SANTA CLARA, Calif. - Transmeta Corp. shares more than doubled in their first trading day yesterday on optimism that the maker of computer chips will take customers from Intel Corp., the world's biggest chip maker.
Transmeta soared $24.25 to $45.25, valuing the company at $5.78 billion. The company's backers include Microsoft Corp. co-founder Paul Allen and investor George Soros.
The jump in the shares signaled that the IPO market may be gathering steam; the last company that doubled at its debut was Ciphergen Biosystems Inc. in September.
Transmeta designed its Crusoe chip - its main product - to use less power than conventional microprocessors. That lets laptop computers work longer between battery charges.
"They certainly have the opportunity to be a serious competitor to Intel, but time will tell," said Robb Parlanti, senior portfolio manager at Turner Investment Partners. Analysts expect Crusoe, introduced in January, to challenge Intel for sales of chips for laptops and Internet-access devices.
IBM on Thursday said it wouldn't use Santa Clara-based Transmeta's chip in one model of its ThinkPad notebook computers, although it did not explain its decision. Analyst Rob Enderle of Giga Information Group said then that company executives had told him that Transmeta chips didn't extend battery life long enough to justify their use. Intel's chips dominate the ThinkPad line.
The success of Transmeta's IPO shows that investors are still willing to pile into select offerings. The company increased and completed its sale as dozens of others canceled or postponed theirs.
Computer-related stocks have slumped recently as companies reduced sales forecasts. The Nasdaq composite index, which includes leading computer stocks such as Intel and Dell Computer Corp., has fallen 19 percent since Sept. 1. The Philadelphia semiconductor index has fallen 37 percent in the same period.
"I think we'll see a pickup [in IPOs]," Parlanti said. "The public will think we're getting back to a more normal market."
Demand was strong enough for 5-year-old Transmeta to offer its shares at $21, above the already increased range of $16 to $18 each. The company sold the shares through Morgan Stanley Dean Witter & Co. and Deutsche Banc Alex. Brown.
The strength of Transmeta's customer base, as well as its backers, helped attract investors to the shares. Compaq Computer Corp., Taiwan's Quanta Computer Inc., and Institutional Venture Partners are among the investors that joined Allen and Soros.