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Transmeta Corporation: Second Quarter 2008 Results
Transmeta Corporation today announced financial results for the second quarter ended June 30, 2008.
Revenue for the second quarter of 2008 was $366,000, all of which was derived from licensing activities. This compared with $661,000 for the first quarter of 2008, comprised of $240,000 of license revenue, $168,000 of services revenue, and $253,000 of end-of-life product revenue.
Total operating expenses for the second quarter of 2008 were $1.9 million, compared with $3.1 million in the first quarter of 2008. Second quarter operating expenses included $5.9 million of income from the settlement and licensing agreement with Intel, net restructuring charges of $455,000, non-cash charges of $908,000 for amortization of intangible assets, and non-cash stock compensation charges of $1.3 million.
In the second quarter, the Company recorded interest income of $1.8 million, including $1.1 million of imputed interest income from the settlement and licensing agreement with Intel. Net income was $214,000, or $0.02 per share, compared with a net loss of $41,000, or $0.00 per share, in the first quarter of 2008.
The Company’s cash, cash equivalents and short term investments at June 30, 2008 totaled $141.8 million. Transmeta continues to be debt free.
As announced today in a separate press release, Transmeta has entered into an agreement with NVIDIA Corporation granting NVIDIA a non-exclusive license to Transmeta’s Long Run and LongRun2 power management technologies and other intellectual property for use in connection with NVIDIA products. Under the agreement, NVIDIA agrees to pay Transmeta a one-time, non-refundable license fee of $25.0 million. The Company expects to receive this cash payment of $25.0 million during the third quarter of 2008.
In the third quarter, the Company expects to recognize $5.9 million of operating income and $1.2 million of imputed interest income from the settlement and licensing agreement with Intel. Transmeta expects to be profitable on a GAAP net income basis in the third quarter of 2008 and continues to expect to be profitable for fiscal year 2008.
“We are very pleased to add NVIDIA to our list of licensees,” said Les Crudele, president and CEO. “We believe the licensing agreement creates significant value for our stockholders. In addition, we continue to actively explore a full range of strategic alternatives and continue to be engaged in discussions with other companies about potential ways to increase value for all of our shareholders.”
Conference Call
Transmeta’s management will host a conference call today at 5:00 p.m. Eastern time / 2:00 p.m. Pacific time to discuss the operating performance for the quarter. The conference call will be available live over the Internet at the investor relations section of Transmeta's website at www.transmeta.com. To listen to the conference call, please dial (913) 312-9304. A recording of the conference call will be available for one week, starting one hour after the completion of the call, until 11:59 p.m. Pacific time on August 13, 2008. The phone number to access the recording is (719) 457-0820, and the passcode is 3504365.
About Transmeta Corporation
Transmeta Corporation develops and licenses innovative computing, microprocessor and semiconductor technologies and related intellectual property. Founded in 1995, we first became known for designing, developing and selling our highly efficient x86-compatible software-based microprocessors, which deliver a balance of low power consumption, high performance, low cost and small size suited for diverse computing platforms. We are presently focused on developing and licensing our advanced power management technologies for controlling leakage and increasing power efficiency in semiconductor and computing devices, and in licensing our computing and microprocessor technologies to other companies. To learn more about Transmeta, visit www.transmeta.com.
Safe Harbor Statement
This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date of this release, and we will not necessarily provide updates of our projections or other forward-looking statements. Investors are cautioned that such forward-looking statements are subject to many risks and uncertainties, and may differ materially or adversely from our actual results or future events. Important risk factors that could have material or adverse effects on our results include practical operational challenges following our recent restructuring and change of business model, the potential loss of key technical and business personnel, uncertainty about the adoption and market acceptance of our technology offerings by current and potential customers and licensees, our inability to predict or ensure that third parties will license our technologies or use our technologies to generate royalties, difficulties in developing our technologies in a timely and cost effective manner, patents and other intellectual property rights, and other risk factors. We urge investors to review our filings with the Securities and Exchange Commission, including our most recent reports on Forms 10-K, 10-Q and 8-K, which describe these and other important risk factors that could have an adverse effect on our results. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.
