NEW YORK (CNNfn) - IBM on Wednesday marooned mobile computing chipmaker Transmeta Corp., which plans to go public next week, saying it would not use the company's Crusoe processor in an upcoming laptop.
Transmeta, based in Santa Clara, Calif., is one of the most highly anticipated initial public offerings because of what analysts call its breakthrough technology which uses less power to enable portable devices to run longer.
But IBM, which manufactures the Crusoe chip for Transmeta, confirmed it will not be using them in its upcoming ThinkPad 240.
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"If indeed something were to go wrong with (Transmeta) we can close the door on (the IPO market) for the rest of the year"
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Irv DeGraw
WorldFinanceNet.com |
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"That's a bruise, but not a deal breaker," said Irv DeGraw, IPO analysts and research director at WorldFinanceNet.com. "But losing it when they did will put somewhat of a crimp in their early valuation."
Transmeta is scheduled to go public next week. Led by Morgan Stanley Dean Witter, the company is looking to raise about $156 million, selling 13 million shares between $11 and $13
DeGraw stressed the importance of Transmeta's performance to the new issues market.
"If indeed something were to go wrong with this then we can just close the door on the rest of the year," he said.
But he said that while IBM's move pulls the perception of Transmeta down, the company's first day will still be strong, possibly seeing a gain in share price of 30 to 50 percent.
IBM spokesman John Bukovinsky played down his company's decision, saying IBM never committed to using the Crusoe in this ThinkPad and only used it in one demonstration model.
"We will continue to consider Transmeta chips in the future," Bukovinsky said.
DeGraw noted other high-profile customers such as Toshiba, Sony (SNE: Research, Estimates), NEC and Hitachi (HIT: Research, Estimates) should boost investor confidence in the upcoming stock.
Transmeta is limited by IPO quiet period rules on what it can say, but did give its position on the mobile computing market.
"The emerging ultra-light mobile market is showing dramatic innovation in terms of battery life, screen technology and wireless cellular capabilities." Transmeta spokesman Philip Bergman said. "Transmeta's customers including Sony, NEC, Fujitsu and Hitachi have in the past two months introduced Crusoe based mobile PCs of various sizes with 5 to 20 hours of battery life. It is clear that these customers are taking a lead in long battery life mobiles that are already reaching the marketplace."
The company will trade as "TMTA" on the Nasdaq. 
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