Updated from 8:48 a.m. EDT

Hype isn't helping

Google

.

The search-engine giant, whose increasingly star-crossed IPO was expected to be sold to the public as early as Wednesday, instead slashed the deal's expected price range and halved the number of shares being offered by existing shareholders. The new parameters suggest Google is worth around $26 billion, not the $36 billion it was originally expected to command.

The development, announced early Wednesday in a

Securities and Exchange Commission

filing, confirms rumors that have been buzzing around Wall Street for days: that demand for the IPO is slack, and that the company's unconventional Dutch auction distribution system is complicating efforts to sell it.

The action also reflects the brutal market for technology stocks, particularly new ones. Since Google registered the offering with the SEC in late April, the

Nasdaq Composite

is down close to 10%, and a handful of IPOs have been delayed or withdrawn.

According to Wednesday's filing, the IPO's selling shareholders, a category that consists of ground-floor investors looking to cash out their stakes, will sell only 5.5 million shares in the deal, down from an originally planned 11.6 million. The new price range is $85 to $95 a share, not the $108 to $135 a share that was initially pegged.

The company itself still hopes to sell a little more than 14 million shares in the deal. If all the shares are sold in the new range, Google and its backers will raise about $1.9 billion, not the $3.6 billion they had originally expected.

Google also disclosed in the filing that the SEC wants more information on the interview that founders Sergey Brin and Larry Page gave

Playboy

in April. The company conceded in a previous filing that the article conceivably could

represent a violation of federal "quiet period" rules that govern pre-IPO promotion, although it said at the time -- and continues to maintain -- that the interview was kosher.

In an updated 10-Q also filed Wednesday, Google added an additional caveat, saying, "Management currently believes there is only a remote possibility that the ultimate outcome with respect to any such claim that might be made would materially adversely affect the operating results, financial position or liquidity of the company."

In the updated IPO filing, Google told prospective buyers that it has again requested the SEC declare effective the offering's registration statement, and that it will close the deal once that occurs. If all goes according to plan, the timetable could put Google shares in public hands as early as Thursday.

Late Tuesday, the SEC said it had made no decision on the registration statement.

Whatever happens, Wednesday's news will be read as a blow to Page and Brin, whose personal, paper fortunes suffer real-time hits commensurate with the lowered price range. The hangups are also fodder for those on Wall Street who believe Google should have gone public through a conventional underwriting, in which demand is calculated and filled by investment bankers, not an auction.

The snafu took a toll on other publicly traded Internet shares.

Yahoo!

(YHOO)

was recently off 54 cents, or 1.9%, to $27.80,

eBay

(EBAY) - Get Report

fell 82 cents, or 1%, to $78.75, and

Amazon.com

(AMZN) - Get Report

dropped 48 cents, or 1.3%, to $37.75.

Google and its underwriters had asked regulators to declare the then-$3 billion initial public offering effective Tuesday so that pricing could take place as soon as Tuesday evening.

But regulators made it clear they weren't moving the IPO along Tuesday. "As of the close of business today, the registration statement had not been declared effective," an SEC spokesman told

TheStreet.com

.

A Google representative wasn't immediately reachable late Tuesday.

The news comes as the IPO process enters its final phase. Late last week, Google opened bidding under an unusual Dutch auction system that will have investor demand setting the price of the deal. The company then surprised observers by reissuing its IPO documents to include the text of the

Playboy

magazine interview.

The company also revealed Monday that the SEC and state regulators are probing some $26 million in stock and stock options paid to employees.

Google has been the top tech story of the year, what with its household name and strong growth in the hot paid-search business. Still, some investors have questioned the company's prospects in a fast-evolving, hypercompetitive business full of deep-pocketed competitors.

At the time of publication, Mannes had no positions in stocks mentioned, but he has placed a bid in the Google IPO for the purpose of reporting on the auction process.

TheStreet.com

has waived the provision of its Investment Policy with respect to Mannes' ownership of the stock solely for the purpose of writing stories on Google's IPO. If Mannes' bid is accepted, he has agreed to sell his shares as soon as possible following his brokerage firm's 30-day "no-flipping" window for initial public offerings. As the situation warrants, he will be reimbursed by

TheStreet.com

for any losses, or donate any gains to a charity to be named later.