses increased from $26.4 million for
                                                     the three months ended March 31, 2000 to $48.7 million for the three months ended March 31, 2001.  Product development expense was 8%
of total revenues in both the fiscal 2000 period and 2001 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 continue to increase in absolute dollar amount but remain at a similar percentage of total revenues as in the first three
months of fiscal 2001.  The Company considers technological feasibility of its software products to have been reached upon completion
of a working model that has met certain performance criteria.  The period between achievement of technological feasibility and
general release of a software product is typically very short, and development costs incurred during that period have not been
material. Accordingly, the Company has not capitalized any software development costs to date.



Sales and Marketing.



General and Administrative.  General and administrative expenses consist primarily of salaries and
occupancy costs for administrative, executive and finance personnel, along with bad debt expense.  General and administrative
expenses increased from $28.9 million for the three months ended March 31, 2000 to $54.5 million for the three months ended March 31,
2001 and as a percentage of total revenues were 9% in each of the three months ended March 31, 2000 and 2001.  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 dollar amount as a result of the continued expansion of the Company's
administrative staff and facilities to support growing operations.  The Company anticipates that general and administrative expenses
as a percentage of total revenues will remain the same or decrease as a percentage of total revenues as compared to the percentage of
total revenues in the first three months of fiscal 2001.



Operating Income and Operating Margin



Operating income increased from $46.0 million for the three months ended March 31, 2000 to $107.4 million for
the three months ended March 31, 2001 and operating margin was 14% and 18% in the first quarter of 2000 and 2001, respectively.
Operating margins increased in the first quarter of 2001 over the comparable period in 2000 primarily due to management's acceleration of cost control
initiatives in the Company's sales, marketing and other operations as part of an overall program to improve operational efficiencies
and in response to the weakening U.S. economy, and due to efficiencies obtained subsequent to the Company's acquisition of OpenSite,
OnLink and Janna.  The Company's gross margin for the first quarter of 2001 decreased compared to the first quarter of 2000
as a result of a higher percentage of total revenues coming from professional services, maintenance and other revenues, which are at
lower margins than software license revenues.  The Company expects operating margins to remain
comparable to the operating margin for the first quarter of 2001.



Other Income, Net





`Three months Ended March 31,
                                                --------------------------
                                                   2000           2001
                                                -----------   ------------
Interest income............................... $10,307,000   $ 19,108,000
Interest expense..............................  (4,450,000)    (4,734,000)
Losses from equity method investee............  (2,531,000)           --
Contribution of investments................... (28,700,000)           --
Gain on sale of investments...................  38,919,000        504,000
Other, net....................................    (334,000)      (179,000)
                                                -----------   ------------
                                               $13,211,000   $ 14,699,000
                                                ===========   ============`

Interest income represents earnings on the Company's increased balances of cash and cash equivalents and
short-term investments.  Interest expense represents interest on the Company's $300.0 million of convertible subordinated debentures
bearing interest at 5.50%.  In December 1999, the Company sold a controlling interest in Sales.com and accounted for this investment
under the equity method of accounting during fiscal 2000.  The Company re-acquired Sales.com in early January 2001 and, accordingly,
has consolidated the operations of Sales.com in 2001.  During the three months ended March 3l, 2000, the Company had realized gains
on sales of investments of $38.9 million, which primarily represented gains on the Company's investment in USinternetworking, Inc.
During the three months ended March 31, 2001, the Company had realized gains of $0.5 million related to sales of short-term
investments.  Charitable contributions during the three months ended March 31, 2000 were primarily comprised of the Company's
contribution of a portion of its investment in USinternetworking, Inc. to various charitable organizations.



