News > Technology
Transmeta shares battered
May 7, 2001: 12:31 p.m. ET

As 'lockups' expire, upstart chipmaker's shares fall more than 25 percent
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NEW YORK (CNNfn) - Shares of upstart microprocessor maker Transmeta fell more than 25 percent early Monday after the majority of its shares were freed to trade following the company's initial public offering.

The "lockup agreements" on roughly 113 million of Transmeta's outstanding shares expired on Saturday, allowing insiders such as venture capitalists and employees who bought shares prior to the IPO, to sell them.

Transmeta went public on November 6, pricing 13 million shares on Nasdaq at $21 each. Its shares were among the most actively traded on Nasdaq early Monday, with more than 17 million shares changing hands.

Under Securities and Exchange Commission rules, insiders are prohibited from selling their shares in a company for 180 days following a company's IPO. The 113 million shares that were freed to trade represent roughly 86.2 percent of the company's 132.2 million shares outstanding.

A Transmeta (TMTA: down $3.58 to $10.99, Research, Estimates) spokesman on Monday said the price move is not unusual and "the company had been expecting this for the past six months."

In its latest quarterly report filed with the SEC on March 30, Transmeta noted the lockup agreements and warned investors that "the market price of our common stock could decline as a result of sales of a large number of these shares of our common stock in the market or the perception that these sales could occur."

Separately, Transmeta on Monday announced that it had scored a major design win for its "Crusoe" microprocessors, landing Toshiba, the world's largest supplier of notebook computers, as its latest customer.

Toshiba said it will use Crusoe processors, which Transmeta claims consume less power and run cooler than competing chips, in its "Libretto" ultralight notebook computers due to begin shipping in Japan later this month.

So far, the company's chips, which achieve their low-power characteristics using a patented software technology the company calls "code-morphing," have been designed into a range of products since they were introduced in Jan. 2000, including notebook computers from Japanese manufacturers Sony, NEC, Fujitsu, Hitachi and Casio.

Transmeta has not landed a major design-win with a U.S. manufacturer. The company has said it is aiming to build a base of customers in Japan and then use that as a foothold to push its way into the United States and Europe. graphic