EMERYVILLE,
Calif., Mar 4, 2004 --
- Acquisition
Doubles Ask Jeeves' Market Share and Strengthens
Position in the Rapidly Growing Search Market
- Acquisition is Highly Accretive
- Ask Jeeves Raises Stand-Alone Financial Guidance for the
First Quarter and Full-Year 2004
Ask Jeeves, Inc. (Nasdaq:
ASKJ), a provider of Web-wide search, today announced it has signed a
definitive agreement to acquire privately-held Interactive Search Holdings,
Inc. Under the terms of the agreement, Ask Jeeves will issue 9.3 million
shares of common stock and options and pay $150 million in cash. This
reflects an aggregate purchase price of $343 million based on Ask Jeeves'
closing price on March 3, 2004. In addition, Ask Jeeves may pay up to
an additional $17.5 million in cash based on various factors including
Interactive Search Holdings' operating performance.
"The acquisition
of Interactive Search Holdings will be an important step in Ask Jeeves'
growth strategy. This acquisition will double our market share, enhance
our ability to compete in the fast-growing search market, and is expected
to increase the financial returns to our shareholders," said Steve
Berkowitz, CEO of Ask Jeeves. "This acquisition will enable us to
combine Ask Jeeves' proven strengths in user experience, search technology
and brand development with Interactive Search Holdings' strengths in distribution
and direct marketing. By leveraging these two complementary approaches
to search, we expect to accelerate Ask Jeeves' market share gains in 2004
and beyond."
Interactive Search
Holdings is one of the largest privately held online search and media
companies, ranking as the 9th most visited U.S. property on the Web in
December 2003 as measured by comScore Media Metrix (where it is listed
as "The Excite Network"). Interactive Search Holdings' Web properties
and businesses include My Way, My Search, My Web Search, iWon, Excite
and the MaxOnline advertising network. In December 2003, Interactive Search
Holdings' Web properties reached 17 percent of domestic Internet users.
Additionally, Interactive Search Holdings had approximately 700 million
searches in the fourth quarter. This compares to 680 million searches
on Ask Jeeves' proprietary sites during the same period.
"Interactive
Search Holdings shares Ask Jeeves' commitment to search. We have been
successful growing our search business and joining Ask Jeeves gives us
an even greater opportunity to scale going forward," said Jonas Steinman,
co-CEO and founder of Interactive Search Holdings.
"Together, Ask
Jeeves and Interactive Search Holdings will have substantially more traffic
and advertising inventory, which we believe will increase our value to
advertisers and partners," added Bill Daugherty, co-CEO and founder
of Interactive Search Holdings.
Following completion
of the acquisition, Interactive Search Holdings will become a wholly-owned
subsidiary of Ask Jeeves and its operations will remain in Irvington,
New York. The transaction is subject to customary closing conditions,
including regulatory approval. It is expected the transaction will be
completed by the end of the second quarter of 2004.
Business Outlook
The following business
outlook contains forward-looking statements describing management's current
expectations for the future. The matters discussed in these forward-looking
statements are subject to numerous assumptions, risks and uncertainties,
some of which are listed or referred to in the cautionary note below.
Similarly, the forward-looking guidance provided in this press release
is based on limited information available to Ask Jeeves at this time,
which is subject to change. As a result of these uncertainties and information
limits, Ask Jeeves' actual results in the future may differ materially
from management's current expectations. Although management's expectations
may change after the date of this release, Ask Jeeves undertakes no obligation
to revise or update the guidance below. The lack of any revision or update
is not meant to imply continued affirmation of the guidance below. The
pro forma guidance below has been calculated in a manner consistent with
the pro forma historical data provided in Ask Jeeves' year-end 2003 earnings
release.
First Quarter and
2004 Business Outlook (Ask Jeeves on a Stand-Alone Basis)
Commenting on Ask
Jeeves' business outlook, the company's CFO, Steve Sordello, said, "We
are raising our stand-alone financial projections primarily due to stronger
than anticipated traffic this quarter."
For the first quarter
on a stand-alone basis, Ask Jeeves now anticipates revenues of $37 million
and pro forma income of approximately $0.18 per share. This compares to
prior revenue and pro forma income projections of $35 million and $0.16
per share, respectively. Ask Jeeves anticipates that GAAP net income will
be $0.17 per share, which compares to prior expectations of $0.15 per
share. The anticipated difference between first quarter GAAP-basis net
income and pro forma income of approximately $0.01 per share is expected
to result primarily from amortization of other assets.
For 2004 on a stand-alone
basis, Ask Jeeves now anticipates revenues of $148 million and pro forma
income of $0.68 per share on a stand-alone basis. This compares to prior
revenue and pro forma income projections of $142 million and $0.60, respectively.
