Transmeta Q3 revenue plummets 52% on Q2
Downward spiral accelerates
Transmeta's chairman and CEO, Murray Goldman, last night declared himself "pleased" with the direction his company is pursuing. The comment rings hollow following as it does the effective dismissal of former CEO Mark Allen, the admission that Transmeta is having problems getting its TM5800 chip out of the door and an unimpressive set of Q3 results.
For the three months to 28 September, Transmeta lost $29.6 million (22 cents a share), including one-off charges of $9.1 million. That compares with the $27.7 million (83 cents a share) loss it announced for Q3 2000.
During Q3 2001, Transmeta made sales worth $5 million, up from $3.5 million this time last year. Given that the company had revenues of $29.1 million for the Q1 through Q2, that marks a significant drop - around 66 per cent - on its average quarterly sales figure.
From Q1 revenues of $18.6 million, sales fell around 44 per cent to $10.5 million in Q2 and now 52 per cent to $5 million. At this rate, Transmeta won't be selling anything during the current quarter. Certainly the prognosis doesn't look good, and you can see why the company's board might have sought and found a scapegoat in Allen.
So where is the company heading? Having failed to ship the TM5800 as scheduled, Transmeta reckons it will achieve volume production next month. Hopefully the delay won't have knocked back the 1GHz version that world+dog has been waiting for since the company announced in its IPO prospectus that it would ship early 2001. The part is now due to ship early 2002. Its 1GHz+ TM6000 is due in the second half of next year - a very long way off if you're running out of revenue.
Don't look to the first TM5800s to help much - Transmeta is declining to offer Q4 revenue and earnings guidance, which tells you all you need to know about how much money the company expects the chip to bring in this quarter.
Worryingly, the company has no plans to increase its R&D spending. Money is tight, so savings have to be made, but since research is the foundation on which a fabless chip company is built, suggestions that R&D - together with, we should add, sales, general and admin spending - will be "approximately flat to slightly lower to the third quarter level of $25.8 million" is surely a matter of concern.
Given that the company is "actively pursuing other markets in which our low power Crusoe microprocessor will provide competitive, energy efficient solutions", according to Goldman, we hope this essential increased sales effort doesn't harm equally essential product development work. ®