Transmeta Files For IPO

Richard Finney writes "Reuters News Sevice is reporting that Transmeta is filing for an IPO." They are looking to raise $200 million - the rest of the details are sketchy.Update: 08/17 09:59 PM by H :Check out the FreeEdgar filing.

Put off by IPOs? Transmeta == infrastructure.

Most people in this 21st century, are educated enough about trying to invest in a .com and look for "infrastructure" companies instead. Sun and Cisco are 2 prime examples of companies that have done very well when investors follow this path. Investing in a company that has something truley of value and, services the hell out of they're customers is more likely to return very handsomly in the long term (in internet years, long term = 1 year).

Transmeta has the right tech (high powered yet *low* powered chips in the handheld market). Transmeta has the right patents (code morphing, long run) but what remains to be seen is weather they can do that last very important thing. Service the hell out of their customers.

Can the fab line scale? Will the patents be challenged? How will they respond to Intel dumping dragonballs into the market?

These are all questions that remain to be answered. For me, I have to say, if they're smart enough to hire Linus, they're smart enough for me.

What does slashdot think

about this:

We rely on a combination of patents, copyrights, trademarks, trade secret laws and contractual obligations with employees and third parties to protect our proprietary rights.

Still support this company, just because Linus is on board, right? If it were any other company that declared this, everyone here would be up in arms like "boycott them! i hope they go out of business" yada yada yada...

Re:IPO Obsession

You answered your own question. A venture-funded tech company is expected to become publicly held in not-too-much time. When the venture partners are major staeholders in your company, there can be a lot of pressure to get the IPO out the door.

Also the wild stock market gyrations are irrelevant. Once the stock has gone out the door, the company has made its money. The capital is already raised, regardless of whether the stock roller-coasters, or tanks, or stays level.

Re:Well, it would be nice to have a shipping produ

Even if you don't believe in the Code Morphing technology, they have two other big things going for them:

* Much lower power consumption. If you have two laptops, where one can get 10fps more out of Quake but the other one can go twice as long on one battery, which do YOU think will be more popular? Most people just want to be able to work. My personal mark for a usable laptop is 12 hours.

* Sony and IBM making lapops based on Transmeta chips. With products from companies like these, how can they loose?

The only wildcard in my mind is production. Can they produce chips fast enough to fulfil demand? I personally believe they can. Simply dismissing them because they have slower processors is totally ignoring the market segment they are aiming for (of which laptops are the high end in terms of performance!).

Some Advice.

1. If they do send "the letter", tear it up and throw it away.

2. Watch all the yuck-a-puck daytraders make the stock "pop".

3. Wait for the stock to settle down and pass the "lock-out" period.

4. After the lock-out you will likely have at least one or two opportunities to buy the stock for close to, or perhaps even less than the IPO price. At that point, decide for yourself whether or not the company has a future worth investing in. Be sure to base this decision on your knowledge of the market and the competition. In this case, that means knowing a lot about Intel, Motorola, Xilinx, and other chip manufacturers.

Another good thing about this approach is that you don't have to buy some minimum alottment or conform to any rules about when you take a profit. If you only want 50 shares, then that's all you have to buy. If the stock jumps on some analyst's recommendation, you can cash out without having to worry about being barred from future IPOs.

The real beauty of this stategy is that while all the other fools are riding over the IPO hill and crying their eyes out on Yahoo message boards, you can put your money someplace else where it will really work for you.

Of course, if you are a Type-A "I lost 20k yesterday and it doesn't bother me" cocaine snorting day-trader, you can ignore my advice. Don't blame me if this advice doesn't work for you, and don't blame me if you drop dead from a heart attack at 40 either.

Transmeta IS Shipping Crusoe (5400)

C|Net article: Transmet a starts shipping its chip of choice [cnet.com]

Interesting how Slashdot announces the IPO but not the shipping of actual product. My, how what "matters" to nerds has changed in a year!

Now hiring experienced client- & server-side developers

Thank god it's MSDW listing TMTA!

Well, I'm not just saying that because of what happened with Red Hat. As some of you may know, I and some others pounded on ETrade when they didn't release the shares for the coders promptly, even getting the SEC into the act. And even though my initial $51K that was in E*Trade never got put in (I did get 100 shares, though), I'm not really complaining, even if that was a lot to have sit in cash for weeks.

When we look back at all the Linux stocks, we'll see very few did well - Red Hat (marketing is why, brand is big), VA Research (now VA Linux Systems, mostly the quality rep), and not much more.

Don't be distracted by the huge first day pops - that's the institutionals letting out the air and the hype factor. If you can get IPO shares - great! If you can't - wait at least 90 days to buy them - best times are 90-100 day and 180-210 day when the option lockups expire.

