Corel IPO stumbles out of the gate

The maker of WordPerfect and CorelDraw, which priced its IPO at $16, saw shares open at $15.36. The reaction from investors may not come as a surprise to Corel.

The company on Tuesday had lowered its pricing range to $16 to $18 a share, from its initial range of $18 to $20. Companies often do that when investor interest in their IPO is lacking. Analysts note it's hard to recover from such a move.

"It's not good. Historically, it's hard to make up ground," said Richard Peterson, a senior researcher at Thomson Financial. He noted that Corel was off by 20 percent from the high end of its initial pricing range.

Corel, however, is not alone. This year, more than half of the 53 IPOs that debuted were priced below the high end of the pricing range, Peterson said.

That said, however, only four companies that launched an IPO at the low end had amended their pricing range.

Corel sold 5 million shares in the offering, raising $80 million for the company. Its existing investors sold 1.5 million shares, allowing them to collect $24 million.

Vector Capital Group, which took Corel private in 2003 at a value of $97.6 million, will retain a 72 percent investment stake in the company after the IPO. Its previous stake was nearly 95 percent.

Vector will not only recoup some of its investment from selling its Corel IPO shares, but the investment firm will also sell one of its portfolio companies, WinZip, to Corel as part of the IPO transaction. Under this deal, Vector will not only receive roughly 4.3 million shares of Corel, but also have $19.2 million in WinZip debt paid by Corel, according to Corel's IPO filing with the Securities and Exchange Commission.

"That's a lot of moving parts," Peterson said.