You could look at it this way: At least

Ariba's

(ARBA)

revenue glass is still half-full.

But that doesn't make the company's anticipated sales miss any easier to swallow -- there's little reason for optimism.

The B2B software maker issued a shocking revenue and profit warning Monday afternoon, saying that it would record just $90 million in sales for the first quarter, half of the $180 million that analysts were expecting, according to

Thomson Financial/First Call

.

That sales miss will translate to a loss of 20 cents per share, wiping out the new-found profitability that Ariba boasted about as recently as last fall. Analysts were expecting earnings of 5 cents per share. It's a severe-enough miss to cause speculation that Ariba may not survive on its own.

The company also said it would lay off approximately a third of its workforce, or 700 employees, and that its announced acquisition of

Agile Software

(AGIL)

, the cornerstone of the company's "value-chain management" initiative, has been called off. (

TheStreet.com

wrote a story about the possibility of this deal falling through last week.)

In after-hours trading, Ariba shares dropped more than a dollar, or 16%, to $5.47 on

Island

ECN. Before they were halted at the end of the regular session pending Ariba's warning, they were trading at $6.53. They're off 97% from their all-time high of $183.34, reached just over a year ago.

Like so many other companies, management blamed the foundering economy and executives' reluctance to spend money on technology as culprits for its breathtaking miss.

Analysts, however, were somewhat skeptical of that explanation.

"This is an unmitigated disaster," says Mark Verbeck, an analyst at

Epoch Partners

in San Francisco. "The economy hasn't fallen off the tracks to this degree. This seems to indicate that there are big problems at Ariba." (His firm hasn't done underwriting for Ariba.)

Some of those problems, analysts are now saying, may stem from the lightning-fast spread of the kind of software that Ariba makes. In 2000, procurement software, which helps companies buy every day supplies such as office products over the Internet, was the candy that every corporate IT department wanted. Now, it seems, demand for that kind of software just isn't there.

"It's not the economy, it's the sector they were playing in," says Jon Ekoniak, an analyst at

TheStreet Recommends

U.S. Bancorp Piper Jaffray

. "This was a sector that was so robust in 2000, I think they saturated the market for the near term. Procurement is still the critical first step for an e-commerce strategy, and companies will continue to buy this kind of software, but not at the pace they were six months ago."

Bob Calderoni, Ariba's CFO, said demand for software that lets companies run electronic exchanges or marketplaces over the Internet, basically disappeared in 2001, after accounting for nearly half of Ariba's revenue during early and mid-2000.

"That

exchange business now has completely reversed," Calderoni said during a conference call with financial analysts. "It's not down to zero, but we're near zero." At another point during the call, he said, "We don't think that will show a recovery."

In other words, Ariba, the erstwhile king of B2B software and one of the leading proponents of electronic Internet exchanges, now says that business is dead. Add to that the demise of Ariba's plans to buy Agile Software, and you've got serious questions about Ariba's viability over the long run. Ditto for its main competitor,

Commerce One

(CMRC)

.

"I think the company's in deep trouble," says Melissa Eisenstat, an analyst with

CIBC World Markets

who rates the company a buy. "I don't think procurement in and of itself is a stand-alone application. I would say that the likelihood that both Commerce One and Ariba being stand-alone companies for the long-term is in question."

"This doesn't bode well for Commerce One at all," says Scott Barnum, an analyst at

ABN Amro

who rates Commerce One a buy. "I made a list last week of the companies that could potentially warn, and Ariba was right at the top. But Commerce One wasn't too far down, either."

That said, most analysts don't expect Commerce One to miss the mark as widely as Ariba, largely because of its partnership with German software maker

SAP

(SAP) - Get SAP SE Sponsored ADR Report

. However, when

i2 Technologies

(ITWO)

issued its own warning Monday, it said international business was off as well. Commerce One derives nearly half its revenues from international sales.

But as for Ariba itself, Monday's news only stoked speculation from

last week about potential management changes at the company, including whether Keith Krach can continue on as CEO.

"I think we will see changes, including top-level management changes," says U.S. Bancorp's Ekoniak. "Either (president) Larry (Mueller) or Keith, but someone is going to move over to let somebody new take the reins."

With Ariba's stock continuing to descend, shareholders might not be so averse to that possibility.