Transmeta Looks to Shore Up Its Credibility

One month after ousting its chief executive, Transmeta set up shop at a Las Vegas hotel during Comdex to pitch its newest processor and offered assurances about the company's future.

One month after ousting its chief executive, Transmeta Inc., a designer of low-power microprocessors, set up shop at a Las Vegas hotel during Comdex this week to pitch its newest processor and offered assurances about the companys future.

Instead of appearing on the showroom floor at Comdex, the Silicon Valley startup instead displayed its wares at a suite in the Venetian Hotel. There the company offered customers and reporters a look at more than 30 ultralight notebooks, high-density servers and prototype Tablet PCs utilizing the companys yet-to-be-released processor, the Crusoe TM5800.

Slumping sales and a several-month delay in releasing the TM5800--which will be first offered at 800MHz, with a 1GHz version slated for early next year--ultimately cost Mark Allen his job as the companys CEO four weeks ago after less than eight months in the position.

Addressing his companys recent management shakeup, Jim Chapman, Transmetas executive vice president of sales and marketing, admitted the delay in releasing the TM5800, originally slated for launch in June, was a critical mistake for a chip maker seeking to establish credibility with computer makers.

"The bottom line is that we would have liked to have our products out sooner," he said. "We think the management going forward should be different than it was. But its not like we have had some major strategic change."

With Allens ouster, company Chairman Murray Goldman assumed the duties of CEO and appointed board member Hugh Barnes as president and chief operating officer. Although Transmeta expects itll be several months before it hires a new CEO, Chapman said the companys current leadership has the experience and management skill to guide the chip maker through these unsettled times.

"We have quality people in there," said Chapman, noting that Goldman worked for 27 years at Motorola Inc. and headed the semiconductor division. "He clearly brings a lot with his semiconductor background and a focus on quality."

While Transmeta so far has been unable to secure design wins with U.S. computer makers, the Santa Clara, Calif., the chip maker has had its chips featured in several ultralight notebook designs by Japanese manufacturers, including Sony Corp., Fujitsu Ltd., Hitachi and NEC Corp.

Early last year, Transmeta got the industrys attention when it introduced its low-voltage, cooler running chips for the handheld digital market. While the companys claims about its processors performance were met with skepticism, Transmetas focus on reducing power consumption of processors for mobile devices was widely lauded by major computer makers.

But Transmetas failure to quickly bring its product to market last year enabled industry leaders Intel Corp. and Advanced Micro Devices Inc. to release new low-power designs of their own. As a result, Intel and AMD effectively blocked Transmetas access to major U.S. computer makers.

Over time, Chapman said, Transmeta will likely win over vendors by continuing to offer efficient power-saving designs at a relatively low cost compared with products from Intel and AMD, and by further establishing its credibility by delivering products on time as promised.

"If we execute and maintain a religious focus on customer service and quality, things will take care of themselves," Chapman said.