100% correct->TheTruthseeker.com Initiates Coverage of Ask Jeeves ASKJ
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TheTruthseeker.com Announces Investment Opinion on Ask Jeeves, Inc.
NEWTON, N.J.--(BUSINESS WIRE)--Oct. 25, 1999--
TheTruthseeker.com Initiates Coverage of Ask Jeeves Inc With
Immediate Sell and Sell Short, Recommendation @ $83.
We Project a 12-18 Month Price Target Range of $15 to $25
TheTruthseeker.com sent a sell recommendation to our members today, advising that they carefully evaluate their positions in the stock of Ask Jeeves, Inc. ( NASDAQ: ASKJ )
At the core of our valuation concerns, we have doubts about the usefulness of Ask Jeeves search engine, its ability to withstand competition in the Internet search engine space, its low revenues in relation to its market capitalization, its rate of operating losses, and downward pressure on its stock from dilutive factors.
In doing our research we tested Ask Jeeves by asking it numerous questions, all of which were answered by more questions. Many of its responses did not help us find the information we were seeking.
We have also determined that Ask Jeeves responses give priority to their advertisers' web pages. This raises questions about the fairness of its search results and recommendations, suggesting that advertising dollars, rather than best available information, may drive responses to users' questions. We believe that this will reduce users' confidence in Ask Jeeves' results.
The company has made numerous PR announcements regarding sub-licensing of its search technology to Microsoft and others for use on corporate websites. However, financial terms of these licenses have not been included in the announcements. From the company's last quarterly report, sublicensing fees represented a scant $1 million, which was appx. 35% of ASKJ revenues of $3.8 million for the most recently reported 6 months.
At its current stock price, Ask Jeeves has a market cap of over $2.3 billion. When compared with true search engines, which are also richly valued, we see that Ask Jeeves is severely overvalued and cannot sustain these valuations.
For example, Infoseek ( NASDAQ: SEEK ) has a market capitalization of less than $1.82 billion and the stock price has been drifting lower as Wall Street's initial excitement with the novelty of search engines has worn thin.
Cash and short term assets remaining from ASKJ's IPO total appx. $23 million as of June 30. In its June report, the company states that its cash will be sufficient to fund it for the next 18 months, but clearly it cannot do so while sustaining its current rate of losses
($10 million loss in the last reported June quarter). Considering ASKJ reported spending over $10M in the June quarter alone for promoting its branding strategy, the company will obviously need large amounts of additional cash if it is to fund both continuing branding promotion and the R&D required to keep abreast of its many better funded competitors. If it resorts to a secondary offering to raise this cash, the effect will be dilutive on current shareholders.
An additional dilutive factor is the 21,106,168 shares of ASKJ currently held by directors, executive officers and existing stockholders which are currently subject to lock-up agreements, due to expire Dec 27, 1999, appx. 2 months from now. This will increase the number of shares in float by up to 600%.
Many of the very best search engines such as DogPile.com and 37.com, are far superior for many search tasks. The upcoming true search engine Google.com will compete directly with Ask Jeeves and further reduce users' motivation to use this site. Many of ASKJ existing competitors, as well as potential new competitors, have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than ASKJ does. This will allow ASKJ existing competitors to devote greater resources than ASKJ to the development and promotion of their services.
Many of these competitors offer a wider range of services than ASKJ does. These services may attract users to ASKJ's competitors' sites and, consequently, result in a decrease of traffic to ASKJ's site. These competitors may also engage in more extensive research and development, adopt more aggressive pricing policies and make more attractive offers to existing and potential employees, partners, advertisers and electronic commerce merchants. ASKJ competitors may develop products and services that are equal or superior to ASKJ's or that achieve greater market acceptance. In addition, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to better address the needs of advertisers and businesses engaged in electronic commerce. As a result, it is possible that new competitors may emerge and rapidly acquire significant market share.
In addition TheTruthSeeker.com would also like to announce that it has initiated a public interactive Free stock discussion thread on the Net's Newest Message Board Site: WallStreetStand.com, wallstreetstand.com. We were impressed by the quality of the site and the board operators policy of accountability. "It is the best Message Board site on the net, bar none" said Floyd Schneider, CEO of Thetruthseeker.com.
For a complete free copy of our report including details from the Company, please visit us thetruthseeker.com
TheTruthseeker.com is an Interactive Online Magazine and E-mail service site. TheTruthseeker.com issues Truthseeker Reports on a weekly basis. Some of the past reports by The Truthseeker include USATalks.com (NASDAQ: USAT) Citron (NASDAQ: CTRN), NET COMMAND TECH INC (NASDAQ: NCDR), 2TheMart.com (NASDAQ:TMRT), PLAY-BY-PLAY TOYS&NOVELTIES ( NASDAQ: PBYP), PREMIER LASER SYSTEMS'A' (NASDAQ: PLSIA ), AMPLIDYNE INC (NASDAQ: AMPD ), MP3.COM INC NASDAQ: MPPP) and various others .
The Truthseeker Reports are sent to our members and often are forwarded to other regulatory bodies. Past reports in the archives are available for free to the public.
TheTruthseeker.com agents, associates, and or employees may or may not have investment positions consistent with the above-stated investment opinion. |
