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Last Updated: Tuesday, 16 November, 2004, 23:41 GMT
Google shares fall as staff sell
Google's headquarters
Google's flotation attracted a lot of interest from investors
Shares in Google have fallen 6.7% after employees and early investors in the web search took advantage of the first chance to sell their holdings.

Restrictions were imposed ahead of its flotation in August, to prevent shares being dumped quickly onto the market.

In one of the most closely-watched initial public offerings in stock market history, the US-based company sold 19.6 million shares at $85 each.

Google shares have risen since but fell $12.33 on Tuesday to close at $172.55.

The restriction - known as a lockup - is being eased piecemeal: in all, some 227 million additional shares will become free to trade by February 2005.

Selling the shares could turn many of Google's workers into millionaires.

'Potential ceiling'

There were fears that the potential increase of shares in circulation from Tuesday would ease demand for stock.

However, analysts say they expected most shareholders would be holding back from selling all their shares immediately, as Google's good performance and future growth potential means demand will hold.

Graph of Google share performance since 18 August 2004

In its first earnings report since floating on the stock market, Google said it made a net profit of $52m in the three months ending 30 September.

Sales surged to $805.9m in the third quarter, up from $393.9m a year earlier.

Google's main service - its internet search - is free to users, so the firm makes much of its money from selling advertising space linked to the words for which its users search.

It also sells the use of its technology to companies who need to make either their websites, or their internal information systems, searchable.

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