Transmeta raises $273 m. on Wall Street

Transmeta, which hopes to give Intel a run for its money with a low-power

consuming, Linux software-driven microprocessor, took to Wall Street on Election

Day 2000. Investors voted strongly in favor of the company, sending its stock

soaring from an opening bid of $21 to $44.88 per share and reaching $50.88 at

one point. Transmeta raised $273 million in the initial public offering.

Going public, besides raising the much-needed start-up financing resources,

will help boost global visibility for the company and its Crusoe processor. The

chip is targeted at notebook and other non-desktop-based computer device

markets, including the emerging wave of new Internet appliance devices.

Analysts said the stock would likely have done better still if IBM had not

announced last week that it had abandoned a program to bring a Crusoe-based

ThinkPad 240 computer to market. IBM apparently was unable to achieve the

hoped-for 8 hours of battery life, more than double that of most of today's

notebooks. Reportedly, IBM achieved only a 10-20 per cent increase in battery

life over models driven by competing Intel chips.

Analysts said that despite the IBM disappointment, investors snapped up

Transmeta stocks simply because there are so few new microprocessor investment

opportunities around. And even modest success in the microprocessor market can

generate substantial sales and profits.

Other potential major customers for the Crusoe remain committed to using the

chip, whose software was developed by Linus Torvalds, father of the Linux

operating system. They include Sony, Fujitsu and NEC who use Crusoe chips in

ultralight laptops. Gateway also plans to use the Crusoe in Internet appliances

being developed jointly with America Online.

And reportedly Microsoft Chairman Bill Gates will open the Comdex show in Las

Vegas on Sunday by demonstrating a tablet-size wireless computing device powered

by a chip from Transmeta. The demonstration would be a major coup for Transmeta.

Microsoft will make the device's architecture available as a standard to other

manufacturers. While manufacturers will have a choice of microprocessors to

choose from, a proven design, supposedly certified by Microsoft will likely

drive design wins for this and similar devices towards Transmeta.

At $44.88, Transmeta achieved an initial market value of $5.8 billion. The

company's sales are projected to reach $5 million this year. The firm has lost

$71.5 million so far this year on sales of $3.8 million. The Crusoe chip was

launched only a few months ago and most sales have been from small-volume sample

deliveries. Those volumes are certain to pick up in 2001 as many Transmeta-based

devices, many under development in Taiwan and other Asia Pacific areas, reach

the market.