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Google slashes IPO price range

Google announced in April its plans for an initial public share offer.

NEW YORK (CNN) -- Google has slashed the price range for its initial public offering by more than 20 percent, suggesting there is much less demand than projected for the widely anticipated debut of the search engine's stock.

The company also said Wednesday its existing shareholders would be selling significantly fewer shares to the public because of the lower price.

The moves came the day after the Securities and Exchange Commission declined to declare the registration effective, as Google had requested. An SEC official would not say why the agency had not signed off on the IPO.

But Google, in an SEC filing early Wednesday, said the agency had requested additional information about the publication of an interview with the company's two founders in Playboy magazine.

Google continues to insist it did not believe the interview, conducted after the company announced plans for the IPO, was a violation of securities law, and it said it would fight any such finding by courts.

But it said it did list the article as a risk factor for the IPO that could force it to repurchase shares from investors, the same boilerplate warning it gave in an SEC filing Friday.

In a statement on its IPO Web site, Google said it had asked the SEC to declared the offering effective as of 4 p.m. ET Wednesday.

The company said the offering price was now expected to be between $85 and $95 per share, rather than the previously announced range of $108 to $135.

Google also said that selling shareholders are reducing the shares they expect to sell to about 5.5 million shares, well below the 11. 6 million shares they originally expected to sell.

The company itself is still selling 14.1 million shares, but the lower price means that the offering will now raise $1.2 billion to $1.3 billion for the company, rather than the $1.5 billion to $1.9 billion previously expected.

One analyst following Google's stock offering said investors should not read anything into the latest delay, but a lawyer specializing in IPOs said the delay may indicate a problem.

"There's nothing that mandates the SEC had to comply with the request in the timetable expected by Google," said Scott Kessler, an equity analyst with Standard & Poor's.

Kessler added that the SEC may just simply be taking extra care in going through the details of approval since the offering was being so widely scrutinized.

"There is a lot of pressure on the SEC to ensure that this process is in full compliance with all governing rules and regulations. As high profile as this offering is, it puts a substantial onus on the SEC, so that's why it might be taking more time than expected," he said.

The setbacks are the latest in a series of strange twists and turns in the IPO process for the No. 1 Internet search engine, which filed to go public in April.

At the time, Wall Street raved about the company's leading position in the hot market for search-based advertising and marveled at its sales in the last few years. But in recent months, the enthusiasm waned.

There was a fair amount of confusion surrounding the controversial Dutch auction process the company chose to sell its shares. Google has also warned that it may have violated securities laws by failing to properly register shares and options it awarded to current and former employees.

In addition, Google, based in Mountain View, Calif., is going public when investors are worried about a possible slowdown in tech spending in the second half of the year. Internet stocks in particular have been hit hard due to concerns about their heady valuations.

Once the company begins trading, it will do so under the ticker symbol GOOG on the Nasdaq.

CNNfn's Chris Isidore and Paul LaMonica contibuted to this report.

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