PeoplePC Puts Public Questions to Rest with $100M IPO Filing

Eschewing the speculative game of “will they or won’t they?” that typically follows a large Series C venture round, PeoplePC Inc. last week filed an initial public offering just five days after completing a $49.5 million private equity transaction.

The unusual move raised even more eyebrows due to the fact that the March 23 offering of emachines Inc., a PeoplePC competitor, has not fared terribly well in the public market. In fact, the stock’s first trade was below the $9 offering price, it peaked at just $9.50 and closed at $5.625 last Thursday. Ford Motor Co. led the recent venture funding, making a $24.65 million investment in exchange for 4,765,650 of Series C preferred shares and future stock considerations. The automobile maker also entered into a strategic agreement with PeoplePC, whereby qualified Ford employees will receive PeoplePC products and services. The issuer had entered into a similar agreement with Delta Airlines back in January.

The only other new institutional player involved in the deal was venture firm Rosewood Capital. The two new buyers were joined by existing investors Softbank Capital Partners, Maveron, Hambrecht & Quist and

Nexus Group.

San Francisco-based PeoplePC offers customers a brand-name personal computer, Internet access and other assorted e-goodies for a low monthly fee.

“One of the most significant things about this company is that they’ve approached the marketplace with a low-cost model rather than with a free business model,” said Dan Levitan, co-founder of Maveron. “I don’t believe that brands can stay sustainable and relevant to consumers on a free-model basis, and I think that some of the frothiness in the market recently is due to the fact that you can’t get something for nothing.”

The PeoplePC S-1 filing with the Securities & Exchange Commission indicates an estimated offering amount of $100 million with the underwriting syndicate being led by Goldman, Sachs & Co.

The company, which plans to trade on the Nasdaq under the ticker symbol PEOP, recorded a net loss for 1999 of $64,339.