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Transmeta: Got the Buzz, But Does It Have Legs?

Everyone knew that Transmeta would go public.

The company has been in the proverbial "stealth" mode. But when a company files for an IPO, everything is exposed. Now we can see the inner workings of Transmeta.

No date has been set on the offering, nor is there a price range. Although, expect the IPO to hit the markets in about two months. The lead underwriter is Morgan Stanley.

Interestingly enough, the company has the brainpower of Linus Torvalds, who created the Linux operating system. He is working on a variety of software projects for Transmeta. In fact, Transmeta is chock-full of highly talented individuals. Of the 138 employees, 44 have Ph.Ds.

What does Transmeta do? Basically, the company develops technologies for Mobile Internet Computers. Transmeta's line of microprocessors is called the Crusoe family.

However, the company has taken a unique approach to the design; that is, there is a heavy reliance on software solutions. By using fairly simple hardware configurations, Transmeta can optimize solutions for low power consumption, but still allow for high-speed performance.

The technology has been gaining lots of traction. For example, Transmeta has struck key OEM deals with Sony and Gateway.

But as expected, the financials are drenched in losses. In the first six months of 2000, the company had $43 million in net losses. Revenues were a mere $358,000.

Yet, the technology is definitely strong and, as a result, the IPO is expected to be very successful. But the fact remains that the company is competing with the behemoth Intel, which is a fierce competitor. In other words, there is lots of risk with the IPO and it would probably be a good idea to wait a while before considering it a buy.