Transmeta and LongRun2 are trademarks of Transmeta Corporation. All other product or service names mentioned herein are the trademarks of their respective owners.
ASSETS
Current assets:
Cash and cash equivalents $ 96,919 $ 15,607 $ 4,267
Short-term investments 44,840 2,968 10,984
Accounts receivable 44 163 224
Other receivables, current 19,393 149,400 ---
Prepaid expenses and other
current assets 2,064 2,476 1,935
Total current assets 163,260 170,614 17,410
Other receivables, long-term 68,089 85,200 -
Property and equipment, net 231 284 487
Patents and patent rights, net - 2,388 5,811
Other assets 400 800 2,015
TOTAL ASSETS $ 231,980 $ 259,286 $ 25,723
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 593 $ 341 $ 1,406
Accrued compensation 934 15,351 1,183
Income taxes payable 15 3,306 9
Accrued restructuring costs 511 1,592 3,771
Other accrued liabilities 882 1,028 2,455
Current portion of deferred income from settlement and licensing 23,460 23,460 -
Current portion of long-term payable 800 667 533
Total current liabilities 27,195 45,745 9,357
Long-term deferred income from settlement and licensing, net of current portion 199,410 211,140 -
Long-term payable, net of current portion 400 800 1,200
Total liabilities 227,005 257,685 10,557
Stockholders' equity:
Convertible preferred stock 6,966 6,966 -
Common stock 742,441 739,268 726,823
Treasury stock (2,439 ) (2,439 ) (2,439 )
Accumulated other comprehensive gain (loss) 57 29 7
Accumulated deficit (742,050 ) (742,223 ) (709,225 )
Total stockholders' equity 4,975 1,601 15,166
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 231,980 $ 259,286 $ 25,723
Transmeta Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, 2008 March 31, 2008 June 30, 2007 June 30, 2008 June 30, 2007
Revenue:
Product $ - $ 253 $ 25 $ 253 $ 167
License 366 240 - 606 -
Service - 168 146 168 2,143
Total revenue 366 661 171 1,027 2,310
Cost of revenue
Product - 3 - 3 80
Service (1) - 163 80 163 1,218 Impairment charge on inventories - - - - 364
Total cost of revenue - 166 80 166 1,662
Gross profit (loss) 366 495 91 861 648
Gross margin % 100.0 % 74.9 % 53.2 % 83.8 % 28.1 %
Operating expenses:
Income from settlement
and licensing (5,865 ) (5,865 ) - (11,730 ) -
Research and
development (1) 2,315 2,850 2,537 5,165 7,473
Selling, general and
administrative (1) 4,108 4,342 5,644 8,450 11,750
Restructuring charges,
net 455 342 1,978 797 8,701
Amortization of patents
and patent rights 908 1,480 1,711 2,388 3,423
Impairment charge on
long-lived and other assets - - 8 - 302
Total operating
expenses 1,921 3,149 11,878 5,070 31,649
Operating loss (1,555) (2,654) (11,787) (4,209) (31,001)
Interest income
and other, net ,769 2,615 350 4,384 859
Interest (expense) - (2) (28) (2) (38)
Income (loss) before
income taxes 214 (41) (11,465) 173 (30,180)
Provision for income
taxes - - (15) - 4
Net income (loss) $ 214 $ (41) $ (11,450) $ 173 $(30,184)
Net income (loss)
per share - basic $ 0.02 $ (0.00) $ (1.15) $ 0.01 $ (3.02)
Net income (loss)
per share - fully diluted $ 0.02 $ (0.00) $ (1.15) $ 0.01 $ (3.02)
Weighted average shares outstanding - basic 12,152 12,113 9,997 12,133 9,979
Weighted average shares outstanding - diluted 13,242 12,113 9,997 13,197 9,979
(1) Includes stock-based compensation:
Cost of service revenue $ - $ 82 $ 14 $ 82 $ 17
Research and
development 596 847 364 1,443 282
Selling, general and
administrative $ 684 $ 632 $ 315 $ 1,316 $ 697
Contact:
Transmeta Corporation
Sujan Jain, 408-919-3000
or
Mozes Communications LLC
Kristine Mozes, 781-652-8875 (Investors)
Source: Transmeta Corporation
Revenue for the second quarter of 2008 was $366,000, all of which was derived from licensing activities. This compared with $661,000 for the first quarter of 2008, comprised of $240,000 of license revenue, $168,000 of services revenue, and $253,000 of end-of-life product revenue.
