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By | Joe Fay 25th September 2008 10:51

Transmeta calls it a day and looks for a buyer

Power down

Coulda shoulda chip vendor Transmeta has thrown in the towel and put itself on the auction block.

The low-power chip vendor, which launched in 2000 and IPO’d later that year, said yesterday that it had “initiated a process to seek a potential sale of the Company”.

The decision came after it had actively explored “a full range of strategic alternatives over the past few months”.

When it IPO’d, Transmeta raised $273m, giving it a $2.7bn valuation. Yesterday its shares closed at $13.50, giving it a market cap of $163m.

The announcement that it was looking for a sale coincided with a licensing deal with Intel, which will see it pull in a one-off payment of $91.5m and further payments of $20m a year between 2009 and 2013, and comes just weeks after a $25m deal with Nvidia.

Transmeta reckons its licensing activities will be worth at least $265m in cash this year, and said it would continue to work with potential licensees and was continuing to develop and validate its IP blocks to broaden its market.

It would seem then that the firm is marketing itself as an IP cash cow, which is somewhat different than its pitch back in 2000, when it was taking aim at Intel in the low-power chip market.

Of course, at least some of what it argued back then – the need for new architectures to deliver efficient computing and low power, and the potential of low-powered devices aimed squarely at web browsing – has proved to be bang on the money.

Unfortunately, the company’s history also proved that smart ideas and insights and the support of some Japanese sub-laptop vendors aren’t enough to turn you into a player in the chip market. Massive capital resources and established commercial relationships are rather important after all.

Should you fancy taking on a chip company that said it was going to revolutionise the CPU market turned IP licensing house, you just need to get in touch with Piper Jaffray & Co. ®

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