Google gouges IPO share price

Google on Wednesday reduced the price range for its long-awaited initial public offering to between $85 and $95 per share, and lowered the number of shares being sold by company executives.

The changes cut the value of the company by almost 30 per cent - to $25.8bn - compared with the high end of its initial pricing range of $108 to $135 a share.

The initial range was considered high by typical IPO standards.

David Menlow, president of IPO Financial Network, said: "As far as I'm concerned, it wasn't priced low enough."

The IPO would have raised as much as $3.5bn under the earlier range; that figure is now down to $1.9bn.

The numbers of shares offered has also dropped from 11.6 million to 5.5 million. Several executives, including company founders Larry Page and Sergey Brin and Chief Executive Eric Schmidt, cut in half the number of shares they will offer.

And some insiders, including well-known investors John Doerr and Michael Moritz, have been cut out of the IPO entirely.

The company has asked the Securities and Exchange Commission to make its registration statement effective as of 1 pm PDT on Wednesday. That could have the company trading publicly as early as on Thursday.

Google priced the shares in a rare auction-style IPO. The deal promised to put more shares in the hands of ordinary investors rather than wealthy investment banking clients. The auction was also widely seen as a slap at Wall Street and the clubby culture that contributed to investigations into improper IPO trading activities at the height of the dot-com bubble.

In a recent poll of silicon.com readers, 85 per cent of respondents said they wouldn't buy Google shares at the original price range of $108 to $135 - either because they were just too expensive or because they think all internet companies are a bad investment right now. Ten per cent said that was a fair price range and a mere five per cent said they'd pay even more.

Dawn Kawamoto and Stefanie Olsen write for CNET News.com