Provision for Income Taxes







Net Income and Net Income (Loss) Available to Common Stockholders



The Company had net income of $35.3 million and $76.9 million for the three months ended March 31, 2000 and
2001, respectively.  The Company had a net loss available to common stockholders of $41.7 million for the three months ended March
31, 2000 compared to net income available to common stockholders of $76.9 million for the three months ended March 31, 2001.  Net
income for the three months ended March 31, 2000 has been reduced by accretion on OpenSite's mandatorily redeemable convertible
preferred stock to determine net loss available to common stockholders.  The accounting for OpenSite's mandatorily redeemable
convertible preferred stock required non-cash accretion to the then current fair value of the common stock into which the mandatorily
redeemable convertible preferred stock was convertible.  This resulted in a non-cash charge to accretion and offsetting credit to
mandatorily redeemable convertible preferred stock for the three months ended March 31, 2000. The amount of accretion for an income
statement period was dependent upon how much the fair value of OpenSite's common stock fluctuated during that period.  In connection
with the Company's acquisition of OpenSite, the holders of the mandatorily redeemable convertible preferred stock converted their
shares pursuant to their existing terms on a one for one basis into shares of OpenSite's common stock.  Accordingly, the Company
stopped recording accretion on the mandatorily redeemable convertible preferred stock on May 17, 2000.



Diluted net loss available per common share was $.10 per share for the three months ended March 31, 2000
compared to diluted net income available per common share of $0.15 per share for the three months ended March 31, 2001.



Adoption of Accounting Pronouncements



On January 1, 2001, the Company adopted SFAS 133, as amended by SFAS 137 and SFAS 138.  The cumulative
transition adjustment upon adoption on January 1, 2001 was insignificant.  SFAS 133 establishes accounting and reporting standards
for derivative instruments and hedging activities.  SFAS 133 requires that all derivatives be recognized as either assets or
liabilities at fair value.  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.



If the derivative is designated as a hedging instrument, depending on the nature of the exposure being hedged,
changes in fair value will either be offset against the change in fair value of the hedged asset, liability, or firm commitment
through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings.  Derivatives or
portions of derivatives that are not designated as hedging instruments are adjusted to fair value through earnings and are recognized
in the period of change in their fair value.



The Company does not believe that ongoing application of SFAS 133 will significantly alter the Company's
hedging strategies.  However, its application may increase the volatility of other income and expense and other comprehensive
income.



Liquidity and Capital Resources



The Company's cash, cash equivalents and short-term investments in aggregate increased from $1,152.6
million as of December 31, 2000 to $1,337.5 million as of March 31, 2001, representing approximately 53% and 56% of total assets,
respectively.  The Company's days sales outstanding in accounts receivable was 81 days as of December 31, 2000 compared with 76 days
as of March 31, 2001.  As of April 30, 2001, the fair value of the Company's marketable equity securities was $4.9 million.



As of March 31, 2001, the Company had $300.0 million of convertible subordinated debentures outstanding.  The
seven-year term notes bear interest at a rate of 5.50% and are convertible into 12.9 million shares of the Company's common stock at
any time prior to maturity, at a conversion price of $23.32 per share, subject to adjustment under certain conditions.  The Company
may redeem the notes, in whole or in part, at any time on or after September 15, 2002.  The redemption price will range from $309.4
million to $302.4 million if the notes are redeemed between September 15, 2002 through September 14, 2006.  Any redemption made on or
after September 15, 2006 will be redeemed at $300.0 million.  In addition, accrued interest to the redemption date will be paid by
the Company in each redemption.



Cash provided by operating activities was $139.2 million and $226.0 million for the three months ended March
31, 2000 and 2001, respectively.  Cash provided by operating activities for the three months ended March 31, 2001 increased over the
comparable period in fiscal 2000 primarily due to an increase in net income.



Cash used in investing activities was $73.6 million and $99.9 million for the three months ended March 31,
2000 and 2001, respectively.  Cash used in investing activities during the first quarter of fiscal 2000 was primarily the result of:
(i) the Company's purchase of $28.9 million of short-term investments; (ii) the Company's purchase of $28.1 million of property and
equipment, including leasehold improvements; and (iii) the acquisition of Paragren for proceeds totaling $18.0 million.  Cash used in
investing activities during the first quarter of fiscal 2001 was primarily the result of: (i) the Company's purchase of $21.3 million
of short-term investments; (ii) the Company's purchase of $91.9 million of property and equipment, including leasehold improvements;
(iii) earnout payments in the aggregate of $2.1 million to the stockholders of MOHR and Paragren; and (iv) purchases of other
non-operating assets of $6.7 million, partially offset by cash received in the amount of $11.6 million as part of the Sales.com purchase
and repayments of $10.6 million from an affiliate.



