Been lurking...interesting Place here
T
Its Stock Pressured, Transmeta Responds With New
Business
By Caroline Humer
Senior Writer
5/9/01 9:50 AM ET
While start-up chipmaker Transmeta (TMTA:Nasdaq - news) may continue to
see its shares pressured now that its initial public offering lock-up period has
ended, the company's product agreements this week are soothing some on
Wall Street.
After the lock-up expired on Tuesday, Transmeta shares declined by about
25%. And news that the company had scored some points in the U.S.
notebook and front-end server markets did little to help the stock. (The end of
a lock-up period means insiders whose shares were "locked up" for a period
of time after an IPO now can sell.) But by Wednesday, Transmeta's stock was
improving, adding $1.18, or 11%, to close at $12.35. And at least one analyst
said that the new agreements were an indication that Transmeta was chipping
away at the markets in which it's striving to become a player.
Transmeta is facing formidable competition from industry giant Intel
(INTC:Nasdaq - news), which in recent months has turned its attention to
low-power chips, Transmeta's specialty. It also has yet to ink a deal with a
major computer supplier in the U.S. like Compaq (CPQ:Nasdaq - news) or
Dell (DELL:Nasdaq - news). Transmeta itself says it could be difficult to crack
that market.
But Transmeta says it's trying.
On Monday, the company announced that it had signed a deal with notebook
giant Toshiba, which plans to use Transmeta's low-power chips for the first
time in its Libretto notebook in Japan. Transmeta makes semiconductors that
use less power than a standard microprocessor, which the company says
enables them to extend a notebook computer's battery life. The Toshiba deal
is expected to be followed by year-end by one in the U.S., where Toshiba is
one of the leading notebook sellers.
And on Wednesday Transmeta partner Casio announced that it will begin
selling in the U.S. by the end of May a version of its Cassiopeia notebook with
Transmeta's Crusoe chip. Transmeta already works with Casio in Japan. The
notebook will sell for just under $2,000.
Meanwhile, Transmeta is making inroads in the server market: Tuesday, it
announced plans for IBM (IBM:NYSE - news) to sell servers made by start-up
RLX Technologies that are based on Transmeta's Crusoe chips. The
company says that because its chips produce less heat, they can put more of
them in a smaller place and create a less energy-intensive, more powerful
server.
That last piece of news has analyst Brian Alger at Pacific Growth Equities in
San Francisco feeling good about Transmeta's ability to meet his revenue
forecasts of $87.6 million for 2001 and $222 million for 2002. His firm hasn't
done any underwriting for Transmeta.
"I'm much more comfortable with [the estimates] knowing that Big Blue will be
selling," Alger said. Start-ups like RLX, which was formed by ex-Compaq
executives, don't give Transmeta the same kind of exposure that an industry
giant like IBM can, he explained. |
