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Transmeta could wake up moribund IPO market

After nearly a month of quiet, the market for initial public offerings should pick up next week with the public launch of two companies: chipmaker Transmeta and fiber-optics upstart Luminent.

After nearly a month of quiet, the market for initial public offerings should pick up next week with the public launch of two companies that are generating a lot of buzz: chipmaker Transmeta and fiber-optics upstart Luminent.

 IPOs on tap
Transmeta
Ticker: TMTA
Business: PC chipmaker
Web site: www.transmeta.com
Lead underwriter:
  Morgan Stanley Dean Witter
Pricing range: $16-$18
Recent Transmeta news

Luminent
Ticker: LMNE
Business: Fiber optics
Web site: www.luminentinc.com
Lead underwriter:
  Credit Suisse First Boston
Pricing range: $13-$15
Recent fiber-optics news

For more IPO information, see CNET Investor
*price information may change
Investor interest in Santa Clara, Calif.-based Transmeta has been so strong that the company substantially raised the price of its shares Friday, to a range of $16 to $18, from $11 to $13. Under the revised terms, Transmeta will raise up to $234 million through the sale of 13 million shares.

Transmeta makes chips for notebooks and portable Net appliances that are compatible with the Linux and Windows operating systems. However, the chips use less power than rival chips, allowing computer batteries to last longer.

Morgan Stanley Dean Witter, which is handling the sale, plans to sell shares to institutional investors Monday night. The stock will begin public trading Tuesday under the ticker "TMTA" on the Nasdaq.

Transmeta has caught the attention of investors for several reasons, including its high-profile backers. Paul Allen, George Soros and Sony are among its big-name investors. Others include Compaq Computer, Taiwan's Quanta Computer and Institutional Venture Partners.

The company also hired developer Linus Torvalds, who is credited with creating the Linux operating system.

In addition to its affiliations, investors like Transmeta's strong customer base. So far, companies that plan to incorporate the company's Crusoe chip into their products include Sony, NEC, Fujitsu, Gateway and Hitachi.

Not all PC manufacturers are sold on the chip, however. IBM, one of the largest notebook manufacturers in the world, recently canceled plans to use Crusoe microprocessors in its ThinkPad 240 notebook. IBM's previous support had been seen as a major victory for Transmeta, and the about-face just before Transmeta's IPO could dampen investor enthusiasm.

But neither IBM's withdrawal, nor Transmeta's record of losses, have seemed to deter investors--as was reflected in Friday's price hike. While Transmeta has lost money every year since 1995, according to its IPO filing, its revenues have jumped dramatically. Product revenue increased to $3.8 million in the nine months ended Sept. 30 from $76,000 during the same period in 1999.

Since 1995, Transmeta has posted a net loss of nearly $150 million, including $71 million during the first nine months of this year, according to a filing with the Securities and Exchange Commission.

"I think there's been a lot of anticipation for this IPO for quite some time," said Steven Tuen, a portfolio manager with the Kinetics Internet Fund. "Very recently the Nasdaq has snapped back. I think this short-term effect is giving some optimism to the market place."

Including Transmeta, six companies are scheduled to launch IPOs next week. This is a partial list of the technology companies on the calendar:

• Luminent, a subsidiary of networking equipment maker MRV Communications, makes fiber-optic hardware used to assemble voice and data networks.

"I think this company is going to do really well," said Matt Zito, co-founder of IPOguys.com. "They have good revenue and we're going to continue to see the build-out of the fiber-optics networks."

IPO forecast
The Chatsworth, Calif.-based company plans to raise up to $180 million through the sale of 12 million shares at a range of $13 to $15. The company has applied to trade on the Nasdaq under the ticker symbol "LMNE." Credit Suisse First Boston will handle the sale.

Luminent boasts a list of well-known customers including Cisco Systems, General Instrument, Marconi Communications and Pandacom. The company also sells its products through distributors. The three largest customers through distributors this year were Cabletron Systems, Extreme Networks and Foundry Networks.

For the six month ended June 30, Luminent lost $10.8 million on revenue of $43.5.

After the IPO, MRV will own approximately 92 percent of Luminent's outstanding common stock. MRV plans to distribute this stake to its shareholders in the months following the offering, according to the IPO filing.

• Inficon, which makes vacuum instrumentation used in chip manufacturing, plans to raise up to $227 million through the sale of 17.4 million shares at a range of $11.11 to $13.05.

The Switzerland-based company has applied to trade on the Nasdaq under the ticker symbol "IFCN." Credit Suisse First Boston will handle the sale.

• Computer Access Technology, which sells software and verification systems to test and monitor connectivity products, plans to raise as much as $49 million through the sale of 3.5 million shares at a range of $12 to $14.

The Santa Clara, Calif.-based company has applied to trade on the Nasdaq under the ticker symbol "CATZ." Robertson Stephens will handle the sale.