Economy Takes Toll on Tech: Part 2

B2B companies Ariba, Commerce One report losses; find themselves looking for new markets.

Ariba Inc. and Commerce One Inc. were the stars of the business-to-business world last year when seemingly every company was looking to join an industry consortium and throw up an online marketplace.

Now that the fever has cooled, the two companies are hemorrhaging money, as shown by their recent earnings reports, and find themselves looking for new markets.

Ariba, which appointed Chief Financial Officer Bob Calderoni as its chief executive earlier this month, has all but completed its move away from providing e-marketplace software toward supply chain automation.

Commerce One, of Pleasanton, Calif., will stay the course in the marketplace-building business, but company officials said the product strategy is tilting more toward the enterprise.

Both companies are struggling financially. For the fiscal year ended Sept. 30, Ariba last week reported that revenues jumped 47 percent from the previous year, to nearly $409 million. However, the net loss for the year was more than $88 million. For the companys fiscal fourth quarter, the net loss was $27.7 million on sales of $62.6 million.

To turn its fortunes around, Ariba, of Mountain View, Calif., earlier this month introduced Ariba Spend Management, a strategy to provide purchasing officers a single place to go to access their companies spending data. The plan is to sell Aribas Buyer and Enterprise Sourcing product suites with a host of new products in strategic analysis, supplier relationship management and contract management. The suite should be complete by April.

Although Aribas plan is centered on purchasing, its new products will not compete with supply chain management software, Calderoni said.

"Supply chain [automation software] is all about planning for production—the components, who to order from, when to update—that is only one portion of the spend," he said.

Meanwhile, Commerce One reported a third-quarter net loss of $119 million on sales of $81 million. Compared with the same quarter last year, sales were down, and the loss was up.

Shortly before announcing those numbers, Commerce One CEO Mark Hoffman said the company was cutting 700 jobs and eliminating 600 more by selling its services operations.

With a renewed focus on developing new applications, Hoffman said Commerce One is readying solution sets for the enterprise that build on the companys existing collaborative procurement software. "We are taking the capabilities that run the worlds most successful e-marketplaces and bringing them into the enterprise," Hoffman said.