Transmeta's revenue remains thin
Although its Crusoe chips have been showing up in notebooks for about a year now, the company's financial picture doesn't change dramatically.
The Santa Clara, Calif.-based chip designer on Thursday reported third-quarter revenue of $5 million with a net loss of $29.4 million, or 22 cents a share, including charges. Its net loss, excluding special charges, came to $20.5 million, or 16 cents per share. A consensus of analysts was expecting a loss of 15 cents per share, according to First Call.
For the same period a year ago, the company reported revenue of $3.5 million and a net loss of $27.7 million.
The results come amid great turmoil at Transmeta. Earlier this month, the company announced that revenue would hit $5 million--lower than expectations. And earlier this week, the company dismissed CEO Mark Allen. Transmeta also delayed the release of its next chip, the 5800, from October to November, due to manufacturing and testing problems.
During a conference call, Chairman and now Chief Executive Murray Goldman mentioned Allen.
"Mark demonstrated integrity, courage and a propensity to make tough decisions. And on behalf of the board, I would like to thank him," Goldman said. "However, we were disappointed as a board over the results of the last two quarters."
Goldman added that he and President Hugh Barnes will search for a new CEO over the next six to nine months. "We are committed to whatever it takes," Goldman said.
Last quarter, the company also lowered revenue expectations before earnings, blaming the stagnant world economy.
Chief Financial Officer Merle McClendon said the company has $262 million in cash and expects to burn through $20 million in the current quarter, just as they did in the previous quarter.
The company would not give guidance or revenue estimates for the current quarter.
Sales of notebooks with Transmeta processors fell behind expectations, Executive Vice President Jim Chapman acknowledged in the call.
Chapman asserted that notebook makers need to aggressively drop prices of new lightweight notebooks to between $1,000 and $1,700.
Toshiba was the company's largest customer for the previous quarter. Sources have said that Sony will be announcing a Transmeta-based notebook for the U.S. market in mid-November.
The deja vu quality to the financial results reflects the difficult circumstances that surround the company. Transmeta sells energy-efficient processors for notebooks and skinny servers that compete against similar chips from Intel. Although competing against Intel remains a daunting task, Sony and other manufacturers were beginning to incorporate the chip into mini-notebooks because of the power advantages.
While most of these customers have continued to use Transmeta's chips, they haven't greatly expanded their purchases. Transmeta's chips still largely only get used in mini-notebooks and in models sold mostly in Japan. Intel has also come out with competing products that have been adopted by IBM and Compaq Computer, among others.
"They are a slice of a slice of a slice of the pie," Kevin Krewell, an analyst at Microprocessor Report, noted before the earnings.