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Ask Jeeves: Unquestionably, People Want Answers

What stocks should I buy? You might want to go to Ask Jeeves and see what the answers are. Or, you might even consider buying the stock of Ask Jeeves .

Ask Jeeves is the place to answer virtually any questions - which you pose in natural language queries. And it is popular. The site is the 12th most-visited (according to Media Metrix), with 13.3 million unique users (thats a 17% reach of the Web).

The popularity has turned into a business model. In the latest quarter, Ask Jeeves had $17.8 million in revenues, which was an increase from $1.5 million for the same period a year ago.

The Ask Jeeves model relies heavily on advertising. It is very targeted (based on the types of questions posed and even the context). But Ask Jeeves also has e-commerce relationships with key merchant partners.

However, I think the real promise of the company is the corporate market. The Ask Jeeves technology has proven to be effective for customer service. In the past quarter, Ask Jeeves' realized $5.2 million in revenues from the Corporate Services division. In all, the company was able to close 38 corporate deals in the quarter, which was up from 22 in the prior quarter. New customers include ShopNow.com, Radio Shack and DaimlerChrysler.

In terms of the company's cash position, there was a follow-on offering in March that resulted in $120 million into the bank account. According to the company, break-even will likely occur without the need for more outside financing.

Ask Jeeves has continued to innovate. The company recently launched the Jeeves Text Sponsorship system. Companies use this to allow advertisers to develop and distribute keyword-targeted text advertising (using an auction model). The system yields click-through rates of about 1%. True, this sounds low, but consider that the average rate is .38%.

Ask Jeeves also purchased Direct Hit Technologies. With the acquisition, Ask Jeeves now owns a portfolio of key patented technologies for searching. The technologies enhance relevancy, prioritization and frequencies.

Finally, Ask Jeeves has many wireless opportunities. Yesterday, the company announced Phase One of its strategy, with the introduction of its service for Palm users. For more information, go to Ask Jeeves and enter the following: "How can I use Ask Jeeves for my Palm?"

What started as a simple database has now become a comprehensive source of knowledge. In the past quarter, the company fielded about 275 million questions. So long as there is a thirst for knoweldge, Ask Jeeves will continue to grow -- and perhaps investors will start asking for more and more shares of the company.



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