Total operating expenses for the second quarter of 2008 were $1.9 million, compared with $3.1 million in the first quarter of 2008. Second quarter operating expenses included $5.9 million of income from the settlement and licensing agreement with Intel, net restructuring charges of $455,000, non-cash charges of $908,000 for amortization of intangible assets, and non-cash stock compensation charges of $1.3 million.
In the second quarter, the Company recorded interest income of $1.8 million, including $1.1 million of imputed interest income from the settlement and licensing agreement with Intel. Net income was $214,000, or $0.02 per share, compared with a net loss of $41,000, or $0.00 per share, in the first quarter of 2008.
The Company’s cash, cash equivalents and short term investments at June 30, 2008 totaled $141.8 million. Transmeta continues to be debt free.
As announced today in a separate press release, Transmeta has entered into an agreement with NVIDIA Corporation granting NVIDIA a non-exclusive license to Transmeta’s Long Run and LongRun2 power management technologies and other intellectual property for use in connection with NVIDIA products. Under the agreement, NVIDIA agrees to pay Transmeta a one-time, non-refundable license fee of $25.0 million. The Company expects to receive this cash payment of $25.0 million during the third quarter of 2008.
In the third quarter, the Company expects to recognize $5.9 million of operating income and $1.2 million of imputed interest income from the settlement and licensing agreement with Intel. Transmeta expects to be profitable on a GAAP net income basis in the third quarter of 2008 and continues to expect to be profitable for fiscal year 2008.
“We are very pleased to add NVIDIA to our list of licensees,” said Les Crudele, president and CEO. “We believe the licensing agreement creates significant value for our stockholders. In addition, we continue to actively explore a full range of strategic alternatives and continue to be engaged in discussions with other companies about potential ways to increase value for all of our shareholders.”
Conference Call
Transmeta’s management will host a conference call today at 5:00 p.m. Eastern time / 2:00 p.m. Pacific time to discuss the operating performance for the quarter. The conference call will be available live over the Internet at the investor relations section of Transmeta's website at www.transmeta.com. To listen to the conference call, please dial (913) 312-9304. A recording of the conference call will be available for one week, starting one hour after the completion of the call, until 11:59 p.m. Pacific time on August 13, 2008. The phone number to access the recording is (719) 457-0820, and the passcode is 3504365.
About Transmeta Corporation
Transmeta Corporation develops and licenses innovative computing, microprocessor and semiconductor technologies and related intellectual property. Founded in 1995, we first became known for designing, developing and selling our highly efficient x86-compatible software-based microprocessors, which deliver a balance of low power consumption, high performance, low cost and small size suited for diverse computing platforms. We are presently focused on developing and licensing our advanced power management technologies for controlling leakage and increasing power efficiency in semiconductor and computing devices, and in licensing our computing and microprocessor technologies to other companies. To learn more about Transmeta, visit www.transmeta.com.
Safe Harbor Statement
This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date of this release, and we will not necessarily provide updates of our projections or other forward-looking statements. Investors are cautioned that such forward-looking statements are subject to many risks and uncertainties, and may differ materially or adversely from our actual results or future events. Important risk factors that could have material or adverse effects on our results include practical operational challenges following our recent restructuring and change of business model, the potential loss of key technical and business personnel, uncertainty about the adoption and market acceptance of our technology offerings by current and potential customers and licensees, our inability to predict or ensure that third parties will license our technologies or use our technologies to generate royalties, difficulties in developing our technologies in a timely and cost effective manner, patents and other intellectual property rights, and other risk factors. We urge investors to review our filings with the Securities and Exchange Commission, including our most recent reports on Forms 10-K, 10-Q and 8-K, which describe these and other important risk factors that could have an adverse effect on our results. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.
Transmeta and LongRun2 are trademarks of Transmeta Corporation. All other product or service names mentioned herein are the trademarks of their respective owners.
