Despite less-than-stellar fourth-quarter results--sales plummeted 54%--Ariba Inc.'s newly appointed CEO Bob Calderoni says the company's latest product strategy will pull the business-to-business software maker out of its doldrums.
Ariba reported a net loss of $224.3 million, or 89 cents a share, for the quarter ending Sept. 30, compared with a loss of $339.4 million, or $1.50 a share, a year ago. Revenue dropped to $62.6 million from $134.9 million a year ago. Fiscal 2001 revenue was $408.8 million, up 47% compared with $279 million in fiscal 2000. The year's net loss was $2.7 billion, or $10.96 per share, compared with $792.8 million, or $4.10 per share last year.
Originally a maker of procurement software for public online marketplaces, the company shifted its strategy first tovalue-chain management and then to "spend management," creating software that helps purchasing managers analyze and cut costs. Calderoni claims Ariba Sourcing, announced in September, accounted for 15% of its software revenue in the fourth quarter.
Over the next three to five months, Ariba plans to ship a supply-chain analytics product. "All (new products are) aimed at helping customers manage the entire spend life cycle with the goal to reduce costs," Calderoni says.
Calderoni acknowledges that "value-chain management" was a buzzword without any real meaning. "Value-chain management, inner-enterprise, process computing, B-to-B, global trade revolutions, all of those things I want to say under my leadership are buzzwords of the past," Calderoni says. "We're not in the buzzword game. We're in a game of saving customers money."
He acknowledges that Ariba got caught up in the Internet hype about public marketplaces revolutionizing the way companies buy supplies. "There's no global trade revolution going on out there," he says. "Public marketplaces were once thought to take over the world. That's not happening."
Calderoni declined to project when Ariba would be profitable. "There's no question we're in a challenging market today, and in this market environment, I don't believe it's prudent to make any bold, long, far-reaching predictions," Calderoni says. However, he insisted that profitability "is within our reach." Ariba slashed operating costs and laid off a third of its staff earlier in the year in response to plummeting revenue and profits that followed the demise of many dot-coms. Those actions, along with $294 million in the bank, will ensure that the company can "weather the storm," Calderoni says. He couldn't promise there would be no more layoffs but says he believes "we've taken all the actions that we need to take." Says Calderoni, "It's in our past. Our focus isn't internal; it isn't on cost reduction."