And if they send you an email saying you should get shares, don't take no for an answer. Send in the cash, take your allotment, and ride it for all it's worth. If you get a few hundred shares, consider dropping 25 to 100 of them during the first week to cover your cost, and then keep the rest until you retire. Don't worry about warnings about not selling - that's only if you do IPOs all the time. I've been restricted from IPOs a few times, when I dropped a hot IPO for a good 300 to 600 percent return and never regretted it.

Note: I own MSDW stock (a major chunk of my portfolio, and a great stock) and I'm going for as many TMTA shares as I can get in my large MSDW account. Remember, if you are friends and family, you don't have to jump through the same hoops as everyone else. And if people mess with you, the SEC is your friend.

Questions to ask before you invest in Transmeta

1. Whats your tolerance for risk? (This company has burned almost 200 million already and they need more to ship their first product. Given Moore's law they will need to release a new product sometime in the next 12-18 months. 2. Are you buying stock because you like Linus, or are you buying an investment you expect to return money? 3. Are you paying a too much of a premium for this company because of the celebrities invovled (Linus, Paul Allen, etc)? 4. Semiconductor stocks have had a pretty good run up in the last year, but are they peaking?

Re:Are they running low on funds?

I wonder if the uptake on Transmeta's products has been slow enough that their venture capital is drying up

Well.... The uptake on the products doesn't have to be slow. They merely need to appear slow. Just look at 3dfx about a year ago. They almost lost all of their venture capital for R&D, because their VSA-100 seemed slow. In retrospect, we know that had they shipped their products in time, the Voodoo[45] series would've been among the fastest product out there. Of course, they survived, and has seemed to get the product cycle headaches sorted out to an extent (or have they?).

It doesn't matter how good the company performs in the good times. It only matters how well the company survives when the times turn sour. All companies, large and small, had to go through this phase. If Transmeta is indeed hurting for venture capital, it just seems that they're going through the "growing pains" sooner rather than later.

Of course, this also may be a bid to increase their cash reserves so they can seriously invest in something infrastructure-related. $200million won't buy you a fab, but possibly some space in one? They've been having issues with IBM's fabbing costs, and they've been courting TSMC and others, but perhaps they want to do it on their own?

Of course, the yahoo listing was full of the usual drivel; claiming that the Crusoe processor "gives laptops Internet access performance similar to that of desktop computers". A 1GHz T-bird will be slower than a 300MHz PII if the PII had been mated to a T3 while the T-bird was connected via a modem. *sigh*

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What is the deal with Delware?

From the filing:
We were incorporated in California in March 1995. We intend to reincorporate in Delaware prior to this offering.

Why is it that so many of these IPOs reincorporate in Delaware? Is there something intrinsic to the corporation laws in Delaware that makes this desirable?
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Re:Put off by IPOs? Transmeta == infrastructure.

How will they respond to Intel dumping dragonballs into the market?

Probably with slack-jawed incredulity, same as I would, since the MC68328 'DragonBall' [apspg.com] is not an Intel product [apspg.com]...

Re:What is the deal with Delware?

Delaware doesn't charge corporations taxes and has a lot of laws that are titled in corporation's favor in regards to litigation.
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Chaosnetwork [chaosn.com]

Here's a nibble for the troll.

Except that patents are meant to protect small startup companies while they form a market share over a period of time.

Patenting the ability to set a cookie, OTOH, is a bit different from a genuine new way of "morphing" the ISA of one processor into the ISA of another (especially going from CISC to VLIW!), and in such a way that is actually saves power.

Again, it's the "one of these things is obvious, one of these things is not" and the "this company is small, in debt, and being eyed by the the larger companies," versus the, "lock out the competition by patenting a common practice" method of business. Patents do have a real, useful purpose. Why do you think they were made in the first place?
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Re:What is the deal with Delware?

Way back in the 19th Century, New York had very liberal incorporation laws. When New York passed a stricter set of laws, a group of New York lawyers went to Delaware and convince the legislature to pass their own very liberal incorporation laws.

A flood of incorporations then came to Delaware, making it nationally dominant, and thus created a network effect. Most incorporations happened in Delaware, so most legal experts in incorporation were specialized in Delaware incorporation law, so most incorporations were done in Delaware, so...

Since then, Delaware has managed to keep itself a good location for incorporation with low taxes, liberal laws, and expert judges to supplement the network effect.

Steven E. Ehrbar

Raising Money to pay off debt

It seems that they're shooting for the $200 million to pay off a $119 million debt already. To quote Yahoo: "Transmeta has historically posted significant losses, and as of June 30 had an accumulated deficit of $119.4 million, according to the SEC filing." I really don't think that companies should be filing for an IPO just to get out of debt, in fact I think that I'd be more comfortable investing in a company that has historically made some money, not lost it. (I still love Transmeta though) ==>Sheeplet