Earnings Update: Season Starts Strong

Ariba (ARBA) is set to report its fiscal second-quarter earnings on Wednesday, April 12. The B2B e-commerce market maker is expected to lose $0.15 per share. However, on Tuesday the company announced that its earnings will be “significantly higher than analyst expectations because of better-than-expected demand for its business-to-business software and services.” Ariba expects revenues to be in the range of $36-$38 million, which would represent a sequential increase of around 60 percent. Just in time, CIBC World Markets initiated coverage today with a "strong buy."

The stock is down 42 percent from its all-time high reached only weeks ago. After two weeks of getting absolutely punished, many analysts believe the B2B e-commerce sector is set to move higher from current levels. In addition, the fundamentals at Ariba remain strong; WhatsHotNow.com announced just yesterday that it will use the Ariba B2B Commerce Platform to build a marketplace for the $200 billion licensing industry.

Yahoo! Update
Yahoo! (YHOO) reported better than expected earnings for its first quarter. Earnings before unusual items amounted to $63.3 million, or $0.10 per diluted share, beating analyst earnings-per-share (EPS) estimates by a penny. Besting the estimates didn’t help the stock, however, which continued falling in Thursday trading.

Analysts and investors must have been looking for more (the results were shy of the unofficial “whisper number”), especially considering the stock’ enormous valuation and no near-term catalysts on the horizon. “The quarter was spectacular in terms of top-line business drivers, particularly revenue, audience and pageviews. The top line upside, however, did not flow through to the bottom line, and as a result EPS beat consensus by only a penny,” remarked Merrill Lynch Analyst, Henry Blodget.

Nevertheless, Yahoo!’s numbers were impressive. Revenues of $228 million beat the consensus estimate of $205 million and represented a 14 percent sequential increase and a 120 percent year-over-year increase. Gross margins were an impressive 85.8%, and, for those who complain about a lack of earnings at dot-com companies, it’s worth noting that this quarter’s $63.2 million in net income is almost two-thirds of last year’s entire quarterly revenue. Page views averaged 625 million per day, up 34 percent, from 465 million in December. Non-US revenues grew to 14 percent of total revenue, an increase of about 4 percent. And yes, Yahoo beat EPS estimates for the 16th straight quarter.

Analysts at Credit Suisse First Boston, Deutsche Banc Alex Brown, and Chase Hambrecht & Quist all reiterated their “buy” rating on the stock.

Yahoo also named Susan Decker, the former global head of research at Donald, Lufkin & Jenrette, as its new chief financial officer. Decker replaces Gary Valenzuela, who will retire this summer.

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