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



Cash provided by financing activities was $50.5 million and $37.9 million for the three months ended March 31,
2000 and 2001, respectively.  For the three months ended March 31, 2000, the Company's financing activities consisted primarily of
$30.6 million of proceeds from the issuance of common stock pursuant to the exercise of stock options and proceeds of $20.0 million
from the issuance of preferred stock by OnLink prior to its acquisition.  For the three months ended March 31, 2001, the Company's
financing activities consisted primarily of $37.2 million of proceeds from the issuance of common stock pursuant to the exercise of
stock options and proceeds of $0.7 million from the repayment of stockholder notes.



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



Risk Factors

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

Our total revenue and operating results may fluctuate.

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

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

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

Our quarterly operating results may fluctuate.

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

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

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

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



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

The revenue growth and profitability of our business depends on the overall demand for
eBusiness application software and services.  Because our sales are primarily to major corporate and government customers, our
business also depends on general economic and business conditions.  A softening of demand for computer software caused by a weakening
of the economy, domestically or internationally, may result in decreased revenues and growth rates.

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

We need to successfully integrate acquisitions and manage growth.

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

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

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

In particular, we have established non-exclusive strategic relationships with Accenture (formerly Andersen
Consulting), IBM Global Services, PricewaterhouseCoopers and Deloitte Consulting.  A significant portion of our revenues has
historically been derived from customers for whom the systems integrators with which we have a relationship have been engaged to
provide system integration services.  Any deterioration of our relationship with these significant third-party systems integrators
could have a material adverse effect on our business, financial condition and results of operations.  We also have relationships with
technology vendors such as IBM Corporation, Compaq Computer Corporation, Microsoft Corporation and Sun Microsystems, Inc., among
others.  Failure to maintain existing relationships on terms equally favorable to us, or to establish new relationships in the
future, could have a material adverse effect on our business, 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.  In addition, we offer industry-specific versions of these products.  We expect that these
products and related consulting, maintenance and training services will continue to account for a majority of our future revenues.
Our success depends in part on our ability to market and maintain the industry-specific versions of our products.  Factors adversely
affecting the cost and pricing of, or demand for, these products, such as competition or technological change, could have a material
adverse effect on our business, operating results and financial condition.

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

The timing of the sales and implementation of our products and services is lengthy and not predictable
with any degree of accuracy.  Prior sales and implementation cycles should not be relied upon as any indication of future cycles.

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



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

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

Our expanding distribution channels may create additional risks.

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

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

Our success depends on gaining new customers and maintaining relationships with our existing customers.
From quarter to quarter, a relatively small number of customers generally account for a significant percentage of our revenues.
License revenues from our ten largest customers in the three months ended March 31, 2001 accounted for approximately 46% of total
license revenues for such quarter.  We expect that licenses of our products to a limited number of customers will continue to account
for a significant percentage of revenue in an individual quarter for the foreseeable future.  However, because the top ten customers
vary from quarter to quarter, we anticipate that license revenues from the top ten customers for the year ending December 31, 2001
will be significantly lower as a percentage of total license revenues.  The failure to successfully market our products to new
customers or to new industries, or the loss of a small number of customers or any reduction or delay in orders by any such customer,
could have a material adverse effect on our business, financial condition and results of operations.

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

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

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

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

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

A large number of personal, departmental and other products exist in the Siebel eBusiness applications market.
Companies such as BroadVision, Inc., CAS Software AG, Dendrite International, Inc., E.piphany, Inc., FirePond, Inc., FrontRange
Solutions, Inc., Interact Commerce Corporation, Kana Communications, Inc., Nortel Networks, ONYX Software Corporation, Oracle
Corporation, PeopleSoft, Inc., Pivotal Software, Inc., Remedy Corporation, SAP AG, Trilogy Software, Inc. and Vignette Corporation
are among the many firms in this market segment.  Some of these competitors have longer operating histories, significantly greater
financial, technical, marketing and other resources, significantly greater name recognition and a larger installed base of customers
than we do.  In addition, many competitors have well-established relationships with our current and potential customers.  As a
result, these competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements,
or to devote greater resources to the development, promotion and sale of their products than we can.

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

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

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

Software errors or defects in our products could reduce revenues.

