Transmeta must win the support of notebook PC vendors to survive
as a Nasdaq listed company, the US chip startup has warned in a
detailed filing ahead of its flotation.
In its prospectus, filed on Monday with the US Securities and
Exchange Commission (SEC), Transmeta said it would offer 13 million
shares of its common stock, priced between $11 and $13. Transmeta
develops low power chips for notebook PCs and mobile internet
Transmeta said it estimates that the net proceeds from the
initial public offer (IPO) will be approximately $143.6m, at an
assumed public offering price of $12 per share. This is more than
$50m less than Transmeta said it hoped to raise in a filing with
the SEC in August.
The company said that its success depends on its ability to sell
its Crusoe chips in volume to notebook PC makers. So far Hitachi,
Sony, Gateway, IBM and Fujitsu have announced that they are
developing notebook PCs based on Crusoe, and Transmeta said it
began shipping processors to these companies late last week.
Transmeta said the success of its business is also dependent on
the success of these relationships with notebook vendors.
"We expect to derive a substantial portion of our revenue from a
small number of customers," the company said. "Our revenue would
decline significantly if any major customer cancels, reduces or
delays a purchase of our products."
Transmeta added that its relationship with IBM was doubly
important as the latter is manufacturing Crusoe chips as well as
developing a product based on the processor. "We currently rely
exclusively on IBM to fabricate our wafers," said the company.
The proceeds from the IPO will be used for "additional capital
and for other general corporate purposes," it said. "We anticipate
using $1.1m of the net proceeds to repay indebtedness to Quickturn
Design Systems which we incurred for equipment purchases in
Transmeta also warned that it has a history of "substantial
losses". As of 30 June 2000, it had an accumulated deficit of
around $119.4m, it said.
Morgan Stanley Dean Witter, Salomon Smith Barney, Deutsche Bank
Alex Brown and Bank of America Securities will act as underwriters
for the offering.
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