If Jeeves were a real butler, he might have had to pull out the smelling salts for investors yesterday as Ask Jeeves (NASDAQ:ASKJ) plummeted 10% after guiding lower than analyst forecasts for the third quarter. This fall was despite the company more than doubling earnings year over year, with its results including its acquisition of Interactive Search Holdings for the first time.

The paid search space is crowded, but Ask Jeeves can definitely hold its own. The company has the eyeballs to match its valuation -- Nielsen NetRatings ranked it the ninth most-visited property on the domestic Internet in June, with more than 32 million unique users.

Ask Jeeves also recently extended until 2007 its deal with Google, in which Google provides sponsored advertising links on Ask Jeeves' suite of websites. Since Ask Jeeves' full-year guidance remains in line with analysts' estimates, perhaps the question to ask is why the company's shares dropped so sharply without any drastic change in fundamentals.

The answer to this lies with Google. Ask Jeeves has been trending downward since its 52-week high of $44.66 set on April 27. It is no coincidence that the Google IPO has been picking up momentum since then. Google's imminent offering means that investors are understandably quick on the trigger finger, looking for any reason to exit. Yesterday's lower guidance might just have provided the impetus to jump. Ask Jeeves boasts a staggering 95% institutional ownership, so the herd mentality comes into play, causing huge swings such as yesterday's in its share price this year.

Those who want to get in on paid search may want to think about taking advantage of the current price as a buying point, but they must be aware of the risks involved. Investors would be wise to keep their eyeballs on the ticker as the Google IPO approaches.

Fool contributor Tim Goh does not own any stake in the companies mentioned.