Ariba Drops on Lehman Neutral Rating

Ariba, Inc. (Nasdaq: ARBA) sank 10 3/16 to 76 11/16 Tuesday after Lehman Brothers began coverage of the stock with a neutral rating.

Lehman analyst Patrick Walravens reportedly said Ariba shares, trading at 431 times projected earnings, are too expensive at current levels to warrant a higher investment rating.

Shares of Ariba are trading below their 52-week high of 183 3/4, but still well above their low of 49.

Ariba, a provider of business-to-business (B2B) e-commerce services, reported a loss before charges for the fourth quarter ended September 30th of US$1.1 million, or breakeven per share, compared with a loss of $4.6 million, or 3 cents, in the year-earlier quarter. Revenue for the quarter rose 687 percent from a year earlier to $134.9 million.

Though the Mountain View, California-based company claimed the distinction of being the first B2B company to break even before charges, the company's bottom line was a net loss of $339.34 million, or $1.50 per share, compared with a loss of $9.88 million, or 7 cents, a year earlier.

For the fiscal year, the company saw revenue of $279 million, up 515 percent from the prior year, and a loss before charges of $29.5 million, or 15 cents per share.

Chairman and chief executive officer Keith Krach said the results "validate" the company's business strategy. "During the year we increased our customer base 500 percent and deployed more B2B customers than any competitor," Krach added.

Ariba said it added 114 customers during the quarter, with Allied Worldwide, Pfizer, Target Corp., American International Group, Inc., Kmart and Honeywell joining a roster of clients that also includes American Express, Bank of America and E*Trade.