Ask Jeeves Lays Out Plans for Interactive Search Holdings

Ask Jeeves will explore search personalization and re-design the MyWay portal now that the $500 million acquisition of Interactive Search Holdings is complete, the company’s CEO said in a conference call with investors this week.

“ISH is going away, but its brands are staying and its brands are now part of Ask Jeeves,” said Steve Berkowitz, CEO of Ask Jeeves.

The acquisition, which closed this week, doubled Jeeves’ market share. It brought popular sites and search services including iWon, Excite, My Way, My Search, My Web Search and MaxOnline into the search company’s domain. It also raised questions about how the search company would integrate the new properties into its existing business.

Berkowitz said Ask Jeeves will remove some of what Berkowitz calls “non-targeted advertising,” or banner ads, from Ask Jeeves. The CEO had mentioned this plan in the company’s earnings report in April. However, Berkowitz said, the company’s portal sites will continue to run banner ads.

My Way, one of the newly acquired ISH properties, is a “clean” portal with features such as email and registration and no major advertising. The acquisition of My Way positions Ask Jeeves for possible growth into extra-search capabilities and even a portal-like online identity. It also moves the company closer to potential personalization.

Along those lines, Berkowitz said, “We believe the registration and email on our portal sites gives us another opportunity to address search personalization and email systems from a different perspective.” He did not divulge details about plans for personalization.

Berkowitz did share some specifics about his plans for portals iWon and My Way.

IWon uses a sweepstakes format to attract users, giving away $10,000 a day. Berkowitz said iWon’s users are “loyal,” and ROI for advertisers is good, but not much has been invested in iWon over the last 18 months. He vowed to update the site experience, optimize advertising units on each page, market the brand and “focus the iWon search experience to make it an even stronger retention tool.”

Berkowitz also said the My Way portal site will be updated and the user experience improved.

Going forward, Ask Jeeves will report its earnings on a combined basis, Ask Jeeves CFO Steve Sordello said. Revenues will be broken into two categories, search and media. Sordello shared some facts about ISH, whose finances, as a privately held company, were not publicly available before.

The company had revenues of about $85 million for 2003. (Ask Jeeves’ revenue for 2003 was $107.3 million.) ISH answered about 880 million search queries in the first quarter of 2004, Sordello said. Revenue was $29 per thousand queries in the first quarter. ISH has 190 employees, which brings Ask Jeeves’ total employee roster to about 500.

Ask Jeeves now expects operating profit for the second quarter of 2004 to be 21 cents a share on revenues of $55 million. The 21-cent EPS is on target with the predictions of analysts polled by Thomson/First Call.

“We believe Ask Jeeves has a much stronger position in search than it is given credit for,” said Safa Rashtchy in the May 10 Silk Road Weekly, the Piper Jaffray analyst’s newsletter. Rashtchy said Ask Jeeves is in an attractive position because competition between Google and Yahoo may provide it with an increased paid search revenue share.

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