Popular search engine Ask Jeeves Inc. lays off 25 percent of its workers

SAN FRANCISCO (AP) _ Ask Jeeves Inc., a search engine whose aristocratic butler is one of the Internet industry's best-known mascots, laid off 25 percent of its work force in the latest fallout from

Wednesday, December 13th 2000, 12:00 am

By: News On 6

SAN FRANCISCO (AP) _ Ask Jeeves Inc., a search engine whose aristocratic butler is one of the Internet industry's best-known mascots, laid off 25 percent of its work force in the latest fallout from the faltering online advertising market.

By jettisoning 180 workers, the company estimated it will save about $45 million annually. That would put the Emeryville, Calf.-based company on course to turn a quarterly profit by the end of next year.

Ask Jeeves lost $127.6 million through the first nine months of this year, up from a loss of $29.2 million at the same point in 1999.

The company said it will absorb a one-time charge ranging from $10 million to $12 million to pay for severance packages and other expenses incurred in the shake-up.

With the move, Ask Jeeves becomes the second major online search engine to slash its work force during the last three months. In September, Palo Alto-based AltaVista Co. trimmed 225 workers from its payroll.

Ask Jeeves' cutbacks come less than a week after the company warned that it expects to lose $18 million during the final three months of the year, worse than investors anticipated. The company demoted its CEO, Rob Wrubel last week.

Skip Battle, Ask Jeeves' new CEO, said the reorganization will help push Ask Jeeves ``into the mainstream economy.''

Analyst Safa Rashtchy of U.S. Bancorp Piper Jaffray said he expected the layoffs, although the number was slightly higher than he anticipated

``This is the beginning of the changes that they need to make,'' Rashtchy said. ``We still have to see whether this new management can execute and how much more pain there is to come.''

The turmoil at Ask Jeeves reflects the weakening market for online advertising, which suffers as more dot-com businesses go out of business or slash their marketing budgets in an attempt to stay alive.

The slowdown has put a crimp in the business plans of many popular Web sites that depend on advertising for revenue.

Even Yahoo! has been affected, though the company remains profitable. Investor worries about the advertising slowdown have contributed to an 83 percent decline in Yahoo! stock so far this year, wiping out $99 billion in shareholder wealth.

Unprofitable Web sites like Ask Jeeves have been hammered even harder. Ask Jeeves' shares gained 66 cents Tuesday to close at $3.97 _ but that was 97 percent below the 52-week high.

Even as its stock has sunk, Ask Jeeves' Web sites, including ask.com, directhit.com and askjeeveskids.com, have grown in popularity. Using a technology the allows Web surfers to make search requests as simple questions, the Ask Jeeves sites field about 11 million queries from 45 million visitors per day.

Ask Jeeves also licenses its search engines to many major businesses, including Ford Motor, Dell Computer, Nike and Compaq. Management said Tuesday that Ask Jeeves will start running the licensing business as an independent unit from the Web sites.