PeoplePC Reports First Quarter 2002 Financial Results

Business Wire, May 1, 2002

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--May 1, 2002

PeoplePC Inc. (NASDAQ: PEOP), today announced financial results of the first fiscal quarter, 2002.

First Quarter Results

PeoplePC reported total net revenue of $48.0 million compared to $37.3 million in the first quarter of 2002. Operating expenses decreased by 65% to $13.2 million compared to $37.7 million a year ago. This improvement reflects the aggressive cost-cutting measures the company took throughout the previous year.

The Company reported a net loss of $8.8 million, or $0.03 per basic and diluted share, compared to a net loss of $36.2 million, or $0.33 per basic and diluted share, in the first quarter of 2001. Excluding non-cash charges for the amortization of deferred stock-based compensation, the Company's net loss was $7.0 million, or $0.02 per basic and diluted share, versus $30.4 million, or $0.28 per basic and diluted share, in the first quarter of 2001. PeoplePC reported a gross profit of $4.2 million versus a gross loss of $603,000 in the same quarter last year.

As of March 31, 2002, the company had cash and restricted cash of approximately $13.7 million and $5.7 million in accounts receivable.

Total PeoplePC membership at the end of the first quarter 2002 increased to 588,000 members compared to 496,000 members at the end of the first quarter 2001.

Program agreements that were signed in the U.S. and United Kingdom during the first quarter include:

-- Go to PeoplePC's home page: www.peoplepc.com.

-- Click on "About Us" at the bottom of the page

-- Click on "Media and Investor Relations" on the sidebar of the page

-- Click on the "Live Webcast" icon

PeoplePC also signed several other private label Internet access program agreements in the U.S., which have yet to be announced, including an agreement with a leading online ethnic community portal and an agreement with a diversified media and services company.

In other news, the Company's Board of Directors elected two new members to the board, Robin Richards and Lee Feldman. Robin Richards, 46, is the Chief Executive Officer of Vivendi Universal Net USA, where he oversees six Internet sites including MP3.com, GetMusic.com and Education.com. Before that, he served as director and President of MP3.com, Inc. Mr. Richards received a Bachelors of Science degree from Michigan State University.

Lee Feldman, 34, is a Partner at SOFTBANK Capital Partners. He has extensive experience in corporate/business development, mergers and acquisitions and corporate finance. Before joining SOFTBANK, Lee was the Vice President of Corporate Development at Ziff-Davis. He received his BA and JD from Columbia University.

The annual meeting of stockholders of PeoplePC will be held May 31, 2002 at 11 a.m. PDT, at the Hyatt Regency, 5 Embarcadero Center, San Francisco, California.

Quarterly Conference Call

PeoplePC will be holding a conference call with investors today, May 1, 2002 at 2 p.m. PDT or 5 p.m. EDT. To access the call live over the Internet:

-- Go to PeoplePC's home page: www.peoplepc.com.

-- Click on "About Us" at the bottom of the page

-- Click on "Media and Investor Relations" on the sidebar of the page

-- Click on the "Live Webcast" icon

Listeners should sign on five minutes before the broadcast starts to allow time to download the media software.

About PeoplePC

PeoplePC is the leading global provider of complete Internet access solutions, enabling its partners to reduce costs, generate revenues and deepen relationships with their constituencies. It works with ISPs, employers, membership organizations and individuals. PeoplePC's Custom Connections service is built on a high-quality dial-up network, aggregated through relationships with a dozen major telecommunications providers. The service has a number of tiers of customization: (i)billing management and customer care;(ii) branded or private label email and online experience;(iii) a suite of Customer Relationship Management tools;(iv)PC and other hardware options. PeoplePC's clients include some of the world's largest corporations such as The Ford Motor Company, Delta Air Lines, Vivendi Universal; and some of the most powerful affinity groups, including AAA and VFW.

For more information, visit http://www.peoplepc.com.

The 2002 financial information provided above is based upon preliminary, unaudited financial results.

This press release contains forward-looking statements that are subject to the assumptions, risks, and uncertainties discussed below. Actual results may vary from those projected in the forward-looking statements. If the company's assumptions about the future do not materialize or prove to be incorrect, the company's results could differ materially from those expressed or implied by such forward-looking statements. A forward-looking statement is any statement that looks to future events, including any projections of earnings, revenues, or other financial items; any statements of plans, strategies and objectives of management for future operations including the company's plan to achieve profitability, through various strategic initiatives; any statements regarding proposed new products, services, business opportunities, or developments; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing.