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Transmeta files for IPO

Much ballyhooed chipmaker Transmeta (Proposed ticker: TMTA) has filed to go public.

Transmeta on Thursday registered a form S-1 for a $200 million initial public offering with the U.S. Securities and Exchange Commission. IPO dollar amounts in early filings are typically included solely for the purpose of calculating a registration fee, and usually change as a company near the actual offering date.

The number of shares being offered, as well as a proposed per-share price range, will be included in later filings.

Investment banks Morgan Stanley Dean Witter and Deutsche Banc Alex.Brown are lead managers for the IPO, with assistance from Salomon Smith Barney, Banc of America Securities and SG Cowen.

Major stakes of Transmeta include 12.7 percent directly owned by Silicon Valley venture capital firm Institutional Venture Partners. Microsoft co-founder Paul Allen's Vulcan Ventures investment arm owns 7 percent of Transmeta. Financier George Soros' Quantum Industrial Partners owns 5 percent.

Company co-founder and CEO David Ditzel owns 3.9 percent of Transmeta. Co-founder and senior vice-president of engineering owns 2.4 percent.

Transmeta made a splash earlier this year when it unveiled plans for low power microprocessors for notebook computers and Internet appliances. The company claims its Crusoe chips will extend battery life, enable lighter devices and cost less than other processors, while providing comparable performance.

The IPO prospectus lists six chip lines, three TM3X00 processors for Internet appliances and three TM5X00 types for notebook computers. Transmeta currently has three chip lines in product, with the other three slated for launch in the first half of 2001.

Crusoe processors rely on Transmeta's proprietary "code-morphing" software to handle certain functions normally designated as hardware tasks on chips from other companies.

Although Transmeta is well-known for employing Linus Torvalds -- creator of the increasingly-popular Linux operating system -- the company says it has a "working relationship" with Microsoft, and expects most Crusoe notebook computers to use a version of the Windows OS. Transmeta sees its Linux expertise as important for Internet appliances that need smaller operating systems.

Transmeta remains a relatively small semiconductor operation with just 313 people worldwide, and has yet to show significant revenue. Although Transmeta has been incorporated since 1995, and has been actively developing its products with partners IBM (NYSE: IBM) and Toshiba since 1997, Crusoe products only began shipping recently. In the first six months of this year, Transmeta lost $43.4 million on revenue of $358,000. Since inception, Transmeta has lost $119.4 million.

Much of the company's revenue in the future will come from outside the United States, particularly Asia, according to the IPO filing. Transmeta expects a few customers will generate a large percentage of business.

Transmeta faces stiff competition, particularly in the notebook market. Notable rivals cited by the company include Intel (Nasdaq: INTC), Advanced Micro Devices (NYSE: AMD) and licensees of RISC technology used in mobile devices.

IBM currently manufactures all of Transmeta's chips at a plant in Vermont. From the start of the companies' agreement through June 30, IBM has racked up $18.9 million in expenses for Transmeta's manufacturing.

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