Ariba Names New CEO

CFO takes over as e-procurement pioneer charts course to profitability

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Sunnyvale, CA  October 18, 2001  Ariba on Wednesday tapped its chief financial officer to be its new president and CEO, the company's third chief in just six months, as the e-procurement platform provider seeks to cut costs and chart a new product strategy on its road to profitability.

In announcing the appointment of Robert Calderoni, 41, Ariba said in a statement that its new CEO will drive Ariba's new product strategy, "Ariba Spend Management," intended to assist companies in managing spend and improving their bottom-line results.

"In today's economic environment, I don't know of a company that couldn't benefit from reducing costs," said Calderoni in the Ariba statement. He went on to assert that financial and purchasing professionals have lacked the solutions to manage and control their spend. Companies need to capture and leverage the widest amount of spending across as many categories as possible to maximize benefits, Calderoni said, and he offered Ariba's spend management software as the solution to this challenge.

The spend management solution, an analytical toolkit planned for release in the near future, joins the software company's current software lineup, which includes a corporate e-procurement platform and the recently unveiled e-sourcing application.

Calderoni may well want to use the spend management at Ariba itself. In a conference call to announce his appointment, Calderoni said that part of his mandate is to reduce costs and take the software company into the black in the next year, before refocusing on top-line revenue growth. "My goals are to create a profitable, growing Ariba," the new CEO said. "We are going to instill a level of business discipline in everything we do."

The focus on "business discipline" reflects Ariba's maturation as a company, Calderoni said. "Not unlike other young companies, they have grown with a very entrepreneurial spirit and entrepreneurial culture, and that certainly has tremendous benefits," he said. "But Ariba is now moving to another stage in its lifecycle, and it's a stage where we need to complement that enthusiasm and entrepreneurial spirit with what I call basic business discipline in everything you do."

Calderoni was vague in explaining what that discipline would entail. As examples, he said that Ariba would think through carefully its future investments and would bring together cross-functional teams to map out its product strategy. In April, shortly after Calderoni joined Ariba, the company announced it would lay off 700 employees, or about one-third of its workforce. At the time of past Ariba CEO Larry Mueller's resignation in July, Calderoni, then CFO, said he expected additional staff cutbacks.

Tracking Ariba's leadership over the past six months has required a scorecard. Calderoni replaces Keith Krach, Ariba's founder, who will remain as chairman of the board. Krach took over as interim CEO in July, replacing Mueller, who had taken over the company in April, replacing Krach.

Calderoni will continue as interim-chief financial officer until a new CFO is named, and he will also take a seat on Ariba's board.

The new CEO boasts 15-plus years of operations and financial management experience, including as chief financial officer for Avery Dennison. Previously Calderoni served at Apple Computer, IBM's Storage Systems Division and Arthur Andersen & Co. "Calderoni has intimate knowledge of change management and a deep understanding of how technology can optimize a corporation's spending practices," Ariba's statement read.

Also Wednesday, Calderoni said that Ariba expects its fourth quarter revenues to come in $62 million to $63 million, above analyst estimates of $59 million. The company said it would provide further details during its earnings call on October 24.

Calderoni noted during the conference call that Ariba has $340 million in cash in the bank, $190 million in deferred revenues and essentially no debt. "Clearly we have the financial revenues to weather the economic climate," the CEO said.