Comment Articles

Transmeta and the right stuff

Charles Cooper AnchorDesk

Published: 08 Nov 2000 15:23 GMT

Hats off to the two underwriters in the deal, Morgan Stanley and Deutsche Banc Alex Brown, who pulled off a real "beaut." Twice in the last week they boosted the IPO price, whipping up enough outsider interest to make sure this offering was wonderfully oversubscribed.

And so it was that Transmeta climbed more than $24 in its market debut to finish with a first-day capitalisation of $5.8 billion. After a prolonged drought, lots of investors are desperate for a big score. And who knows? This thing may even go higher in the days and weeks ahead.

Enjoy it while you can because, to borrow the words of Tennessee Williams' immortal Big Daddy, I detect the powerful odor of mendacity in the air.

A sucker's bet?
In the rush to get in on the action, retail buyers got so bamboozled by the hype around Transmeta that they simply ignored anything that poked holes in the story line.

Yet what should one make of the not-so-insignificant disclosure that Compaq, one of the big investors behind Transmeta, had decided to take a pass on including the Crusoe processor in any of the company's domestic product lines? And what of the decision a few days earlier by IBM to suspend plans to build a Crusoe-based ThinkPad notebook?

That's a telling sign. Especially since Transmeta's only volume customers are Sony, Fujitsu and Hitachi. The Crusoe is also slated to power the appliances being built by Gateway and America Online.

Hardly the equivalent of setting the world on fire.