Transmeta prices IPO

Transmeta Corp. (Nasdaq: TMTA) priced 13 million shares at $21 for its initial public offering Monday, $3 above its range of $16 to $18.

Last week, IBM cancelled a project aimed at building a ThinkPad mini-notebook using Transmeta's Crusoe processor., but that didn't stop the chipmaker from having its price range bumped up Friday from $11 to $13.

The company's software-based Crusoe chip has gotten plenty of hype; Transmeta says it can make semiconductors that run cool and conserve energy without sacrificing performance. That would be a big challenge to Intel (Nasdaq: INTC).

Transmeta promises big things, but it may have a ways to go yet.

For the six months ended June 30, Transmeta reported sales of $358,000 and a net loss of $43.7 million. It also has an accumulated deficit of nearly $120 million. For the quarter ending Sept. 30, Transmeta said its revenue would be about $3.5 million. The company has a limited operating history, having only shipped its Crusoe chip in bulk this past September.

IBM and Toshiba account for nearly all of its sales. Other customers include NEC, Sony, and Hitachi.

Transmeta also faces stiff competition --industry heavyweights Intel (Nasdaq: INTC) and Advanced Micro Devices (NYSE: AMD) cover the notebook market. Transmeta also faces MIPS (Nasdaq: MIPS), ARM Holdings (Nasdaq: ARMHY) and National Semiconductor (NYSE: NSM) in the Internet appliance market.

Morgan Stanley is the lead underwriter. Deutsche Banc Alex Brown and Salomon Smith Barney are co-managers.
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