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Ask Jeeves CEO steps down as loss widens

The online search company issues a revenue warning and announces that its chief executive will step down and end his tenure as a board member.

3 min read
Online search company Ask Jeeves issued a revenue warning Thursday and announced that its chief executive will step down and end his tenure as a board member.

The company said it expects to report consolidated revenue of approximately $25 million in the fourth quarter, which ends later this month. Ask Jeeves said it expected a pro forma net loss from continued operations of approximately $18 million, or 50 cents per share. Wall Street expected the company to lose 33 cents, according to First Call/Thomson Financial.

The Emeryville, Calif.-based company generates revenue through advertising and licensing, allowing people to search the Web by posing real-world questions on the Ask Jeeves site.

A typical Internet portal requires people to type keywords such as "Ice Age" and "date," then dig through a list of sites that contain those words. By contrast, Ask Jeeves' users may simply write, "When was the last Ice Age?" and then get a list of sites likely to contain answers.

The company became a Wall Street darling for its relatively easy-to-use search technology, and the stock hit a 52-week high of $144 in December 1999. But the collapse of the e-commerce sector and questions about the company's business model have resulted in a 91.42 percent decline in the stock since the beginning of the year. The stock closed Thursday at $9.69, down 7.74 percent and close to its 52-week low of $8 per share.

Executives blamed the company's revenue shortfall on the slowing economy and increasing reluctance of companies to spend money on Internet advertisements.

"The broad-based economic slowdown has caused weakness in the online advertising market, advertising pricing pressure and a decreased sense of urgency among Fortune 1,000 companies to implement their online initiatives," Ask Jeeves president Adam Klein said in a statement. "We believe the more calculated attitude toward spending presents a more mature and more attractive market for Ask Jeeves in the long term given the strong return on investment we continue to deliver to our customers."

The company also announced that CEO Rob Wrubel is resigning from the board of directors and will assume a new role as executive vice president of market development. Board member A. George Battle will assume the role of interim CEO.

A news release said that Wrubel, who has spent the past two and a half years as CEO, will focus on "evangelizing Ask Jeeves' value proposition to both customers and partners."

"The board and I agree that for the next phase of Ask Jeeves' development a different set of skills are required to strengthen the company's ability to address the new business environment," Wrubel said in a statement.

The company emphasized its "solid cash position," but Klein would not discuss whether the company planned to lay off workers as part of a cost-cutting campaign.

"We're not discussing other apsects of the company," Klein said in an interview, emphasizing that he and the interim CEO were "just starting to understand all of our choices."

The company expects to become profitable in the fourth quarter of 2001, but executives cautioned that they are reviewing 2001 growth targets "and therefore cannot confirm prior 2001 revenue and operating guidance at this time."