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Ask.com Staying the Course

Jonathan Berr

IAC/InterActiveCorp's (IACI Quote) Ask.com, which has been gaining market share in search since Barry Diller took it under his wing last year, isn't going to make any major changes under new head Jim Lanzone.

"We feel we have a very strong strategy and it's a matter of execution," says Lanzone, 35, who was named to the job Monday after Steve Berkowitz was hired to run Microsoft's (MSFT Quote) MSN. "It's always a surprise when the top executive leaves the business, but the team feels very confident in the strategy for Ask and the way we operate, and my objective is to keep that going."

Searches at Ask grew 33% in the fourth quarter of last year, according to one study. That's four times as fast as the industry rate and faster than search goliath Google's (GOOG Quote) 25% gain. In February, Ask's search growth remained strong, rising 28% from a year ago, vs. Google's 29%.

Ask has recently unveiled a raft of new improvements to its search technology, including "binoculars" that let users check out a Web site by scrolling over its URL. The engine has won kudos from industry observers, including The Wall Street Journal's influential tech columnist Walter Mossberg.

The engine began a new advertising campaign in February to promote the relaunch of its offbeat television spots, including one featuring a talking orangutan. Ask's longtime mascot, Jeeves the butler, has left to spend more time with his family.

"The marketing campaign has a very specific strategy, which is to promote the product differentiation and not just entertainment. The marketing has driven increased usage of those features," Lanzone says.

Berkowitz's departure is a "strategic loss" for IAC, says Scott Devitt, an analyst with Stifel Nicolaus, in a note to clients Monday. He reduced his rating on New York-based IAC from buy to hold.

"While we do not expect the management change to immediately impact the business, we think the loss of a leader in a business segment so core to the company's strategic vision justifies a ratings change," Devitt writes. "Ask has been a bright spot for Interactive and will now most likely present a drag."

Indeed, Chief Financial Officer Thomas McInerney told investors earlier this year that sales at the company's HSN division would decline in the first quarter. Results will be further crimped by Diller's plans to "invest significantly and aggressively in our business" for long-term growth.

Lanzone, formerly Ask's senior vice president and general manager for North America, is the second major appointment IAC has made in less than a month. Mindy Grossman was named to head IAC's retailing group on April 17, overseeing one of the company's most important units, which included HSN and Cornerstone Brands.

IAC reports first-quarter results on May 2. Analysts are expecting earnings of 27 cents on sales of $1.55 billion, according to Thomson Financial.

On Monday, IAC slipped 81 cents to $29.26.