PeoplePC continued to slide in its second trading day, falling 1 15/16, or 22 percent, to 6 15/16 after opening at $10 a share Wednesday.
PeoplePC (Nasdaq: PEOP) closed off 1 1/8, or 11 percent, to 8 7/8 in its debut. The 8.5 million-share offering had been delayed for several weeks.
It finally priced at $10 a share after having its terms changed twice.
PeoplePC originally planned to offer 11.5 million shares priced between $13 and $15, to an offering of 8.5 million shares for between $10 and $12 each. PeoplePC is backed by Softbank, a ZDNet investor.
The company's business model doesn't look promising considering its similarity to rivals eMachines (Nasdaq: EEEE) and NetZero (Nasdaq: NZRO).
PeoplePC's heavy losses and big marketing budget will force it to raise cash about a year after its IPO. For 1999, PeoplePC had sales of $3.4 million and a net loss of $66.3 million. For the six months ended June 30, it had sales of $18.9 million and a net loss of $107 million. For the six months ended June 30, the company incurred $67.9 million in sales and marketing expenses.
The company has garnered a lot of media attention by inking deals with Ford Motor (NYSE: F) and Delta Airlines (NYSE: DAL); but PeoplePC reveals in its regulatory filings that it isn't making money off these pacts. PeoplePC subsidizes the Ford and Delta deals more than it does its service to individuals.
PeoplePC sells Internet access and PCs to "members" for $24.95 a month, hoping they will become lifelong customers and buy from partners. PeoplePC will make up the difference via high-margin buying clubs and merchant deals.
Chase H&Q, Robertson Stephens and J.P. Morgan are the deal's underwriters.
• The Day Ahead: PeoplePC faces stiff odds>