Ask Jeeves anticipates that GAAP net income for 2004 will be $0.64 per
share. The $0.04 per share difference between GAAP and pro forma is primarily
due to the amortization of intangibles.
2004 Business Outlook
(Upon Acquisition Closing)
Commenting on the
acquisition, Sordello added, "From a financial perspective, this
acquisition is expected to be highly accretive. We are increasing the
scale of our business in terms of revenue, earnings and market position.
We believe this will better enable us to increase our return to shareholders
over the near term and the long term."
Upon the closing of
this acquisition, Ask Jeeves anticipates combined company revenues of
approximately $220 to $230 million and pro forma income of approximately
$0.85 to $0.90 per share for 2004. Ask Jeeves at this time is unable to
forecast the combined company's GAAP-basis net income for 2004 without
unreasonable effort inasmuch as Ask Jeeves is still evaluating how the
acquisition will affect the company's amortization of intangibles.
Conference Call Scheduled
for 8:30 a.m. Eastern Time on March 4, 2004
Ask Jeeves will hold
a conference call to discuss the acquisition of Interactive Search Holdings
on March 4, 2004 at 8:30 a.m. Eastern time. A more detailed outlook will
be presented on the call than is contained in this release. Interested
persons can listen to a live broadcast of the conference call on the Internet
at www.ask.com/investor or dial 800-257-6607 for domestic callers and
303-262-2142 for international callers. To listen to the live call, go
to the web site at least fifteen minutes prior to the start time to download
and install the necessary audio software. For those unable to listen to
the live broadcast, a replay will be available one hour after the conclusion
of the call at www.ask.com/investor for a period of three months.
Cautionary Note Regarding
Forward-Looking Statements
This press release
contains forward-looking statements. All statements regarding the future
are forward-looking statements, including those statements regarding (i)
the expected benefits of the acquisition, including doubling our market
share, enhancing our ability to compete, increasing financial returns
to investors, acceleration of market share gains in 2004, increasing our
value to advertisers and partners, and expected accretion, and (ii) all
expectations regarding revenue and productivity metrics, cash flow, net
income, pro forma income, revenue growth and pro forma income per share
in the future. The matters discussed in those statements are subject to
risks and uncertainties that could cause actual results to differ materially
from the results expressed or implied by the forward-looking statements.
Factors that might cause or contribute to such differences include, but
are not limited to: Ask Jeeves' dependence on the Internet and its dependence
on a single third-party paid placement provider; the risk of further vertical
consolidation in the Internet search and keyword advertising markets;
the risk that Ask Jeeves' user base might migrate to other search engines
or that its web traffic might otherwise decline; risks associated with
rapid technological change; the risk that companies' internet advertising
budgets might contract or grow at a slower pace; Ask Jeeves' dependence
on third parties for content, distribution and advertising delivery; potential
lack of market acceptance of Ask Jeeves advertising products; introduction
of new advertising products or search technologies by competitors; declines
in the average selling price of Ask Jeeves' advertising products; adverse
economic conditions in any of the major countries or markets in which
Ask Jeeves does business or to which its web content is targeted; and
risks associated with the integration of Interactive Search Holdings.
In addition, the post-acquisition forecasts are subject to the additional
risks faced by Interactive Search Holdings. As a relatively short announcement,
this press release cannot present a full discussion of such risks. Further
information on risk factors that could affect Ask Jeeves' financial results
is included in its most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission. Ask Jeeves encourages investors to
read all of the disclosures in its SEC filings for a broader discussion
of important factors that may be material to investors and may affect
Ask Jeeves' business, financial condition and results of operations.
About Interactive
Search Holdings
Interactive Search
Holdings (www.interactivesearchholdings.com), whose properties and subsidiaries
include My Way, My Search, My Web Search, iWon, Excite and MaxOnline,
is one of the largest online search and media companies in the world.
Founded in October 1999, Interactive Search Holdings is a comScore Media
Metrix Top Ten Web Property. The company is headquartered in Irvington,
NY, and has sales offices in New York, Chicago, San Francisco and Los
Angeles.
About Ask Jeeves,
Inc.
Ask Jeeves, Inc. is
a provider of Web-wide search, providing consumers with authoritative
and fast ways to find relevant information to their everyday searches.
Ask Jeeves deploys its search technologies on Ask Jeeves (Ask.com and
Ask.co.uk), Teoma.com, and Ask Jeeves for Kids (AJKids.com). In addition
to its Web sites, Ask Jeeves syndicates its search technology and advertising
units to a network of third-party web sites. Ask Jeeves is based in Emeryville,
California, with offices in New York, Boston, New Jersey, Los Angeles,
London and Dublin.
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