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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.
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.
Paul Allen invested in Transmeta privately... not Microsoft.
Open Source. Closed Minds. We are Slashdot.
They could save money by printing thier stock certificates on the back of DrKoop.com certificates.
-B
One of the big reasons a compony goes public is to get some working capital to make investments (factories, expensave talent, marketing blitz) that will make an even bigger profit. A profitable compony frequently has less reason to IPO then a not-so-profitable one. One of the other big reasons is because tipically Venture Capitalists get to make some of those calls in exchange for money when the compony really really really needs it (like to go from a literal garage start-up to a underfunded low-rent office park start-up; or to go from "I got an idea!" to "It works in the lab!").
As for investing in a compony that has made money, well that doesn't mean they will make more in the furure. More importantly, it doesn't mean it will make more money then people are currently betting on which is what stock value really is. You would rather invest in a compony that is about to make a lot more money then people think it is. Maybe one that is just shipping a product that really is as good and revolutionary as people say (it's a good excuse to buy products the day they hit the market -- to check for good stock investments...a lession I should have learned with the Zip drive, and applyed to the AMD K7!).
P.S. I am not a profesional. This advice may lose you money. I'm not responsable. The risk is yours. Blah blah blah.
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...
your post does a good job of explaining the bit about a deficit, but it also contains a nuanced error of its own:
Corporate debt mostly doesn't get paid back, either. Yes, bonds are retired when they mature, but they are generally paid off with money raised by issuing new debt. From the company's perspective, the debt did not decrease: the debt essentially never gets paid back. In fact, company's generally increase the amount of debt they carry as they grow.
Most people are used to personal debt so this can non-intuitive. Personal debt represents a shift of future income to the present. You want more than you can afford now so you borrow, but in the future you'll be able to afford less. Corporate debt is a different matter. It represents "ownership" of the company just like shares of equity do, more precisely "subordinated ownership". Because it has lower risk than equity and the interest paid is less than the returns that shareholders expect, debt is a cheaper way of raising capital for companies. Because interest paid is tax deductile (e.g. subsidized by non-owning taxpayers), it is an even more desirable form of ownership for the other shareholders.
as to the error about the shareholders absorbing the loss... I correct that in a separate post.
Transmeta isn't really a "linux company". They are not like Red Hat or other companies that are centered around linux and need to score points with the community.
:-)
Linux is just one of the operatings systems they plan to run on their devices.
There's also that Linus guy, of course...
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Stop worrying about the risks of nuclear power and start worrying about the risks of not using nuclear power.
A deficit is not debt. It doesn't have to be paid back - it is a loss coming out of the current owners' deep pockets. Don't cry for Paul Allen et al, not only can most of these investors absord a puny loss like $119 million, but once Transmeta goes public (only 10% or so will be in public hands) but they will increase the value of their paper investment many times over what they have so far contributed.
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.
It prolly means our fearless leader will soon be our *rich* fearless leader.
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When all you have is a hammer, every problem starts to look like a thumb.
You seem not to grasp the purpose of going public. Perhaps they have already tapped about all the private capital they can and now need to go public to raise more which would allow them to continue to function, distribute, etc. It's much trickier now than it was last year (before tech investors opened their eyes), but Transmeta does have one thing going, a viable product with OEMs lining up. A good sign.
Pre IPO doesn't hold the romantic vision of instant wealth it once did, now filings for IPO meet a critical eye. Which can be a good thing, as smarter investors are less likely to turn tail and run when the rest of the market hiccups.
Vote Naked 2000
A feeling of having made the same mistake before: Deja Foobar
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!).
"There is more worth loving than we have strength to love." - Brian Jay Stanley
The simple point with Transmeta is this - can they make a better processor than Intel?
Better means many things, cooler, faster, cheaper...whatever the public is obsessing over at the moment. Customer service really isn't an issue for Transmeta (I presume you are simply parroting some drivel from Business 2.0 or some other rag here), no more than it is for AMD and Intel.
Every indiciation is that Transmeta has a cute product but Intel will be able to come within 10% of each of their quantifiable attributes. In the short term this means Transmeta needs to market directly to companies looking to get out from under Intel's thumb, and even then, this is only going to get them in the door. They need to be able to demonstrate that there is a real reason to have a Transmeta chip inside a unit instead of an Intel one. If Intel can beat the power consumption problem (they have indicated they can, and quickly), Transmeta could be in for a rought ride.
