Ask Jeeves, Google Team Up for Advertising Deal.

Byline: Ellen Lee

Jul. 19--Two of the most popular Internet search companies, Ask Jeeves Inc. and Google Inc., have linked up in a $100 million three-year advertising deal.

The agreement should help Emeryville-based Ask Jeeves reach pro forma profitability -- that is, profitability excluding certain costs -- by the end of this year and is expected to double its revenues between the upcoming third and fourth quarters.

Google replaces Overture Services Inc. as Ask Jeeves' paid listings partner. Under the agreement, which launches in September, Ask Jeeves will show a list of advertisers that pay Google to be listed when the right search terms are entered. Google will share with Ask Jeeves more than $100 million in estimated revenue over three years that will come from Google's advertisers on Ask Jeeves' search sites.

"For Ask Jeeves, it seems to be a good deal," said Safa Rashtchy, a senior analyst with U.S. Bancorp Piper Jaffray. "I have to assume it's getting substantially larger revenues than from Overture."

Details of the deal, including how the revenues will be split between the two companies, were not disclosed, but Ask Jeeves CEO Skip Battle said, "Most of that $100 million comes to us."

The agreement puts a twist on the relationship between Google and Ask Jeeves, which compete against each other. Ask Jeeves recently launched Teoma.com, whose technology is said to rival Google's.

"It's certainly a surprise given that Ask Jeeves has really tried to put itself out there to challenge the throne as the most qualified search engine," said Danny Sullivan, editor of Search Engine Watch.

Battle said that deal won't stop Ask Jeeves from competing against Google.

"We're going to compete for our share of the market," he said.

Ask Jeeves also reported on Thursday revenues of $17.6 million for the quarter ended June 30, compared with $16.7 million for the year-ago quarter. Net loss, including certain costs, was $8.5 million, or 21 cents per share, compared with a net loss of $20.9 million, or 58 cents per share, for the same quarter last year.

Excluding charges, the company said that net loss was $6.5 million, or 16 cents per share, for the second quarter, compared with $9.9 million, or 27 cents per share, for the same quarter last year. Two analysts polled by Thomson Financial/First Call had predicted a net loss of 21 cents per share.

The company also projected that revenues would grow 20 percent during the rest of the year. The third quarter is seasonally slower, but the company said it expects the fourth quarter to be strong. It said that fourth quarter revenues, boosted by its deal with Google, should be about $21 million, with a pro forma net profit of about two cents per share.

During the three-month period, the company laid off about 35 employees as part of its ongoing effort to shave expenses. A few of the cuts came from discontinued operations and the rest came from the company's software division.

Shares of Ask Jeeves, which made its announcements after the market closed, slipped 2 percent, or two cents, to 98 cents per share on Thursday. In after hours trading the shares jumped 25 percent to $1.25.

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(c) 2002, Contra Costa Times, Calif. Distributed by Knight Ridder/Tribune Business News.

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