After pricing late yesterday at $10, the shares rose slightly in early trading before slipping to $8.88 at the close of regular trading.
"It wasn't a surprise to us," IPO Financial president David Menlow said of the shaky performance. "We were calling for a flat opening on the stock."
Last night, San Francisco-based PeoplePC raised $85 million through the sale of 8.5 million shares at $10 each.
The sale came after the offering was cut last Friday in both size and price. Menlow and other IPO analysts saw the reduced offering terms as a strategic move.
PeoplePC initially sought to raise about $160 million through the sale of 11.5 million shares at a range of $12 to $14. The company cut the size of its deal last Friday after it delayed its pricing Aug. 9.
For $24.95 a month, PeoplePC supplies customers with a new computer, unlimited Internet access, an email account and a personal Web site. Other Internet service providers, such as EarthLink Network and America Online, offer similar services at a slightly lower cost, but without the free computer.
Earlier this year, the company announced contracts to supply thousands of employees of Ford and Delta with computers. Under the deals, employees can buy computers through affiliate programs, with the employers subsidizing part of the PC costs.
From its founding in March 1999 through Dec. 31, PeoplePC lost $66 million on a revenue of $3.4 million. The company lost another $107 million during the first six months of this year on revenue of $18 million.
Chase Hambrecht & Quist handled the sale.