Orbitz, A Busted IPO Out Of The Chute? (OWW, BX, TZOO)

Orbitz Worldwide Inc. (NYSE:OWW) came public as planned, but so far that is the only good news.  This was an anticipated IPO as the company used to be public, but most shareholders knew that the IPO commitment money was just going to Blackstone Group (NYSE:BX) to let Schwarzman do more things to garner negative press.

Shares opened under the $15.00 pricing and have traded as low as $14.25 so far in early trading on more than 4 million shares.  That makes this a busted IPO by definition right out of the chute.  What is even more disappointing is that Orbitz priced under the initial $16.00 to $18.00 range.  That doesn’t mean the IPO will stay a busted deal as it is impossible to know if this closes up or down on the day. 

The weakness in Travelzoo (NASDAQ:TZOO) and the new 52-week lows there probably isn’t helping either.  Orbitz priced under the $16.00 to $18.00 range at $15.00, and based on the initial reaction after the open it would appear that the IPO subscribers wished this one priced even lower.  These private equity firms may need to start letting at least a portion of IPO proceeds go to the underlying companies rather than going to pay back debt and pay a one-time looting dividend all to themselves.

Jon C. Ogg
July 20, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.