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updated 8/9/2004 1:33:16 PM ET 2004-08-09T17:33:16

Tensions are rising among some underwriters of Google's controversial initial public offering, making it more likely that the unusual stock sale's terms will be revised.

Some of the underwriters privately argue that the offering should even be delayed or restructured to make it appeal to a broader group of investors.

However, the internet search engine and its lead banking advisers, Credit Suisse First Boston and Morgan Stanley, have given no indication that they are reconsidering.

Google's insistence on setting the price for its shares using an auction system has left many professional investors wary that the stock will fall once trading on Wall Street begins, according to two people close to the process.

The company has said it expects to set the highest price possible under the auction something that it has warned may leave no room for the shares to rise further in the stock market, at least in the short term.

Some of the biggest institutional investors have indicated informally that they do not intend to bid for Google shares in the auction, one person close to the process said.

He added, though, that this might amount to gamesmanship, as potential investors try to talk down the eventual sale price of the shares.

Series of setbacks
A series of setbacks in recent days has added to the tensions among those responsible for making Google public.

A technology problem prevented Google opening on time a Web site, where institutional investors could register to bid delaying the issue by nearly a week.

As a result, the auction is not expected to be held until next week even though the second half of August is traditionally a very quiet period for the stock market.

This, along with a lukewarm response to presentations given by Google management during its "roadshow" with institutional investors over the past two weeks, was likely to lead to weakened demand for the stock, one person said.

Meanwhile, regulators in Google's home state of California said last week that they were investigating the company's failure to register shares issued under its employee stock options plan with the Securities and Exchange Commission.

Although widely seen as a little more than a technical glitch, this has added a new element of uncertainty to the timing of the offer.

In another possible sign that early interest in the IPO has been low, the Web site for private investors to register for the IPO remained open on Sunday, nine days after it was first opened.

Google had indicated that the Web site would remain open for about a week, although the company did not commit itself to a firm timetable.

© The Financial Times Ltd 2010. "FT" and "Financial Times" are trademarks of the Financial Times.

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