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Transmeta rules IPO roost
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November 4, 2000: 7:15 a.m. ET
Mobile computer chipmaker set to dominate IPO week, but sleepers exist
By Staff Writer Kim Khan
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NEW YORK (CNNfn) - Want a challenge this week? Try watching the new issues markets without hearing the name "Transmeta."
Mobile computer chipmaker Transmeta Corp.'s initial public offering, already the 800-pound gorilla for the week, garnered even more attention last week after IBM spurned the company's Crusoe for its upcoming ThinkPad 240.
According to IPO analysts, investors started to look at the company as damaged goods, but the analysts themselves kept faith in the upcoming offering because the company has taken the lead in chips that use less power and allow laptops to run longer and faster.
At the end of last week, the company fired a warning shot across the bow of any doubters, raising its expected pricing range a whopping $5 to between $16 and $18 -- a bold move in a decidedly unstable IPO market.
Transmeta, which will trade on the Nasdaq as "TMTA," now looks set to raise about $221 million, selling 13 million shares. Lead underwriters Morgan Stanley Dean Witter said they expect to price the shares Monday for trading Tuesday.
"This shows a tremendous amount of confidence," said Ben Holmes, president of IPOPros.com. "That's saying: 'We've got (share) orders, buddy.' I wouldn't be surprised if we saw an increase in shares."
"Transmeta boosting its range shows a lot of institutional demand," said Corey Ostman, co-CEO of Alert-IPO.com.
The big names behind the company will also power the spotlight on the Santa Clara, Calif.-based company. Microsoft (MSFT: Research, Estimates) Co-Founder Paul Allen and wealthy hedge fund manager George Soros are both investors, and Linux operating system inventor Linus Torvalds was on the software development team.
Ostman said IPO market attention will be so focused on Transmeta, it will overshadow the other five deals coming to market.
But that doesn't mean there aren't solid companies hiding in the chip maker's shadow.
"Computer Access Technology is a real sleeper," said Irv DeGraw, analyst and research director at WorldFinanceNet.com. "They make engineering products, hardcore infrastructure, they are growing like a maniac and they are profitable."
Another Santa Clara, Calif.-based company, Computer Access Technology hopes to raise a modest $45.5 million, selling 3.5 million shares between $12 and $14.
According to Holmes, the balance sheet combined with "some pretty cool products" will likely make this offering a winner.
The company had revenues of $12.5 million in 1999, up nearly 85 percent from the previous year, and a gross profit of $9.4 million.
"Plus this is a Robertson Stephens deal and Robbie Stephens is on fire," Holmes said.
 Computer Access Technology will trade as "CATZ" on the Nasdaq.
Also on the radar is optical networking company Luminent Inc. The optical networking sector, once the darling of the IPO market, is again showing some resilience after a few down weeks. On Friday, Optical Communication Products Inc. enjoying a 63 percent first-day gain.
"I think there's still some life left in these second-tier optical networking sector," DeGraw said. "And by (saying) second tier I'm not being disparaging. They don't have breakthrough technology; they're just good production people."
Chadsworth, Calif.-based Luminent is also profitable, with 1999 revenue of more than $65 million and earnings of more than $4 million.
The company, led by Credit Suisse First Boston, plans to raise about $168 million by pricing 12 million shares between $13 and $15 each. It will trade as "LUMN" on the Nasdaq. 
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TRASMETA IPO HISTORY
