NEW YORK -- The drama involving Transmeta Corp. this week almost matched that of the Bush-Gore contest for the U.S. presidency. Rebounding from the recent loss of a key IBM Corp. design win, the company launched a successful public offering even as renewed skepticism surfaced over the fate of the low-power microprocessor maker.
Amid the flurry of publicity, Transmeta today teamed with Gateway Inc. to announce an Internet "table top" appliance featuring Transmeta's Crusoe processor and a broadband modem chip from Broadcom Corp. The announcement came after Broadcom and Gateway announced an alliance to jointly develop products for moving streaming audio and video content between music players, TVs, PCs, cable modems and Internet appliances (see Nov. 9 story).
But even the buzz surrounding that commercial enterprise was muted by reports that Compaq Computer Corp. and Toshiba Corp. have opted not to use the company's Crusoe CPU, a week after IBM confirmed that it had dropped the processor from its latest line of ThinkPad notebook PCs.
Transmeta, based in Santa Clara, Calif., would not comment on the status of its design wins, although a source close to the company contradicted published reports by saying the Crusoe will appear in a Compaq notebook PC that will be announced before the end of the year. A spokesman for Compaq said only that the company was looking at the Crusoe "as it did at all technologies." Toshiba, which together with IBM comprised the bulk of Transmeta's revenue last year, did not return calls by deadline.
Despite the uncertainties, Transmeta's stock performed well, shooting up to $45.25 Tuesday, after debuting in an initial public offering at $21. In early afternoon trading Friday, Transmeta shares slipped to $39.62, amid a general selloff in the stock market owing to the cliffhanger in the presidential election.
The solid stock performance showed that for many investors Transmeta's promise lies in its ability to drive a new generation of Internet appliances and mobile PCs, according to Nathan Brookwood, an analyst at Insight 64 in Saratoga, Calif.
"Many investors have seen Transmeta get a lot of press about taking on Intel with its low-power Crusoe and its low-power technology, while not hearing the skeptics, which might have driven the stock price up," Brookwood said. "But at the same time, Web appliances look attractive for Transmeta. Right now the market is very small, but many folks think it's going to be very big. To that extent, Transmeta can grow in parallel with this market."
Transmeta's future rests with its ability to carve out a niche serving low-power Web-based applications while fending off Intel Corp., said Ashok Kumar, an analyst at San Francisco-based U.S. Bancorp Piper Jaffray Inc., which helped underwrite Transmeta'sIPO.
But Kumar warned that rough times lie ahead for the company. "Transmeta has been designed out of Compaq and Toshiba, and the only tier-one OEMs who continue to show interest are its strategic investors: Sony, Hitachi, and Fujitsu," he said.
"Transmeta's grip on this market is precarious. Now that Intel has stopped ignoring the needs of the growing mobile market, Transmeta will find it more difficult to sustain an advantage."
In the Internet-appliance market, Gateway's table-top Web device, which the company is slated to introduce next month, could offer Transmeta its first real chance to shine. Paired with Broadcom's HPNA 2.0 modem technology, the appliance will achieve data rates of 10 Mbits/s over existing phone lines, according to the companies.
For Gateway of San Diego, the new device created in alliance with Broadcom of Irvine, Calif., is expected to be the first of many products for enabling streaming audio and video content in music players, TVs, PCs, cable modems, and Internet appliances.
In another design win announced last week, Transmeta reported its X86 processor technology will power a wearable computer device supplied by Via Inc., Burnsville, Minn. In the notebook-PC market, the Crusoe processor is also expected to power systems offered by Fujitsu, Hitachi, NEC, and Sony.