Two Companies, Same Boat

Ariba, Commerce One report increased revenues, losses

Tempe, AZ  April 20, 2001  e-Procurement platform stalwarts Ariba and Commerce One today reported increased revenues but larger losses for quarter ending March 31.

First, Ariba: The company's revenues for the second quarter of its 2001 fiscal year were $90.7 million, up 126 percent from the same period last year. Pro forma net loss for the quarter, excluding certain special charges, was $48.3 million, or a loss of $0.20 per share. During the corresponding quarter in fiscal 2000, the comparable pro forma net loss was $11.5 million, or a loss of $0.06 per share, excluding certain special charges.

The loss for the quarter just ended was in line with analysts' estimates.

Ariba, based in Mountain View, Calif., had issued revised guidance for the quarter to reflect the weakening macroeconomic climate. The company also announced a plan to reduce spending across all major areas, including a 30 percent workforce reduction.

"The slowdown in both the economy and technology spending impacted our business more dramatically than we had expected," said Bob Calderoni, Ariba's chief financial officer. "While the current uncertain market conditions provide low visibility going forward, we took decisive and immediate actions to realign our expense structure to reflect today's economic realities. We believe a strong focus on operational efficiencies and financial discipline will help us weather the current environment and should position us well as the economy recovers."

As a result of the economic conditions and other factors, Ariba has incurred a total of approximately $33.6 million in special charges relating to, among other things, equity investments, and costs related to the cancelled acquisition of Agile Software. The company also has written down approximately $1.4 billion of goodwill related to an acquisition.

In a statement, Keith Krach, Ariba's chairman and CEO, was philosophical about the company's prospects, noting that Ariba had signed up several high-profile customers during the quarter, including AT&T, British Airways, Exxon-Mobil, Herman Miller, Saks, Unilever and Zurich Financial Services.

Ariba now claims more than 240 customers using its e-procurement platform.

Pleasanton, Calif.-based Commerce One reported revenues for the current quarter totaling $170.3 million, an increase of 386 percent over revenues of $35.0 million for the quarter that ended March 31, 2000. Operating loss for the first quarter of 2001, excluding acquisition related costs, interest, taxes and other non-cash charges, was $25.5 million, or $0.11 per share, as compared to $14.0 million, or $0.09 per share, for the corresponding quarter in 2000.

Including amortization of goodwill and other charges, the net loss for the current quarter was $228.5 million, or $1.02 per share, as compared with a net loss of $43.6 million, or $0.29 per share, for the corresponding quarter in 2000.

Commerce One said the loss for the quarter just ended met revised estimates, while the revenue figure was just below its expectations. Prior to a warning from the company on April 4, analysts had been predicting a loss of $0.06 per share for the quarter.

Like Krach, Commerce One CEO Mark Hoffman said he remains optimistic about his company's prospects: "We believe the current pressure to improve productivity and profits plays directly into our value proposition as the e-marketplace company. This is what is driving the demand for public and private e-marketplaces, and we believe Commerce One is in the sweet spot to fulfill this demand."

Commerce One added 63 new customers for the quarter, bringing its total customer count to 567 (excluding SAP customers who have received shipments of Enterprise Buyer, the joint procurement solution). Commerce One's Global Trading Web, which the company claims is the world's largest B2B trading community, continued its expansion and now includes 157 e-marketplaces, 80 of which are currently operational.

Also during the quarter, Commerce One announced a definitive agreement to acquire Exterprise, whose technology is expected to accelerate the creation and integration of custom marketplace applications based on MarketSite. These applications will support cross-business-unit and multi-enterprise process automation. The Exterprise acquisition is subject to customary closing conditions and is expected to close in the second quarter of 2001.

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