Ariba, Commerce One Report LossesAriba, Commerce One Report Losses

Ariba Inc. and Commerce One Inc., high flyers two years ago when online business exchanges were expected to change the way companies buy from each other, reported losses Tuesday in their most recent quarters.

Ariba, which also said it expected to break even by midyear, reported a net loss for the first quarter ended Dec. 31 of $161.3 million, or 63 cents a share, compared with a loss of $347.6 million, or $1.48 a share, during the same quarter a year ago. Commerce One reported a net loss of $168.3 million, or 59 cents a share, for the fourth quarter ended Dec. 31, compared with $197.5 million, or 99 cents a share, last year. Commerce One's net losses increased from the previous quarter, which was in the red at $119 million, or 45 cents per share.

Losses for both companies decreased on a pro forma basis, which excludes a number of expenses. Ariba lost $6.9 million, or 3 cents a diluted share, compared with $14 million, or 5 cents a share, last year. Wall Street analysts polled by Thomson Financial/First Call had expected a loss of 5 cents a share. Commerce One reported a loss of $66.5 million, or 23 cents a share, compared with $13.3 million, or 7 cents a share, a year ago. The company's losses were considerably more than analysts' expectations of 16 cents a share.

Ariba's revenue was $55.3 million for the quarter, down 68% from the $170.2 million reported a year earlier. Commerce One had revenue of $56 million, compared with $191.4 million a year ago and $81.1 million for the previous quarter.

Ariba CEO Bob Calderoni said he expects the company to break even in the June quarter after a loss of 1 cent a share in the March quarter. Nevertheless, revenue isn't expected to grow until the economy improves and the company's new products gain popularity. In September, the company expanded its basic transaction-oriented commerce applications to include software for analyzing spending patterns and finding suppliers online. First-quarter software licenses, a key indicator of a software company's core growth, dropped to $23.7 million, from $32.7 million the previous quarter and $128.9 million a year ago.

Nevertheless, some financial analysts believe Ariba's long-term viability is no longer in doubt, pointing to the company's cost-cutting measures and new product rollout. Goldman Sachs raised its stock rating for Ariba earlier this month to "market outperform" from "market performer."

Like Ariba, Commerce One has shifted the focus of its product line, looking to make money by helping companies build private, vs. public, exchanges. The company lost some investor confidence earlier this month when minority owner SAP, a German maker of enterprise resource planning software, said it would scale back its sales partnership with the company. SAP owns about 20% of Commerce One.

For the year ended Dec. 31, Commerce One reported revenue of $408.6 million, compared with $401.8 million the previous year. Pro forma net loss was $253.9 million, or $1.01 a share, compared with $55.1 million, or 33 cents a share last year. Non-pro forma losses were $2.58 billion, or $10.30 a share, compared with $344.95 million, or $2.05 a share, in 2000.

"We believe that Commerce One is taking the right steps to compete effectively as the economy improves," CEO Mark Hoffman said in a statement. "Our new Commerce One 5.0 suite, which ships this quarter, is engineered to deliver the short-cycle ROI solutions customers are demanding for procurement and sourcing, providing a strong competitive foundation for Commerce One."