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.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
2. Watch all the yuck-a-puck daytraders make the stock "pop". Then SELL ALL YOUR SHARES, thus making a huge profit.
If you were here for the last round of discussions concerning "the letter", you would know that this is called "flipping your stock". It is unethical (though not illegal) and can prevent you from participating in future IPOs, and will certainly damage your reputation on Wall Street, assuming that they keep a record of such things.
If Wall Street didn't frown on this, then LinuxOne type companies could float stock. They would send letters to their partners who would flip the stock and kick back the profits. Then they would fly off to South America leaving lots of investors holding worthless paper.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
It's transmeta, what else is new?
Transmeta is great and all, and Crusoe seems really cool. But I do think they should at least wait until they have a proven, shipping, mass market product before moving forward.
This is protection, if nothing else, for their employees, who are going to have to rely on Transmeta's success, not the day of the IPO, but months and often years later.
Why must every venture capital startup immedietally apply for IPO without actually establishing a market for its wares yet?
Transmeta may be cool and have potential, but do we need to wreck the market with yet another volatile stock thats going to go up 100 points in the first day and then drop back to its original price?
Emerson Willowick: Thinker, Writer, Human Being.
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
-- @rjamestaylor on Ello
The larger part of an IPO is raising capital, and they need it. They have a heavy debt load and a product. How many companies have done an IPO with only the former?
Transmeta is in a transition period, and it is a risk to buy. If you think it is too much a risk stay away, this is a financail decision for the individual investor. However there are many who will think the risk is low compared to others that have taken in the past 36 months.
If provided the capital Transmeta might create a foundation from which the concepts and prototypes could have an impact on the market. If so, those who invest will be rewarded. If not, they are punished. Isn't capitalism great?
I guess the Microsoft port article distracted everyone... Microsoft made a huge investment in Transmeta too. I wonder if that's going to effect anything at all... Kind of funny to think in a way that Microsoft owns 7% of Linus Torvalds Paycheck :-)
Anyways, 7% isn't too much, but that's still quite a chunk. I don't understand completely how IPO's work, but it does look pretty strange :)
Who's the black private dick, who's a sex machine for all the chicks?
Why not just "YHBT"? It'd be funny to watch how few investors would pick up on the name.
"If one is really a superior person, the fact is likely to leak out without too much assistance" -- John Andrew Holmes
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.
Will in Seattle
I don't understand. If the current owners can easily absorb the $119 million current debt, why don't they just plunk down another $200 million and keep all the profits for themselves?
After all, the people running up the value of the stock are doing so with the expectation that Transmeta is going to be making buckets of cash. So why sell any of the company unless you have to?
(confused)
Torrey Hoffman (Azog)
Torrey Hoffman (Azog)
"HTML needs a rant tag" - Alan Cox
But that's what they're doing. Paul Allen & Co. will own stock in the company, and they'll be paying less than 1/10th of the "retail" price.
Think -- who owns the stocks before they're flogged on the open market?
Right: the insiders. The VCs. The employees who took stocks in lieu of cash.
Who sells the stocks once the IPO happens?
Right, the private investors. For a significant multiple of what they originally paid.
The "people running up the value of the stock" are the people who own pre-IPO shares. It's in their very best interest to hype the company as much as possible!
Paul Allen won't come out hurtin', that's for sure.
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Don't like it? Respond with words, not karma.
There is a real explanation, not a conspiracy. Delaware Chancery court is set up to handle corporate litigation. It has specialist judges, specialist courts and all the necessary infrastructure. This gives investors confidence that they know what to expect in the event of litigation. That is why 95% of Fortune 500 are incorporated in Delaware. Other states have enacted more generous laws (toward the corporations) to try and attract companies. It hasn't worked.
If at first you don't succeed, try try again. Then give up. No sense being a damn fool about it. -- W. C. Fields
I've noticed a few comments about *the letters* that went out for the Red Hat IPO and letter recipients inability to participate with e*trade. Looking at the Transmeta's IPO information it doesn't appear that individuals will be invited to participate in the IPO. The lead underwriters of the offering are the *Big Boys* of investment banking - Morgan Stanley Dean Witter, Salomon Smith Barney, and a few others. No mention of any "e-" company involved with this deal.
.com IPO. This company is actually selling something tangible. It appears as though they should actually make some profit once they start selling something.
You can't really compare this to a
Microsoft Does Windows? Why do all you stock freaks call a company by their stupid ticker symbol. It doesn't make you sound more intelligent, merely a fucking geek without a life. As for sitting on $51k.. BOOHOO. My heart bleeds for you. If I had $51k in cash I'd be fucking rich and wouldn't sit there complaining about it. you fucking people are too greedy.
