EPlus to Get $37 Million From Ariba

EPlus Inc., a Herndon company that sells cost management software, will collect $37 million in cash under a settlement of its patent infringement lawsuit against Ariba Inc.

Last week a U.S. District Court in Virginia found Ariba of Sunnyvale, Calif., liable for infringing on three business process patents. Under the settlement, the two companies will be able to use each other's patents without paying fees.

"The other recourse is to go through a very lengthy appeal. It would cost both companies a lot of money to do so," said Ken Farber, president of EPlus's software and services division.

EPlus sells software to help corporations manage their purchasing processes. It also acts as a reseller of technology products and leases equipment to clients.

EPlus stock sank 15 percent yesterday, despite the settlement, as the company announced other developments.

The company said a payment on a lease transaction was incorrectly recorded and as a result, EPlus will reduce its earnings for its fiscal second quarter, ended Sept. 30, by $438,604 (5 cents a share), to $2.1 million (23 cents). The company's revenue for the quarter will be reduced by $743,395, to $153.2 million. EPlus said it discovered the accounting error that led to the restatement.

EPlus also reported that it earned $1.6 million (17 cents) in its fiscal third quarter, ended Dec. 31, down from $2.6 million (26 cents) a year earlier. Revenue rose to $147.7 million from $79.8 million. Executives said the drop in profit was due partly to their focus on the lawsuit.

"This is a small company; the senior managers are involved in the sales. Anytime you have an operation like this, it's going to cost their sales," said analyst Christopher Penny of Friedman, Billings, Ramsey & Co.

The company's stock fell $2.38 to close at $13.21.