Total revenues are now expected to be approximately $90 million, which would represent approximately 125 percent growth over the same period last year. As a result of the revenue shortfall, the Company expects a significant loss from operations of approximately ($0.20) per share excluding certain non-cash charges for the quarter.
As many others are also realizing, the slowdown in both the economy and technology spending has been much more dramatic than we had previously expected. At the end of the quarter, we experienced a large unexpected drop-off in our sales closure, said Keith Krach, Ariba’s chairman and CEO. While many customers selected Ariba’s technology, spending decisions at the executive level were postponed as customers evaluated their budgets in light of the prevailing economic uncertainty. This impact was primarily in North America, but is beginning to be felt in Europe as well.
As a result of the economic conditions, the Company also announced a plan to reduce spending across all major areas, including a reduction in workforce by approximately 700 employees, which represents about one-third of the total current employee base. We are taking immediate and decisive action to ensure our business plans reflect today’s economic realities, continued Mr. Krach. We have some of the best people in the industry at Ariba and this is certainly a difficult step to take. Unfortunately, like many other companies, we find ourselves having to make similar, painful moves.
Under current market conditions, the predictability of our business going forward is very limited, so it’s important to realign our own expense structure immediately, said Bob Calderoni, executive vice president and chief financial officer. We believe that the actions we are initiating today will help to protect our financial position during this current economic downturn and should position us well as the economy recovers.
As a result of the difficult economic conditions and other factors, Ariba expects to incur significant one-time write-offs relating to, among other things, investments and real estate commitments. The Company also expects to incur a significant write down of goodwill related to recent acquisitions.
