Ariba

(ARBA)

investors, maybe you can take solace in this: your stock is a leader once again. It's just not exactly in a category you're going to be proud of.

Ariba's shares turned in the worst performance of any stock with a market capitalization of $1 billion or more during the first quarter of 2001, off more than 85%, as of March 29. That's quite a distinction, as many market watchers Friday afternoon were already calling this one of the worst quarters in the history of the stock market.

Even before those results were final, though, analysts up and down Wall Street were doing their best to brace for a profit warning from Ariba, the erstwhile king of B2B software.

"The stock has absolutely cratered this year, it's been decapitated," says Eric Upin, an analayst at

Robertson Stephens

who rates the stock a buy. "These are the very bad times. We think there's considerable risk to the quarter. Not just a nick or a scrape, but a really measurable miss." (His firm hasn't done underwriting for the company.)

That risk, coupled with what many analysts see as a deteriorating market for the company, has led many analysts to become incredibly glum on the company. Not only do they expect the company to issue a profit warning sometime next week, but many are starting to talk about possible layoffs and even changes in management at the company, including the possibility that CEO Keith Krach could be replaced.

An Ariba spokeswoman declined to comment for this story, and Krach did not respond to a direct email asking about his status with the company.

The stock closed down 6 cents Friday, or 0.8%, at $7.91. That's 95.6% off its all-time high of $183.34, reached in March 2000.

In a short note to clients Friday, Upin wrote that he would not be surprised to see management changes, layoffs and challenges to Ariba's proposed acquisition of

Agile Software

(AGIL)

, something

TheStreet.com

wrote about earlier this week. The note followed comments earlier in the week from

Needham

analyst Richard Davis that a really bad quarter at Ariba "potentially puts the CEO at risk."

Davis points out that if Ariba does warn, that surely would have a negative effect on competitors. Companies such as

Commerce One

(CMRC)

,

i2 Technologies

(ITWO)

and

Siebel Systems

(SEBL)

are all on analysts' worry lists as potential warning candidates.

"The obvious problem would be that any announcement from Ariba would put a pall over the entire sector," Davis says. "After all, if Ariba can't do well, who can?" (Davis has a buy on the stock, and his firm hasn't done underwriting for the company.)

But the unenviable distinction the company garnered Friday only followed weeks of speculation of just how bad things at Ariba have become, as the appetite for Internet procurement software has slowed along with overall technology spending. In fact, Wall Street's outlook is so bleak for the company that if it just misses its numbers marginally, that would be a relief to many.

"The speculation is not so much as to whether or not the company will make the quarter, but rather, how bad it will be," wrote John Ederer, an analyst at

Pacific Growth Equities

who has a neutral rating on the stock, and who penned a note Friday titled "Ariba Derci?" "In this scenario, if the company even comes close, we could see the stock move up on the news." (His firm hasn't done underwriting for Ariba.)

This bleak outlook at Ariba comes during a period of dramatic change at the company that spilled into public view last November, when co-founder and CFO Ed Kinsey left the company, saying that he wanted to spend more time with his family. In the 10 months leading up to his departure, though, Kinsey sold $30 million in Ariba stock. And Krach himself was recently highlighted in a

Wall Street Journal

story as having sold $100 million of his company's stock.

All of that makes some analysts wonder how far behind Kinsey Krach might be, especially given the tough economic environment that still lies ahead.

"I'm not sure this is much fun for Keith anymore," says Mark Verbeck, an analyst at

Epoch Partners

. "All of these guys have taken plenty of money off the table, so they don't have to be there. The only reason to be there is because it's fun. I think it's safe to say things aren't that fun right now." (His firm hasn't done underwriting for the company.)

With the outlook for the company week so bleak, and other earnings warnings sure to come, it doesn't look like the fun is going to return any time soon.