NEW YORK, Aug 11 (AFP) - Technical concerns, criticism of stock auctions and high prices have clouded Google's initial public offering, expected to bring juicy returns to creators of the world's most-celebrated Internet search engine.
Although the IPO is expected soon, Google may not be posted on the Nasdaq until the second half of August. There are problems with a website registering buyers as well as a lack of interest, according to analysts, for such a high-priced stock.
"They've excluded everyone but the institutional investors," The New York Times quoted one top representative of the high-tech industry as saying.
Google plans to offer the public 24.6 million shares, or about nine percent of its capital.
The anticipated price is between 108 dollars and 135 dollars a share, but the bidding will ultimately determine the price.
"Five years ago you would have sold anything at that price but the market is more skeptical today," said George Perry, a stock market specialist with the Brookings Institution. "Such a price requires a lot of optimism about future earnings."
However, according to David Menlow, who represents IPOfinancial.com, the main concern is keeping up interest in the offering once the auction gets underway.
"I don't believe that the institutional investors are willing to participate because it's an auction based at a very high price," the analyst pointed out.
Larry Page and Sergey Brin, the men who created Google in 1998, have stuck with the auction, bypassing investment banks, which were tainted recently by corporate scandals.
They believe auctions are synonymous with shareholder diversity. Because an auction sells to the highest bidder, it avoids the phenomenon of selling shares at a low initial price, just to watch them quickly resold at a higher price by turnover artists, a phenomenon witnessed frequently in the 1990s.
However, the owners' good intentions have revealed pitfalls unforeseen in April, when the IPO was announced.
"The bad luck for them is to run into a weak market; that reduces the enthusiasm," Perry continued.
Faced with skyrocketing oil prices and a weak job market, the stock market plunged to its lowest level in months on Friday.
The Nasdaq, which Google expects to call home, is loaded with technology stocks and plummeted to its lowest level since August 2003.
Was it a bad omen? On August 3, nanotech firm Nanosys, another rising star of Silicon Valley, suspended its IPO, citing poor market conditions.
According to Menlow, it is unlikely that Google will back off from its auction or even lower its target price.
However, "if the bids are lower, the company doesn't have to accept it," the analyst observed.