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

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

If we fail to manage our growth effectively, our business, financial condition and results of operations
could be materially and adversely affected.  Our business has grown rapidly in recent years.  This growth has placed a significant
strain on our management systems and resources.  In addition, this growth may require us to implement new systems or upgrade current
systems, and the failure to successfully implement such new or improved systems could materially and adversely affect our business.
To manage future growth, we must continue to (i) implement and improve our financial, operational and management controls, reporting
systems and procedures on a timely basis and (ii) expand, train and manage our employee work force.



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

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

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

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

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

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

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

The loss of key personnel could negatively affect our performance.

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



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 7 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 March 31, 2001.  While these stockholders do not hold a majority of our
outstanding common stock, they will be able to exercise significant influence over matters requiring stockholder approval, including
the election of directors and the approval of mergers, consolidations and sales of our assets.  This may prevent or discourage tender
offers for our common stock.

Our stock price may continue to be volatile.

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

Provisions in our charter documents may prevent certain corporate actions.

Our Board of Directors is authorized to issue up to 2,000,000 shares of preferred stock and to determine
the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further approval by
our stockholders.  One of these shares has been designated Series A-1 Preferred Stock, which was issued in connection with the
acquisition of Janna.  Please see Note 2 to the consolidated financial statements.  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.  The first table includes the Company's foreign currency forward contracts used to hedge
foreign currency receivables, payables and intercompany balances, which are subject to exchange rate risk.  The second table includes
the Company's available-for-sale short-term investments, which are subject to interest rate risk.



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



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

`Contract                  Fair Value at
                                          Amount       Contract     March 31,
                                     (Local Currency)   Amount      2001 (US$)
                                     ----------------  ---------   ------------
Australian dollars ("AUD") (contracts
  to pay AUD/receive US$)...........      (AUD) 6,736   US$3,842  $        516

British pounds ("GBP") (contracts to
  pay GBP/receive US$)..............      (GBP) 3,307   US$4,795  $         48

Japanese yen ("YEN") (contracts to
  pay Yen/receive US$)..............  (YEN) 2,930,208  US$25,466  $      1,524

Canadian dollars ("CAN") (contracts
  to receive CAN/pay US$)...........     (CAN) 11,082   US$7,107  $        (24)

Singapore dollars ("SGD") (contracts
  to pay SGD/receive US$)...........      (SGD) 5,401   US$3,238  $        232

Euro ("EUR") (contracts to pay
  EUR/receive US$)..................     (EUR) 17,569  US$15,112  $       (487)

Swiss Franc ("CHF") (contracts to
  pay CHF/receive US$)..............      (CHF) 4,274   US$2,605  $        125

Swiss Franc ("CHF") (contracts to
  receive CHF/pay EUR)..............     (CHF) 15,268  EUR 10,087 $        (99)

British pounds ("GBP") (contracts to
  pay GBP/receive EUR)..............      (GBP) 2,763  EUR 3,346  $       (996)`





`Expected maturity date
                         -----------------------------------------------------
                                                                       There-
                           2001     2002     2003     2004     2005    after
                         -------- -------- -------- -------- -------- --------
US Treasury and Agency
  securities............ $34,346  $25,409  $57,273  $17,248  $41,348   $7,047
Wtd. Avg. Yld...........    5.17%    4.74%    4.48%    4.61%    4.68%    5.31%

Municipal securities.... $22,941  $19,560   $1,981       --       --       --
Wtd. Avg. Yld...........    3.28%    3.41%    4.31%

Corporate bonds......... $53,309  $40,535  $54,397  $23,056  $23,370   $5,075
Wtd. Avg. Yld...........    5.37%    5.11%    5.19%    5.47%    5.74%    5.78%`







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 $439,000 decrease in
the fair value of the Company's marketable equity securities as of March 31, 2001.



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



Part II.	Other Information

Item 1.	Legal Proceedings.



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



Item 5.	Other Information.



The Company has revised its Insider Trading Policy to allow directors, officers and other employees
covered under the policy to establish, under limited circumstances contemplated by Rule 10b5-1 under the Exchange Act, written
programs that permit automatic trading of the Company's stock or trading of the Company's stock by an independent person (such as an
investment bank) who is not aware of material inside information at the time of the trade.  The Company believes that certain of its
directors, officers and employees, including Thomas M. Siebel, the Company's Chairman and Chief Executive Officer, may
establish such programs.

