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Tech Cash Slashed? Learn From Google

Ever get that sinking feeling after the bean counter has come into your office to tell you about the slash in your IT capex budget?

Google's having that kind of day. The company's feeling the IPO pinch after filing SEC forms today, revealing its newly lowered IPO expectation to sell a total of about 21 million shares at a price range of $85 to $95 each. (Google's latest filing is here.)

That puts a serious dent in the size of the IPO. As now proposed, the IPO would raise as much as $1.9 billion at the top end of the proposed price range, down from $3.5 billion if the shares had priced at the previous range of $108 to $135 per share.

The reduction in shares comes mostly from insiders, including CEO Eric Schmidt and co-founders Larry Page and Sergey Brin, who cut the number of shares they plan to sell in half, from 11.6 million to 5.5 million. Google itself still plans to sell about 14 million shares.

But here's the question, as raised by some of our topnotch Wall Street sources: Now that those insiders have scaled back their selling plans for the IPO, doesn't that just leave more of them to dump after the issue starts trading? Many of these shares will be locked up against selling for some time, but Google's lockup expiration is laxer than most IPOs, with the first lockup period expiring a mere 15 days after the IPO starts trading. The most skeptical sources we spoke with are raising eyebrows at this, wondering how this reduced IPO will perform in the aftermarket with a insider overhang such as this.

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