Transmeta Still Seeing Red

One day after Transmeta Corp. announced its latest lines of processors, the company reported that it continued to bleed red ink. Transmeta Wednesday said it lost $23.7 million on revenue of $2.7 million in the third quarter.

The companys revenues were about half of the $5.1 million Transmeta reported in the second quarter, and about a third less than the $6.4 million the company reported in the year-ago quarter.

However, executives said there could be light at the end of the tunnel. The result will depend on the success of its Efficeon processor, which the company announced yesterday. In a conference call with analysts, Transmeta executives said fourth-quarter revenues could be flat or increase by up to 50 percent, depending on how the Efficeon ramps.

Still, expected operating expenses in the next quarter will be approximately $18.5 million, according to Svend Olaf Carlsen, Transmetas chief financial officer. And while the launch of the Efficeon could attract more funding, the company still owes a substantial licensing fee to IBM, approximately $70 million, Carlsen said.

“We continue to be in transition period, as thin client (designs) ramp and mobile customers shift to our new Efficeon processor,” President and Chief Executive Officer Matthew Perry said.

The Efficeon will be used in a notebook from Sharp Electronics, a tablet from Antec Technologies, as well a “mobile computing core” from Antelope Technologies. Both Fujitsu Ltd. and Hewlett-Packard have endorsed the processor. However, Perry noted that a shortage of LCD panels in Japan has delayed the launch of at least one product until early next year.

Meanwhile, sales of Transmetas existing Crusoe chips had trailed off more quickly than expected. According to Carlsen, about three-quarters of all Crusoe sales went to notebook PCs, with the remaining quarter primarily being sold into the embedded market.

Transmeta said it expected higher sales of TM5800 Crusoe chips as part of a pair of thin clients from Hewlett-Packard Co. and Sharp Systems of Americas Actius MM10 notebook.

In the second half of 2004, Transmeta will launch its second-generation Efficeon at 90-nanometers using a foundry provided by Fujitsu Ltd. The company expects double the performance over the current Efficeon using the new process, Perry said.

In addition, Transmeta said that it had received substantial interest for its LongRun2 power-management technology, and planned to license the technology to interested parties. LongRun2 manages leakage current, which trickles off when a notebook is not in use and lowers battery life.

Editors note: This story has been updated since its original posting to include direct information from company executives.

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