In a sign that Google Inc.'s (search) initial public offering will not be as hot as expected, the Internet search giant reduced the number of shares to be sold by insiders and slashed its estimated per-share price range.

The world's most popular search engine said it now expects its stock to trade between $85 and $95 per share, down from its old forecast of between $108 and $135. It also said the total number of shares to be sold will be cut to 19.6 million, down from 25.7 million.

The surprise announcement — made shortly before midnight Tuesday Pacific time in an e-mail to investors — dramatically changes the size of the offering. Instead of raising up to $3.6 billion, it will generate $1.86 billion if the final stock price is set at $95. And Google's market capitalization at $95 a share will be less than $26 billion, down from the original high-end estimate of $36 billion.

Wednesday morning, Google amended its prospectus to reflect the new numbers and make other adjustments.

The developments came less than a day after the Securities and Exchange Commission (search) did not grant Google's request for final approval of its registration before stock is sold — a normally routine process.

SEC spokesman John Heine declined to state the reason for the delay. Google spokeswoman Cindy McCaffrey declined to comment. In its amended prospectus, Google said the SEC had requested additional information on a new Playboy magazine article about Google.

Google's statement said it and its underwriters are requesting that the registration document be made effective at 4 p.m. EDT Wednesday.

At that time, the unusual auction Google is using to determine the actual IPO price is to close. Investors could be able to trade Google shares on the Nasdaq Stock Market as early as Thursday.

Some observers have questioned whether Google's triple-digit price estimate was realistic, given the rocky stock market conditions in recent weeks. Several companies, in fact, have delayed or abandoned plans to go public.

Thomas Hechtfisher, a lawyer with the Germany's DSW private investor association, said that the move "confirms the tendency of previous offerings, that the investors won't jump at everything."

But Google, until Wednesday, surprised many by bucking the market trends. In fact, it's repeatedly been a source of surprises since it announced its public stock offering in April.

It eschewed Wall Street tradition and decided that the final IPO price would be set by an auction. Its founders wrote an idealistic letter in its prospectus, outlining the company's "Don't Be Evil" mantra and plan to avoid the trappings of traditional companies.

Google also has been embroiled in controversies. It revealed that millions of its pre-IPO shares and options were issued to employees and contractors without being registered, prompting a SEC inquiry.

And Google founders Sergey Brin (search) and Larry Page (search) gave an interview that appeared in September's issue of Playboy magazine, a potential violation of the SEC's rules barring company officials from talking to the media prior to an initial public stock offering. That was the article that the SEC was requesting more information about.

Despite the missteps, few deny that Google is both very popular and prosperous.

Since it was founded in 1998 by Stanford University students Page and Brin, it has always been something of an oddball. Its design has no flashy ads but a simple, quick-loading layout. Its search algorithm out-powers rivals. Its name became synonymous with Internet search.

The Mountain View-based company, which makes money by selling unobtrusive text advertising, managed to prosper as a private company even while other dot-coms were collapsing. Now, as the technology industry is just recovering, Google stands to prosper even more.

In the second quarter of this year, for instance, Google earned $79.1 million, or 30 cents per share, compared with $32.2 million, or 12 cents per share, in the same period last year. Sales more than doubled, to $700 million in the latest period from $311 million last year.

Page, Brin, employees and other early investors stand to profit handsomely in the IPO — even with a lower anticipated price range.

In earlier filings, the company said the co-founders would each sell about 1 million of their shares, which would have generated $117 million for each based on the midpoint of the old range.

Now, according to Wednesday's filing, the two will each offer about 480,000 shares, which will be worth $43.2 million based on a final IPO price of $90, the midpoint of the new range.

According to Google's e-mail, pre-IPO shareholders expect to sell 5.5 million shares, less than half the 11.6 million originally planned. The company itself will sell 14.1 million shares, which is unchanged from previous filings.