Transmeta's decision to stop making and selling microprocessors and focus on licensing chip-design technology was once again validated during the company's most recently completed quarter.

However, the company warned it expects to make a loss in its current quarter.

During Q2, Transmeta made $6.8m (four cents a share) on sales of $24.7m. For the year-ago quarter, it reported revenues of $7m and a loss of $28.8m (16 cents a share).

Back to the most recently completed quarter, and the company reported gross margins of 70.5 per cent, up from 67.1 per cent in Q2. Revenues were split $9.6m from licensing, $10.3m from services and $7.9m from product sales. Transmeta quit the quarter with $56.9m in the bank. It had a positive cash flow from operations of $9.5m.

Looking to Q4, Transmeta said it expects its cash flow to go negative to the tune of $3-3.5m, which will leave it with $53m in the bank - though that's still up from the company's previous forecast, $47m.

It said it expects Q4 revenues to total $12-13m, less than half Q3's figure and ending the company's profit streak: it will lose $5.4-5.9m (three cents a share) the company said. ®

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