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Transmeta plans restructuring, focus on licensing

Transmeta plans restructuring, focus on licensing

Transmeta will reorganise its operations at the end of March to focus on licensing its intellectual property for low-power microprocessor designs.

The company will cut jobs on March 31 to reduce costs and hopefully generate a profit for the first time in the company's history. It plans to fulfill the orders of existing customers for its Crusoe and Efficeon processors, but the majority of its future business plan centers on licensing,Transmeta's chief executive officer, Matthew Perry, said.

The company has retained investment banking firm, Perseus Group, to search for partners that will allow it to continue to provide chips to its current customers, he said.

Transmeta was one of the first chip makers to release a low-power processor for ultraportable notebooks and embedded devices that was compatible with Microsoft's software.

The company thought that its software-based approach to microprocessor design would usher in a new era of mobile computing, but it has been unable to capitalise on the technology.

After a classic hype-filled dot-com era company launch in 2000, Transmeta has recorded almost $US600 million in losses attempting to compete against Intel for notebook design wins. Transmeta was never able to convince the top-tier PC vendors such as Dell and HP that the miserly power consumption of its processors provided enough benefits for users to overlook the performance gap between Transmeta's chips and those of other companies.

Transmeta enjoyed most of its success in Japan, where demand for ultraportable notebooks is higher. Fujitsu and Sharp have released sleek notebooks and Tablet PCs with Transmeta's chips. HP does use the chips in a Tablet PC and a thin-client device, but none of those products generate enough volume to lift Transmeta into profitability.

The company's new plan is to secure licensing deals with other chip companies for its power management technology. Transmeta has already signed licensing deals for its LongRun 2 technology with Fujitsu and NEC, and last week announced a third deal with "a global consumer electronics company."

The name would not be revealed until later this week, Perry said.

LongRun 2 is a power management method that allows chip designers to change the threshold voltage of transistors in order to reduce current leakage when a transistor is not active. The threshold voltage is the amount of electrical power required to activate the transistor.

Passive current leakage has become a major problem for chip makers using cutting-edge manufacturing technology as transistors have grown smaller.

LongRun 2 can raise the threshold voltage of the processor so it doesn't inadvertently turn itself on in the presence of leaking current.

Going forward, Transmeta also planned to seek out licensing deals for its microprocessor designs, Perry said.

The company had not determined how many employees would be affected by the March 31 layoffs, Transmeta's chief financial officer, Mark Kent, said.

Employees will be given a cash retention bonus if they stayed with Transmeta through that date, he said.

The number of layoffs woulddepend on the company's business prospects over the next few months, senior vice-president of marketing, Art Swift, said.

Transmeta would report its fourth quarter and 2004 full-year earnings in late February or early March, Perry said.


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