Transmeta (Semiconductor) (TMTA)

[weaksidehelp]

Re WCOM

Steak, glanta, I have been accumulating WCOM since last Tues, and it presently is my second largest holding. After Tuesday's loan approval, I believe most of the real risk has been removed from the stock.

There really are only two serious risks facing WCOM at present: There is the risk whether the $5B credit line will go through, and what might come out of the ongoing SEC investigation.

The news on Tues. that the banks signed the $1.5B secured line answered for me whether the $5B would be extended. Why would banks take that action if they were not fully intending to grant the extension (after getting certain concessions, capex cuts, and securities worked out with Sidgmore).

The second risk is much harder to handicap, but bits and pieces floating around seem to me to suggest that a deal with the SEC is in the offing. Likely a number of recent actions by WCOM are part of such a deal: Ebbers leaving, termination of A Anderson and retaining KPMG, and the details of how Ebbers is to repay loan (tied to his retirement).

Otherwise, Sidgmore and the management team seem to have a great handle on what needs to be done (eg, cutting capex, trimming assets, reassuring customers, reassuring lenders). The MCI dividend issue has already been dealt with. I suspect they will use this opportunity to also make big cuts in the workforce.

BTW, WCOM's website has the recent CC's for replay, and they are well worth listening to. I get the feeling that this ship is well on its way to being righted.

I see the stock quickly moving to around $3 - $3.50. After that, hard to know. With 2B shares trading in recent days, it is hard to understand the dynamics of future movements. Nonetheless, the stock has not been damaged in any fundamental way, and actions by management should result in a stronger company eventually. I see no reason why WCOM will not rebound to historic levels. If so, it is one heck of an investment between now and $5.00.

regards, wsh