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2HRS2GO: Intel, Transmeta take turns in spotlight

SAN FRANCISCO -- Like everything else in life, the world of finance offers its own sets of contrasts.

Never were they more evident than this morning, on the second day of the Banc of America Securities Technology Week 2000 conference, when chip gargantuan Intel (Nasdaq: INTC) and the oh-so-secretive upstart Transmeta presented themselves.



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Banc of America evidently has its own ironic sense, judging by a schedule that had Transmeta CEO David Ditzel immediately following Intel CFO Andy Bryant in the same room, although it was twice the size for Bryant, for obvious reasons.

Even if you weren't paying attention to his words, Bryant's colorful charts and languid tone conveyed every bit of Intel's strong self-confidence. I guess he managed to block the encroachment of Advanced Micro Devices (NYSE: AMD) from his mind.

Fund managers and analysts who did heed the substance of the Intel CFO's speech no doubt took at least a bit of comfort from Intel's continuing cost cutting drives. Thanks to 0.18 micron technology, Intel expects by the fourth quarter costs-per-Celeron chip will be down 20 percent from their peak, while Pentium III manufacturing will be 50 percent cheaper.

Bryant repeated earlier forecasts of a 61 percent gross margin for 2000, which would be flat compared to the fourth quarter, but still an improvement from 59.7 percent for the full 1999.

All told, it was your typical performance from a veteran of PowerPoint-and-click investment conferences, right down to the dig about the government-mandated Safe Harbor Act statement displayed at the end of the show. "Here's the 'Don't Believe What I Just Said' slide," Bryant joked. "I hate putting these things up."

The man following him behind the podium didn't have to worry about it. In fact, Transmeta's Ditzel's main worry was learning not to speak so freely. That's another one of the investing world's ironies: a public company like Intel must carefully watch its words, especially during the quiet periods immediately preceding quarterly reports and stock offerings; a private outfit can be more open with information, because it has no fears about stock prices or shareholder lawsuits.

"You'll look back on these days fondly," one audience member told Ditzel during an impromptu hallway gabfest that substituted for a formal breakout session (that would normally be closed to the press) following his slide presentation.

Ditzel radiated enthusiasm about Transmeta's mobile chip technology, which isn't surprising since today marked his first time speaking at an investment conference. He should relish it while he can; the ho-hum attitude of long-time participants tells you the experience gets old very quickly.

No plans for an IPO yet (you can find out the same thing by listening to the answering machine for Transmeta's PR office), but Transmeta may go public this year. The company is also considering another round of private financing. For whatever they're worth (probably not much), rumors assert Transmeta has lost at least $190 million since inception, but Ditzel says cash isn't a reason to go public or seek out more venture dollars.

"We don't need the money so much as there are some interesting partnerships out there," Ditzel says.

Transmeta was criticized for giving few details during the much ballyhooed and overhyped debut of the Crusoe chip family last week. Ditzel didn't say much this morning about financials or operating metrics, which is no surprise since he's accountable to no one besides Paul Allen, George Soros, Deutsche Bank and other private investors.

But Ditzel did say that, yes, there really are OEMs out there using Crusoe technology, which comes in at least two variations: the 400 mHz TM 3120 chip for "mobile Internet appliances" like touchpads with a browser; and the 500 to 700 mHz TM 5400 processor for ultra-light notebook PCs.

The 3120 is in full production now. Internet devices using the 3120 will start shipping in the second quarter.

The 5400 should be in full production by mid-year, Ditzel predicted. Transmeta expects notebook computers with the 5400 will start shipping in the third quarter.

And that's about it as far as news, if that's what you want to call it.

Ditzel went through the same low power, lightweight, code-morphing, fewer transistors, fully x86-compatible features detailed during last month's press conference. Mobile Linux got a mention -- "Transmeta, as you know may know, has a certain amount of expertise with Linux" -- as a high demand item, although Ditzel spent more time focusing on the chip's ability to run any type of x86 program, rather than emphasizing any particular OS.

I'm not sure if that's a recipe for huge success, but at least it's encouraging to see Transmeta follow a new path as low-power chip specialists for mobile devices. In spite of all the hype of Transmeta as an Intel-killer, the company is attacking markets that don't have an Intel focus.

Intel sees growth drivers as its core business (meaning chips for desktops and laptops), along with silicon for wireless, communications and networking systems. Transmeta is aiming for the other end.

In other words, they can co-exist.

Other issues:

  • Datron Systems
  • (Nasdaq: DTSI) A broadband announcement lifted shares for this provider of satellite communication technology. Datron says it has can provide high speed Internet access for satellite TV antennae on moving vehicles. "Discussions are under way" with satellite service providers, the company says.

    I like the idea. But until we hear about a major installation of it -- some top-shelf airlines would be great -- I'd be cautious about diving into Datron purely on the basis of broadband Internet technology, just as I would be leery about investing in Transmeta (if it were publicly-traded) without a list of OEM clients. Perhaps that's why I'm a writer instead of a trader. 22GO>