Ariba shares tumble after downgrade

Cowen and Co. analyst Peter Goldmacher downgraded Sunnyvale, Calif.-based Ariba to "Outperform" from "Neutral."

"We remain fans of the story, but although the stock is only moderately expensive on traditional multiples, we are concerned that (Wall Street's) expectations for organic bookings growth, the best measure of the health of the business, are aggressive," the analyst wrote in a note to investors.

Goldmacher expects fiscal 2009 earnings of 70 cents per share on sales of $368 million. Analysts polled by Thomson Reuters are expecting, on average, a profit of 70 cents per share on sales of $373 million. The company's fiscal year ends in September 2009.

Shares fell $2.10, or 14 percent, to $13.02 in midday trading as the Dow Jones industrial average fell nearly 270 points amid the sale of Wachovia's banking operations to Citigroup Inc. and as a vote on the government's $700 billion bailout is pending.

In the past 52 weeks, the stock has traded between $8.26 and $18.58.