9th June 2005 Software maker Siebel Systems has caved into shareholder pressure and will pay a dividend in its current financial quarter. The announcement comes as Siebel tries to placate restless shareholders who are looking for the company to be sold.

In a letter to shareholders, Siebel CEO George Shaheen confirmed that it would pay a dividend of 2.5 cents per share for its current quarter.

“This dividend program reflects our Board of Directors’ confidence in Siebel Systems’ long-term record of positive cash flow generation, strong future growth opportunities and substantial commitment and ability to return capital to shareholders over time,” wrote Shaheen.

The deal is unusual for US software companies, few of which pay dividends. But Siebel has been forced into this concession as pressure has built from shareholders for Siebel to put its $2.2 billion cash pile to use.

Shareholders have recently expressed their dissatisfaction with the software maker’s performance – the company which virtually invented the customer relationship management market has seen its share price take a battering and it recently posted an operating loss in its first financial quarter of 2005.

And the decision to pay a dividend may ease pressure on Siebel’s management board to find a buyer for the company.

“The dissident [shareholders] see a company that is failing to make consistent headway in a market that is growing modestly, while rival business application vendors like SAP seem to be doing nicely,” said David Bradshaw, principal analyst at market watchers Ovum.

“They’d also like Siebel to sell itself to Oracle; as we’ve said in the past, this might be a possibility, but there is a very narrow time window in which it would make sense for Oracle to buy Siebel,” he added.

The dividend will only cost Siebel $13.5 million per quarter – hardly making a dent on its cash reserves. But it may ease investor disquiet, at least in the short term.

Story by Kaia Hødnebø