Actually, Microsoft regularly buys back shares. They also do regular stock splits, but this doesn't raise any more money for the company. It's merely done to keep the price of a single share at a reasonable level. Regularly issuing new offerings devalues current stockholder value, which, btw, is the best way to get yourself fired.
sigs are a waste of space
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?
Unless they release (or whatever the correct term is) over 50% of their shares (highly unlikely), I doubt they would be a takeover target.
I'm probably the only one who subliminally read "They are looking to secretly raise $200 million" into the story. Transmeta just has that effect on your brain.
> they should at least wait until they have a proven, shipping, mass market product before moving forward. ... errr ... real soon now... and after that ... a 700 MHz processor!" Wow! And all real information they gave was some OBVIOUSLY manufactured performance test. And even with that manufactured thing they couldn't really make it look cool.
You don't seem to understand what it's all about. It's about making money, as much and as quickly as possible. So why are they going for IPO before even shipping a product? Because they know they'll get less money after shipping their product because people will see then that their product is about as revolutionary as the latest i386 clone from Cyrix.
Seriously, didn't anyone notice how lame everything has been we've heard from them up to now? "We'll ship some 400 MHz processor some day
Face it, the only "cool" thing about Transmeta is one of their employees, and once they start shipping something people will realise that the big name of one employee alone won't make money.
LNUS INTC2 VAPR LOJUCE MNYPIT
anyhow, i hope they do great.
There are two kinds of people in the world: Those with good memory.
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, several demonstarations by companies such as Toshiba, Dell, Compaq, etc, and products scheduled to ship this year aren't good enough for you?
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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No one likes to read the Edgar filing?
Hmmm. $157 mil in Assets. Current burn rate at $43 mil per last 6 months.
We intend to significantly increase our product development, sales and marketing, and administrative expenses.
Translation: Got cash. Shipping product. Work on the next chip generation, beef up marketing, and hire a bunch of new people to support operations.
60 mil shares outstanding x $20/share = $1.2 bn valuation. That's assuming 10 million shares sold to raise the $200 mil.
Should be an interesting IPO...
How will they respond to Intel dumping dragonballs into the market?
Probably with slack-jawed incredulity, same as I would, since the MC68328 'DragonBall' is not an Intel product...
Well, I wouldn't count his stock options before they're exercised. Remember, the figure they usually quote is the closing price for the first day, and then sometimes the closing price for the first week, when they talk about how much he'll be worth.
But he probably won't be able to exercise his options until at least 90 days, and if he has significant holdings, maybe 180 days. They might grant him an initial exercise of say a few thousand shares just so he can finally pay off his student loans and get that new Hybrid VW Beetle with the 90 mpg that he wants.
And even then, if he gets significant holdings, he has to file notice of intent to sell them, so we can track his holdings on Yahoo and figure out when his mortgage comes due.
Will in Seattle
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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Internet Explorer (n): Another bug -- that is, a feature that can't be turned off -- in Windows.
Listen up folks!
YOU too can make hundreds of millions of dollars in days by starting a company and going IPO without even shipping a product!
All you need are some good Wall Street buzzwords like "Linux" and "code morphing" to descibe your nonexistent product! Be sure to cut in people like Linus Torvalds in on your deal so that you can leverage their names to maximum effect.
By the time the public realizes that you'll never ship a product, you will have enough money to buy your own private island in the Pacific, far, far away from all the angry Wall Street investors and the FTC. Remember, this may take a little work to make people initially believe you (sucking up to Slashdot editors doesn't hurt), but it will be well worth the work!
Pissing off the open-source community with non-recursive acronyms since 9/2/00
First of all, letter getters seem to some degree arbitrary. For example, I got the VA letter, and not the Red Hat letter (I didn't deserve either, especially when I later learned the teTeX guys got _nothing_). Other people got Red Hat but not VA. It seems pretty arbitrary.
However, there is a constant - the companies giving "the letter" have been companies based around free software. Transmeta is not. They are a company based around hiring a big name kernel developer (_the_ big name kernel developer), and making a x86 clone that's rather useless, then releasing no information about it. They are not open in any way. I will be very surprised if they send a letter at all.
Windows 2000: Designed for the Internet. The Internet: Designed for UNIX.
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
-- Breaking Windows: Not just for kids anymore KDE