Transmeta increases revenue, reduces loss

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Transmeta increases revenue, reduces loss

Transmeta is making significant steps to become a profitable company: After the transition from a processor manufacturer to an IP company that licenses processor and chip technologies, the company has made huge steps to improve its balance sheet.

For the fourth quarter of 2005, the company reported sales of $13.3 million and a net loss of $2.1 million. This compares to revenues of $11 million and a loss of $28.1 million in the fourth quarter of last year. Transmeta reported a profit in the third quarter of this year for the first time in the firm’s history.

For complete year, Transmeta’s revenues climbed 147% from $29.4 million in 2004 to $72.7 million in 2005. A significant portion of the new revenue, $48.1 million, originated from LongRun2 licensing agreements with Fujitsu and Sony. Sony previously announced that it will integrate the power management technology LongRun2 into the Cell processor. Transmeta was able to decrease its 2004 net loss of 106.8 million by more than $100 million to $6.2 million in 2005.

The Company’s cash, cash equivalents and short term investments at December 31, 2005 totaled $56.5 million, which was $3.5 million ahead of prior guidance the company had given. In addition, Transmeta said it ended the year with no long-term debt as it paid its remaining $5.0 million debt obligation to IBM in the fourth quarter of 2005.

According to the balance sheet, the company was able to successfully phase out the production of its Crusoe and Efficeon processors – and reduce its inventory. While inventory amounted to about $5.4 million at the end of 2004, the company now lists its inventory value at $265,000. Transmeta plans to compensate revenues it achieved through selling processors with existing and additional licensing agreements.

With new customers such as Toshiba, which today announced that it has licensed LongRun2, Transmeta expects 2006 revenues to be in the range of $60.0 to $72.0 million. Net loss is expected to increase to $12 to $18 million, which will include non-cash charges of $7 million of patent amortization and $5 million of stock option compensation.

“Based on our current visibility we expect a loss for the year, but it is manageable while we build a business characterized by recurring revenue streams, which we expect to begin to realize later in 2006 and 2007,” said Mark Kent, chief financial officer at Transmeta.