Transmeta to finally see licensing revenues

Santa Clara (CA) - Transmeta has gone through a painful business model transition, but just in time before the company is virtually running out of cash, it can expect to receive cash from licensing its LongRun2 technology.

The revenues will come from NEC’s recently announced M2 cellphone processor, which, according to Transmeta, has become the first commercially available product to integrate its power management technology "LongRun2". The chip is shipping in sample numbers at this time and will ramp into volume production by October. NEC said that it will produce about 1 million M2 processors per month in 2008.

For Transmeta, that announcement comes after a quarter that increased concerns whether the company can survive. Revenues in Q1 of this year were $2.1 million, consisting of about $142,000 from sales of the phased out Crusoe/Efficeon microprocessors and not quite $2 million for support services relating to LongRun2.

The quarter loss amounted to $18.7 million ; the firm’s available cash and short term investments fell to about $25.5 million by the end of March this year. In its 10-Q filing, Transmeta noted that it will have to secure "additional financing" soon to be able to make it through the "next 12 months".

Transmeta did not say how much licensing revenue it expects to receive from the NEC licensing agreement.

The company abandoned further development of its Crusoe and Efficeon microprocessors in late 2004 and shifted its business model to licensing its technologies in early 2005. Since then, the company has licensed Longron2 to NEC, Fujitsu, Toshiba and Sony.

Transmeta’s stock has been trading below the $1 mark mid-January and currently hovers around $0.73. The company has a market cap of about $145 million.