Aug. 19 (Bloomberg) -- Google Inc.'s shares may rise from their initial price of $85 when they open on the Nasdaq Stock Market today, according to futures contracts traded through Cantor Index and IG Index in London.

The contracts show that the stock, sold yesterday at the bottom of a price range the company had sought in its initial public offering, may rise as high as $90.

``I expect to see an increase at the start of trading, and there will be a lot of people taking advantage of the volatility,'' said Todd Everts, chief executive of Wallstreet Global, a securities brokerage in Hong Kong.

Google, which runs the world's most-used Internet search engine, and investors yesterday sold 19.6 million shares for $1.67 billion in the biggest auction-style IPO.

The Mountain View, California-based company originally sought $108 to $135 a share. Yesterday, the company cut the size of the sale in half by lowering the range to between $85 and $95 and reducing the number of shares offered.

``There was not much interest at the beginning, but since the humiliating price cut yesterday, we are seeing a rise in interest,'' said John Austin, manager of the futures desk at IG Index.

Google's failure to get the price it initially suggested reflected difficulties with the IPO, including missteps by its executives that prompted probes by the Securities and Exchange Commission.

Billionaires

The company sold the shares through an auction that challenged the way Wall Street firms handle IPOs and failed to win support from some institutional investors. At least 18 other companies canceled IPOs this month amid a drop in computer- related stocks.

``Investors may have been scared off because the initial pricing range was so outrageously high,'' said Jim Lyon, a money manager at Oakwood Capital Management in Los Angeles. His firm oversees about $400 million.

The sale was the biggest IPO for a Web company in four years and gave Google a market value of $23 billion. Founders Larry Page, 31, and Sergey Brin, 30, hold stakes valued at $3.28 billion and $3.27 billion, respectively. Chief Executive Eric Schmidt's 6.1 percent stake is valued at $1.25 billion.

Google, employees and investors sold a 7.2 percent stake. They reduced the number of shares for sale by 24 percent, from 25.7 million. The company sold 14.1 million shares, valued at $1.2 billion, and shareholders sold 5.5 million, valued at $464.3 million.

Google spokeswoman Cindy McCaffrey didn't return calls to her office and cell phone.

Fees

Google's 28 underwriters were led by Morgan Stanley and Credit Suisse First Boston. Fees may be as much as $65 million, Google said in an SEC filing yesterday. The total equals 3.2 percent of a share sale that may raise as much as $2 billion once additional stock is sold.

Twice this month, the company told shareholders in filings with the SEC that it may have run afoul of securities laws.

On Aug. 4, Google said it failed to register 23.2 million shares distributed to employees and consultants. The company offered to buy back the shares and Monday said the SEC was investigating the matter.

Google yesterday said the SEC was investigating whether an interview with Page and Brin in Playboy magazine might have violated disclosure rules. Most companies observe a so-called quiet period before a share sale to avoid suggestions they improperly promoted shares before an offering.

Brin and Page

Google employees sold fewer shares than planned, while venture-capital investors, including Kleiner Perkins Caufield & Byers and Sequoia Capital, didn't sell any of their stock.

The share price announced yesterday makes Google's IPO the second-biggest by an Internet company after the $1.9 billion offering by Genuity Inc. in 2000. Genuity filed for bankruptcy in November 2002.

Brin and Page, who started the company as Stanford University doctoral candidates in 1998, tried to challenge Wall Street's traditional method of managing IPOs. They departed from the practice in which securities firms assess demand and award shares, often to favored clients who can reap the benefits of price increases in the first days of trading.

Three of the 31 original underwriters, including Merrill Lynch & Co., dropped out of the offering before the auction started.

Dutch Auction

Google's so-called Dutch auction let investors submit bids over the Internet, fax and telephone, a method it said would let small investors get more shares and set a stable price.

Investors including Thomas Wyman, who helps manage about $500 million at Husic Capital Management in San Francisco, said the company didn't promote the auction adequately. At a presentation at the Waldorf-Astoria hotel in New York last month, more than a third of 1,200 seats in a meeting room were empty.

Google sold Class A shares that carry one vote each. Brin and Page hold Class B shares, having 10 votes each.

Google is going public with a higher market value than Amazon.com Inc., the world's largest online retailer, valued at $16 billion, or IAC/InterActiveCorp, the world's largest online travel company, valued at $16.4 billion.

Growth

The price tag partly reflects Google's growth. Net income more than doubled to $143 million, or 54 cents a share, in the first half from $58 million, or 23 cents, in the year-earlier period, the company said in SEC filings. Sales also more than doubled.

The sale values Google at 118 times its earnings for the past 12 months, compared with a price-to-earnings multiple of 114 for Yahoo! Inc., the second-most used search engine, and 78 for EBay Inc., the largest online auction site. The price values Google at 10 times the $2.3 billion in revenue it recorded in the past four quarters.

Yahoo has $38.7 billion in market value and EBay has $52.8 billion.

To contact the reporter on this story: Brett Cole in New York at coleb@bloomberg.net; Adam Steinhauer in San Francisco at asteinhauer@bloomberg.net.

Last Updated: August 19, 2004 08:08 EDT