FreeMarkets’ buyer loses $7.6 million

 

Ariba Inc., the successor to locally based FreeMarkets Inc., said Wednesday it lost more than $7.6 million, or 17 cents a share, in the fiscal third quarter ended June 30.

The results were the first since the California company acquired Pittsburgh's high-flying Internet auctioneer in a deal that closed July 1. Revenue slipped 6.4 percent to just under $53 million. The decline was mostly due to software license revenue, which dropped 27 percent to $15.5 million last quarter. "This was a solid quarter for Ariba," said CEO Bob Calderoni. He said results were well in line with company projections. Ariba executives also said the company would probably use some of its growing cash reserve -- $110 million at June 30 -- to buy back shares. Its board already has authorized up to $50 million to be used for that purchase. Ariba shares closed yesterday at $8.60, down 1 cent. Like FreeMarkets before it, Ariba provides corporations and government with software-based purchasing solutions. Based in Sunnyvale, Calif., Ariba agreed to acquire FreeMarkets in January for $444 million in cash and stock. Ariba employs about 1,600 systemwide. Since the merger was struck six months ago, FreeMarkets' worker base has shrunk from 650 to roughly 500, all Downtown. "We are pleased with the progress we've made to bring these two companies together," said President Dave McCormick, formerly FreeMarkets' CEO. "We feel like we're off to a very solid start." Ariba executives said the company would eliminate 100 jobs -- almost all outside of Pittsburgh -- by the end of the year. The staff cuts are part of a 250-person reduction announced in January along with the deal. FreeMarkets was founded in Pittsburgh in 1995 by Glen Meakem and Sam Kinney Jr., who created software that allows corporations to purchase supplies and raw materials via Internet-based auctions.