Jeeves Posts Solid Profit

A lucrative advertising deal with rival Google Inc. helped Ask Jeeves Inc. more than double its fourth-quarter profit, but shares fell Thursday on concerns that the Internet search engine was growing too slowly.

The Oakland-based company earned $17.1 million, or 25 cents a share, in the quarter ended Dec. 31, up from $7.6 million, or 13 cents, a year earlier. Sales rose 170% to $86.1 million.

For the year, Ask Jeeves earned $52.4 million on sales of $261.3 million. In 2003, it earned $24.8 million on $107.3 million in sales.

About 70% of revenue came from Google, which pays fees to have its text-based advertisements appear on Ask Jeeves’ search sites, Chief Financial Officer Steve Sordello said. The agreement runs through 2007.

“Ask Jeeves is right back on track,” said analyst Clay Moran of Stanford Group Co.

Nonetheless, Ask Jeeves shares fell nearly 5% in after-hours trading following the earnings announcement. They slid 35 cents to $26.94 during regular Nasdaq trading.

Investors appeared nervous that Ask Jeeves was losing ground to Google and Yahoo Inc. Its Web search business grew 16% from the previous quarter, compared with 28% at Google and 17% at Yahoo, said Marianne Wolk, an analyst with Susquehanna Financial Group.

Web surfers used Ask Jeeves’ search sites for 5.3% of all searches, according to a December 2004 survey by ComScore Networks. By comparison, Google took a 35% share of all searches and Yahoo 32%.

For 2005, Ask Jeeves forecast sales of $380 million to $395 million and per-share earnings of 90 cents to $1.05.

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Reuters was used in compiling this report.