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Shares of Ask Jeeves Inc. (ASKJ.O) fell 5 percent after a weekend report in Barron's said the Web search provider's stock, which has risen around 660 percent this year, may be overvalued.

The story, in the Oct. 27 issue of Barron's released on Sunday, said the Emeryville, California-based company has profited from a lucrative Web search advertising deal with privately held Google Inc., but has garnered only a 2.3 percent share of the U.S. search business.
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The Barron's article is called "Searching Question: Why do Ask Jeeves shares command a bubble-era valuation?" and is dated Oct 27. Sorry, you have to have subscription for Barrons.com to read the full article.

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For Ask, the real danger isn't so much Google pulling the plug as it is fading into irrelevancy in the face of growing competition not just from Google, but also from intensifying search efforts from Yahoo, Microsoft and AOL. Ask thinks it can build a business around being the second search option for people using Google or one of the other search behemoths.

So that brings us back to the key question for Jeeves: Can the stunning revival of Ask's stock price continue? It seems hard to imagine, given the company's already stretched valuation, the volatile and increasingly competitive nature of the search-engine business, the delicate competitor/partner relationship the company has with Google and the company's need to outperform the relatively slow-growth search market to justify its huge multiple.
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