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

Everyone knew that
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.

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