I looked at the graphs of these ERP companies and they're priced from $15 to 40+.
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ERP is the boring stuff that enables companies to track expenses, procurement, human resources and other necessary functions. ERP is the playground of Oracle Corp. (Nasdaq: ORCL), Peoplesoft (Nasdaq: PSFT) and SAP (NYSE: SAP).
In fact Oracle officials mentioned Ariba on their recent earnings conference call and noted that they do see Ariba in the field. Surprisingly, Oracle didn't badmouth them either. That fact either means Oracle actually respects Ariba or doesn't see them as a threat yet. Bet on the latter. All of Oracle CEO Larry Ellison's good material is saved for SAP and Peoplesoft.
You would never know that Ariba could be lumped in with the battered ERP stocks because it uses the ORM (operating resources management) as its acronym of choice. There's a good reason for that -- ERP stocks stink lately (chart). Give Ariba credit -- it knows a tainted acronym when it sees it.
ORM may not be an exact fit with ERP in the land of acronyms, but it is a bit odd that Ariba is presenting at "HP World Conference & Expo/ERP World" in August.
Don't be fooled. Ariba has the same risks that all the ERP guys have. In regulatory filings, Ariba cited the following:
Year 2000 spending: Delays or reductions in spending for application software could hurt Ariba. The thinking here is clear: Information technology departments don't want to add any applications that could introduce risk to the network. Folks get fired for that.
Long sales cycles. "Because we target large customers, our sales cycles range from four to 24 months and average approximately nine months," the company said.
Competition: "We may also encounter competition from several major enterprise software developers, such as Oracle, PeopleSoft and SAP," the company said. As of March 31, only 31 customers licensed Ariba's products "ORMS solution." Peoplesoft, SAP and the Web-enabled Oracle all have longer track records with customers.
Granted the company is trying to expand through Ariba.com, a buying network for its ERP, err. ORM, customers, but the company hasn't made a cent in revenue from its Ariba.com network. Ariba isn't exactly VerticalNet (Nasdaq: VERT) yet. "As of May 31, 1999, only one customer was buying operating resources through our Ariba.com network from a limited number of online suppliers," said Ariba in filings.
So before you drop your cash on Ariba, you may want to take a look at some of the struggling ERP companies that are prime candidates to eventually acquire Ariba. ERP will become a hot buzzword again as soon as that pesky Y2K cloud passes. |
