09.05.08

Transmeta Reports Q1 2008 Results

Transmeta Corporation, today announced financial results for the first quarter ended March 31, 2008.

Revenue for the first quarter of 2008 was $661,000 compared to $126,000 for the fourth quarter of 2007. First quarter revenue consisted of $240,000 of license revenue, $168,000 of services revenue, and $253,000 of end-of-life product revenue. For the fourth quarter of 2007, license revenue was $102,000 and service revenue was $24,000.

Total operating expenses for the first quarter of 2008 were $3.1 million, compared with $20.9 million in the fourth quarter of 2007. First quarter operating expenses included $5.9 million of income from the settlement and licensing agreement with Intel, restructuring charges of $342,000, non-cash charges of $1.5 million for amortization of intangible assets, and non-cash stock compensation charges of $1.5 million.

In the first quarter, the Company recorded interest income of $2.6 million, including $1.7 million of imputed interest income from the settlement and licensing agreement with Intel. Net loss was $41,000, or $0.00 per share, compared with a net loss of $23.9 million, or a loss of $1.99 per share, in the fourth quarter of 2007.

The Company’s cash, cash equivalents and short term investments at March 31, 2008 totaled $158.8 million. Transmeta continues to be debt free.

Transmeta expects to be profitable on a GAAP net income basis in the second quarter of 2008, and for fiscal year 2008. Operating expenses in the second quarter of 2008, excluding non-cash charges, are expected to be in the range of $4.5 million to $5.0 million. In the second quarter, the Company expects to recognize $5.9 million of operating income, and $1.1 million of imputed interest income, from the settlement and licensing agreement with Intel.

“We initiated a process several months ago to actively explore a full range of strategic alternatives. With the assistance of our independent advisors, including Piper Jaffray, we have been engaged in discussions with other companies about potential ways to increase value for all of our shareholders, and we are committed to pursuing that process,” stated Les Crudele, president and CEO. “At the same time, we are making progress on developing IP components and tools to help facilitate the adoption and implementation of LongRun2 technologies. In addition, we have seen renewed interest in our patent portfolio since the Intel settlement and continue to pursue opportunities to monetize those assets.”

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) 312-0822. 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 May 14, 2008. The phone number to access the recording is (719) 457-0820, and the passcode is 8889410.

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
Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                    
            March 31, 2008         December 31, 2007         March 31, 2007
                            
    ASSETS                         
    Current assets:                         
    Cash and cash equivalents         $     138,922             $     15,607             $     6,863     
    Short-term investments             19,921                 2,968                 18,981     
    Accounts receivable             126                 163                 454     
    Other receivables, current             19,138                 149,400                 -     
    Prepaid expenses and other current assets               2,567                     2,476                     2,383     
    Total current assets             180,674                 170,614                 28,681     
                            
    Other receivables, long-term             67,195                 85,200                 -     
    Property and equipment, net             228                 284                 639     
    Patents and patent rights, net             909                 2,388                 7,523     
    Other assets               600                     800                     2,147     
    TOTAL ASSETS         $     249,606               $     259,286               $     38,990     
                            
    LIABILITIES AND STOCKHOLDERS' EQUITY                         
    Current Liabilities:                         
    Accounts payable         $     765             $     341             $     2,523     
    Accrued compensation             13,128                 15,351                 1,193     
    Income taxes payable             23                 3,306                 40     
    Other accrued liabilities             1,391                 1,028                 2,248     
    Current portion of deferred income from settlement and licensing             23,460                 23,460                 -     
    Current portion of accrued restructuring costs             980                 1,592                 4,667     
    Current portion of long-term payable               733                     667                     533     
    Total current liabilities             40,480                 45,745                 11,204     
                            
    Long-term deferred income from settlement and licensing, net of current portion             205,275                 211,140                 -     
    Long-term accrued restructuring costs, net of current portion             -                 -                 651     
    Long-term payable, net of current portion               600                     800                     1,339     
    Total liabilities               246,355                     257,685                     13,194     
                            
    Stockholders' equity:                         
    Convertible preferred stock             6,966                 6,966                 -     
    Common stock             740,957                 739,268                 726,003     
    Treasury stock             (2,439     )             (2,439     )             (2,439     )
    Accumulated other comprehensive gain (loss)             31                 29                 7     
    Accumulated deficit               (742,264     )               (742,223     )               (697,775     )
    Total stockholders' equity               3,251                     1,601                     25,796     
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $     249,606               $     259,286               $     38,990     
Transmeta Corporation
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
                                        
                Three Months Ended
                

March 31, 2008
        December 31, 2007         March 31, 2007
                                
Revenue:                             
    Product         $     253             $     -             $     142     
    License             240                 102                 -     
    Service               168                     24                     1,997     
        Total revenue               661                     126                     2,139     
                                
Cost of revenue                         
    Product             3                 -                 80     
    Service (1)             163                 11                 1,138     
    Impairment charge on inventories               -                     -                     364     
        Total cost of revenue               166                     11                     1,582     
Gross profit (loss)               495                     115                     557     
Gross margin %             74.9     %             91.3     %             26.0     %
                                
Operating expenses:                         
    Income from settlement and licensing             (5,865     )             -                 -     
    Research and development (1)             2,850                 1,981                 4,936     
    Selling, general and administrative (1)             4,342                 17,236                 6,106     
    Restructuring charges, net             342                 1                 6,723     
    Amortization of patents and patent rights             1,480                 1,712                 1,712     
    Impairment charge on long-lived and other assets               -                     -                     294     
        Total operating expenses               3,149                     20,930                     19,771     
Operating loss             (2,654     )             (20,815     )             (19,214     )
    Interest income and other, net             2,615                 138                 509     
    Interest (expense)               (2     )               53                     (10     )
Income (loss) before income taxes             (41     )             (20,624     )             (18,715     )
    Provision for income taxes               -                     3,301                     19     
Net income (loss)         $     (41     )         $     (23,925     )         $     (18,734     )
                                
Net income (loss) per share - basic         $     (0.00     )         $     (1.99     )         $     (1.88     )
Net income (loss) per share - fully diluted         $     (0.00     )         $     (1.99     )         $     (1.88     )
                                
Weighted average shares outstanding - basic             12,113                 12,021                 9,961     
Weighted average shares outstanding - diluted             12,113                 12,021                 9,961     
                                
(1) Includes stock-based compensation:                         
Cost of service revenue         $     82             $     1             $     3     
Research and development             847                 328                 (82     )
Selling, general and administrative         $     632             $     343             $     382     


Contact:
Transmeta Corporation
Sujan Jain, 408-919-3000

Source: Transmeta Corporation
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