Ariba's new chief executive said Monday that his top priority will be to narrow the focus of the software company's sales strategy, concentrating on industries in which the company already has a strong lead.
"We must be industry-specific in our sales force and consultants and in product development," said Larry Mueller, who was promoted to CEO on Monday, succeeding company co-founder Keith Krach.
Contrasting the new focus with Ariba's earlier strategy of selling across as many industries as it could, Mueller said Ariba will concentrate on selling its business-to-business software to industries in which it already has several customers, including financial services, high technology, automotive, consumer packaged goods and pharmaceuticals.
"We really own those [areas] now," he said. "Our initial focus will be those five sectors. The opportunities in those five sectors are tremendous."
Krach will continue as chairman of the company he co-founded in 1996. Before his promotion Monday, Mueller had been Ariba's president and COO. Before joining Ariba in 1999, Mueller was the CEO of Imageware, a 3D-software company.
Krach said he began talking to Mueller in December about taking the CEO post. "This is a natural transition for Larry," Krach said.
Mueller, 48, takes over Ariba's top job at a critical time. The Mountain View, Calif.-based company, founded to help businesses automate purchases for common items such as paper and pencils, had visions of becoming a colossus that would automate a company's entire supply chain. But on April 2, Ariba said that its quarterly sales would be half of what it had promised and that its plans to acquire Agile Software - which provides systems that help manage inventory, production and shipping - were dead. The scrapped acquisition plan was a blow to Ariba's growth strategy and led to increased speculation that Ariba itself might be acquired.
Mueller denied that Ariba was going to be bought. He said the company still has excellent growth potential and more than $400 million in cash to help it through the lean times.
Last year, when Ariba was racking up sales at a steady clip, the company had a market value in excess of $30 billion. As of Monday, that market capitalization had been cut to about $1.9 billion as investors worried that the company's outlook has dimmed. Krach recently told analysts that Ariba would not be providing a revenue forecast for the second quarter or for the full year, because executives cannot yet gauge whether businesses will start ramping up spending on their software.
Ariba also said Softbank CEO Masayoshi Son was appointed to the company's board, succeeding Crosspoint venture capitalist John Mumford, who retired from the board.
Ariba's shares were up about 5 percent in Monday afternoon trading on the Nasdaq, to $7.80. The stock hit a 52-week high of $173.50 in September.
