Ariba Rebounds After Dip

Ariba, Inc. (Nasdaq: ARBA) ended Thursday up 4 3/8 at 62 1/4, erasing an early decline sparked by news of a new chief financial officer and an analyst downgrade.

The Mountain View, California-based business-to-business (B2B) e-commerce company said Robert M. Calderoni, former CFO of Avery Dennison Corp., will succeed Edward P. Kinsey, who is retiring. Kinsey, one of Ariba's founders, will stay on to assist with the transition.

Before joining Avery Dennison in 1997, Calderoni served as vice president of finance at IBM (NYSE: IBM). He has also served as senior vice president of finance and controller of Apple Computer (Nasdaq: AAPL).

Ariba chairman and chief executive officer Keith Krach said Calderoni's "proven track record, executive leadership and strong management skills in finance, global operations, and strategy will ensure Ariba continues on its path of successful execution."

Noted Calderoni, "Ariba's leadership position in the B2B market is enviable. The company's business model and success in delivering bottom-line results to customers speaks volumes."

Analysts had mixed reactions to the news. Prudential Securities reportedly downgraded Ariba to accumulate from strong buy, while at Robertson Stephens, analyst Eric Upin said the transition "introduces a new element of execution risk in an increasingly more challenging environment."

"Although we remain confident in the company's near-term prospects, we believe the company increasingly faces a set of market-wide and company-specific risks that are new to the Ariba story," Upin wrote in a research note. A slowdown in software spending and online marketplaces and "significant dot-com exposure" among customers, along with the management change, could "weigh heavily on the stock over the near term."

Added Upin, "While it may take several months for these risks to play out, we continue to believe Ariba is extremely well positioned to be a leading B2B player over the long run."

First Union Securities, meanwhile, repeated a buy recommendation on Ariba, saying the company's results "continue to demonstrate the tremendous demand for e-business platforms and the strong sense of urgency for corporations of all sizes to address their e-business initiatives."

However, the firm said it might revise its current price target of 175 in light of "recent volatility in the software group."

Ariba recorded revenue of US$134.9 million for the fourth quarter ended September 30th, and posted a loss before non-operating charges of $1.1 million, or breakeven per share.