The Night Watch: Agile, Ariba Take a Dive After Calling Merger Off

(Updated from 7:20 p.m. ET)

The bell may have rung, but ugly Monday isn't over. Indeed, stocks, which tumbled in the daytime session, were doing some further falling in extended-hours trading as companies continued their stream of unpleasant earnings confessions. Tonight's danger zone lay in the software sector.

Agile Software AGIL was plummeting on both Island ECN and Instinet after business-to-business software company Ariba ARBA said it was scrapping its planned acquisition of the San Jose, Calif., company. The stock recently gave up 10.3% to $9.44 on Instinet, and 11.1% to $9.35 on Island. Volume was heavy on both platforms.

In a prepared statement, the companies cited the "challenging economic and market conditions," and said they have mutually agreed to terminate their proposed merger agreement without payment of any termination fees.

"We are disappointed that adverse economic and market conditions prevent the merger with Agile from proceeding as planned," Ariba said.

Investors also sent Ariba's beaten-down stock tumbling 15.4% to $5.50 on Island, down from its new 52-week low of $6 today. And no wonder. The company also warned tonight of a second-quarter earnings shortfall and disclosed plans to cut about 700 employees, or one-third of its workforce.

Ariba's warning recalls a string of announcements from software firms. This morning, i2 Technologies ITWO lowered its first-quarter outlook and speculated on the possibility of layoffs. Its shares closed up at $15.44 during the day's regular session on the Nasdaq . But in after-hours action, it lost 3.5% to $14.90 on Island.

Rivals Commerce One CMRC and Art Technology ARTG were faring no better. On Island, shares of Commerce One were down 8.3% to $7.20, while Art Technology slid 3.8% to $5.74. Art Technology, which is based in Cambridge, Mass., had its own first-quarter confession earlier in the day that sent the shares free falling to a new 52-week low of $5.94 on Nasdaq.

With eerie echoes, Broadvision BVSN, an e-commerce software firm, sharply lowered its first-quarter guidance tonight, citing the slowing economy and reduced information technology spending. And the company set plans to terminate about 325 workers, or 15% of its workforce. Investors on Island lately sold off on the shares, sending them down 16.7% to $3.75.

And just when you're wondering if it'll ever end, Inktomi INKT issued a second-quarter warnings after today's close, and said it would -- yes, you guessed it -- hand out those pink slips. And the shares plummeted by 26.1% to $4.60 on Island.

Also, online security software company Entrust Technologies ENTU took a beating in a knee-jerk response to its first-quarter earnings warning, which also came after the bell. The shares were off 27.9% to $5.25.

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With bad news like this, most tech bellwethers were mired in the red. Software giants Cisco Systems CSCO, Juniper Networks JNPR and Oracle ORCL were off their closing prices on both extended-hours trading platforms. Juniper fared especially poorly, losing 4.2% to $34.32 on Instinet.

But the software companies are not alone. Redback Networks RBAK, one of the latest casualties in the beleaguered telecom sector, said this evening that it expects to sharply miss first-quarter earnings. The company, based in Sunnyvale, Calif., also announced job cuts of about 150 workers, or 12% of its workforce. The shares fell 13.2% to $10.15 on Instinet.

And copier giant Xerox XRX recently slid 8.3% to $5.50 on Instinet after the company delayed its annual 10-K filing with regulators in order to review its books.

Bucking the trend, however, was another telecom equipment company, New Focus NUFO, which climbed 7.9% to $12.40 on Instinet after the company reaffirmed its first-quarter revenue outlook of $38 million to $41 million.

10 most active stocks on Instinet (6:30 p.m. EST)
Company	Price	Change	Session Volume
Agile Software AGIL	9.30	-1.22	1,994,100
Cisco Systems CSCO	15.00	-0.06	269,164
i2 Technologies ITWO	15.00	-0.44	195,500
Nasdaq 100 QQQ	37.51	-0.11	171,750
Litton Industries LIT	80.07	+0.06	171,200
Dell Computer DELL	23.94	-0.13	134,439
Intel INTC	25.50	-0.30	128,215
Commerce One CMRC	7.00	-0.85	125,057
New Focus NUFO	12.40	+0.91	119,500
Redback Networks RBAK	10.15	-1.55	111,026

This information is provided by Instinet, a wholly owned subsidiary of Reuters RTRSY. For further information, please contact Instinet at www.instinet.com.

10 most active stocks on Island ECN (8:00 p.m. EDT)
Company	Price	Change	Session Volume
Ariba ARBA	5.50	-1.00	1,285,716
Agile Software AGIL	9.35	-1.17	245,077
Nasdaq100 QQQ	37.45	n.a.	154,254
i2 Technologies ITWO	14.90	-0.54	151,546
Commerce One CMRC	7.20	-0.65	149,240
P-Com PCOM	0.85	+0.19	127,750
Cisco Systems CSCO	15.00	-0.06	118,388
Broadvision BVSN	3.75	-0.75	111,900
MarchFirst MRCH	0.09	--	69,751
JDS Uniphase JDSU	16.38	-0.31	69,467

Island ECN offers trading, mainly in Nasdaq-listed stocks, from 7 a.m. to 8 p.m. EST.

Confused? TheStreet.com explains how the rules change when the sun goes down in Investing Basics: Night Owl, a section devoted to after-hours trading.