Breaking Web Marketing News
Microsoft To Buy Ask Jeeves
April 3, 2004

The Web search industry is in the midst of the perfect storm. And that means Ask Jeeves Inc.'s stock is being slapped about like the Andrea Gail.

On March 26, the company's stock shot up more than 10 percent amid speculation that Microsoft Corp. was interested in the Emeryville-based company. It fell back Monday, March 29, then jumped another 10 percent to almost $37 the next day after a Wall Street analyst issued positive comments on the stock.

The forces lifting Jeeves are a rare confluence of corporate news and investor euphoria in what is arguably one of the hottest technology sectors this year.

The first jump came after Microsoft admitted it had missed the boat on search technology and promised an array of online search products in coming months to bolster its position in a market where, until now, it has relied heavily on partnerships with competitors.

Comments by officials in Redmond spurred renewed rumors that Microsoft might be interested in acquiring Jeeves, which is a relatively small player in a market dominated by Google Inc., Yahoo Inc. and MSN.

It's not the first time, the 800-pound gorilla's move into a market has created a frenzy. Pleasanton Polycom Inc. got a boost a year ago when Microsoft bought Web collaboration firm PlaceWare Inc. of Mountain View. Microsoft's interest drew attention to the entire field, which helped Polycom and others.

A Microsoft acquisition of Jeeves seems unlikely to some because the software giant has been developing its own search technology for the past year.

"There's been lots of rumors and lots of volatility in the stock," said Mark May, a Kaufman Brothers analyst who does not believe Microsoft is interested in Jeeves.

"What Ask Jeeves has is a lot of traffic and they have this technology, Teoma," he said. "Microsoft doesn't need traffic, it's already one of the most heavily trafficked sites. And it's not necessarily seeking technology. They are very much down the path to building their own algorithmic search technology."

Still, Microsoft merely talking about the rollout of its search offerings in coming months was enough to whip the search engine seas into a frenzy, again. Microsoft's moves are just the latest in a string of major announcements by search industry players, each of which seems to push Jeeves' stock ever higher.