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Revenues fell by more than 50 percent at electronic commerce software maker Ariba in its fiscal fourth quarter, but the company took some comfort in its ability to wrestle expenses under control.
The Sunnyvale, Calif. company reported Wednesday that revenues fell to $62.7 million in the quarter ended Sept. 30, from $134.8 million for the same period a year earlier. The net loss in the quarter was $224.3 million (89 cents per share) compared to $339.3 million ($1.50 per share) a year earlier, but when acquisitions and special charges were taken out the picture, the operating loss was just $27.7 million.
Newly minted chief executive officer Bob Calderoni wouldnt go so far as to predict that company would break even in the next quarter, because the ongoing effects of the Sept. 11 attacks are making revenue projections too difficult to forecast, but he said it will be close. He said total expenses should be in the $60 million range – about the same as current revenues.
“We are on the cusp of profitability,” he said. “Our first step is to gain stability, from there well move on to profitability, and from there well focus again on growth.”
Ariba took tough action earlier this year to curb expenses, laying off more than one-third of its staff. The company currently has just under 1,000 employees, but no further reductions are planned.
Aribas revenues came in lower for the quarter than its chief competitor Commerce One, $62.7 million compared to $81 million, but Ariba may be in a stronger position. Commerce Ones software license sales were only $16.7 million, with the majority of its revenues coming from consulting services. Ariba, on the other hand, earned about half of its revenues, or $32.7 million from software licenses. It also had several big customer wins in the quarter, including a sale to Home Depot for its complete e-commerce suite.
“That was a huge win for us,” said Calderoni, noting that Home Depot is already a customer of competitor SAP. “It showed we can beat SAP in their own backyard.”
While the company aims to bring on more new customers in the current quarter, Calderoni said the game plan in the short term is to sell more software functionality and services to existing clients. It just introduced an upgrade to its enterprise sourcing application and will be launching a new analytics package in January.
Calderoni assumed the role of president and chief executive a week ago after the sudden departure of Larry Mueller in July. Mueller took over from original CEO Keith Krach in April.
Analysts said Ariba, with $294 million in cash and no debt, appears fit to survive the current economic storm. “I think well see them live to fight another day,” said Steve Bowen, an analyst with First Analysis.