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Technology Stocks : Ariba Technologies (Nasdaq-ARBA) -- Ignore unavailable to you. Want to Upgrade?

To: D. K. G. who wrote (335)	8/26/1999 2:55:00 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 2110

I shared some PMs with someone on this and decided to post to the thread. Companies fork out roughly 35% of their revenues on nonproduction goods* -anything that doesn't go into products sold. These items range from office supplies to machinery.* Ariba's PR machine always presents this in a positive light... that office supplies and non-production goods go directly against the bottom line on the books, whereas purchasing that occurs in the order cycle is a cogs or cos. The truth is though, that I doubt many CEOs are really concerned about saving money on office supplies and non-production goods. Its a nice-to-have, sure but you have to weigh the savings against buying Ariba, installation and maintenance costs etc. The 35% figure seems awfully high to me. Otoh almost every company would like to save money on purchasing through the order cycle... it doesn't hit the books directly but on volume its a much larger slice of the pie. The problem is I don't think Ariba can functionally be altered to serve as a purchasing engine in the manufacturing process. Sap and Oracle have the order cycle pretty well locked up, there is no incentive to open up for them (especially now that they are hurting for biz), and besides its much more complicated - SKUs change daily for manufacturing components, you'd have to automate that... I wonder what sort of expansion plans the analysts and investors are thinking about for Ariba and Commerce One, its hard to see where to grow with these companies and Ariba is already valued in excess of some of the smaller ERPs.