Business-to-business eCommerce software maker Ariba [: Nasdaq] remains a speculative play, as it trades at 290x FY01 earnings projections. With signs of a slowing economy, investors are wondering if the B2B software sector will be negatively impacted by reduced corporate spending. However, we believe Ariba is still well-positioned in its market, and the stock will be attractively priced near the release of 1Q results in early January.
Ariba is betting its platform gets picked up by leading corporations. Wall Street is not so sure: last month more than one analyst suggested Ariba won’t be able to grow network revenues as fast as it would like, and that it’s best for indirect materials like office furniture, not for the more lucrative direct materials marketplace in which manufacturing supplies are sold.
Growth in its global network might not be super-strong now, but as many companies are focused on supply-chain management and procurement software that works to streamline business in-house, it’s only a matter of time before they turn their focus outwards toward the marketplace. Small and mid-sized businesses don’t have the IT infrastructure to participate in these markets – but they will in the next few years.
Analysts expect Ariba to grow revenues by 170% in 2001, following 500% growth this year. In 2002, growth is forecast at 71%. Similarly, profits are expected to grow at about 60% per year over the next five years.
That’s the long-term picture, and we remain believers. In the short term, investors can look forward to a first-quarter earnings report scheduled for Jan. 11. After a break-even fourth quarter, Wall Street expects $0.02 per share in profits on $155m in sales. That equates to 15% sequential growth in sales. Sequential growth of 24% is expected in network revenues.
The sequential growth numbers will be closely watched by Wall Street. We believe many investors may be disappointed by these figures, as they show Ariba can no longer achieve the 50%-100% sequential growth it did in 2000. Even if Ariba blows away estimates, there are bound to be those who feel the company (and stock) has already seen its best days. That sentiment is likely to lead to a slump in the stock over the next few weeks and immediately after the earnings announcement.
We remain bullish about Ariba’s long-term prospects and urge investors to take advantage of this near-term weakness.
The downtrend remains strong and although the stock has rebounded off the December lows, we look for further broad market weakness to pressure a retest of these lows at $43 in two to four weeks.
Es wird mit einem Abrutschen auf 43$ gerechnet und empfohlen,solange zu warten,das KGV 2001 liegt bei 290,das Umsatz-Wachstum für 2001 beträgt nur noch 170% nach 500% in 2000 und nur noch 71% in 2002,der erwartete Gewinn am 11.Januar liegt bei 0,02 $ per share,insgesamt bei 155 Millionen.Es wird vermutet,dass viele Investoren von den Zahlen enttäuscht sein werden.
Ariba is betting its platform gets picked up by leading corporations. Wall Street is not so sure: last month more than one analyst suggested Ariba won’t be able to grow network revenues as fast as it would like, and that it’s best for indirect materials like office furniture, not for the more lucrative direct materials marketplace in which manufacturing supplies are sold.
Growth in its global network might not be super-strong now, but as many companies are focused on supply-chain management and procurement software that works to streamline business in-house, it’s only a matter of time before they turn their focus outwards toward the marketplace. Small and mid-sized businesses don’t have the IT infrastructure to participate in these markets – but they will in the next few years.
Analysts expect Ariba to grow revenues by 170% in 2001, following 500% growth this year. In 2002, growth is forecast at 71%. Similarly, profits are expected to grow at about 60% per year over the next five years.
That’s the long-term picture, and we remain believers. In the short term, investors can look forward to a first-quarter earnings report scheduled for Jan. 11. After a break-even fourth quarter, Wall Street expects $0.02 per share in profits on $155m in sales. That equates to 15% sequential growth in sales. Sequential growth of 24% is expected in network revenues.
The sequential growth numbers will be closely watched by Wall Street. We believe many investors may be disappointed by these figures, as they show Ariba can no longer achieve the 50%-100% sequential growth it did in 2000. Even if Ariba blows away estimates, there are bound to be those who feel the company (and stock) has already seen its best days. That sentiment is likely to lead to a slump in the stock over the next few weeks and immediately after the earnings announcement.
We remain bullish about Ariba’s long-term prospects and urge investors to take advantage of this near-term weakness.
The downtrend remains strong and although the stock has rebounded off the December lows, we look for further broad market weakness to pressure a retest of these lows at $43 in two to four weeks.
Es wird mit einem Abrutschen auf 43$ gerechnet und empfohlen,solange zu warten,das KGV 2001 liegt bei 290,das Umsatz-Wachstum für 2001 beträgt nur noch 170% nach 500% in 2000 und nur noch 71% in 2002,der erwartete Gewinn am 11.Januar liegt bei 0,02 $ per share,insgesamt bei 155 Millionen.Es wird vermutet,dass viele Investoren von den Zahlen enttäuscht sein werden.
