For what it is worth, I shorted a little Transmeta this (Wednesday) afternoon at 44 1/4. Why would I short such a great prospect, you might ask? (And, BTW, I'm not the type of person who normally goes short).
It would appear (as many have stated) that this entire TMTA business is a lot of hype. It is very cool that they made a chip that successfully "code morphs," but is it cheaper to make than a comparable performance chip? Hell no (Intel/AMD will get you more bang for the buck). Is it cheaper than a comparably low-power chip? Hell no (there are other low-power chips, like StrongARM--they just aren't x86 compatible or as powerful). Is is cheaper than a comparably low-power chip if you take performance into account? Maybe, for now, but we'll have to wait for some weird benchmark to compare this relatively unimportant point. Low performing chips (even if low power) are not the sorts of chips that are going to bring in high margins, and with the trickle-volume Transmeta has now, low margin * low volume = low cash flow.
But that's not my main gripe. My main gripe is the valuation of the company. It now has a market cap of 5.82 billion dollars. Compare that to, say, AMD, with a market cap of 6.75 billion. Is TMTA comparable to AMD? Well, in some respects, but not market cap! Christ, AMD owns a couple fabs and ships a whole hell of a lot more chips than Transmeta will in the next few years (and has many more employees to boot, although there are many ex-AMDers are at Transmeta).
I consider the current price of TMTA to be best case. That doesn't mean it won't pop higher (and which time I double down), but in the long run, I expect it'll be lower. Being chicken, I will probably cover at 30 just to be safe, but I think even the IPO price was generous for this toy-chip company.
Just my opinion,
Steve |
