Transmeta gets a much needed cash infusion from AMD

Posted by Wolfgang Gruener

Santa Clara (CA) – Transmeta gets some financial breathing room thanks to a $7.5 million investment from AMD, which boosted the company’s stock by more than 30% today.

The investment comes at a critical time for the once high-flying maker of notebook processors. Transmeta noted in its Q1 2007 earnings report that it does not have the funds and revenues that would allow the company to survive the 2007 calendar year.

The $7.5 million investment from AMD provides some relief for Transmeta’s bank account, which stood about $6.8 million on March 31 of this year. Combined with short term investments available to Transmeta, the company has about $33 million to fund the period between April 1, 2007 and December 31, 2007. Assumed that Transmeta continues to lose about $10 million per quarter (restructuring charges not included), the company has just about enough money for this year.

“Transmeta has been an innovative force in the industry for more than a decade,” commented Dirk Meyer, president and chief operating officer of AMD. “Transmeta was a key ally in helping to bring our highly-successful AMD64 technology to market and has supported the widespread industry adoption of both AMD64 and AMD’s HyperTransport technology. Our investment will support Transmeta’s technology development work and AMD’s efforts to leverage Transmeta’s innovative energy-efficient technologies to the benefit of AMD’s customers.”

Yesterday, Transmeta announced that NEC has become the first licensee of its technology to actual make a product commercially available. NEC will begin shipping the product in volume in October, which should bring in some money for Transmeta in Q4 of this year.

Transmeta’s stock was up more than 31% at $0.92 following the announcement of the AMD investment. AMD’s stock was up about 1.3% to $14.39.