Transmeta plans to offer 13 million shares to the public tomorrow. Despite IBM's decision last week not to use the company's Crusoe chip in its new ThinkPad 240, investor interest is so strong that Transmeta raised the expected offering price from $11-13 to $16-18. The company's low-power chip technology promises a new era in mobile computing, and Sony, Gateway, America Online and others agree, diminishing the importance of IBM's decision.
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Transmeta (proposed ticker of TMTA on the Nasdaq) plans an IPO tomorrow, expecting to market 13 million shares at between $16 and $18 dollars and raise well over $200 million. The Santa Clara, California chip designer has excited the semiconductor world with its Crusoe product family, designed to use less power through software to perform what millions of transistors do now. It snagged an $88 million round of venture capital financing in April but reportedly burned through $50 million in the third quarter, leaving $64.1 million in cash. The IPO is IPO timely. Hello Footprints in the Sand Transmeta trumpets the low-power Crusoe for the battery-powered mobile computing devices market. For example, the Crusoe is estimated to run a 3-pound laptop for 10 hours or more on a single charge. Brian Lund (TMF Tardior) looked at the technology and the company's position in August. Transmeta's Customers and Competition The media will react tomorrow if Transmeta's price shoots beyond the offering price. But Foolish investors should watch from the sidelines, shaking their heads. A rising price may mean that the investment bankers mispriced the deal and the company left valuable cash on the table. It can also mean that those who buy in a first-day run up get burned later. Better to wait, watch the company perform, read its SEC filings as it operates as a public company, and determine then whether it's a good investment. Does the Crusoe promise to revolutionize mobile computing? Or is Transmeta a one-trick pony? Jump in on the Semiconductor industry discussion board!
Until Transmeta unveiled the Crusoe in April, it communicated only with a picture on its Web page of footprints on an idyllic ocean beach and a written teaser. The industry buzzed about the new product because Linus Torvalds, inventor of the Linux operating system, participated in developing Crusoe, and Microsoft co-founder Paul Allen and financier George Soros's opened their wallets to the company.
Sony, NEC, Hitachi, and Fujitsu plan to use the Crusoe. But last Tuesday, IBM (NYSE: IBM) -- which manufactures the chip -- announced that it would not use the chip in its new Think Pad 240. Apparently this didn't dull investor interest, because Transmeta on Friday upped its offering price range from $11-13 a share to $16-18. With the other PC deals and Gateway's (NYSE: GTW) plans to power the America Online (NYSE: AOL) Web pad Internet appliance with the Crusoe, the IBM decision seems less important. Investors may also be discounting Intel's (Nasdaq: INTC) competing SpeedStep mobile computing alternative and its planned low-power XScale technology.
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