Robbie Stephens Downgrades Ariba

Analyst Eric Upin thinks the firm's job cuts leave it facing significant execution and organizational stability challenges

Ariba (ARBA ) lowered Q2 guidance. Robertson Stephens downgraded its investment rating on the shares to market perform.

Analyst Eric Upin says the company missed recently published estimates by 43% on the top line, and $0.23 per share on the bottom line. Of equal significance, Ariba announced termination of its pending merger with Agile. With workforce cuts, Upin believes the company will face significant execution and organizational stability challenges.

The analyst cut his $0.18 fiscal 2001 (Sep.) EPS estimate to a $0.35 loss and his $0.38 EPS forecast for fiscal 2002 to to $0.01 EPS; he adds that his new estimates may prove aggressive. Although most of the risk is already priced into the stock, Upin believes the pre-announcement sheds additional light on the fundamental deterioration in Ariba's core business and its market opportunity.

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