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Author: Donde Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3069  
Subject: Clean Sheet of Paper From Here out? Date: 4/22/2003 8:12 AM
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One never really knows but here's a good summary...Ariba's revisionist history http://cbs.marketwatch.com/news/default.asp?siteid=fool&dist=foolhttp://cbs.marketwatch.com/news/default.asp?siteid=fool&dist=foolFriday April 11, 11:23 am ET By Bambi Francisco
Plus: Earnings preview for next week
By Bambi Francisco, CBS.MarketWatch.com
Last Update: 11:23 AM ET Apr 11, 2003


SAN FRANCISCO (CBS.MW) -- You mean to say the books weren't reliable?
In a testament to the go-go years when loose accounting practices were the norm, Ariba, once a darling on Wall Street with a market cap of $22 billion in 2000, said it's restating virtually all revenue numbers since it went public.
Ariba (ARBAE), which debuted smack in the heart of the Internet boom in June 1999, said Thursday that it's restating its revenue since fiscal 2000, which began in the December quarter of 1999.
This means the company had only one quarter in its entire public life that its books were reliable. The mere acknowledgment of restating revenue conjures up the accounting scandals that plagued the era, and the subsequent fictitious revenue that stoked expectations to the high heavens.
In Ariba's case, it was part of the so-called business-to-business clan in an industry estimated by Goldman Sachs back in September 1999 to be worth $1.5 trillion in 2004. In that same infamous report, titled: "B2B: 2B or Not 2B," Goldman said: "The best is yet to come."
"It's a testament to the times," said Charles Mulford, director of the DuPree Financial Analysis Lab at Georgia Institute of Technology.
The latest adjustment for Ariba follows a restatement of expenses announced earlier this year regarding a $10 million loan in March 2001 made by Ariba Chairman and co-founder Keith Krach to Larry Mueller, the company's president at the time.
While there are many adjustments made throughout the last several years, the bottom line is that during this period, the cumulative expenses added and cumulative revenue subtracted is relatively small.
Essentially, Ariba lost $3.8 million more than it had originally reported since the December 1999 quarter. And Ariba generated $3.1 million less than it reported during the same period. This is relative chump change for a software company that lost $661 million and generated just over a quarter billion dollars in just fiscal year 2002 alone, which ended in September.
"These are rounding errors," said Mulford. "Even when the amount seems relatively small, one is left with an empty feeling of having the rug pulled out ..."
But after five months, the lengthy investigation of its accounting will cost Ariba $5 million in the quarter ending March. Due to the accounting probe, Ariba said that its second-quarter expenses will widen by 2 cents a share. The company originally expected to lose between 16 and 18 cents in the March quarter. This loss is now expected in a range of 18 cents to 20 cents. Ariba left revenue expectations unchanged at $56 million to $60 million.
Still branded
Additionally, Ariba will soon be able to rid itself of that "e" at the end of its ticker symbol as it wraps up its filing of certain 10-Qs from last year. Nasdaq listing rules require companies to put an "e" at the end of their symbol for being out of compliance with SEC filings.
Shares of Ariba were higher by 3 percent to $3.30 on Friday.
Ariba, which went public at a split-adjusted price of $5.75, may also be remembered as the dot-com that rewrote its books even as its executives cashed in, big time.
Indeed, even if the restatements are small, they revive memories of the self-enriching years.
More reflective of those times is the money that founders and former executives were able to take out of the company. Recently, Krach sold 465,000 shares at $4 apiece in November. He still owns 14.5 million shares. But from October 1999 to November 2002, Krach sold $190 million worth of stock, according to George Muzea, author of "The Vital Few vs. the Trivial Many," and president of 10-year-old Muzea Insider Consulting Services. Between October 1999 and August 2000, Edward Kinsey, who was the company's CFO, sold $107 million worth of stock
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