Transmeta files details of IPOOct 02, 2000, 22:14 (0 Talkback[s])
(Other stories by Jo Ticehurst)
By Jo Ticehurst, VNU Net
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 devices.
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 1998."
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.