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Last Updated: Wednesday, 18 August, 2004, 13:02 GMT 14:02 UK
Google cuts IPO share price range
Google founders, Larry Page and Sergey Brin
The sale of Google shares will make some people very, very rich
Google has cut the price range for the shares it plans to sell in a long-awaited initial public offering.

The move is likely to have been needed to revive interest as stock exchanges around the world come under pressure.

The new range is $85-95 a share - a reduction of about a quarter from the previous level of $108-135, which valued the company at $36bn (19bn).

With the rewards set to be less, Google founders Larry Page and Sergey Brin are selling a smaller part of their stake.

Other executives have also decided to hold on to more of their stocks and the total number of shares on offer has dropped to 19.6 million from an initial 25.7 million.

That will cut the market value of Google to about $26bn and generate just $1.9bn instead of the previously forecast $3.6bn.

"They recognised that there wasn't the appetite for shares," said Hilary Cook, an analyst at Barclays stockbrokers in London.

Hiccups

The planned flotation, watched with keen interest around the globe, already has encountered some problems.

It has been delayed for at least a day as paperwork required for its shares to be sold has yet to be approved by regulators.

The Google Philosophy
Never settle for the best
Focus on the user and all else will follow
It's best to do one thing really, really well
Fast is better than slow
Democracy on the web works
You don't need to be at your desk to need an answer
You can make money without doing evil
There's always more information out there
The need for information crosses all borders
You can be serious without a suit
Great just isn't good enough
Source: Google website

Google hopes to get the go ahead and close the auction at 2000 GMT on Wednesday.

The Securities & Exchange Commission (SEC) gave no reason for the previous day's delay to the IPO.

Once the SEC gives its approval, Google will stop accepting bids for its shares and could start issuing stock within a matter of hours.

The lower price, however, means the number of shares being sold also has been cut.

According to a statement on its website, Google said that "selling shareholders" would now offer 5.5 million stocks, less than half the amount they first planned to offload.

Among those offloading a portion of their stock are Google founders Larry Page and Sergey Brin, a number of other company executives and the venture capital firms which helped fund the company's expansion.

'Dutch auction'

The SEC approval will mean the "Dutch auction" under way to set the price of the Google shares will come to an end.

The auction is designed to give small investors a better chance of getting their hands on the shares that have been made available.

Potential buyers are asked to specify both the price they are willing to pay, and the number of shares they want.

The bids are placed in order, starting with those offering the highest price. The allocators work down the list from the top, allotting each bid in turn the shares it requests, until all the shares available have been accounted for.

The lowest successful bid then becomes the issue price, and the flotation can begin.

Google will trade on the technology-heavy Nasdaq exchange.

Investigation

Google's headquarters
The company prides itself on a smart, hard-grafting workforce

The company does, however, have a couple of clouds on its horizon.

Google revealed on Monday that the US stock market watchdog had launched an informal inquiry into its failure to register shares given to employees.

The probe centres on a possible breach of US stock market rules arising from the firm's failure to register 23 million shares and 5.6 million share options it offered to employees and consultants.

The company may face fines if the SEC finds that the share issue was contrary to stock market regulations.

Google has offered to buy back the shares, but at a lower price than they are expected to reach when traded on the stock market.

There is no guarantee that the holders of the shares will accept the buyback offer. Some may choose to sue the company instead, or hang onto their allocation and sell them once the shares start trading on the Nasdaq.


WATCH AND LISTEN
The BBC's Julian Haynes
"Google has rarely done what the market expected"



SEE ALSO:
Google market debut delayed
18 Aug 04  |  Business
Google IPO faces Playboy slip-up
13 Aug 04  |  Business
Google auction begins on Friday
12 Aug 04  |  Business
Google sets IPO bidder deadline
10 Aug 04  |  Business


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