Ask Jeeves Getting the Respect

Ask Jeeves (ASKJ Quote - Cramer on ASKJ - Stock Picks) reported revenue and earnings above expectations, and raised forecasts.

For the third quarter ended Sept. 30, the Internet search firm reported revenue of $27.2 million, up from $15.9 million in the third quarter of 2002. Analysts surveyed by Thomson First Call had forecast revenue of $25.5 million. Revenue, which the company had forecast to be modestly down from the second-quarter figure, was actually up 6%.

Pro forma income from continuing operations -- excluding various expenses and charges -- amounted to $5.1 million, or 9 cents per share, compared with a loss of $1.7 million, or 4 cents per share, one year earlier. Analysts had been expecting a 7-cent gain.

On a GAAP basis, income from continuing operations amounted to $3.8 million, or 7 cents per share, compared with a year-ago loss of $2.2 million, or 6 cents per share.

Shares in Ask Jeeves, which have stumbled lately after a remarkable rise over the past year, fell $1.59 during normal trading to close at $19.27. Shares fell an additional 43 cents after hours. At the after-hours price, Ask Jeeves was trading at 34 times the company's estimated 2004 pro forma earnings. The company's stock has ranged from $1.32 to $22.75 over the past 52 weeks.

Ask Jeeves is no longer a Rodney Dangerfield in the search industry, CEO Skip Battle commented on a conference call with analysts Wednesday.

For full-year 2003, the company is now forecasting revenue of $105 million and pro forma earnings per share of 36 cents. That's slightly ahead of analysts' current estimates of 34-cent EPS on revenue of $103 million. For 2004, the company expects EPS of 55 cents on revenue of $135 million, compared with expectations of 47 cents, also on $135 million.

Investor interest in Ask Jeeves is an outgrowth not only of the company's operations but also the continuing success of paid search advertising on the Internet. The biggest players in paid search are Overture Services, recently acquired by Yahoo! (YHOO Quote - Cramer on YHOO - Stock Picks), and privately held Google.

Google, which sells pay-per-click advertising that appears on Web sites operated by Ask Jeeves and other affiliates, accounts for a majority of Ask Jeeves' revenue.