IBM cancels Crusoe laptop

IBM had planned to use Transmeta's low-energy Crusoe microprocessor chips in its ThinkPad 240 laptop personal computers, and had even demonstrated a Crusoe laptop at the PC Expo trade show in New York in June. Originally, IBM said they would start shipping by the fourth quarter of 2000.

"The only thing we can say is that it is only this one project, and that we're continuing to look for ways to lower the energy costs for consumers," said Rick Bause, an IBM spokesman. "We will continue to look at Transmeta on an ongoing basis."

Sony released a laptop with the Crusoe chip in the US -- the Vaio C1 PictureBook -- one week ago. NEC and Hitachi also have Transmeta-powered computers, but only in Japan and in limited quantities.

IBM Microelectronics manufactures the Crusoe processors for Transmeta, which is a so-called fabless semiconductor company with no production facilities of its own. Transmeta relies on IBM for substantially all of its assembly and test services, and as a result, it does not directly control its product delivery schedules, according to Transmeta's filings with the US Securities and Exchange Commission.

Transmeta has plans in place to make its initial public offering on the US NASDAQ exchange on Monday, according to a spokeswoman from Morgan Stanley Dean Witter, the chip maker's underwriter.

A Transmeta spokeswoman said she could not comment on the IBM change of plans, citing the SEC "quiet period" rules preceding an IPO.

However, the company's SEC filings indicate Transmeta anticipated using $US2.5 million of the net proceeds from this offering to make a payment to IBM that is payable within 30 days of the offering. Transmeta has agreed to pay IBM a total of $US38 million over the next four years and fixed the conversion rate of a convertible promissory note issued to IBM at 1,200,000 shares of its common stock, according to their filings. Transmeta owes IBM $US5 million in 2000, $US4.0 million in 2001, $US6.0 million in 2002, $US7.0 million in 2003 and $US16.0 million in 2004.

License fees from IBM and Toshiba constituted substantially all of Transmeta's revenue in 1997, 1998 and 1999, according to the document.

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