Linus Torvalds’ old company acquired and gone
Santa Clara (CA) – Transmeta, once a sparkling startup that set out to beat Intel and AMD in mobile computing, announced that it will be acquired by Novafora. The company’s most famous employee, Linux inventor Linus Torvalds, kept the buzz and rumor mill about the company throughout its stealth phase alive and guaranteed a flashy technology announcement in early 2000. Almost nine years later Transmeta’s journey is over.
Transmeta’s acquisition ends one of the most interesting corporate stories in Silicon Valley. What began with a company wrapped in secrecy, but had enough technology to keep Linus Torvalds as a software engineer on its staff, continued with an impressive launch of the Crusoe processor in 2000, some design wins (including Sony and Toshiba). However, Transmeta was never able to seriously challenge the might of Intel and AMD and eventually stopped building microprocessors in late 2004. The company went through several business transitions and tried to license its LongRun and LongRun2 power saving technologies, which did not provide the kind of income the company needed to survive.
Shortly before it ran out of cash, it won a $150 million cash infusion from Intel in a patent dispute and in fact was able to secure an investment from AMD in 2007 and recently convinced Nvidia to license its tech for $25 million. Following an announcement in September that the company had begun looking for a buyer, Transmeta today announced that Novafora will acquire Transmeta and its assets for $255.6 million in cash. Novafora is a privately held fabless semiconductor company in San Jose that develops a series of digital video processors.
Under the terms of the agreement, stockholders are expected to receive between $18.70 and $19.00 for each outstanding share of Transmeta's common stock. An interesting footnote in Transmeta’s Q3 refers to the 713,470 shares of Transmeta Series B stock currently held by AMD. 700,000 shares will be converted into 499,429 shares of common stock and transferred back to Transmeta – in exchange for a non-exclusive license of Transmeta technologies granted to AMD and its future Foundry Company.
Commenting on the acquisition, the president and CEO of Transmeta, Les Crudele, said he “was pleased with the value that [Transmeta] will be able to return to [its] stockholders as a result of this acquisition agreement with Novafora.”
"We believe the deal is a win for all our stockholders. We have spent the past several months extensively exploring our strategic options and believe that the agreement with Novafora best serves the interest of our stockholders," he said. Zaki Rakib, CEO of Novafora, added that "Transmeta's innovative technology and the expertise of its employees are valuable additions to Novafora."
“Adding Transmeta's power management technology to our video processor will advance our vision of making our products applicable across the broadest range of video-oriented devices," Rakib said.
Transmeta reported sales of $25.3 million for the third quarter, which included $2.9 million of income from two previously announced agreements with Intel made during the quarter. Third quarter operating expenses also included $5.9 million of income from the December 2007 settlement and licensing agreement with Intel, and non-cash stock compensation charges of $887,000. Its stockpile of cash brought a Q3 interest income of $1.8 million. Transmeta's cash, cash equivalents and short term investments at September 30, 2008 totaled $255.2 million.