Will Ariba reach the black figures in 2007… and/or be acquired?

I’m regularly browsing for Ariba news, in blogs, at Ariba website. Bottom line, Ariba is the market leader for spend management solutions and the best sensor to get more than some clue about where . To be honest, after 7 years in the eSourcing battlefield, I am still amazed by the very poor media-coverage Ariba has. I’m even sometimes wondering if they really have any marketing structure any more (kidding) .

Are you thinking I’m going too far? go on their website and land on Ariba’s media coverage page: the last article mentioned is from June 2006 and is not at all related to any kind of strategy. The excellent article from october 2006 I’ll mention later on is not even there… Then you go to Ariba’s news page: you’ll find almost nothing more than annoucement of customer acquisition. Difficult from there to get any clue of where Ariba’s goes…unless you read the inevitable 4th quarter and fiscal year 2006 result report (published in November). There you learn that Ariba is still losing money but improving dramatically:

Total revenues for fiscal year 2006 were $296.0 million, as compared to $323.0 million for fiscal year 2005. Software license revenues were $23.9 million, as compared to $47.8 million for fiscal year 2005. Subscription and maintenance revenues were $126.6 million, as compared to $123.4 million for fiscal year 2005. Services and other revenues for the year were $145.5 million, as compared to $151.8 million for fiscal year 2005.

Net loss for fiscal year 2006 was $46.1 million, or $0.70 per share, as compared to a net loss for fiscal year 2005 of $349.6 million, or $5.49 per share. The net loss for fiscal year 2006 included charges of $16.5 million for amortization of intangible assets, $41.2 million for stock-based compensation, and $25.4 million for lease and integration related costs. Excluding these items, non-GAAP net income was $37.0 million, or $0.53 per diluted share.

If you want to be informed that the CEO sold his shares in December 2006, you better use Google finance module

Now, finally if you want to know more about Ariba strategy, about Bob Calderoni’s doubts and efforts to fix things, to reduce losses and to go “on demand” with the famous SaaS concept; if you are still wondering if I was right saying that the Supplier Network is the future for online B2B trading, then I recommend reading this excellent article from Red Herring (October 12, 2006).

For the ones hurrying between two planes, cabs, tasks, here are the key quotes:

  • Analysts still argue that its history of financial instability makes it difficult for Ariba to compete against richer companies like Microsoft, SAP, and Oracle—or nimbler SaaS upstarts such as Santa Clara, California-based Ketera. But IDC analyst Albert Pang says salvation could lie in making more acquisitions, and funneling their customers into its SaaS business. “I would not bet against them,” Mr. Pang says.
  • it’s too soon to know if on demand will prove sustaining. But Ariba does have another arrow in its quiver—an eBay-like marketplace that unites 140,000 suppliers worldwide.
  • Competitors like Perfect Commerce, Ketera, VerticalNet, Emptoris, and Quadrem have their own supplier networks but none is as big and geographically diverse as Ariba’s, says Aberdeen Group analyst Vance Checketts.
  • Whatever the possibilities, Ariba’s supplier network is its advantage. That alone makes it an attractive takeover target—for an Oracle or SAP, some think. As it is, it’s already rumored that private equity firms have been in talks to take it private, encouraged by similar moves by SunGard and Serena Software.

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