Kanisa Buys Ask Jeeves's Enterprise Unit

Kanisa, a provider of knowledge-empowered customer service applications, on Wednesday announced plans to acquire the enterprise software division of Web-search company Ask Jeeves Inc. Under the terms of the deal Ask Jeeves will sell its Jeeves Solutions business software division to Kanisa for $4.25 million. The deal is expected to close during the summer. Forty-one Ask Jeeves employees are impacted by the sale, and will move to Kanisa's headquarters in Cupertino, CA. The combined company will still be called Kanisa and have nearly 100 workers. Bruce Armstrong, Kanisa president and CEO, says the combined company will focus on delivering to enterprise customers a suite of customer service solutions. That offering will include Kanisa's two products--Support Site and Support Center--along with Jeeves Solutions search technology, which is embedded in enterprise customers' sites. The suite of applications will be sold separately as well as together. Armstrong expects the first integrated product to be available in about 12 months. "This gives us a customer-facing search application, a Web-based tech support application, and an agent-facing resolution application that will all have a common knowledge-management platform," he says. "Our enterprise customers have the benefit of all the applications working together." Meanwhile, Ask Jeeves will focus on its online search sites, which include Ask.com and Teoma.com. The search company says it has enjoyed a recent resurgence. Ask Jeeves's Web sites attracted $58.8 million in revenue for the quarter ended December 30, 2002, up 83 percent over the same period a year ago. That growth pushed the company to profitability for the first time in its seven-year history. Ask Jeeves officials say the move to shed the Jeeves Solutions unit was based on declining revenue. Jeeves Solutions posted revenue of $15.4 million for 2002, a 55 percent drop from $34.4 million for the year prior. During 2001 Jeeves Solutions accounted for 50 percent of Ask Jeeves's annual revenue. "Ask Jeeves is wisely concentrating on the Web search," says Benny Lorenzo, general partner at Aspira Capital LLC, in Fort Lee, NJ. "The stock was at $2.30 on November 2002, and has risen to $14 over the last five months, and that is because the market has gotten better--Internet ads are up. That is the profitable part of their business. So it's smart for them to be paring back and focusing on core activities." Other search firms have also been under pressure and consolidation has become commonplace over the past several years--Verity bought Ultraseek, FAST is selling alltheweb to Overture and keeping its enterprise search, Yahoo acquired Hot Bot, and Overture bought AltaVista. However, despite declining revenue Jeeves Solutions has more than 35 customers, including heavyweights Nike, Cincinnati Bell, Novartis, and Ford. Leading technology companies also use Kanisa's software, including Microsoft, Apple Computer, eBay, Hewlett Packard, Network Associates, and Northrop Grumman. For Kanisa's part, Lorenzo says the acquisition is in line with the company's strategy. "Search allows them an expansion and extension of features they can offer enterprise customers," he says.