Transmeta Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, 2008 December 31, 2007 June 30, 2007
ASSETS
Current assets:
Cash and cash equivalents $ 96,919 $ 15,607 $ 4,267
Short-term investments 44,840 2,968 10,984
Accounts receivable 44 163 224
Other receivables, current 19,393 149,400 ---
Prepaid expenses and other
current assets 2,064 2,476 1,935
Total current assets 163,260 170,614 17,410
Other receivables, long-term 68,089 85,200 -
Property and equipment, net 231 284 487
Patents and patent rights, net - 2,388 5,811
Other assets 400 800 2,015
TOTAL ASSETS $ 231,980 $ 259,286 $ 25,723
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 593 $ 341 $ 1,406
Accrued compensation 934 15,351 1,183
Income taxes payable 15 3,306 9
Accrued restructuring costs 511 1,592 3,771
Other accrued liabilities 882 1,028 2,455
Current portion of deferred income from settlement and licensing 23,460 23,460 -
Current portion of long-term payable 800 667 533
Total current liabilities 27,195 45,745 9,357
Long-term deferred income from settlement and licensing, net of current portion 199,410 211,140 -
Long-term payable, net of current portion 400 800 1,200
Total liabilities 227,005 257,685 10,557
Stockholders' equity:
Convertible preferred stock 6,966 6,966 -
Common stock 742,441 739,268 726,823
Treasury stock (2,439 ) (2,439 ) (2,439 )
Accumulated other comprehensive gain (loss) 57 29 7
Accumulated deficit (742,050 ) (742,223 ) (709,225 )
Total stockholders' equity 4,975 1,601 15,166
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 231,980 $ 259,286 $ 25,723
Transmeta Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, 2008 March 31, 2008 June 30, 2007 June 30, 2008 June 30, 2007
Revenue:
Product $ - $ 253 $ 25 $ 253 $ 167
License 366 240 - 606 -
Service - 168 146 168 2,143
Total revenue 366 661 171 1,027 2,310
Cost of revenue
Product - 3 - 3 80
Service (1) - 163 80 163 1,218 Impairment charge on inventories - - - - 364
Total cost of revenue - 166 80 166 1,662
Gross profit (loss) 366 495 91 861 648
Gross margin % 100.0 % 74.9 % 53.2 % 83.8 % 28.1 %
Operating expenses:
Income from settlement
and licensing (5,865 ) (5,865 ) - (11,730 ) -
Research and
development (1) 2,315 2,850 2,537 5,165 7,473
Selling, general and
administrative (1) 4,108 4,342 5,644 8,450 11,750
Restructuring charges,
net 455 342 1,978 797 8,701
Amortization of patents
and patent rights 908 1,480 1,711 2,388 3,423
Impairment charge on
long-lived and other assets - - 8 - 302
Total operating
expenses 1,921 3,149 11,878 5,070 31,649
Operating loss (1,555) (2,654) (11,787) (4,209) (31,001)
Interest income
and other, net ,769 2,615 350 4,384 859
Interest (expense) - (2) (28) (2) (38)
Income (loss) before
income taxes 214 (41) (11,465) 173 (30,180)
Provision for income
taxes - - (15) - 4
Net income (loss) $ 214 $ (41) $ (11,450) $ 173 $(30,184)
Net income (loss)
per share - basic $ 0.02 $ (0.00) $ (1.15) $ 0.01 $ (3.02)
Net income (loss)
per share - fully diluted $ 0.02 $ (0.00) $ (1.15) $ 0.01 $ (3.02)
Weighted average shares outstanding - basic 12,152 12,113 9,997 12,133 9,979
Weighted average shares outstanding - diluted 13,242 12,113 9,997 13,197 9,979
(1) Includes stock-based compensation:
Cost of service revenue $ - $ 82 $ 14 $ 82 $ 17
Research and
development 596 847 364 1,443 282
Selling, general and
administrative $ 684 $ 632 $ 315 $ 1,316 $ 697
Contact:
Transmeta Corporation
Sujan Jain, 408-919-3000
or
Mozes Communications LLC
Kristine Mozes, 781-652-8875 (Investors)
Source: Transmeta Corporation