Thu Aug 19, 2004
By Nicole Maestri and Reed Stevenson

NEW YORK/SEATTLE (Reuters) - Shares of Google Inc. made their long-awaited stock market debut on Thursday, rising more than 20 percent to over $100 after an initial public offering marked by missteps and lackluster market conditions.

Google co-founder Larry Page and Chief Executive Eric Schmidt, guarded tightly by security, were at the Nasdaq stock market's broadcasting facility in Manhattan as the Web's most popular search engine began trading as a public company.

After ending its unconventional auction to price and sell the shares on Wednesday, Google sold 19.6 million shares at $85 each, raising $1.67 billion, the biggest IPO thus far by an Internet company.

The shares were at $102.01, up $17.01, or 20 percent, in afternoon dealings.

"There were a fair amount of institutional buyers that stayed out the auction but came in (today)," said Martin Pyykkonen, analyst at Janco Partners. "I see a floor in the $90s."

A few minutes before the shares officially opened for trading, the market saw a false start when the shares appeared to debut at $136. A Nasdaq official said this was the result of two trades that "should not have gone through."

Nasdaq declined to comment further.

On Wednesday, Google slashed the expected price range on the shares to between $85 and $95, down from a previous range of $108 to $135. It also cut the number of shares offered to 19.6 million from 25.7 million.

One fund manager said the lowered price might invigorate investor interest. He said he might buy Google shares in the next few days, depending on how they performed.

"At $108 to $135 a share, it was too expensive," said Douglas Wright, a portfolio manager for Britannic Asset Management in Edinburgh, Scotland. "But now we have a much more comfortable valuation."

ISSUES REMAIN

The pricing revision came as Google disclosed that the U.S. Securities and Exchange Commission had requested additional information about a recent Playboy magazine interview with the company's founders.

It was the latest hiccup for the unusual auction-based IPO.

Though Google confronted a jittery investor public -- about two-thirds of this month's IPOs have priced below their estimated ranges, according to Thomson Financial -- market conditions were not purely to blame.

Google has said the SEC staff intends to recommend the agency pursue civil penalties the company's general counsel. Further, the SEC has started an informal inquiry into Google's offer to buy back 23.2 million shares it may have issued illegally.

The company reiterated on Wednesday that it does not believe the Playboy interview violated U.S. securities rules.

Many investors said Google's initial price range was too optimistic. Some fund managers thought even the lowered price range was on the rich side.

Yahoo, seen as the closest comparable stock to Google, was down nearly 2 percent at $27.93 in afternoon Nasdaq trade.

Shares in smaller Internet search companies rose sharply, however. Mamma.com Inc. led the pack, up more than 12 percent at $5.91, having peaked at $6.43. FindWhat.com was up 2.6 percent at $14.21 after reaching a high of $14.85, and Ask Jeeves Inc. was down 6 cents after climbing as much as 3.5 percent. (Additional reporting by Alison Tudor and Bernhard Warner in London and Jonathan Stempel in New York)

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