Transmeta shares soar despite Crusoe doubts

Shares in Transmeta rocketed by 115 per cent on the US startup's first day of trading yesterday, despite fresh speculation that Compaq and Toshiba have cancelled Crusoe projects.

In a note issued to customers on Tuesday, Piper Bancorp analyst Ashok Kumar claimed Compaq and Toshiba have scrapped plans to develop Crusoe-based laptops, and that Intel is now targeting the low-power market which Transmeta is focused on.

However, representatives from both Toshiba and Compaq said they are still evaluating the Crusoe chips and have not made firm decisions. Recently a Toshiba UK executive expressed doubts about Crusoe's performance claims.

Trading in Transmeta shares began at $21 on Tuesday and closed at $45.25 - putting a $5.7bn valuation on the Intel contender. Transmeta had already sold 13 million shares at $21 to institutional investors on Monday, beefing up its coffers by $273m.

The flotation is one of Nasdaq's most successful trades since the market downturn in early May. Originally Transmeta was prepared to sell the shares to institutions at between $11 and $13, but so great was the demand that the price rose steadily in the run-up to the initial public offering.

Transmeta was also given a boost on Tuesday by indications that Microsoft chairman Bill Gates is to demonstrate a Crusoe-based wireless webpad during his keynote speech at the Comdex trade show this Sunday.