One out of Three Ain't Bad

Two B2B giants slump, one stuns

New York, Sunnyvale and Pleasanton, CA, and Walldorf, Germany  July 20, 2001  Not to end your week on a down note, but the results are in for a couple of B2B giants, and they're not exactly cause for celebration.

Ariba announced that revenues for the third quarter of fiscal 2001 were $85.3 million, up 6 percent from the same period last year. Pro forma net loss for the quarter, excluding certain special and non-cash charges, was $26.1 million, or a loss of $0.10 per share, beating the First Call consensus estimate of $0.12 per share. During the corresponding quarter in fiscal 2000, the comparable pro forma net loss was $11.3 million, or a loss of $0.05 per share, excluding certain special and non-cash charges.

Net loss on a GAAP basis for the third quarter of fiscal 2001 was $273.5 million, or a loss of $1.10 per share. During the corresponding quarter in fiscal 2000 the net loss on a GAAP basis was $317.1 million, or a loss of $1.45 per share.

Despite the challenging environment, we reported better than expected revenue and earnings results this quarter, said Bob Calderoni, executive vice president and chief financial officer. Major corporations continue to turn to Ariba substantiating our value proposition of saving companies money.

During the quarter, Ariba signed deals with 3M, Amtrak, U.S. Department of Defense, Wesfarmers, Nestle Brazil and others. A number of existing customers including FedEx, Royal Bank of Canada, Sara Lee, and the U.S. Navy, also extended their relationship with Ariba by buying additional products.

While our pipeline has increased, market conditions remain difficult. Therefore, we will continue to reduce costs throughout the organization, positioning the company to benefit when IT spending opens up, said Calderoni.

In news that perhaps belies the rosy cast of the preceding statements, the company also announced the departure of  president and CEO Larry Mueller. Keith Krach, chairman of the board, will act as interim CEO. Now, more than ever, I still believe in the opportunity of this company and feel confident we have the assets for long-term success, said Keith Krach. Ariba has an incredibly strong management team to help navigate through these times.

In the third quarter, Ariba wrote-off approximately $70 million in special charges for the restructuring of its worldwide operations including a reduction in workforce. 

Fellow B2B giant Commerce One didn't lose any executives, but their news was also less than rosy. Revenues for the current quarter (ending June 30) totaled $101.3 million, an increase of 61 percent over revenues of $62.7 million for the quarter ended June 30, 2000. Operating loss for the second quarter of 2001, excluding acquisition-related costs, interest, taxes, amortization of technology agreement, stock compensation and intangible assets, and other non-recurring charges, was $70.2 million, or $0.31 per share, as compared to $16.2 million, or $0.10 per share, for the corresponding quarter in 2000.

The net loss for the current quarter was $2,068.3 million, or $9.02 per share, as compared with a net loss of $43.1 million, or $0.28 per share, for the corresponding quarter in 2000.

The second quarter net loss includes acquisition-related costs, interest, amortization of technology agreement, stock compensation and intangible assets, and certain one-time charges. These one-time charges include a non-cash charge of $1,712.8 million resulting from the impairment of intangible assets and equity investments, and a restructuring charge of $62.0 million.

"In spite of the short term pressures, we remain confident in our vision for both public and private e-marketplaces," said Mark Hoffman, chairman and CEO of Commerce One. "We are committed to driving the company to profitability by both rationalizing the company with current market conditions and staying focused on making our customers successful, delivering ROI and developing the products and services our customers need long-term."

While Commerce One might not be reveling in the latest news, SAP, which recently invested some $225 million in C1, did have news worthy of commendation instead of commiseration. In the second quarter of 2001, SAP's revenues rose 24 percent over the same period last year, and net income rose 78 percent to $179 million.

"We are the acknowledged leader in e-business software solutions  no other company comes even close in the breadth and depth of our offerings," commented Hasso Plattner, co-chairman and CEO of SAP AG. "Customers and prospects trust our ability to deliver complete solutions to business challenges in any industry anywhere. We continue to expand our leadership through investments in enterprise portal solutions and exchange technology, which we consider to be significant revenue drivers of the future."

"Our strong operating performance this quarter was driven mostly by our ability to control on-going costs. In an uncertain business environment, SAP's strength and commitment are a competitive advantage. Excluding the currency effects, all regions performed well; even in the Americas, where we believe our overall market share increased," said Henning Kagermann, co-chairman and CEO of SAP AG.

SAP confirms its earlier expectations for the first nine months of 2001. SAP has also provided its extended expectations for revenue and margin performance for the full year. SAP expects revenue for the full year 2001 to grow by more than 20 percent. Operating margin, excluding stock based compensation and acquisition related charges, are expected to exceed the 20 percent achieved in 2000 by 1 to 2 percentage points. 

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