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

a. Exhibits.

|Exhibit Number | Description of Document                                                                                                                                                                             
|-------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            | Agreement and Plan of Merger and Reorganization dated April 5, 2000, among the Registrant,
OS Acquisition Corp., OpenSite Technologies, Inc. and Alan Taetle as Stockholders' Agent. (1)            
|2.2            | Agreement and Plan of Merger and Reorganization dated August 3, 2000, among 
the Registrant, Ocelot  Acquisition Corp., OnLink Technologies, Inc. 
and Cornell P. French as Stockholders' Agent. (2)
|2.3            | Arrangement Agreement dated September 11, 2000 among the Registrant, certain indirectly
wholly-owned subsidiaries of the Registrant, and Janna Systems Inc. (3)                                     
|3.1            | Amended and Restated Certificate of Incorporation of the Registrant. (4)                                                                                                                            
|3.2            | Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the
Registrant. (5)                                                                                            
|3.3            | Bylaws of the Registrant. (6)                                                                                                                                                                       
|4.1            | Reference is made to Exhibits 3.1 and 3.2.                                                                                                                                                          
|4.2            | Specimen Stock Certificate. (6)                                                                                                                                                                     
|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. (6)                                          
|4.4            | Certificate of Designation of Series A1 Preferred Stock of the Company.  (3)                                                                                                                        
|10.1           | Registrant's 1996 Equity Incentive Plan, as amended. (4)                                                                                                                                            
|10.2           | Registrant's Employee Stock Purchase Plan, as amended. (4)                                                                                                                                          
|10.3           | Form of Indemnity Agreement entered into between the Registrant and its officers and directors. (6)                                                                                                 
|10.4           | Registrant's Deferred Compensation Plan, dated January 10, 1997. (7)                                                                                                                                
|10.5           | Lease Agreement, dated June 4, 1996, by and between the Registrant and Crossroad Associates
and Clocktower Associates. (6)                                                                          
|10.6           | Lease Agreement, dated March 11, 1999, by and between the Registrant and Sobrato Interests III,
as amended. (5)                                                                                     
|10.6.1         | First Amendment to Lease  dated June 11, 1999 and Second Amendment to Lease dated
July 31, 1999. (8)                                                                                                
|10.7           | Lease Agreement, dated March 11, 1999, by and between the Registrant and Sobrato Interests III,
as amended. (5)                                                                                     
|10.7.1         | First Amendment to Lease  dated June 11, 1999 and Second Amendment to Lease dated
July 31, 1999. (8)                                                                                                
|10.8           | Lease Agreement, dated June 11, 1999, by and between the Registrant and Sobrato Interests III,
as amended. (5)                                                                                      
|10.8.1         | First Amendment to Lease  dated September 23, 2000. (8)                                                                                                                                             
|10.9           | Lease Agreement, dated August 24, 1994, by and between the Registrant and Watergate Tower
Associates. (5)                                                                                           
|10.10          | Lease Agreement, dated August 16, 1999, by and between the Registrant and Spieker
Properties, L.P. (5)                                                                                              
|10.11          | Lease Amendment 10, dated April 8, 1999, by and between the Registrant and Spieker
Properties, L.P. (5)                                                                                             
|10.12          | Lease Amendment 11, dated August 13, 1999, by and between the Registrant and Spieker
Properties, L.P. (5)                                                                                           
|10.13          | Lease Amendment 12, dated October 28, 1999, by and between the Registrant and Spieker
Properties, L.P. (5)                                                                                          
|10.14          | Registrant's 1998 Equity Incentive Plan, as amended. (9)                                                                                                                                            
|23.1           | Consent of KPMG LLP, Independent Auditors. (10)                                                                                                                                                     

__________________



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

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

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

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

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

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

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

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

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

(10)	Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 31,
2000.





b.	Reports on Form 8-K.

None.

---

**SIGNATURES**

Pursuant to the requirement of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



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

| |             
| | ------------
| | (Registrant)

Dated: May 15, 2001



| |     |                       
| | --- | ----------------------
| | 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)

---