Orbitz Revives IPO as Fog Clears

Times Staff Writer

Grounded for months by a bad financial climate, Orbitz Inc.'s IPO has been cleared for takeoff.

The Chicago-based online travel company filed an updated registration statement Wednesday to raise up to $303.6 million in an initial public offering that was originally proposed in May 2002.

The company, which plans to sell a 28% stake, is jointly owned by the nation's five largest air carriers: AMR Corp.'s American Airlines, UAL Corp.'s United Air Lines, Northwest Airlines Corp., Continental Airlines Inc. and Delta Air Lines Inc.

Unlike plenty of companies that went public during the dot-com craze, Orbitz is making a profit, despite a slump in travel. The third-largest online travel merchant, after Expedia Inc. and Travelocity.com, Orbitz posted $3.9 million in net income on revenue of $64.4 million for the quarter ended Sept. 30.

In 2002, it lost $17.9 million on $175.5 million in revenue. Since its founding in February 2000, the company has lost $169 million on $391 million in revenue from booking 22 million travel and hotel transactions.

Orbitz executives declined to comment on the revived IPO, citing a quiet period required by the Securities and Exchange Commission. The offering coincides with a stock market upturn that has lifted the Nasdaq composite index 46% this year amid renewed demand for many dot-com names.

"This market is alive," said John Fitzgibbon, an IPO analyst with 123jump.com, an online news service. "We've had a great run in the Nasdaq, which quite frankly is a barometer of the IPO market. About 75% of IPOs are traded on the Nasdaq."

Besides Orbitz, 17 companies are scheduled to go public in December, Fitzgibbon said. That compares with just 10 companies in the entire first half of 2003.

More recently, RedEnvelope Inc., a San Francisco online luxury gift shop, raised $30 million in September, and IPass Inc., a Redwood Shores, Calif., company that sells wireless networking software, raised $98 million in July.

On tap for next month are Ctrip.com International, a Chinese travel site, and Provide Commerce Inc., a San Diego online merchant that sells flowers, produce and meat.

Orbitz would be the largest consumer-oriented Internet IPO this year. But its magnitude could be eclipsed if Google Inc. entered the market. The popular Mountain View, Calif., Internet search company has long been rumored to be considering an IPO. A Google spokesman declined to comment.

Still, the dot-com bust of 2000 has left many market watchers wary.

"Just because one IPO does well, that does not become a bellwether for all IPOs to come afterwards," said Gail Bronson, an independent securities and IPO analyst in Palo Alto. "You have to look at each stock in each company separately."

Bronson noted that many companies set their IPOs in December to take advantage of market rallies that often occur at the end of the year.

"Orbitz is clearly hoping to get a share of the Santa Claus rally," Bronson said.



Net gains

Many Internet-related stocks have been market stars this year as they have bounced back from sell-offs. A sampling:

*--* Wed. YTD Stock close change Ask Jeeves $18.99 642% InfoSpace $25.58 203% Amazon.com $52.96 180% Yahoo $43.08 163% Digital River $22.98 92% FindWhat.com $14.92 87% United Online $18.17 71% DoubleClick $9.45 67% EBay $55.60 64% InterActiveCorp $32.20 40% S&P; 500 $1,058.45 20%


Sources: Bloomberg News, Times research

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