Feeds

Transmeta replaces CEO amid major restructure

Big Sony deal boosts tech licensing play

  • alert
  • submit to reddit

The essential guide to IT transformation

Transmeta last night began its transformation from a chip maker to a processor technology developer, a move heralded by the replacment of president and CEO Matthew Perry, almost three years after his appointment to that role, and the loss of 67 jobs worldwide.

Hints that the company might shift from producing and selling processors to simply licensing key chip technologies first appeared at the beginning of the year, and were soon confirmed by Transmeta itself. Yesterday, company bosses said that is indeed how the firm will be directed, with its licensing programme being backed up by a design and engineering consultancy and outsourcing business.

The near-term suitability of the move was indicated earlier this week by the company's Q4 FY2004 results, which showed big gains in its licensing and services revenue, both sequentially and year-on-year. To highlight the longer term benefits of the company's strategic shift, Transmeta also announced yesterday Sony's decision to extend its LongRun 2 licence.

The Japanese consumer electronics giant licensed LongRun 2 in January. Now it will "accelerate and expand its adoption" of Transmeta's leakage-reducing power conservation system, and confirmed it will indeed use the technology in "derivatives" of its 'Cell' microprocessor and "other portable applications" covering "current and future generation semiconductor process technologies".

The two companies will also "engage [in] strategic technology collaboration in other engineering areas", they said, without delving into the details. Transmeta will dedicate around 100 engineers to the project.

The focus on licensing will come at the expense of Transmeta's chip business, which will now essentially be dismantled. Transmeta said it will offer its Crusoe and 130nm Efficeon products on an "end-of-life" basis - it will continue to sell them until stocks disappear or demand dwindles, whichever comes first. It said it will continue to make certain 90nm Efficeon chips, essentially to maintain supply contracts already in place. But it hinted it would be looking to change the terms of those deals, presumably to allow it to exit the chip business as soon as possible.

CEO swap

"We feel confident that our strategic direction and the decisions we have already made will have an immediate positive impact on our financial position," said incoming president and CEO, Art Swift, who replaces Perry with immediate effect.

Perry joined Transmeta in April 2002, to allow then CEO Murray Goldman to become chairman. Perry brought Swift into the company in March 2003 to run its marketing operation. It's not clear yet whether Perry jumped or was pushed. Certainly his voice was absent from the company's restructuring statements, not what you'd expect in the case of an amicable separation.

In addition to Perry's departure, 67 other jobs will go, leaving the company with 208 workers - half of them dedicated to the Sony deal. Transmeta said it will take a $6m hit to cover the cost of the restructure during the current quarter, Q1 FY2005, which ended yesterday.

Transmeta CFO Mark Kent said the company ended the quarter with $38m in cash and equivalents, down from $53.7m at the end of the previous quarter.

"For Q1 FY2005, we expect to report negative cash flow of $16m, including some restructuring-related costs," said Kent. "Our first objective will be to reduce our negative cash flow run rate to $5m per quarter or less within the next one or two quarters.

"We believe that our ongoing efforts on licensing and strategic collaborations, combined with careful expense management, provide us with sufficient liquidity to successfully execute on our growth strategies." ®

Related stories

Transmeta to re-organise
Transmeta licences low-power tech to Sony
Once fabless, almost chipless - is Transmeta's future hopeless?
Transmeta licences low-power tech to Sony
Transmeta may power down chip making biz
Transmeta sales grow as losses mount
Transmeta gets new CEO

Next gen security for virtualised datacentres

More from The Register

next story
BBC: We're going to slip CODING into kids' TV
Pureed-carrot-in-ice cream C++ surprise
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
Twitter: La la la, we have not heard of any NUDE JLaw, Upton SELFIES
If there are any on our site it is not our fault as we are not a PUBLISHER
Facebook, Google and Instagram 'worse than drugs' says Miley Cyrus
Italian boffins agree with popette's theory that haters are the real wrecking balls
Sit tight, fanbois. Apple's '$400' wearable release slips into early 2015
Sources: time to put in plenty of clock-watching for' iWatch
Facebook to let stalkers unearth buried posts with mobe search
Prepare to HAUNT your pal's back catalogue
Ex-IBM CEO John Akers dies at 79
An era disrupted by the advent of the PC
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?