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Former Intel clone maker seeks buyer

The for-sale sign is up at Transmeta, once a supplier of Intel-compatible chips that later remade itself into a supplier of chip patents.

Transmeta's chips are on the block. The former supplier of low-power Intel-compatible processors said Wednesday that it is actively seeking a buyer, and also announced two agreements with Intel.

The Santa Clara, Calif.-based company, which has remade itself into a supplier of chip-related intellectual property, said that after exploring a range of "strategic alternatives" over the past few months and after strengthening its balance sheet, it will seek a sale as a way to "enhance value for all its stockholders."

Transmeta is working with financial adviser Piper Jaffray.

Back in February, Transmeta weighed an unsolicited offer from Riley Investment Management, which the company ultimately rejected. At that time, Riley claimed Transmeta had an unconvincing business strategy based on its LongRun2 technology--described by Transmeta as a suite of technologies for advanced power management and "leakage control." Riley claimed at the time that there was no "credible evidence" that shareholders would benefit from the LongRun2-related operating expenses.

Transmeta also announced Wednesday that it had entered into two agreements with Intel relating to the licensing of Transmeta technologies and intellectual property. The first agreement is a fully paid-up, nonexclusive technology licensing agreement that provides for the company to deliver "proprietary Transmeta computing technologies" to Intel and grants to Intel a nonexclusive license to use them.

The second agreement is an amendment to a previously announced settlement that Transmeta and Intel entered into on December 31, 2007, which granted Intel a perpetual nonexclusive license to all Transmeta patents and patent applications, including any patent rights later acquired by Transmeta before December 31, 2017.

That settlement provided for Intel to make five annual future payments to Transmeta of $20 million per year for each year from 2009 through 2013. "This amendment accelerates Intel's remaining future payment obligations under the settlement agreement," Transmeta said.

As a result, Transmeta expects to receive cash payments from Intel totaling $91.5 million before the end of Transmeta's current fiscal quarter ending September 30, the company said.