EarthLink To Acquire PeoplePC

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Internet service provider EarthLink Inc. said yesterday it has agreed to buy PeoplePC Inc. for 1.71 cents per outstanding share or $10 million.


According to EarthLink, Atlanta, pre-closing adjustments to the purchase price could raise the price to 24.5 cents per share or $14.3 million.


The deal is expected to close in the third quarter.


EarthLink will assume approximately $35 million in deferred service liabilities to PeoplePC subscribers who purchased pre-paid Internet access services along with a personal computer as part of a bundled package.


The deal is expected to bring 60,000 paying monthly subscribers to EarthLink and about 500,000 pre-paid monthly subscribers.


PeoplePC, San Francisco, in May reported net revenue of $48 million for the first quarter of 2002 compared to $37.3 million in the first quarter of 2001.


The company reported a net loss of $8.8 million or 3 cents per share in the first quarter of 2002, compared to a net loss of $36.2 million or 33 cents per share, in the first quarter of 2001.


As of March 31, PeoplePC said the company had cash and restricted cash of approximately $13.7 million and $5.7 million in accounts receivable.


EarthLink says it has 4.9 million subscribers. It also claims on its home page that it is actively looking to acquire ISPs and offers a link to a form for would-be suitors.


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