Ask Jeeves Reports Strong Results

Ask Jeeves more than doubled its profits in 2004, posting net income from continuing operations of $52.4 million, or $0.80 per share, on revenues of $261.3 million. This compares with $24.8 million net income on revenues of $107.3 million in 2003.

Much of the increase comes from Ask Jeeves’ May acquisition of Interactive Search Holdings (ISH). The ISH properties — which include the MaxOnline network and the Excite, MyWay and iWon portals — were rolled in with Ask Jeeves’ own advertising products under the AJinteractive umbrella in October.

The company expects to significantly expand its marketing efforts, increasing ad spend by more than 40 percent over last year. Plans include a print, television and online campaign aimed at adding new customers, and getting existing users to take advantage of more features on Ask.com.

“We want to focus on the message that Ask.com is the most authoritative place to search,” said Steve Berkowitz, Ask Jeeves’ CEO.

Ask Jeeves will also continue investing in its Teoma technology to improve search relevance. The company plans to hire several people for its research and development team in the coming year. The newly combined AJinteractive sales force will focus on building relationships with its existing 1400 advertisers. Plans include first putting systems in place to deliver better yield to all advertisers, and later focusing on improving results for specific advertiser segments.

Revenues for the fourth quarter were $86.1 million, a 170% growth over revenues of $31.8 million for Q4 of 2003. Ask Jeeves’ income from continuing operations for the quarter was $17.1 million, or $0.25 per share. This compares to income from continuing operations of $7.6 million, or $0.13 per share, for the comparable year-ago quarter.

The growing search market should allow Ask Jeeves to continue growing its revenues, said Steve Sordello, Ask Jeeves’ CFO, who reported an optimistic outlook for the coming year. “Our key volume, pricing and productivity metrics are positive. We’re generating cash and strengthening our balance sheet while investing in our brands, technologies and infrastructure,” Sordello said.

For the first quarter of 2005, Ask Jeeves anticipates revenues of $94 million and net income of $0.24 per share. For the full year ahead, the company expects revenues of $380 to $395 million and net income of $0.90 to $1.05 per share.

Shares of Ask Jeeves slipped nearly 7 percent in Friday morning training to $25.08, after closing Thursday at $26.94 before the earnings news. While Ask Jeeves — and the broader online search advertising market — is expected by most analysts to perform well in 2005, much of the additional revenue is expected to go to top search sites Google, Yahoo and MSN, with AOL gathering a significant share as well.

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